SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
HemaSure Inc.
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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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3) Filing Party:
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4) Date Filed:
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<PAGE>
HEMASURE INC.
140 Locke Drive
Marlborough, Massachusetts 01752
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 26, 1998
The 1998 Annual Meeting of Stockholders of HemaSure Inc. (the "Company")
will be held at the Holiday Inn, Boxborough Woods, Boxborough, Massachusetts
01719, on Tuesday, May 26, 1998 at 10:00 a.m., local time, to consider and act
upon the following matters:
1. To elect five directors to serve until the next Annual Meeting of
Stockholders.
2. To approve and adopt an amendment to the Company's 1995 Employee Stock
Purchase Plan to increase the number of authorized shares of common
stock issuable thereunder from 100,000 to 250,000.
3. To approve and adopt certain amendments to the Company's 1994 Stock
Option Plan.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on April 24, 1998 are
entitled to notice of, and to vote at, the meeting. The stock transfer books of
the Company will remain open for the purchase and sale of the Company's common
stock, par value $.01 per share.
All stockholders are cordially invited to attend the meeting.
By Order of the Board of Directors
JAMES B. MURPHY, Secretary
Marlborough, Massachusetts
April 30, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND PROMPTLY MAIL IT IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES AT THE MEETING. NO POSTAGE NEED BE
AFFIXED IF THE PROXY CARD IS MAILED IN THE UNITED STATES.
<PAGE>
HEMASURE INC.
140 Locke Drive
Marlborough, Massachusetts 01752
Proxy Statement for the 1998 Annual Meeting of Stockholders
To Be Held on May 26, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of HemaSure Inc. (the "Company") for use at
the 1998 Annual Meeting of Stockholders to be held on May 26, 1998 and at any
adjournment or adjournments of that meeting (the "Annual Meeting"). All proxies
will be voted in accordance with the instructions contained therein, and if no
choice is specified, the proxies will be voted in favor of the matters set forth
in the accompanying Notice of Meeting. Any proxy may be revoked by a stockholder
at any time before it is exercised by delivery of written revocation to the
Secretary of the Company.
The Company's Annual Report for the year ended December 31, 1997, is being
mailed to stockholders with the mailing of this Notice of Meeting and Proxy
Statement on or about April 30, 1998.
Voting Securities and Votes Required
On April 24, 1998, the record date for the determination of stockholders
entitled to notice of and to vote at the meeting, there were outstanding and
entitled to vote an aggregate of 8,991,042 shares of common stock of the
Company, par value $.01 per share ("Common Stock"). Each share of Common Stock
is entitled to one vote.
Under the Company's Bylaws, the holders of a majority of the shares of
Common Stock issued, outstanding and entitled to vote on any matter shall
constitute a quorum with respect to that matter at the Annual Meeting.
Stockholders holding shares of Common Stock who are present in person or
represented by proxy (including stockholders who abstain from voting their
shares or who do not vote with respect to one or more of the matters presented
for stockholder approval) will be counted for purposes of determining whether a
quorum is present.
The affirmative vote of the holders of a plurality of votes cast by the
stockholders entitled to vote at the Annual Meeting is required for the election
of directors. The affirmative vote of the holders of a majority of the shares of
Common Stock voting on the matter is required for the approval of each of the
other matters to be voted upon.
Stockholders who abstain from voting as to a particular matter, and shares
held in "street name" by brokers or nominees who indicate on their proxies that
they do not have discretionary authority to vote such shares as to a particular
matter, will not be counted as votes in favor of such matter, and will also not
be counted as votes cast or shares voting on such matter. Accordingly,
abstentions and "broker non-votes" will have no effect on the voting on a matter
that requires the affirmative vote of a certain percentage of the votes cast or
shares voting on a matter.
-1-
<PAGE>
Stock Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information, as of January 31, 1998,
with respect to any person (including any "group," as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) who is known to the Company to be the beneficial owner of more
than five percent of any class of the Company's voting securities, and as to
those shares of the Company's equity securities beneficially owned by each of
its directors and nominees for director, the executive officers of the Company
named in the Summary Compensation Table under the heading "Compensation of
Executive Officers" below, and all of its directors and executive officers as a
group. Unless otherwise specified in the table below, such information, other
than information with respect to the directors and officers of the Company, is
based on a review of statements filed, or that should have been filed, with the
Securities and Exchange Commission pursuant to Sections 13(d), 13(f), and 13(g)
of the Exchange Act with respect to the Company's Common Stock. As of January
31, 1998, there were 8,991,042 shares of Common Stock outstanding.
The number of shares of Common Stock beneficially owned by each director or
executive officer is determined under the rules of the Commission, and the
information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rules, beneficial ownership includes any shares as to which
the individual has sole or shared voting power or investment power and also any
shares which the individual has the right to acquire within 60 days after
January 31, 1998 through the exercise of any stock option or other right. Unless
otherwise indicated, each person has sole investment and voting power (or shares
such power with his or her spouse) with respect to the shares set forth in the
following table. The inclusion herein of any shares deemed beneficially owned
does not constitute an admission of beneficial ownership of those shares. Unless
otherwise specified, the address for each person below is c/o HemaSure Inc., 140
Locke Drive, Marlborough, Massachusetts 01752.
<TABLE>
<CAPTION>
Shares of Percentage of
Common Stock Common
Beneficially Stock
Name and Address Owned Outstanding
---------------- ------------ -------------
<S> <C> <C>
Sepracor Inc....................................................... 3,000,000 33.1%
111 Locke Drive
Marlborough, MA 01752
Novo Nordisk A/S(1)................................................ 827,375 9.1%
405 Lexington Avenue
Suite 6400
New York, NY 10017-6401
Nicholas Madonia, Trustee(2)....................................... 489,000 5.4%
Madonia, Pilles & Co., P.A.
30 Outwater Lane
Garfield, NJ 07026
Timothy J. Barberich(3)............................................ 61,875 *
John F. McGuire.................................................... 20,000 *
David S. Barlow(4)................................................. 15,375 *
-2-
<PAGE>
Shares of Percentage of
Common Stock Common
Beneficially Stock
Name and Address Owned Outstanding
---------------- ------------ -------------
Rolf S. Stutz(4)................................................... 18,375 *
Justin E. Doheny................................................... 0 *
Peter C. Sutcliffe................................................. 1,881 *
James B. Murphy.................................................... 0 *
All directors and executive officers as a group 117,506 1.3%
(persons)(5).......................................................
</TABLE>
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* Represents holdings of less than one percent.
(1) On January 6, 1988, the Company converted all indebtedness under a
convertible subordinated promissory note issued to Novo Nordisk A/S,
pursuant to the terms thereof, into shares of Common Stock at a conversion
price of $10.50 per share. Novo Nordisk A/S has contested the conversion of
the note, including the forgiveness of $3 million of indebtedness pursuant
to the terms thereof.
(2) Mr. Madonia is the trustee for three trusts (the "Trusts") which
collectively hold 489,000 shares of Common Stock. In accordance with the
terms of the Trusts' governing documents, Mr. Madonia has the sole power to
vote and sole power to dispose of the shares of Common Stock held by the
trustee. Each of the Trusts is a charitable remainder trust in accordance
with the applicable rules and regulations of the Internal Revenue Code of
1986, as amended.
(3) Includes 49,875 shares of Common Stock which Mr. Barberich has the right to
acquire within 60 days after January 31, 1998 upon exercise of outstanding
stock options.
(4) Includes 12,375 shares of Common Stock which each of Messrs. Barlow and
Stutz has the right to acquire within 60 days after January 31, 1998 upon
exercise of outstanding stock options.
(5) Includes an aggregate of 74,625 shares of Common Stock which all executive
officers and directors have the right to acquire within 60 days after
January 31, 1998 upon exercise of outstanding stock options.
ELECTION OF DIRECTORS
The persons named in the enclosed proxy will vote to elect as directors the
five nominees named below, unless the proxy is marked otherwise. If a
stockholder returns a proxy without contrary instructions, the persons named as
proxies will vote to elect as directors the nominees named below, each of whom
is currently a member of the Board of Directors of the Company.
Each director will be elected to hold office until the 1999 Annual Meeting
of Stockholders and until his successor is duly elected and qualified. All of
the nominees have indicated their willingness to serve, if elected; however, if
any nominee should be unable to serve, the shares of Common Stock represented by
proxies may be voted for a substitute nominee designated by the Board of
Directors.
-3-
<PAGE>
There are no family relationships between or among any officers or
directors of the Company.
Set forth below are the name and age of each member of, or nominee to, the
Board of Directors, and the positions and offices held by him, his principal
occupation and business experience during the past five years, the names of
other publicly held companies of which he serves as a director and the year of
the commencement of his term as a director of the Company. Information with
respect to the number of shares of Common Stock beneficially owned by each
director, directly or indirectly, as of January 31, 1998, appears above under
the heading "Stock Ownership of Certain Beneficial Owners and Management."
John T. Kimbell, served as a director of the Company from January 1994
until his death in September 1997. The Board of Directors and management of the
Company regret the loss of Mr. Kimbell and are deeply grateful for his dedicated
service as a member of the Board of Directors and for his lifelong contributions
to making blood safer.
In April 1997, Messrs. Philip M. Hampton, Steven H. Rouhandeh and Eugene J.
Zurlo resigned as directors of the Company.
Nominees For Director
Timothy J. Barberich, age 50, has served as Chairman of the Board of the
Company since April 1997, as a director since the Company's organization in 1993
and was Chairman of the Board of Directors from 1993 until March 1996. Mr.
Barberich was a founder of Sepracor Inc. ("Sepracor"), a specialty
pharmaceutical company, and has served as President, Chief Executive Officer and
a director of Sepracor since 1984. As of January 31, 1998, Sepracor owns
approximately 33% of the outstanding Common Stock of the Company. Mr. Barberich
also serves as Chairman of the board of directors of BioSepra Inc., a publicly
traded subsidiary of Sepracor engaged in the manufacture of instrumentation and
media for the pharmaceutical industry.
