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EXHIBIT 4.5
FOURTH AMENDED AND RESTATED
KENSEY NASH CORPORATION
NONEMPLOYEE DIRECTORS' STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT
1.1 Purpose. The Kensey Nash Corporation Nonemployee Directors' Stock
Option Plan ("Plan") is hereby established by Kensey Nash Corporation
("Company"), effective September 1, 1995 ("Effective Date"). The purpose of the
Plan is to promote the overall financial objectives of the Company and its
stockholders by motivating directors of the Company who are not employees and to
further align the interests of such directors with those of the stockholders of
the Company and to achieve long-term growth and performance of the Company. The
Plan and the grant of Options thereunder are expressly conditioned upon the
Plan's approval by the security holders of the Company to the extent required by
Rule 16b-3 of the Securities Exchange Act of 1934, as amended, and if such
approval is not obtained, then the Plan and all Options granted thereunder shall
be null and void ab initio.
ARTICLE II
DEFINITIONS
For purposes of the Plan, the following terms are defined as set forth
below:
2.1 "Affiliate" means any individual, corporation, partnership, limited
liability company, association, joint-stock company, trust, unincorporated
association or other entity (other than the Company) that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, the Company including, without limitation, any member
of an affiliated group of which the Company is a common parent corporation as
provided in Section 1504 of the Code.
2.2 "Agreement" or "Option Agreement" means, individually or collectively,
any agreement entered into pursuant to this Plan pursuant to which an Option is
granted to a Participant.
2.3 "Board of Directors" or "Board" means the Board of Directors of the
Company.
2.4 "Change in Control" shall be deemed to have occurred on the first to
occur of any of the following events:
(a) An acquisition of at least twenty percent (20%) by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) (a "Person") of the beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of the then outstanding
shares of common stock of the Company (the "Outstanding Company Common
Stock") or the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided that such
acquisition would result in the Kensey Nash Entities beneficially owning
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
following the acquisition less than forty percent (40%) of the Outstanding
Company Common Stock or less than forty percent (40%) of the Outstanding
Company Voting Securities; or
(b) The approval by the stockholders of the Company of a
reorganization, merger, consolidation, complete liquidation or dissolution
of the Company, the sale or disposition of all or substantially all of the
assets of the Company or similar corporate transaction (in each case
referred to in this Section as a "Corporate Transaction") or, if
consummation of such Corporate Transaction is subject, at the time of such
approval by stockholders, to the consent of any government or governmental
agency, the obtaining of such consent (either explicitly or implicitly); or
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(c) A change in the composition of the Board such that the individuals
who, as of the date of the Public Offering, constitute the Board (such
Board shall be hereinafter referred to as the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board; provided,
however, for purposes of this Section, that any individual who becomes a
member of the Board subsequent to the date of the Company's Public Offering
whose election, or nomination for election by the Company's stockholders,
was approved by a vote of at least a majority of those individuals who are
members of the Board and who were also members of the Incumbent Board (or
deemed to be such pursuant to this proviso) shall be considered as though
such individual were a member of the Incumbent Board; but, provided,
further, that any such individual whose initial assumption of office occurs
as a result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board shall not be so
considered as a member of the Incumbent Board.
Notwithstanding the foregoing provisions of this Section, the following shall be
excluded from the events described in (a) and (b) above: (i) any acquisition by
or consummation of a or Corporate Transaction with the Company, an Affiliate or
by an employee benefit plan (or related trust) sponsored or maintained by the
Company or an Affiliate, (ii) any acquisition by or consummation of a Corporate
Transaction with a Kensey Nash Entity, (iii) the acquisition by or consummation
of a or Corporate Transaction with any Person who beneficially owned,
immediately prior to such acquisition or Corporate Transaction, directly or
indirectly, twenty percent (20%) or more of the Outstanding Company Common Stock
or Outstanding Company Voting Securities, or (iv) any acquisition or Corporate
Transaction, if more than a majority of the beneficial ownership of the entity
resulting from the acquisition or Corporate Transaction is held by Persons who
held the beneficial ownership of the Outstanding Company Voting Securities
before the acquisition or Corporate Transaction.
2.5 "Code" or "Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, Treasury Regulations (including proposed regulations)
thereunder and any subsequent Internal Revenue Code.
2.6 "Commission" means the Securities and Exchange Commission or any
successor agency.
2.7 "Committee" means the person or persons appointed by the Board of
Directors to administer the Plan, as further described in the Plan.