David S. Barlow, age 41, has served as a director of the Company since
January 1994. Mr. Barlow has been Executive Vice President and President,
Pharmaceuticals Division of Sepracor since October 1995. From July 1993 to
October 1995, Mr. Barlow held the position of Senior Vice President and General
Manager of the Pharmaceuticals Division of Sepracor. From 1991 to 1993, he was
president of the Business Group, a management consulting firm. Previously, he
was Vice President, Worldwide Marketing and Business Development of Armour
Pharmaceutical Company, a subsidiary of Rhone-Poulenc Rorer, from 1988 to 1991.
Prior to that time, he was associated with Pfizer Inc. and Ares-Serono, Inc. in
various business planning and marketing positions.
Rolf S. Stutz, age 48, has served as a director of the Company since
January 1994. Mr. Stutz has been Chairman (since June 1996), Chief Executive
Officer (since 1983) and a director of Zoll Medical Corporation ("Zoll"), a
manufacturer of cardiovascular monitoring and treatment equipment. He served
previously as President of Zoll from 1983 to June 1996. From 1979 to 1983, Mr.
Stutz held a variety of domestic and international management positions with
Millipore Corporation, an industrial filtration manufacturer. Mr. Stutz is also
a director of Cambridge Heart, Inc., a corporation engaged in the research,
development, and commercialization of products for non-invasive diagnosis of
cardiac disease.
John F. McGuire, age 51, has served as Chief Executive Officer and a
director of the Company since April 1997. Prior to that time, Mr. McGuire served
as Vice President and General Manager of Johnson & Johnson's ("J&J") Ortho
Diagnostic Systems Blood Bank Business Unit since January 1996.
-4-
<PAGE>
From March 1995 to January 1996, Mr. McGuire held the position of Vice
President, Sales & Marketing, North America for J&J. From August 1990 to March
1995, Mr. McGuire served as Managing Director of Ortho Diagnostic Systems, U.K.
and Belgium for J&J. From September 1988 to August 1990, Mr. McGuire held the
position of Marketing Director for the AIDS and Hepatitis Business Unit of J&J.
From 1977 to 1988, Mr. McGuire held various management positions at E.I. DuPont
De Nemours & Company, the last of which was National Sales Manager, AIDS &
Hepatitis Business. Mr. McGuire is a member of the Board of Trustees of the
National Blood Foundation Trust Fund and of the Bergen Community Blood Center.
Justin E. Doheny, age 46, has been Executive Vice President and Chief
Operating Officer of Saint Peter's Medical Center, New Brunswick, NJ, since
August 1997. During 1996 (June-October), Mr. Doheny served as Senior Vice
President of Saint Barnabas Health Care System in Livingston, NJ. From December
1985 until June 1996, Mr. Doheny held the position of President of Wayne General
Hospital, located in Wayne, NJ. Mr. Doheny is also Chairman of the Bergen
Community Regional Blood Center.
Board and Committee Meetings
The Company has a standing Audit Committee of the Board of Directors, which
provides the opportunity for direct contact between the Company's independent
accountants and the Board of Directors. The Audit Committee has responsibility
for recommending the appointment of the Company's independent accountants,
reviewing the scope and results of audits and reviewing the Company's internal
accounting control policies and procedures. The Audit Committee did not meet in
1997. In 1997, the members of the Audit Committee were Mr. Kimbell and Mr.
Hampton until April 1997, Mr. Kimbell from April 1997 until August 1997, Mr.
Kimbell and Mr. Stutz from August 1997 until September 1997, and Mr. Stutz for
the remainder of 1997.
The Company also has a standing Compensation Committee of the Board of
Directors, which provides recommendations to the Board of Directors regarding
compensation programs of the Company. The Compensation Committee is responsible
for establishing and modifying the compensation of all corporate officers of the
Company, adoption and amendment of all stock option and other employee benefit
plans, and the engagement of, terms of any employment agreements and
arrangements with, and termination of, all corporate officers of the Company.
The Compensation Committee did not meet during 1997. In 1997, the members of the
Compensation Committee were Messrs. Kimbell and Stutz until September 1997, and
Mr. Stutz from September 1997 until December 1997. See "Report of the
Compensation Committee" below.
The Company does not have a nominating committee or a committee serving a
similar function. Nominations are made by and through the full Board of
Directors.
The Board of Directors held seven meetings during 1997. Each director,
other than Messrs. Hampton, Rouhandeh and Zurlo who are addressed below,
attended at least 75% of the total number of meetings (including consents in
lieu of meetings) of the Board of Directors. Messrs. Hampton, Rouhandeh and
Zurlo attended at least 75% of the total number of meetings (including consents
in lieu of meetings) of the Board of Directors which took place during the
period of their respective directorships.
-5-
<PAGE>
Compensation for Directors
Directors who are neither officers nor employees of the Company or of any
subsidiary of the Company (the "Outside Directors") receive $1,000 for each
meeting of the Board they attend and are entitled to participate in the
Company's 1994 Director Stock Option Plan, as amended (the "Director Option
Plan"), provided that Mr. Barberich and Mr. Barlow do not receive compensation
for attendance at meetings of the Board. Directors who are officers or employees
of the Company do not receive any additional compensation for their services as
directors. On January 5, 1994, options to purchase an aggregate of 75,000 shares
of Common Stock at an exercise price of $2.00 per share were granted under the
Director Option Plan to the following directors: Mr. Barberich, 45,000 shares,
and Mr. Barlow, Mr. Kimbell and Mr. Stutz, 7,500 shares each. On May 17, 1995,
options to purchase 1,500 shares of Common Stock at an exercise price of $5.50
per share were granted under the Director Option Plan to the following
directors: Mr. Barberich, Mr. Barlow, Mr. Kimbell and Mr. Stutz. On February 15,
1996, options to purchase 18,750 shares of Common Stock at an exercise price of
$12.375 per share were granted under the 1994 Stock Option Plan to Mr.
Barberich. On May 16, 1996, options to purchase an aggregate of 39,000 shares of
Common Stock at an exercise price of $16.25 per share were granted under the
Director Option Plan to the following directors: Mr. Barberich, Mr. Barlow, Mr.
Kimbell, and Mr. Stutz, 9,750 shares each. On May 15, 1997, options to purchase
an aggregate of 12,000 shares of Common Stock at an exercise price of $1.75 per
share were granted under the Director Option Plan to the following directors:
Mr. Barberich, Mr. Barlow, Mr. Kimbell and Mr. Stutz, 3,000 shares each.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the names, ages and positions of the current
executive officers of the Company.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
John F. McGuire............................. 51 President, Chief Executive Officer and Director
James B. Murphy............................. 41 Senior Vice President, Finance and Administration
Peter Sutcliffe .......................... 48 Vice President and Chief Operating Officer
</TABLE>
Mr. McGuire's biography is set forth under "Election of Directors --
Nominees for Director."
Mr. Murphy has served as Senior Vice President, Finance and Administration
since February 1996. From April 1994 to January 1996, he served as Vice
President and Corporate Controller of the Company. Prior to that, from 1990 to
April 1994, he served as Corporate Controller of Sepracor. Previously, Mr.
Murphy held the positions of Senior Corporate Accountant at BBN Inc. and Senior
Accountant at Arthur Andersen LLP.
Mr. Sutcliffe has served as Chief Operating Officer of the Company since
April 3, 1998. From May 1996 until that time, Mr. Sutcliffe served as Vice
President of Manufacturing Operations of the Company. From May 1982 until May
1996, Mr. Sutcliffe held the position of Vice President Manufacturing for Cornig
Costar Incorporated. From 1976 until 1982, he was a plant manufacturing manager
at Millipore Corporation.
-6-
<PAGE>
Compensation of Executive Officers
Summary Compensation Table. The following table sets forth certain
information with respect to the annual and long-term compensation for the last
three fiscal years of the Company's President and Chief Executive Officer and
the Company's other executive officers (including former executive officers)
whose total annual salary and bonus for 1997 exceeded $100,000 (collectively,
the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------------------------------------------ ------------
Securities All
Other Annual Underlying Other
Compensation Options/SARs Compensation
Name and Principal Position Year Salary ($) Bonus($) ($)(1) ($)(2)
--------------------------- ---- ---------- -------- -------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
John F. McGuire................. 1997 $140,302 $75,000 - 600,000 $708
President and 1996 - - - - -
Chief Executive Officer 1995 - - - - -
James B. Murphy................. 1997 $119,387 60,000 $222
Senior Vice President 1996 112,926 0 0 30,000 247
Finance and Administration 1995 93,013 20,000 0 12,000 203
Steven H. Rouhandeh (3)......... 1997 $239,064 $260
President and 1996 194,157 0 0 480,000 266
Chief Executive Officer 1995 144,629 50,000 0 150,000 198
Jeffrey B. Davis (3)............ 1997 $234,282 $435
Senior Vice President 1996 116,713 0 0 150,000 255
Chief Financial Officer 1995 - - - - -
Edward W. Kelly (3)............. 1997 $188,342 $3,616
Senior Vice President 1996 106,057 - 0 45,000 2,036
Chief Operating Officer 1995 - - - - -
</TABLE>
- -------------
(1) Other compensation in the form of perquisites and other personal benefits
has been omitted if such perquisites and other personal benefits
constituted less than the lesser of $50,000 or 10% of the total salary and
bonus for the Named Executive Officer.
(2) Represents the taxable portion of group life insurance paid by the Company.
(3) Effective April 2, 1997, Messrs. Rouhandeh, Davis, and Kelly were relieved
of their duties as executive officers and employees of the Company, and, in
connection therewith, all unvested options previously granted to such
persons, aggregating 480,000, 150,000, and 45,000, respectively, expired by
their terms.
-7-
<PAGE>
Option Grant Table. The following table sets forth certain information
regarding options granted during the year ended December 31, 1997 by the Company
to the Named Executive Officers.
OPTION/SAR GRANTS IN LAST YEAR
<TABLE>
<CAPTION>
Individual Grants
--------------------------
Percent of Market
Total Price of
Number of Options/ Securities
Securities SARs Exercise Underlying Potential Realizable Value
Underlying Granted to or Options/ at Assumed Annual Rates of
Options/SARS Employees In Base SARs Stock Price Appreciation
Granted Fiscal Price On Grant Expiration For Option Term(2)
------------------------
Name (#)(1) Year ($/sh) Date Date 5%($) 10%($)
- ----------------------- ------------ ------------ -------- ------------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
John F. McGuire 156,064 12.4861 $2.563 $2.563 4/02/07 $251,522.84 $ 637,489.29
443,936 35.5177 2.563 2.563 4/02/07 715,561.32 1,813,372.87
James B. Murphy.......... 60,000 4.8003 $3.500 $3.50 4/16/07 $131,976.43 $334,401.53
12,000 0.9600 3.500 3.50 4/16/07 26,413.57 66,937.18
30,000 2.4001 3.500 3.50 4/16/07 66,033.94 167,342.96
</TABLE>
- ---------------
(1) Options vest in up to five equal annual installments beginning on the first
anniversary of the date of grant.
(2) Amounts represent hypothetical gains that could be achieved for options if
exercised and sold at the end of the option term. These gains are based on
assumed rates of stock price appreciation of 5% and 10% compounded annually
from the date options are granted. Actual gains, if any, on stock option
exercises will depend on the future performance of the Common Stock on the
date on which the options are sold.
-8-
<PAGE>
Year-End Option Table. The following table sets forth certain information
regarding options held as of December 31, 1997 by the Named Executive Officers.
No Named Executive Officer exercised stock options in 1997.
AGGREGATED OPTION/SAR EXERCISES IN LAST YEAR AND
YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of
Securities
Underlying Value of Unexercised
Unexercised In-The-Money
Options/SARs at Options/SARs at
Fiscal Year-End (#) Fiscal Year-End ($)(1)
------------------- ----------------------
Shares
Acquired
on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable(2) Unexercisable
- ------------------------------------ ------------ ------------ ---------------- ----------------------
<S> <C> <C> <C> <C>
John F. McGuire..................... 0/600,000 0/0
James B. Murphy..................... 19,200/100,800 0/0
Steven H. Rouhandeh(2).............. 150,000/0 0/0
Jeffrey B. Davis(2)................. 0/0 0/0
Edward W. Kelly(2).................. 0/0 0/0
</TABLE>
- ---------------
(1) Value is based on the closing sales price of the Company's Common Stock on
December 31, 1997 ($0.938), the last trading day of the Company's 1997
fiscal year, less the applicable option exercise price.
(2) Effective April 2, 1997, Messrs. Rouhandeh, Davis and Kelly were relieved
of their duties as executive officers of the Company, and, in connection
therewith, all unvested options previously granted to such persons,
aggregating 675,000, expired by their terms.
Option Repricing Table. The table set forth below provides certain
information concerning all adjustments to the exercise prices of outstanding
stock options held by executive officers of the Company during the past 10
years.
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
Number of
Securities Market Price Exercise Length of Original
Underlying of Stock at Price at Option Term
Options/SARs Time of Time of Remaining at Date
Repriced or Repricing or Repricing or New of Repricing or
Name Date Amended Amendment Amendment Exercise Price Amendment (years)
---- ------- --------- --------- -------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
James B. Murphy........... 4/16/97 12,000 $3.50 $ 7.50 $3.50 9
30,000 $3.50 $12.38 $3.50 9
Hans J. Heiniger.......... 4/16/97 25,000 $3.50 $ 7.50 $3.50 9
4/16/97 35,000 $3.50 $12.38 $3.50 9
3/16/95 10,000 $3.38 $ 7.52 $3.38 9
John E. McCray............ 4/16/97 19,600 $3.50 $ 7.50 $3.50 9
4/16/97 15,000 $3.50 $12.38 $3.50 9
Eugene Zurlo.............. 3/16/95 120,000 $3.38 $ 8.50 $3.38 10
</TABLE>
-9-
<PAGE>
Report of the Compensation Committee
The Compensation Committee of the Board of Directors, which is currently
comprised of one non-employee director, Rolf S. Stutz, is responsible for
determining the compensation package of each executive officer and recommending
it to the Board of Directors. The Compensation Committee sets the compensation
for executive officers and establishes compensation policies for the Company's
Chief Executive Officer and the other executive officers of the Company. All
decisions by the Compensation Committee are reviewed by the Board of Directors.
The Company's executive compensation program is designed to promote the
achievement of the Company's business goals, and, thereby, to maximize corporate
performance and stockholder returns. Executive compensation consists of a
combination of base salary and stock-based incentives. The Compensation
Committee considers stock incentives to be a critical component of an
executive's compensation package in order to help align executive interests with
stockholder interests.
Compensation Philosophy
The objectives of the executive compensation program are to align
compensation with business objectives and individual performance, and to enable
the Company to attract, retain and reward executive officers who are expected to
contribute to the long-term success of the Company. The Company's executive
compensation philosophy is based on the principles of competitive and fair
compensation and sustained performance.
o Competitive and Fair Compensation
The Company is committed to providing an executive compensation program
that helps attract and retain highly qualified executives. To ensure that
compensation is competitive, the Company compares its compensation
practices with those of other companies in the industry and sets its
compensation guidelines based on this review. The Company believes
compensation for its executive officers is within the range of compensation
paid to executives with comparable qualifications, experience and
responsibilities in the same or similar businesses and of comparable size
and success. The Company also strives to achieve equitable relationships
both among the compensation of individual officers and between the
compensation of officers and other employees throughout the organization.
o Sustained Performance
Executive officers are rewarded based upon corporate performance and
individual performance. Corporate performance is evaluated by reviewing the
extent to which strategic and business plan goals are met, including such
factors as achievement of operating budgets, timely development and
commercial introduction of new processes and products, establishment of
strategic licensing and development alliances with third parties and
performance relative to competitors. Individual performance is evaluated by
reviewing attainment of specified individual objectives and the degree to
which teamwork and Company values are fostered.
In evaluating each executive officer's performance, the Company generally
conforms to the following process:
-10-
<PAGE>
o Company and individual goals and objectives are established at the
beginning of the performance cycle.
o At the end of the performance cycle, the accomplishment of the
executive's goals and objectives and his contributions to the Company
are evaluated.
o The executive's performance is then compared with peers within the
Company and the results are communicated to the executive.
o The comparative results, combined with comparative compensation
practices of other companies in the industry, are then used to
determine salary and stock compensation levels.
Annual compensation for the Company's executives generally consists of two
elements: salary and stock options. From time to time, the Committee may
consider payment of cash bonuses based upon performance in a particular year.
The salary for executives is generally set by reviewing compensation for
competitive positions in the market and the historical compensation levels of
the executives. Increases in annual salaries are based on actual corporate and
individual performance against targeted performance and various subjective
performance criteria. Targeted performance criteria vary for each executive
based on his area of responsibility, and may include achievement of the
operating budget for the Company as a whole or of a business group of the
Company, continued innovation in development and commercialization of the
Company's technology and products, timely development and commercial
introduction of new products or processes, implementation of financing
strategies and establishment of strategic licensing and development alliances
with third parties. Subjective performance criteria include an executive's
ability to motivate others, develop the skills necessary to grow as the Company
matures, recognize and pursue new business opportunities and initiate programs
to enhance the Company's growth and success. The Committee does not use a
specific formula based on these targeted performance and subjective criteria,
but instead makes an evaluation of each executive officer's contributions in
light of all such criteria.
Compensation at the executive officer level also includes the long-term
incentives afforded by stock options. The stock option program is designed to
promote the identity of long-term interests between the Company's employees and
its shareholders and assist in the retention of executives. The size of option
grants is generally intended to reflect the executive's position with the
Company and his contributions to the Company, including his success in achieving
the individual performance criteria described above. The option program
generally uses a vesting period of up to five years to encourage key employees
to continue in the employ of the Company. All stock options granted to executive
officers in 1997 were granted at fair market value on the date of grant. During
1997, all executive officers received options to purchase an aggregate of
702,000 shares of Common Stock, at a weighted average exercise price of $2.70
per share.
Executive officers are also eligible to participate in the Company's 1995
Employee Stock Purchase Plan, as amended (the "Purchase Plan"). The Purchase
Plan is available to virtually all employees of the Company and generally
permits participants to purchase shares of Common Stock at a discount of
approximately 15% from the fair market value at the beginning or end of the
applicable purchase period.
Base Salaries
Base salaries paid to the Named Executive Officers in 1997 were set forth
in their respective employment agreements. The employment agreements with the
Named Executive Officers are described
-11-
<PAGE>
more fully under "Certain Relationship and Related Transactions." The base
salaries of executives without employment agreements have been set by reviewing
compensation for competitive positions in the market and the historical
compensation levels of such executives.
Annual Bonus
Other than John F. McGuire who received a $75,000 bonus, no executive
officer received a bonus in respect of the Company's 1997 fiscal year due to the
failure to achieve certain performance related goals which were established by
the Board in 1997.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), enacted in 1993, generally disallows a tax deduction to public
companies for compensation over $1 million paid to the corporation's Chief
Executive Officer and four other most highly compensated executive officers.
Qualifying performance compensation will not be subject to the deduction limit
if certain requirements are met. Subsequent to the death of Mr. Kimbell in
September 1997 (who was a member of the Compensation Committee), any performance
based compensation approved by the Board would not be "qualifying performance
compensation" under Section 162(m) of the Code because it was not established by
a compensation committee comprised of two or more outside directors. The Company
intends to structure the performance-based portion of the compensation of its
executive officers (which currently consists of stock option grants and
performance based bonuses described above) in the future in a manner that
complies with the new statute to mitigate any disallowance of deductions.
Repricing of Options
THE FOLLOWING SECTION OF THIS PROXY STATEMENT SHALL NOT BE DEEMED TO BE
INCORPORATED BY REFERENCE INTO ANY FILING BY THE COMPANY WITH THE SEC UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, NOTWITHSTANDING ANY SUCH INCORPORATION BY REFERENCE OF ANY OTHER
PORTIONS OF THIS PROXY STATEMENT.
On April 16, 1997, the Compensation Committee authorized a program pursuant
to which the Company offered to holders of certain "out-of-the-money" stock
options issued under the Company's 1994 Stock Option Plan, as amended (the
"Plan"), the right to surrender those options for cancellation in exchange for
new options exercisable at $3.50 per share, which was the fair value per share
of Common Stock on April 16, 1997. Each new option is exercisable for the same
number of shares as the canceled option for which it was exchanged, and
generally follows the same type of vesting and expiration schedules, but the
vesting and expiration schedules begin on the new grant date. The Committee
believes that this exchange program was in the best interests of the Company and
was necessary in order for the Plan to continue serving one of its primary
purposes -- to encourage key employees to remain with the Company and to
contribute toward efforts to increase the value of the Company's Common Stock.