2.8 "Common Stock" means the shares of the $.01 par value common stock of
the Company, whether presently or hereafter issued, and any other stock or
security resulting from adjustment thereof as described hereinafter or the
common stock of any successor to the Company which is designated for the purpose
of the Plan.
2.9 "Company" means Kensey Nash Corporation, a Delaware corporation, and
includes any successor or assignee corporation or corporations into which the
Company may be merged, changed or consolidated; any corporation for whose
securities the securities of the Company shall be exchanged; and any assignee of
or successor to substantially all of the assets of the Company.
2.10 "Director" means each and any director who serves on the Board and who
is not an officer or employee of the Company or any of its Affiliates.
2.11 "Disability" means a mental or physical illness that renders a
Participant totally and permanently incapable of performing the Participant's
duties for the Company or an Affiliate. Notwithstanding the foregoing, a
Disability shall not qualify under the Plan if it is the result of (i) a
willfully self-inflicted injury or willfully self-induced sickness; or (ii) an
injury or disease contracted, suffered, or incurred, while participating in a
criminal offense. The determination of Disability shall be made by the
Committee. The determination of Disability for purposes of the Plan shall not be
construed to be an admission of disability for any other purpose.
2.12 "Effective Date" means September 1, 1995.
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2.13 "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
2.14 "Extraordinary Termination of Directorship" means the Termination
of Directorship of the Participant due to death or Disability.
2.15"Fair Market Value" means:
(a) prior to a Public Offering, the value determined on the basis of
the good faith determination of the Committee and without regard to whether the
Common Stock is restricted, illiquid or represents a minority interest, unless
expressly provided otherwise in an Agreement; and
(b) on or after a Public Offering, the value determined on the basis of
the good faith determination of the Committee, without regard to whether the
Common Stock is restricted or represents a minority interest, pursuant to the
applicable method described below:
(i) if the Common Stock is listed on a national securities
exchange or quoted on NASDAQ, the closing price of the Common
Stock on the relevant date (or, if such date is not a business
day or a day on which quotations are reported, then on the
immediately preceding date on which quotations were reported),
as reported by the principal national exchange on which such
shares are traded (in the case of an exchange) or by NASDAQ,
as the case may be;
(ii) if the Common Stock is not listed on a national
securities exchange or quoted on NASDAQ, but is actively
traded in the over-the-counter market, the average of the
closing bid and asked prices for the Common Stock on the
relevant date (or, if such date is not a business day or a day
on which quotations are reported, then on the immediately
preceding date on which quotations were reported), or the most
recent preceding date for which such quotations are reported;
and
(iii) if, on the relevant date, the Common Stock is not
publicly traded or reported as described in (i) or (ii), the
value determined in good faith by the Committee.
2.16 "Grant Date" means the date that as of which an Option is granted
pursuant to the Plan.
2.17 "Kensey Nash Entities" mean Kenneth R. Kensey ("Kensey") and John Nash
("Nash"), their respective spouses, their respective heirs, and any group
(within the meaning of Section 13(d)(3) of the Exchange Act) of which any of
Kensey, Nash, their spouses or their heirs is a member for purposes of
acquiring, holding or disposing of securities of the Company, any trust
established by or for the benefit of any of the foregoing and any other entity
controlled by or for the benefit of any of the foregoing.
2.18 "Kensey Nash Interests" mean the beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) or the pecuniary
interest (within the meaning of Rule 16a-1 promulgated under the Exchange Act)
of the Kensey Nash Entities in the outstanding voting securities of the Company
entitled to vote generally in the election of directors or such other securities
as may be specifically referenced.
2.19 "NASDAQ" means The Nasdaq Stock Market, including the Nasdaq National
Market.
2.20 "Option" means the right to purchase the number of shares of Common
Stock specified by the Plan at a price and for a term fixed by the Plan, and
subject to such other limitations and restrictions as the Plan and the Committee
imposes.
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2.21 "Option Period" means the period during which the Option shall be
exercisable in accordance with the Agreement and Article V.
2.22 "Option Price" means the price at which the Common Stock may be
purchased under an Option as provided in Section 5.3.
2.23 "Participant" means a Director to whom an Option has been granted
under the Plan, and in the event a Representative is appointed for a Participant
or another person becomes a Representative, then the term "Participant" shall
mean such appointed Representative. The term shall also include a trust for the
benefit of the Participant, the Participant's parents, spouse or descendants; a
partnership the interests in which are for the benefit of the Participant, the
Participant's parents, spouse or descendants; or a custodian under a uniform
gifts to minors act or similar statute for the benefit of the Participant's
descendants, to the extent permitted by the Committee and not inconsistent with
an application of Rule 16b-3. Notwithstanding the foregoing, the term
"Termination of Directorship" shall mean the Termination of Directorship of the
Director.