Prior to their cancellation pursuant to the exchange program, the
out-of-the-money options had exercise prices ranging from $7.50 to $12.38, and
therefore provided little incentive to employees.
Compensation Committee
Rolf S. Stutz
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Compensation Committee Interlocks and Insider Participation
The current member of the Compensation Committee is Mr. Stutz. Mr. Stutz
was not at any time during 1997, or formerly, an officer or employee of the
Company or any subsidiary of the Company, nor has any member of the Compensation
Committee had any relationship with the Company requiring disclosure under Item
404 of Regulation S-K under the Exchange Act.
No executive officer of the Company has served as a director or member of
the Compensation Committee (or other committee serving an equivalent function)
of any other entity, one of whose executive officers served as a director of or
member of the Compensation Committee of the Company.
Comparative Stock Performance
The comparative stock performance graph below compares the cumulative
stockholder return on the Common Stock of the Company for the period from April
7, 1994 through the year ended December 31, 1997 with the cumulative total
return on (i) the CRSP Total Return Index for The Nasdaq Stock Market (the
"Nasdaq Composite Index"), and (ii) the Nasdaq Pharmaceutical Index (assuming
the investment of $100 in the Company's Common Stock (at the initial public
offering price), the Nasdaq Composite Index and the Nasdaq Pharmaceutical Index
on April 7, 1994 and reinvestment of all dividends).
Measurement points are on April 7, 1994 and the last trading day of the
years ended December 31, 1994, December 31, 1995, December 31, 1996 and December
31, 1997. Prior to April 7, 1994, the Company's Common Stock was not registered
under the Exchange Act.
<TABLE>
<CAPTION>
PERFORMANCE GRAPH
4/7/94 12/31/94 12/31/95 12/31/96 12/31/97
<S> <C> <C> <C> <C> <C>
HemaSure Inc. $100 $ 46 $182 $ 89 $ 13
Nasdaq Composite Index 100 103 145 179 220
Nasdaq Pharmaceutical Index 100 92 169 169 175
</TABLE>
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Certain Relationships and Related Transactions
Sepracor. The Company was organized in December 1993 as a subsidiary of
Sepracor. Effective January 1, 1994, Sepracor transferred its blood filtration
and membrane filter design business to the Company in exchange for 3,000,000
shares of Common Stock. As of January 31, 1998, Sepracor currently owns
approximately 33% of the Company's outstanding Common Stock. Messrs. Barberich
and Barlow, directors of the Company, are President and Chief Executive Officer
and Executive Vice President and President, Pharmaceuticals Division,
respectively, of Sepracor.
Employment Agreements. Effective April 2, 1997, Messrs. Zurlo, Rouhandeh,
Davis, and Kelly were relieved of their duties as executive officers and
employees of the Company. The Company entered into a separation agreement on
April 2, 1997 with Mr. Rouhandeh (the "Rouhandeh Separation Agreement"),
pursuant to which Mr. Rouhandeh will receive 52 weeks of severance pay in the
aggregate amount of $245,000. Pursuant to the terms of the Rouhandeh Separation
Agreement, Mr. Rouhandeh agreed to cooperate with the Company in all litigation
or regulatory matters arising out of or related to the business, operations or
personnel of the Company from the date thereof until April 1, 1998. On August 1,
1997, the Company entered into a separation agreement with Mr. Davis (the "Davis
Separation Agreement"), pursuant to which Mr. Davis received $380,000 of total
severance pursuant to the terms of his employment agreement in exchange for a
release of any and all claims he may have against the Company. Pursuant to the
terms of the Davis Separation Agreement, Mr. Davis agreed to cooperate with the
Company in all litigation or regulatory matters arising out of or related to the
business, operations or personnel of the Company from the date thereof until
April 1, 1998. The Company entered into a master consulting agreement on April
2, 1997 with Mr. Zurlo (the "Consulting Agreement"), pursuant to which Mr. Zurlo
will provide confidential consulting services as an independent contractor. The
initial term of the Consulting Agreement will extend through March 2000.
Pursuant to the terms of the Consulting Agreement, Mr. Zurlo's compensation will
be negotiated on a project by project basis.
The Company entered into an employment agreement, as of April 1, 1997 (the
"Agreement"), with John F. McGuire which provides that Mr. McGuire serve as
President and Chief Executive Officer of the Company. The Agreement provides for
a salary of $14,583 per month and an annual bonus of $75,000 to be earned upon
the achievement of certain goals as determined by the Board of Directors. Upon
execution of the Agreement, Mr. McGuire received an option to purchase 600,000
shares of Common Stock at an exercise price equal to the "low" bid price for the
Common Stock as quoted on the Nasdaq National Market System for the week of
April 4, 1997. The options vest in four equal annual installments commencing in
1998. Pursuant to the Agreement, an additional 200,000 incentive stock options
were issued to Mr. McGuire in January, 1998. Finally, pursuant to the terms of
the Agreement, if Mr. McGuire is terminated other than for cause, he will
receive one year's salary plus the bonus payable for the prior year, to be paid
monthly over the course of the 12 months following such termination, or until he
secures employment in an equivalent role.
Novo Nordisk A/S. Under the terms of the May 1996 agreement relating to the
Company's acquisition of the plasma product unit of Novo Nordisk A/S (the
"Denmark Acquisition"), the purchase price to be paid for the plasma product
unit was to be comprised of three portions: (i) $1,800,000 was to be payable in
1998 in cash or common stock of the Company or a subsidiary of the Company, at
the Company's option; (ii) approximately $13,000,000 was to be payable from time
to time upon the sale of
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<PAGE>
acquired inventory (valued at approximately $13,000,000), but in any event no
later than 1998, provided that up to approximately $3,000,000 of such portion
could be forgiven in certain circumstances; and (iii) approximately $8,000,000
was to be payable in 1998 in cash or Common Stock of the Company or a subsidiary
of the Company, at the Company's option, provided that all of this portion would
be forgiven in certain circumstances. In January 1997, the Company and Novo
Nordisk entered into a Restructuring Agreement relating to the Denmark
Acquisition (the "Restructuring Agreement"). Pursuant to the Restructuring
Agreement, approximately $23,000,000 of indebtedness owed to Novo Nordisk was
restructured by way of issuance by the Company to Novo Nordisk of a 12%
convertible subordinated promissory note in the principal amount of
approximately $11,722,000, which was due and payable on December 31, 20001 (the
"Note"), with interest payable quarterly (provided that up to approximately
$3,000,000 would be forgiven in certain circumstances). Approximately $8,500,000
of the reduction of such indebtedness was forgiven. The remainder of the
reduction represented a net amount due from Novo Nordisk to the Company related
to various service arrangements between the two companies. On January 6, 1998,
the Company elected to convert all indebtedness under the Note, pursuant to the
terms thereof, into shares of Common Stock of the Company at a conversion price
equal to $10.50 per share, or 827,375 shares. Pursuant to a registration rights
agreement, the Company previously granted Novo Nordisk certain registration
rights with respect to any shares of Common Stock acquired by Novo Nordisk upon
conversion of the Note. Novo Nordisk has contested the conversion of the Note,
including the forgiveness of the $3,000,000 amount. The Company believes such
claims are without merit.
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<PAGE>
APPROVAL OF AMENDMENTS TO 1995 EMPLOYEE STOCK PURCHASE PLAN
Summary of Amendment
On April 3, 1998, the Company's Board of Directors adopted, subject to
stockholder approval, an amendment to the Company's 1995 Employee Stock Purchase
Plan (as amended, the "Amended Purchase Plan") to provide for an increase, from
100,000 to 250,000, in the number of authorized shares of Common Stock issuable
under the Amended Purchase Plan. The Board of Directors believes that it is in
the best interest of the Company to continue to encourage stock ownership by
employees of the Company.
The principal provisions of the Amended Purchase Plan are summarized below.
The following summary of the material provisions of the Amended Purchase Plan
does not purport to be complete and is qualified in its entirety by the terms of
the Amended Purchase Plan. A copy of the Amended Purchase Plan may be obtained
from the Company by contacting James B. Murphy, Senior Vice President Finance
and Administration, 140 Locke Drive, Malborough, Massachusetts 01752.
The Amended Purchase Plan
The purpose of the Amended Purchase Plan is to provide eligible employees
of the Company and certain of its subsidiaries with opportunities to purchase
shares of the Company's Common Stock.
Administration. The Amended Purchase Plan will be administered by the
--------------
Company's Board of Directors or by a committee appointed by the Board of
Directors (the "Committee"), whose construction and interpretation of the terms
and provisions of the Amended Purchase Plan shall be final and conclusive.
Eligibility. With certain limited exceptions in the case of employees
-----------
already holding a significant amount of Common Stock, each employee of the
Company as of the date an offering commences and who ordinarily works twenty
(20) or more hours per week and more than five (5) months per year is eligible
to participate in the Amended Purchase Plan. As of April 30, 1998, approximately
45 employees were eligible to participate in the Amended Purchase Plan.
Offerings. The Company will make one or more offerings to employees to
---------
purchase stock under the Amended Purchase Plan. Offerings will begin each June 1
and December 1, or the first business day thereafter (the "Offering Commencement
Date"). The Offering Commencement Date will begin a six (6) month period during
which payroll deductions will be made and held for the purchase of the Company's
common stock at the end of the offering period. The Board of Directors of the
Committee may, at its discretion, select a different period of twelve (12)
months or less for subsequent offerings, as further detailed in the Amended
Purchase Plan.
Participation and Deductions. An employee eligible on the Offering
------------------------------
Commencement Date may participate in an offering by completing and forwarding a
payroll deduction authorization form at least thirty (30) days prior to the
applicable Offering Commencement Date. Payroll deductions may be made in one
(1%) percent increments from 1% to 10% of compensation (which excludes overtime,
incentive or bonus awards, allowances and reimbursements for expenses), with any
change in compensation during the offering period to result in an automatic
corresponding change in the dollar amount withheld. An employee may decrease or
discontinue his payroll deduction once during the offering period, by filing a
new payroll deduction authorization form. An employee may not, however, increase
his payroll deduction during the offering period. Unless an employee files a new
form or withdraws from the Amended
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<PAGE>
Purchase Plan, his deductions and purchases will continue at the same rate for
future offerings under the Amended Purchase Plan as long as the Amended Purchase
Plan remains in effect.