2.24 "Plan" means the Kensey Nash Corporation Nonemployee Directors' Stock
Option Plan, as herein set forth and as may be amended from time to time.
2.25 "Public Offering" means the initial public offering of shares of
Common Stock under the Securities Act.
2.26 "Representative" means (a) the person or entity acting as the executor
or administrator of a Participant's estate pursuant to the last will and
testament of a Participant or pursuant to the laws of the jurisdiction in which
the Participant had the Participant's primary residence at the date of the
Participant's death; (b) the person or entity acting as the guardian or
temporary guardian of a Participant; (c) the person or entity which is the
beneficiary of the Participant upon or following the Participant's death; or (d)
any person to whom an Option has been permissibly transferred by the Committee;
provided that only one of the foregoing shall be the Representative at any point
in time as determined under applicable law and recognized by the Committee.
2.27 "Rule 16b-3" or "Rule 16a-1(c)(3)" mean Rule 16b-3 and Rule
16a-1(c)(3), as promulgated under the Exchange Act, as amended from time to
time, or any successor thereto, in effect and applicable to the Plan and
Participants.
2.28 "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
2.29 "Termination of Directorship" means the occurrence of any act or event
that actually or effectively causes or results in the person's ceasing, for
whatever reason, to be a Director of the Company or of any Affiliate, including,
without limitation, death, Disability, dismissal, severance at the election of
the Participant, retirement, or severance as a result of the discontinuance,
liquidation, sale or transfer by the Company or its Affiliates of all businesses
owned or operated by the Company or its Affiliates. A person who becomes an
employee or officer of the Company shall not have incurred a Termination of
Directorship.
In addition, certain other terms used herein have definitions given to them
in the first place in which they are used.
ARTICLE III
ADMINISTRATION
3.1 Committee Structure and Authority. The Plan shall be administered by
the Committee which, except as provided herein, shall be comprised of one or
more persons. The Committee shall be the Compensation Committee of the Board of
Directors, unless such committee does not exist or the Board establishes another
committee whose
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purpose is the administration of the Plan. In the absence of an appointment, the
Board shall be the Committee; provided that only those members of the
Compensation Committee of the Board who participate in the decision relative to
Options under the Plan shall be deemed to be part of the "Committee" for
purposes of the Plan. A majority of the Committee shall constitute a quorum at
any meeting thereof (including telephone conference) and the acts of a majority
of the members present, or acts approved in writing by a majority of the entire
Committee without a meeting, shall be the acts of the Committee for purposes of
the Plan. The Committee may authorize any one or more of its members or an
officer of the Company to execute and deliver documents on behalf of the
Committee. A member of the Committee shall not exercise any discretion
respecting himself or herself under the Plan. The Board shall have the authority
to remove, replace or fill any vacancy of any member of the Committee upon
notice to the Committee and the affected member. Any member of the Committee may
resign upon notice to the Board. The Committee may allocate among one or more of
its members, or may delegate to one or more of its agents, such duties and
responsibilities as it determines.
Among other things, the Committee shall have the authority, subject to the
terms of the Plan and the Company's intent that transactions be exempt under
Rule 16b-3:
(a) to determine the terms and conditions of any Option granted
hereunder (including, but not limited to, the Option Price, the Option
Period, any exercise restriction or limitation and any exercise
acceleration or forfeiture waiver regarding any Option and the shares
of Common Stock relating thereto);
(b) to provide for the forms of Agreement to be utilized in
connection with the Plan;
(c) to determine whether a Participant has a Disability or
retires;
(d) to determine what securities law requirements are applicable
to the Plan, Options, and the issuance of shares of Common Stock and to
require of a Participant that appropriate action be taken with respect
to such requirements;
(e) to interpret and make a final determination with respect to
the remaining number of shares of Common Stock available under the
Plan;
(f) to determine the restrictions or limitations on the transfer
of Common Stock;
(g) to adjust the terms and conditions, at any time or from
time to time, of any Option, subject to the limitations of Sections 6.1
and 6.3;
(h) to provide for any forms to be utilized in connection with
the Plan;
(i) to cancel, with the consent of the Participant or as otherwise
provided in the Plan or an Agreement, outstanding Options;
(j) to require as a condition of the exercise of an Option or the
issuance or transfer of a certificate of Common Stock, the withholding
from a Participant of the amount of any federal, state or local taxes
as may be necessary in order for the Company or any other entity to
obtain a deduction or as may be otherwise required by law;
(k) to determine whether and with what effect an individual has
incurred a Termination of Directorship;
(l) to determine whether the Company or any other person has a
right or obligation to purchase Common Stock from a Participant and, if
so, the terms and conditions on which such Common Stock is to be
purchased;
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(m) to determine whether an Option is to be adjusted or modified;
(n) to determine the permissible methods of Option exercise and
payment, including cashless exercise arrangements;
(o) to adopt, amend and rescind such rules and regulations as, in
its opinion, may be advisable in the administration of the Plan; and
(p) to appoint and compensate agents, counsel, auditors or other
specialists to aid it in the discharge of its duties.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Option issued under the Plan and to otherwise supervise the
administration of the Plan. The Committee's policies and procedures may differ
with respect to Options granted at different times or to different Participants.