No employee may be granted an option which permits his rights to purchase
the Company's Common Stock under the Amended Purchase Plan and any other stock
purchase plan of the Company and its subsidiaries, to accrue at a rate which
exceeds $25,000 of the fair market value of such Common Stock (determined at the
Offering Commencement Date of the offering period) for each calendar year in
which the option is outstanding at any time.
Withdrawal of Funds. An employee may at any time prior to the close of
--------------------
business on the last business day in an offering period, and for any reason,
withdraw the funds accumulated in the employee's account and thereby withdraw
from participation in the Amended Purchase Plan. Partial withdrawals are not
permitted.
Purchase of Shares. On the Offering Commencement Date of an offering
--------------------
period, the Company will grant to each participating employee, an option to
purchase, on the last business day of such offering period, at the option price
provided for in the Amended Purchase Plan, such number of whole shares of the
Company's Common Stock reserved for the purposes of the Amended Purchase Plan as
does not exceed the number of shares determined by dividing six (6%) percent of
such employee's annualized compensation for the immediately prior six-month
period by the price determined in accordance with the formula set forth in the
Amended Purchase Plan, but using the closing price on the Offering Commencement
Date of such offering period.
Each employee who continues to be a participant in the Amended Purchase
Plan at the end of the offering period shall be deemed to have exercised his
option at the applicable option price on such date, and shall be deemed to have
purchased from the Company the applicable number of full shares of the Company's
Common Stock. With minor exceptions, any balance remaining in the employee's
payroll deduction account at the end of the offering period will be
automatically refunded to the employee.
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<PAGE>
Issuance of Certificates. Certificates representing shares of Common Stock
purchased under the Amended Purchase Plan may be issued only in the name of the
employee, in the name of the employee and another person of legal age as joint
tenants with rights of survivorship, or (in the Company's sole discretion) in
the street name of a brokerage firm, bank or other nominee holder designated by
the employee.
Amendment and Termination. Subject to the approval of the stockholders in
certain circumstances, the Board of Directors may at any time, and from time to
time, amend the Amended Purchase Plan. The Amended Purchase Plan may be
terminated at any time by the Board of Directors. Upon termination of the
Amended Purchase Plan, all amounts in the accounts of participating employees
will be promptly refunded.
Federal Income Tax Consequences.
The Amended Purchase Plan is intended to qualify as an "employee stock
purchase plan" as defined in Section 423 of the Code, which provides that an
employee does not have to pay any federal income tax when such employee joins
the Amended Purchase Plan, or when an offering period ends and such employee
receives shares of the Company's Common Stock. The employee is, however,
required to pay a federal income tax on the difference, if any, between the
price at which he sells the shares and the price he or she paid for them.
If an employee has owned shares for more than one year and disposes of them
at least two years after the date an offering period commenced, he will be taxed
as described below. If the market price of the shares on the date they are sold
is less than the price paid for the shares under the Amended Purchase Plan, the
employee will incur a long term capital loss in the amount equal to the price
paid over the sale price. If the sale price is higher than the price paid under
the Amended Purchase Plan, such employee will have to recognize ordinary income
in an amount equal to the lesser of the market price of the shares on the date
the offering commenced over the price paid, or the excess of the sale price over
the price paid. Any further gain is treated as long-term capital gain. Except as
set forth below, the Company will generally not be entitled to a tax deduction
upon the purchase or sale of shares under the Amended Purchase Plan. If the
employee sells the shares before he or she has owned them for more than one year
or before the expiration of a two-year period commencing on the date the
offering period commenced, the employee will have to recognize ordinary income
in the amount of the difference between the option price and the market price of
the shares on the date of purchase and the Company will receive an expense
deduction for the same amount. The employee will recognize a capital gain or
loss for the difference between the sale price and the market price on the date
of purchase. The gain or loss will be long-term if the employee owned the shares
for more than one year.
Board Recommendation
The Board of Directors believes the Amended Purchase Plan is in the best
interests of the Company and its stockholders and therefore recommends a vote
FOR this proposal.
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APPROVAL OF AMENDMENTS TO THE 1994 STOCK OPTION PLAN
Summary of the Amendments
On April 3, 1998, the Company's Board of Directors adopted, subject to
stockholder approval, an amendment and restatement of the Company's 1994 Stock
Option Plan (as amended, the "Amended Option Plan") to (i) incorporate
amendments previously adopted by the Board and approved by the stockholders,
(ii) make certain changes in light of changes to Rule 16b under the Exchange
Act, and (iii) increase the number of shares authorized for issuance under the
Amended Option Plan.
The Board of Directors adopted a so-called "evergreen" limitation on the
number of shares of Common Stock that can be transferred with respect to the
grant of options made under the Amended Option Plan (i.e., the Amended Option
Plan expresses the maximum number of shares which may be transferred with
respect to the grant of options in terms of a percentage of outstanding shares)
to ensure that the Company can continue to grant options to employees, officers
and directors of, and consultants or advisors to, the Company at levels
determined appropriate by the Board of Directors. This type of limitation will
replenish the shares available under the Amended Option Plan, without the need
for further amendment, in the event there is an increase in the number of shares
the Company has outstanding. The amendment provides for a pool of shares of
Common Stock reserved and available for issuance under the Amended Option Plan
equal to the greater of (i) 2,500,000 shares of Common Stock and (ii) eighteen
(18%) percent of the issued and outstanding shares, calculated generally with
respect to the number of shares outstanding as of the last day of the prior
calendar year (assuming all unexpired and outstanding options are exercised).
The principal provisions of the Amended Option Plan are summarized below.
The following summary of the material provisions of the Amended Option Plan does
not purport to be complete and is qualified in its entirety by the terms of the
Amended Option Plan. A copy of the Amended Option Plan is attached as Exhibit A
to this Proxy Statement.
The Amended Option Plan
The Board of Directors adopted, subject to stockholder approval, the
Amended Option Plan for the purposes of securing for the Company and its
stockholders the benefits arising from capital stock ownership by employees,
officers and directors of, and consultants or advisors to, the Company and its
parent and subsidiary corporations who are expected to contribute to the
Company's future growth and success.
Administration. The Amended Option Plan will be administered by the Board
--------------
of Directors of the Company or a committee of the Board of Directors, whose
construction and interpretation of the terms and provisions of the Amended
Option Plan shall be final and conclusive.
Eligibility. Options may be granted to persons who are, at the time of
-----------
grant, employees, officers or directors of, or consultants or advisors to, the
Company (each a "Participant").
Options. Options granted under the Amended Option Plan may be Incentive
-------
Stock Options ("ISOs") or nonqualified stock options. An option entitles a
Participant to purchase shares of Common Stock from the Company at the option
price. The option price may be paid in cash or with shares of Common Stock. The
purchase price per share of stock deliverable upon the exercise of an option
will be determined by the
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<PAGE>
Board of Directors, provided that in the case of nonqualified stock options, the
exercise price cannot be less than 50% of the fair market value of such stock,
as determined by the Board of Directors, at the time of grant of such option. In
the case of ISOs, however, the exercise price cannot be less than 100% of the
fair market value of such stock, as determined by the Board of Directors, at the
time of grant of the option (110% of the fair market value in the case of an ISO
granted to an ten percent stockholder of the Company). Options may be exercised
at such time or times and during such period as may be set forth in the
agreement evidencing such option, subject to the provisions of the Amended
Option Plan, but the maximum term of an option is ten years from the date of
grant, or five years from the date of grant in the case of an ISO granted to a
ten percent stockholder.
ISOs may only be granted to employees; however, no employee may be granted
ISOs (under the Amended Option Plan or any other plan of the Company) that are
first exercisable in a calendar year for Common Stock having an aggregate fair
market value (determined as of the respective date or dates of grant) of more
than $100,000. In addition, no Participant may be granted options in any
calendar year for more than 600,000 shares of Common Stock.
Transferability. Awards granted under the Amended Option Plan are generally
---------------
non-transferable, except by will or the laws of descent and distribution.
Share Authorization. The maximum number of shares of Common Stock that may
-------------------
be issued pursuant to options granted under the Amended Option Plan shall be the
greater of (i) 2,500,000 shares (which currently is the maximum amount permitted
prior to the amendments contemplated hereby) and (ii) (eighteen (18%) percent of
the total number of shares of Common Stock issued and outstanding (assuming all
unexpired and outstanding options are exercised and the Common Stock subject to
such options is issued) as of the last day of the prior calendar year. All
awards made under the Amended Option Plan will be evidenced by written
agreements between the Company and the Participant. The share limitation and
terms of outstanding options will be adjusted, as the Board of Directors deems
appropriate, in the event of a stock split, combination, reclassification,
recapitalization or other similar event. As of April 30, 1998, approximately 60
individuals were eligible to participate in the Amended Option Plan.
Termination and Amendment. Unless terminated sooner in accordance with its
-------------------------
terms, the Amended Option Plan will terminate, with respect to ISOs, upon the
earlier of (i) the close of business on the day next preceding the tenth
anniversary of the original date of adoption of 1994 Stock Option Plan by the
Board of Directors, or (ii) the date on which all shares available for issuance
under the Amended Option Plan shall have been issued pursuant to the exercise or
cancellation of options granted under the Amended Option Plan. Unless terminated
sooner in accordance with its terms, the Amended Option Plan will terminate with
respect to options which are not ISOs on the date specified in (ii) above.
Certain Federal Income Tax Consequences.
In general, a participant will not recognize taxable income upon the grant
or exercise of an ISO. However, upon the exercise of an ISO, the excess of the
fair market value of the shares received on the date of exercise over the
exercise price of the shares will be treated as an adjustment to alternative
minimum taxable income. When a participant disposes of shares acquired by
exercise of an ISO, the participant's gain (the difference between the sale
proceeds and the price paid by the participant for the shares) upon the
disposition will be taxed as capital gain provided the participant does not
dispose of the shares within two years after the date of grant nor within one
year after the date of exercise, and exercises the option while an employee of
the Company or of a subsidiary of the Company or within three months
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<PAGE>
after termination of employment for reasons other than death or disability. If
the first condition is not met, the participant generally will realize ordinary
income in the year of the disqualifying disposition. If the second condition is
not met, the participant generally will recognize ordinary income upon exercise
of the ISO.
In general, a participant who receives a nonqualified stock option will
recognize no income at the time of the grant of the option. Upon exercise of a
nonqualified stock option, a participant will recognize ordinary income in an
amount equal to the excess of the fair market value of the shares on the date of
exercise over the exercise price of the option. Special timing rules may apply
to a participant who is subject to Section 16(a) of the Exchange Act.
The employer (either the Company or its affiliate) will be entitled to
claim a federal income tax deduction on account of the exercise of a
nonqualified option. The amount of the deduction will be equal to the ordinary
income recognized by the participant. The employer will not be entitled to a
federal income tax deduction on account of the grant or the exercise of an ISO.
The employer may claim a federal income tax deduction on account of certain
disqualifying dispositions of Common Stock acquired upon the exercise of an ISO.
The transfer of a non-qualified stock option to a permitted family member
will have no immediate tax consequences to the Company, the participant or such
permitted family member. Upon the subsequent exercise of the transferred option
by the permitted family member, the participant will realize ordinary income in
an amount measured by the difference between the option exercise price and the
fair market value of the shares on the date of exercise, and the employer will
be entitled to a deduction in the same amount. Any difference between such fair
market value and the price at which the permitted family member may subsequently
sell such shares will be treated as capital gain or loss to the permitted family
member, long-term or short-term depending on the length of time the shares have
been held by the permitted family member.
Section 162(m) of the Code places a limitation of $1,000,000 on the amount
of compensation payable to each of the named executive officers that the Company
may deduct for federal income tax purposes. The limit does not apply to certain
performance-based compensation paid under a plan that meets the requirements of
the Code and regulations promulgated thereunder. While the Amended Option Plan
generally complies with the requirements for performance-based compensation,
options granted at less than 100% of fair market value under the Amended Option
Plan will not satisfy those requirements.
Board Recommendation
The Board of Directors believes the Amended Option Plan is in the best
interests of the Company and its stockholders and therefore recommends a vote
FOR this proposal.
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<PAGE>
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P. is currently serving as the Company's independent
accountants. Coopers & Lybrand L.L.P. has served as the Company's independent
accountants since 1993. Representatives of Coopers & Lybrand L.L.P. are expected
to be present at the Annual Meeting. They will have the opportunity to make a
statement if they desire to do so and will also be available to respond to
appropriate questions from stockholders.
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the meeting. However, if any other matters are properly presented to the
meeting, it is the intention of the persons named in the accompanying proxy to
vote, or otherwise act, in accordance with their judgment on such matters.
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
telegraph, facsimile and personal interviews. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the owners
of stock held in their names, and the Company will reimburse them for their
reasonable out-of-pocket expenses incurred in connection with the distribution
of proxy materials.
Deadline For Submission of Stockholder Proposals for the 1999 Annual Meeting
Proposals of stockholders intended to be presented at the 1999 Annual
Meeting of Stockholders must be received by the Company at its principal office
in Marlborough, Massachusetts not later than December 31, 1998 for inclusion in
the proxy statement for that meeting.
By Order of the Board of Directors
JAMES B. MURPHY
Secretary
April 30, 1998
THE BOARD OF DIRECTORS ENCOURAGES STOCKHOLDERS TO ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. A PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED. STOCKHOLDERS WHO ATTEND THIS MEETING MAY VOTE THEIR STOCK
PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
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<PAGE>
EXHIBIT A
HEMASURE, INC.
AMENDED AND RESTATED
1994 STOCK OPTION PLAN
1. Purpose.
-------
The purpose of this plan (the "Plan") is to secure for HemaSure Inc. (the
"Company") and its shareholders the benefits arising from capital stock
ownership by employees, officers and directors of, and consultants or advisors
to, the Company and its parent and subsidiary corporations who are expected to
contribute to the Company's future growth and success. Except where the context
otherwise requires, the term "Company" shall include the parent and all present
and future subsidiaries of the Company as defined in Section 424(e) and 424(f)
of the Internal Revenue Code of 1986, as amended or replaced from time to time
(the "Code"). Those provisions of the Plan which make express reference to
Section 422 shall apply only to Incentive Stock Options (as that term is defined
in the Plan).
2. Type of Options and Administration.
-----------------------------------
(a) Types of Options. Options granted pursuant to the Plan shall be
-----------------
authorized by action of the Board of Directors of the Company (or a Committee
designated by the Board of Directors) and may be either incentive stock options
("Incentive Stock Options") meeting the requirements of Section 422 of the Code
or non-statutory options which are not intended to meet the requirements of
Section 422 of the Code.
(b) Administration. The Plan will be administered by the Board of Directors
--------------
of the Company, whose construction and interpretation of the terms and
provisions of the Plan shall be final and conclusive. The Board of Directors may
in its sole discretion grant options to purchase shares of the Company's Common
Stock ("Common Stock") and issue shares upon exercise of such options as
provided in the Plan. The Board shall have authority, subject to the express
provisions of the Plan, to construe the respective option agreements and the
Plan, to prescribe, amend and rescind rules and regulations relating to the
Plan, to determine the terms and provisions of the respective option agreements,
which need not be identical, and to make all other determinations in the
judgment of the Board of Directors necessary or desirable for the administration
of the Plan. The Board of Directors 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 it shall be the sole and final judge of such expediency. No director
or person acting pursuant to authority delegated by the Board of Directors shall
be liable for any action or determination under the Plan made in good faith. The
Board of Directors may, to the
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<PAGE>
full extent permitted by or consistent with applicable laws, Section 162(m) of
the Code or any regulations thereunder or any successor section of the Code or
regulations thereunder ("Section 162(m)") or regulations (including, without
limitation, applicable state law and Rule 16b-3 promulgated under the Securities
Exchange Act of 1934 (the "Exchange Act"), or any successor rule ("Rule 16b-3)),
delegate any or all of its powers under the Plan to a committee (the
"Committee") appointed by the Board of Directors, and if the Committee is so
appointed all references to the Board of Directors in the Plan shall mean and
relate to such Committee.
(c) Applicability of Rule 16b-3. Those provisions of the Plan which make
----------------------------
express reference to Rule 16b-3 shall apply only to such persons as are required
to file reports under Section 16(a) of the Exchange Act (a "Reporting Person").
3. Eligibility.
-----------
(a) General. Options may be granted to persons who are, at the time of
-------
grant, employees, officers or directors of, or consultants or advisors to, the
Company; provided, that the class of employees to whom Incentive Stock Options
may be granted shall be limited to all employees of the Company. A person who
has been granted an option may, if he or she is otherwise eligible, be granted
additional options if the Board of Directors shall so determine. No employee
shall be granted options to purchase more than an aggregate of 600,000 shares of
Common Stock under the Plan in any one calendar year. For this purpose, the
issuance of new options in substitution for outstanding options shall be deemed
to constitute a new grant of additional options separate from the original grant
of the options that are to be canceled.
(b) Grant of Options to Directors and Officers. The selection of a director
------------------------------------------
or officer (as the terms "directors" and "officers" are defined for purposes of
Rule 16b-3) as a recipient of an option shall be either (i) determined by (A)
the Board of Directors or (B) by two or more directors having full authority to
act in the matter, each of whom shall be a "non-employee director" within the
meaning of Rule 16b-3, (ii) approved in advance or ratified by the shareholders
of the Company in accordance with Rule 16b-3(d)(3) or (iii) made in reliance on
another available exemption from the application of Section 16(b). To the extent
compliance with Section 162(m) of the Code is desired, in addition to the
foregoing if applicable, the selection of a "covered employee" (as defined in
Section 162(m) of the Code) as a recipient of an option shall be made by two or
more directors each of whom is an "outside director" as defined in Section
162(m) of the Code.
4. Stock Subject to Plan.
---------------------
Subject to adjustment as provided in Section 15 below, the maximum number
of shares of Common Stock reserved and available for issuance under the Amended
Option Plan shall be such aggregate number of Common Stock as does not exceed
the greater of (i) 2,500,000 shares of Common Stock and (ii) eighteen (18%)
percent of the total number of shares of Common Stock issued and outstanding
(assuming all unexpired and outstanding options are exercised and the Common
Stock subject to such options is issued) as of the last day of the prior
calendar year.
-2-
<PAGE>
Notwithstanding the foregoing, the maximum number of shares of Common Stock for
which Incentive Stock Options may be granted under the Amended Option Plan shall
not exceed 2,500,000 shares of Common Stock, reduced by the aggregate number of
shares of Common Stock subject to then-outstanding Incentive Stock Options. For
purposes of this limitation, if any portion of the then-outstanding Incentive
Stock Options are forfeited, canceled, reacquired by the Company, satisfied
without the issuance of Common Stock or otherwise terminated, the shares of
Common Stock underlying such portion of the Incentive Stock Options shall be
added back to the shares of Common Stock available for issuance under the
Amended Option Plan.
5. Forms of Option Agreements.
--------------------------
As a condition to the grant of an option under the Plan, each recipient of
an option shall execute an option agreement in such form not inconsistent with
the Plan as may be approved by the Board of Directors. Such option agreements
may differ among recipients.
6. Purchase Price.
--------------
(a) General. The purchase price per share of stock deliverable upon the
-------
exercise of an option shall be determined by the Board of Directors, provided,
however, that (i) in the case of an Incentive Stock Option, the exercise price
shall not be less than 100% of the fair market value of such stock, as
determined by the Board of Directors, at the time of grant of such option, or
less than 110% of such fair market value in the cause of options described in
Section 11(b), and (ii) in the case of a non-qualified option, the exercise
price shall not be less than 50% of the fair market value of such stock, as
determined by the Board of Directors, at the time of grant of such option.
(b) Payment of Purchase Price. Options granted under the Plan may provide
--------------------------
for the payment of the exercise price by delivery of cash or a check to the
order of the Company in an amount equal to the exercise price of such options,
or, to the extent provided in the applicable option agreement, (i) by delivery
to the Company of shares of Common Stock of the Company already owned by the
optionee having a fair market value equal in amount to the exercise price of the
options being exercised, (ii) by any other means (including, without limitation,
by delivery of a promissory note of the optionee payable on such terms as are
specified by the Board of Directors) which the Board of Directors determines are
consistent with the purpose of the Plan and with applicable laws and regulations
(including, without limitation, the provisions of Rule 16b-3, Section 162(m) and
Regulation T promulgated by the Federal Reserve Board) or (iii) by any
combination of such methods of payment. The fair market value of any shares of
the Company's Common Stock or other non-cash consideration which may be
delivered upon exercise of an option shall be determined by the Board of
Directors.