Any determination made by the Committee pursuant to the provisions of the
Plan shall be made in its sole discretion. All decisions made by the Committee
pursuant to the provisions of the Plan shall be final and binding on all
persons, including the Company and Participants. Any determination shall not be
subject to de novo review if challenged in court.
ARTICLE IV
SPECIAL PROVISIONS REGARDING STOCK
4.1 Number of Shares. Subject to the adjustment under Section 4.6, the
total number of shares of Common Stock reserved and available for issuance
pursuant to Options under the Plan shall be 410,000 shares of Common Stock
authorized for issuance on the Effective Date. Such shares may consist, in whole
or in part, of authorized and unissued shares or treasury shares.
4.2 Release of Shares. If any shares of Common Stock that have been
optioned cease to be subject to an Option, if any shares of Common Stock that
are subject to any Option are forfeited, if any Option otherwise terminates
without issuance of shares of Common Stock being made to the Participant, or if
any shares (whether or not restricted) of Common Stock are received by the
Company in connection with the exercise of an Option including the satisfaction
of any tax withholding, such shares, in the discretion of the Committee, may
again be available for distribution in connection with Options under this Plan.
If any shares could not again be available for Options to a particular
Participant under any applicable law, such shares shall be available exclusively
for Options to Participants who are not subject to such limitations.
4.3 Restrictions on Shares. Shares of Common Stock issued upon exercise of
an Option shall be subject to the terms and conditions specified herein and to
such other terms, conditions and restrictions as the Committee in its discretion
may determine or provide in the Option Agreement. The Company shall not be
required to issue or deliver any certificates for shares of Common Stock, cash
or other property prior to (i) the listing of such shares on any stock exchange,
NASDAQ or other public market on which the Common Stock may then be listed (or
regularly traded), (ii) the completion of any registration or qualification of
such shares under federal or state law, or any ruling or regulation of any
government body which the Committee determines to be necessary or advisable, and
(iii) the satisfaction of any applicable withholding obligation in order for the
Company or an Affiliate to obtain a deduction with respect to the exercise of an
Option. The Company may cause any certificate for any share of Common Stock to
be delivered to be properly marked with a legend or other notation reflecting
the limitations on transfer of such Common Stock as provided in the Plan or as
the Committee may otherwise require. The Committee may require any person
exercising an Option to make such representations and furnish such information
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as it may consider appropriate in connection with the issuance or delivery of
the shares of Common Stock in compliance with applicable law or otherwise.
Fractional shares shall not be delivered, but shall be rounded to the next lower
whole number of shares.
4.4 Stockholder Rights. No person shall have any rights of a stockholder
as to shares of Common Stock subject to an Option until, after proper exercise
of the Option or other action required, such shares shall have been recorded on
the Company's official stockholder records as having been issued or transferred.
Upon exercise of the Option or any portion thereof, the Company will have thirty
(30) days in which to issue the shares, and the Participant will not be treated
as a stockholder for any purpose whatsoever prior to such issuance. No
adjustment shall be made for cash dividends or other rights for which the record
date is prior to the date such shares are recorded as issued and transferred in
the Company's official stockholder records, except as provided herein or in an
Agreement.