-3-
<PAGE>
7. Option Period.
-------------
Each option and all rights thereunder shall expire on such date as shall be
set forth in the applicable option agreement, except that, in the case of an
Incentive Stock Option, such date shall not be later than ten years after the
date on which the option is granted and, in all cases, options shall be subject
to earlier termination as provided in the Plan.
8. Exercise of Options.
-------------------
Each option granted under the Plan shall be exercisable either in full or
in installments at such time or times and during such period as shall be set
forth in the agreement evidencing such option, subject to the provisions of the
Plan.
9. Nontransferability of Options.
-----------------------------
Incentive Stock Options shall not be assignable or transferable by the
person to whom they are granted, either voluntarily or by operation of law,
except by will or the laws of descent and distribution, and, during the life of
the optionee, shall be exercisable only by the optionee. Non-statutory options
may be transferred with the consent of the Board of Directors to family members,
trusts for family members or partnerships in which all of the partners are
family members or family trusts of the option holder.
10. Effect of Termination of Employment or Other Relationship.
----------------------------------------------------------
Except as provided in Section 11(d) with respect to Incentive Stock
Options, and subject to the provisions of the Plan, the Board of Directors shall
determine the period of time during which an optionee may exercise an option
following (i) the termination of the optionee's employment or other relationship
with the Company or (ii) the death or disability of the optionee. Such periods
shall be set forth in the agreement evidencing such option.
11. Incentive Stock Options.
-----------------------
Options granted under the Plan which are intended to be Incentive Stock
Options shall be subject to the following additional terms and conditions:
(a) Express Designation. All Incentive Stock Options granted under the Plan
-------------------
shall, at the time of grant, be specifically designated as such in the option
agreement covering such Incentive Stock Options.
(b) 10% Shareholder. If any employee to whom an Incentive Stock Option is
----------------
to be granted under the Plan is, at the time of the grant of such option, the
owner of stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company (after taking into account the attribution
of stock ownership rules of Section 424(d) of the Code), then the following
special provisions shall be applicable to the Incentive Stock Option granted to
such individual:
-4-
<PAGE>
(i) The purchase price per share of the Common Stock subject to such
Incentive Stock Option shall not be less than 110% of the fair market value
of one share of Common Stock at the time of grant: and
(ii) the option exercise period shall not exceed five years from the
date of grant.
(c) Dollar Limitation. For so long as the Code shall so provide, options
------------------
granted to any employee under the Plan (and any other incentive stock option
plans of the Company) which are intended to constitute Incentive Stock Options
shall not constitute Incentive Stock Options to the extent that such options, in
the aggregate, become exercisable for the first time in any one calendar year
for shares of Common Stock with an aggregate fair market value (determined as of
the respective date or dates of grant) of more than $100,000.
(d) Termination of Employment, Death or Disability. No Incentive Stock
------------------------------------------------
Option may be exercised unless, at the time of such exercise, the optionee is,
and has been continuously since the date of grant of his or her option, employed
by the Company, except that:
(i) an Incentive Stock Option may be exercised within the period of
three months after the date the optionee ceases to be an employees of the
Company (or within such lesser period as may be specified in the applicable
option agreement(, provided, that the agreement with respect to such option
may designate a longer exercise period and that the exercise after such
three-month period shall be treated as the exercise of a non-statutory
option under the Plan;
(ii) if the optionee dies while in the employee of the Company, or
within three months after the optionee ceases to be such an employee, the
Incentive Stock Option may be exercised by the person to whom it is
transferred by will or the laws of descent and distribution within the
period of one year after the date of death (or within such lesser period as
may be specified in the applicable option agreement); and
(iii) if the optionee becomes disabled (within the meaning of Section
22(e)(3) of the Code or any successor provision thereto) while in the
employ of the Company, the Incentive Stock Option may be exercised within
the period of one year after the date the optionee ceases to be such an
employee because of such disability (or within such lesser period as may be
specified in the applicable option agreement).
For all purposes of the Plan and any option granted hereunder, "employment"
shall be defined in accordance with the provisions of Section 1.421-7(h) of the
Income Tax Regulations (or any successor regulations). Notwithstanding the
foregoing provisions, no Incentive Stock Option may be exercised after its
expiration date.
(e) Savings Clause. To the extent any Incentive Stock Option fails to be
---------------
treated as an Incentive Stock Option, it shall be treated as a non-statutory
stock option.
12. Additional Provisions.
---------------------
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<PAGE>
(a) Additional Option Provisions. The Board of Directors may, in its sole
-----------------------------
discretion, include additional provisions in option agreements covering options
granted under the Plan, including without limitation restrictions on transfer,
repurchase rights, commitments to pay cash bonuses, to make, arrange for or
guaranty loans or to transfer other property to optionees upon exercise of
options, or such other provisions as shall be determined by the Board of
Directors; provided that such additional provisions shall not be inconsistent
with any other term or condition of the Plan and such additional provisions
shall not cause any Incentive Stock Option granted under the Plan to fail to
qualify as an Incentive Stock Option within the meaning of Section 422 of the
code.
(b) Acceleration, Extension, Etc. The Board of Directors may, in its sole
------------------------------
discretion, (i) accelerate the date or dates on which all or any particular
option or options granted under the Plan may be exercised or (ii) extend the
dates during which all, or any particular, option or options granted under the
Plan may be exercised; provided, however, that no such extension shall be
permitted if it would cause the Plan to fail to comply with Section 422 of the
Code or with Rule 16b-3 or cause any option granted under the Plan to fail to
qualify as performance-based compensation within the meaning of Section 162(m).
13. General Restrictions.
--------------------
(a) Investment Representations. The Company may require any person to whom
--------------------------
an option is granted, as a condition of exercising such option, to give written
assurances in substance and form satisfactory to the Company to the effect that
such person is acquiring the Common Stock subject to the option for his or her
own account for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the Company deems
necessary or appropriate in order to comply with federal and applicable state
securities laws, or with covenants or representations made by the Company in
connection with any public offering of its Common Stock.
(b) Compliance With Securities Laws. Each option shall be subject to the
----------------------------------
requirement that if, at any time, counsel to the Company shall determine that
the listing, registration or qualification of the shares subject to such option
upon any securities exchange or under any state or federal law, or the consent
of approval of any governmental or regulatory body, or that the disclosure of
non-public information or the satisfaction of any other condition is necessary
as a condition of, or in connection with, the issuance or purchase of shares
thereunder, such option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, or satisfaction of
such condition shall have been effected or obtained on conditions acceptable to
the Board of Directors. Nothing herein shall be deemed to require the Company to
apply for or to obtain such listing, registration or qualification, or to
satisfy such condition.
14. Rights as a Shareholder.
-----------------------
The holder of an option shall have no rights as a shareholder with respect
to any shares covered by the option (including, without limitation, any rights
to receive dividends or non-cash
-6-
<PAGE>
distributions with respect to such shares ) until the date of issue of a stock
certificate to him or her for such shares. No adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
stock certificate is issued.
15. Adjustment Provisions for Recapitalizations and Related Transactions.
---------------------------------------------------------------------
(a) General. If, through or as a result of any merger, consolidation, sale
-------
of all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, (i) the outstanding shares of Common Stock
are increased, decreased or exchanged for a different number or kind of shares
or other securities of the Company, or (ii) additional shares or new or
different shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Common Stock or other securities, an
appropriate and proportionate adjustment may be made in (x) the maximum number
and kind of shares reserved for issuance under the Plan, (y) the number and kind
of shares or other securities subject to any then outstanding options under the
Plan, and (z) the price for each share subject to any then outstanding options
under the Plan, without changing the aggregate purchase price as to which such
options remain exercisable. Notwithstanding the foregoing, no adjustment shall
be made pursuant to this Section 15 if such adjustment would cause the Plan to
fail to comply with Section 422 of the Code or with Rule 16b- 3.
(b) Board Authority to Make Adjustments. Any adjustments under this Section
-----------------------------------
15 will be made by the Board of Directors, whose determination as to what
adjustments, if any, will be made and the extent thereof will be final, binding
and conclusive. No fractional shares will be issued under the Plan on account of
any such adjustments.
16. Merger, Consolidation, Asset Sale, Liquidation, etc.
----------------------------------------------------
(a) General. Subject to Section 16(c), in the event of a consolidation or
-------
merger or sale of all or substantially all of the assets of the Company in which
outstanding shares of Common Stock are exchanged for securities, cash or other
property of any other corporation or business entity or in the event of a
liquidation of the Company, the Board of Directors of the Company, or the board
of directors of any corporation assuming the obligations of the Company, may in
its discretion, take any one or more of the following actions, as to outstanding
options: (i) provide that such options shall be assumed, or equivalent options
shall be substituted, by the acquiring or succeeding corporation (or an
affiliate thereof), provided that any such options substituted for Incentive
Stock Options shall meet the requirements of Section 424(a) of the Code, (ii)
upon written notice to the optionees, provide that all unexercised options will
terminate immediately prior to the consummation of such transaction unless
exercised by the optionee (to the extent then exercisable) within a specified
period following the date of such notice and (iii) in the event of a merger
under the terms of which holders of the Common Stock of the Company will receive
upon consummation thereof a cash payment for each share surrendered in the
merger (the "Merger Price"), make or provide for a cash payment to the optionees
equal to the difference between (A) the Merger Price times the number of shares
of Common Stock subject to such outstanding options
-7-
<PAGE>
(to the extent then exercisable at prices not in excess of the Merger Price) and
(B) the aggregate exercise price of all such outstanding options in exchange for
the termination of such options.
(b) Substitute Options. The Company may grant options under the Plan in
-------------------
substitution for options held by employees of another corporation who become
employees of the Company, or a subsidiary of the Company, as the result of a
merger or consolidation of the employing corporation with the Company or a
subsidiary of the Company, or as a result of the acquisition by the Company, or
one of its subsidiaries, of property or stock of the employing corporation. The
Company may direct that substitute options be granted on such terms and
conditions as the Board of Directors considers appropriate in the circumstances.