4.5 Best Efforts To Register. If there has been a Public Offering, the
Company will register under the Securities Act the Common Stock delivered or
deliverable pursuant to Options on Commission Form S-8 if available to the
Company for this purpose (or any successor or alternate form that is
substantially similar to that form to the extent available to effect such
registration), in accordance with the rules and regulations governing such
forms, as soon as such forms are available for registration to the Company for
this purpose. The Company will use its best efforts to cause the registration
statement to become effective as soon as possible and will file such supplements
and amendments to the registration statement as may be necessary to keep the
registration statement in effect until the earliest of (a) one year following
the expiration of the Option Period of the last Option outstanding, (b) the date
the Company is no longer a reporting company under the Exchange Act and (c) the
date all Participants have disposed of all shares delivered pursuant to any
Option. The Company may delay the foregoing obligation if the Committee
reasonably determines that any such registration would materially and adversely
affect the Company's interests or if there is no material benefit to
Participants.
4.6 Adjustments. In the event of any change in capitalization, such as a
stock dividend, stock split, combination or exchange of shares, recapitalization
or other change in the capital structure of the Company, corporate separation or
division of the Company (including, but not limited to, a split-up, spin-off,
split-off or distribution to Company stockholders other than a normal cash
dividend), sale by the Company of all or a substantial portion of its assets
(measured on either a stand-alone or consolidated basis), reorganization, rights
offering, a partial or complete liquidation, or any other corporate transaction,
Company stock offering or event involving the Company and having an effect
similar to any of the foregoing, then the Committee shall adjust or substitute,
as the case may be, the number of shares of Common Stock available for Options
under the Plan, the number of shares of Common Stock covered by outstanding
Options, the exercise price per share of outstanding Options, and any other
characteristics or terms of the Options as the Committee shall deem necessary or
appropriate to reflect equitably the effects of such changes to the
Participants; provided, however, that any fractional shares resulting from such
adjustment shall be eliminated by rounding to the next lower whole number of
shares with appropriate payment for such fractional share as shall reasonably be
determined by the Committee.
4.7 Transfer of Shares. A Participant may at any time make a transfer of
shares of Common Stock received pursuant to the exercise of an Option to his
parents, spouse or descendants, to any trust for the benefit of the foregoing or
to a partnership the interests of which are principally for the benefit of the
Participant, his parents, spouse or descendants or to a custodian under a
uniform gifts to minors act or similar statute for the benefit of any of the
Participant's descendants. Any transfer of shares received pursuant to the
exercise of an Option shall not be permitted or valid unless and until the
transferee agrees to be bound by the provisions of this Plan, and any provision
respecting Common Stock under the Agreement, provided that "Termination of
Directorship" shall continue to refer to the Termination of Directorship of the
Director.
4.8 Limited Transfer During Offering. In the event there is an effective
registration statement under the Securities Act pursuant to which shares of
Common Stock shall be offered for sale in an underwritten offering, a
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Participant shall not, during the period requested by the underwriters managing
the registered public offering, effect any public sale or distribution of shares
received directly or indirectly pursuant to an exercise of an Option.
4.9 Committee Discretion. The Committee may in its sole discretion include
in any Agreement an obligation that the Company purchase a Participant's shares
of Common Stock received upon the exercise of an Option (including the purchase
of any unexercised Options which have not expired), or may obligate a
Participant to sell shares of Common Stock to the Company upon such terms and
conditions as the Committee may determine and set forth in an Agreement. The
provisions of this Section shall be construed by the Committee and shall be
subject to such other terms and conditions as the Committee may from time to
time determine.
4.10 No Company Obligation. None of the Company, an Affiliate or the
Committee shall have any duty or obligation to affirmatively disclose to a
record or beneficial holder of Common Stock or an Option, and such holder shall
have no right to be advised of any material information regarding the Company or
any Affiliate at any time prior to, upon or in connection with receipt or the
exercise of an Option or the Company's purchase of Common Stock or an Option
from such holder in accordance with the terms hereof.
ARTICLE V
OPTIONS
5.1 Eligibility. Each Director shall be granted Options to purchase shares
of Common Stock as provided herein.
5.2 Grant and Exercise. Each Participant who is a Director on the date of
the Public Offering or who is appointed a Director shall be granted an Option on
such date to purchase Five Thousand (5,000) shares of Common Stock without
further action by the Board or the Committee. On the date of each regular annual
stockholder meeting of the Company to occur after the Effective Date, each
person who is a Director on such date and is either continuing as a Director
subsequent to the meeting or is elected to serve as a Director at such meeting
shall be granted an Option to purchase Seven Thousand and Five Hundred (7,500)
shares of Common Stock without further action by the Board or the Committee. If
the number of shares of