(c) Change in Control. Notwithstanding any other provision contained
-------------------
herein, in the event of a "Change in Control" of the Company (as defined below)
each outstanding option under the Plan held by a person who is then an employee
of the Company shall immediately become exercisable in full. For purposes of the
Plan, a "Change in Control" shall be deemed to have occurred only if any of the
following events occurs: (i) any "person", as such term is used in Sections
13(d) and 14(d) of the Exchange Act (other than the Company, any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, or any corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportion as their ownership of stock of
the Company), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company's then
outstanding securities; (ii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately afer
such merger or consolidation; (iii) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets;
or (iv) individuals who, on the date on which the Plan was adopted by the Board
of Directors, constituted the Board of Directors of the Company, together with
any new director whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at least a
majority of the directors then still in office who were directors on the date on
which the Plan was adopted by the Board of Directors or whose election or
nomination was previously so approved, cease for any reason to constitute at
least a majority of the Board of Directors.
17. No Special Employment Rights.
----------------------------
Nothing contained in the Plan or in any option shall confer upon any
optionee any right with respect to the continuation of his or her employment by
the Company or interfere in any way with the right of the Company at any time to
terminate such employment or to increase or decrease the compensation of the
optionee.
-8-
<PAGE>
18. Other Employee Benefits.
-----------------------
Except as to plan which by their terms include such amounts as
compensation, the amount of any compensation deemed to be received by an
employee as a result of the exercise of an option or the sale or shares received
upon such exercise will not constitute compensation with respect to which any
other employee benefits of such employee are determined, including, without
limitation, benefits under any bonus, pension, profit-sharing, life insurance or
salary continuation plan, except as otherwise specifically determined by the
Board of Directors.
19. Amendment of the Plan.
---------------------
(a) The Board of Directors may at any time, and from time to time, modify
or amend the Plan in any respect, except that if at any time the approval of the
shareholders of the Company is required under Section 422 of the Code or any
successor provision with respect to Incentive Stock Options, or under Rule
16b-3, or is required to ensure that any compensation resulting from any option
under the Plan is deductible for federal income tax purposes under Section
162(m). The Board of Directors may not effect such modification or amendment
without such approval.
(b) The termination or any modification or amendment of the Plan shall not,
without the consent of an optionee, affect his or her rights under an option
previously granted to him or her. With the consent of the optionee affected, the
Board of Directors may amend outstanding option agreements in a manner not
inconsistent with the Plan. The Board of Directors shall have the right to amend
or modify (i) the terms and provisions of the Plan and of any outstanding
Incentive Stock Options granted under the Plan to the extent necessary to
qualify any or all such options for such favorable federal income tax treatment
(including deferral of taxation upon exercise) as may be afforded incentive
stock options under Section 422 of the Code and (ii) the terms and provisions of
the Plan and of any outstanding option to the extent necessary to ensure the
qualification of the Plan under Rule 16b-3 or to ensure the deductibility of any
compensation resulting from any option under 162(m).
-9-
<PAGE>
20. Withholding.
-----------
(a) The Company shall have the right to deduct from payments of any kind
otherwise due to the optionee any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon exercise
of options under the Plan. Subject to the prior approval of the Company, which
may be withheld by the Company in its sole discretion, the optionee may elect to
satisfy such obligations, in whole or in part, (i) by causing the Company to
withhold shares of Common Stock otherwise issuable pursuant to the exercise of
an option or (ii) by delivering to the Company shares of Common Stock already
owned by the optionee. The shares so delivered or withheld shall have a fair
market value equal to such withholding obligation. The fair market value of the
shares used to satisfy such withholding obligation shall be determined by the
Company as of the date that the amount of tax to be withheld is to be
determined. An optionee who has made an election pursuant to this Section 20(a)
may only satisfy his or her withholding obligation with shares of Common Stock
which are not subject to any repurchase, forfeiture, unfulfilled vesting or
other similar requirements.
(b) Notwithstanding the foregoing, in the case of a Reporting Person, no
election to use shares for the payment of withholding taxes shall be effective
unless made in compliance with any applicable requirements of Rule 16b-3.
21. Cancellation and New Grant of Options, Etc.
-------------------------------------------
The Board of directors shall have the authority to effect, at any time and
from time to time, with the consent of the affected optionees, (i) the
cancellation of any or all outstanding options under the Plan and the grant in
substitution therefor of new options under the Plan covering the same or
different numbers of shares of Common stock and having an option exercise price
per share which may be lower or higher than the exercise price per share of the
canceled options or (ii) the amendment of the terms of any and all outstanding
options under the Plan to provide an option exercise price per share which is
higher or lower than the then-current exercise price per share of such
outstanding options.
22. Effective Date and Duration of the Plan.
----------------------------------------
(a) Effective Date. The Plan shall become effective when adopted by the
---------------
Board of Directors, but no Incentive Stock Option granted under the Plan shall
become exercisable unless and until the Plan shall have been approved by the
Company's shareholders. If such shareholder approval is not obtained within
twelve months after the date of the Board's adoption of the Plan no options
previously granted under the Plan shall be deemed to be Incentive Stock Options,
options previously granted to covered employees, directors or officers shall not
vest and shall terminate and no Incentive Stock Options shall be granted
thereafter nor shall any options be granted thereafter to covered employees or
officers. Amendments to the Plan not requiring shareholder approval shall become
effective when adopted by the Board of Directors; amendments requiring
shareholder approval (as provided in Section 19) shall become effective when
adopted by the
-10-
<PAGE>
Board of Directors, but no Incentive Stock Option granted after the date of such
amendment and no option granted to any covered employee, director or officer
after the date of such amendment shall become exercisable (to the extent that
(i) such amendment to the Plan was required to enable the Company to grant such
Incentive Stock Option to a particular optionee or (ii) shareholder approval of
such amendment to the Plan was required to ensure the continued qualification of
the Plan under Section 16b-3 or Section 162(m) or to ensure the deductibility of
any compensation resulting from any option under Section 162(m) unless and until
such amendment shall have been approved by the Company's shareholders. If such
shareholder approval is not obtained within twelve months of the Board's
adoption of such amendment, (i) any Incentive Stock Options granted on or after
the date of such amendment shall terminate to the extent that such amendment to
the Plan was required to enable the Company to grant such option to a particular
optionee and (ii) any option granted to a covered employee, director or officer
on or after the date of such amendment shall terminate to the extent that
shareholder approval of such amendment was required to ensure continued
qualification of the Plan under Rule 16b-3 or Section 162(m) or to ensure the
deductibility of any compensation resulting from any option under Section
162(m). Subject to this limitation, options may be granted under the Plan at any
time after the effective date and before the date fixed for termination of the
Plan.
(b) Termination. Unless sooner terminated in accordance with Section 16,
-----------
the Plan shall terminate, with respect to Incentive Stock Options, upon the
earlier of (i) the close of business on the day next preceding the tenth
anniversary of the date of its adoption by the Board of Directors, or (ii) the
date on which all shares available for issuance under the Plan shall have been
issued pursuant to the exercise or cancellation of options granted under the
Plan. Unless sooner terminated in accordance with Section 16, the Plan shall
terminate with respect to options which are not Incentive Stock Options on the
date specified in (ii) above. If the date of termination is determined under (i)
above, then options outstanding on such date shall continue to have force and
effect in accordance with the provisions of the instruments evidencing such
options.
23. Provision for Foreign Participants.
----------------------------------
The Board of Directors may, without amending the Plan, modify awards or
options granted to participants who are foreign nationals or employed outside
the United States to recognize differences in laws, rules, regulations or
customs of such foreign jurisdictions with respect to tax, securities, currency,
employee benefit or other matters.
Adopted by the Board of Directors on
April 3, 1998
-11-
<PAGE>
HEMASURE INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
Annual Meeting of Stockholders - May 26, 1998
Those signing on the reverse side, revoking any prior proxies, hereby
appoint(s) Timothy J. Barberich and John F. McGuire, or each or any of them,
with full power of substitution, as proxies for those signing on the reverse
side to act and vote at the 1998 Annual Meeting of Stockholders of HemaSure
Inc., and at any adjournments thereof as indicated upon all matters referred to
on the reverse side and described in the Proxy Statement for the Meeting, and,
in their discretion, upon any other matters which may properly come before the
Meeting.
This proxy when properly executed will be voted in the manner directed
by the undersigned stockholder(s). If no other indication is made, the proxies
shall vote "For" proposal numbers 1, 2, 3 and 4.
A vote FOR the director nominiees and FOR proposal numbers 2, 3 and 4
is recommended by the Board of Directors.
PLEASE VOTE, DATE, AND SIGN ON OTHER SIDE AND RETURN
PROMPTLY IN ENCLOSED ENVELOP.
<PAGE>
/ x/ Please mark your votes
as in this example
1. ELECTION OF for all nominees Withheld authority to
DIRECTOR listed at right vote for all nominees
listed at right
/ / / / Nominees: Timothy J. Barberich
David S. Barlow
Roff S. Stutz
John F. McGuire
Justin E. Doheny
INSTRUCTIONS: To withhold authority to vote for individual nominee(s) strike a
line through each such nominee's name in the list at right. Your shares will be
voted for the remaining nominee(s).
2. Approval of the Amendment to the FOR AGAINST ABSTAIN
Company's 1995 Employee Stock / / / / / /
Purchase Plan.
3. Approval of Amendments to the / / / / / /
Company's 1994 Stock Option Plan.
4. To transact such other business as may / / / / / /
properly come before the meeting or any
adjournment thereof.
Please read the reverse side of this card.
PLEASE VOTE, SIGN, DATE AND RETURN THE PROXY CARD PROMPLY
USING THE ENCLOSED ENVELOPE
HAS YOUR ADDRESS CHANGED? DO YOU HAVE COMMENTS?
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE ___________________________ DATE __________________
NOTE: Please sign this proxy exactly as your name appears hereon. Joint
owners should each sign personally. Trustees or other Fiduciaries
should indicate the capacity in which they sign. If a corporation or
partnerships signature should be that of an authorized officer who
should give his or her title.
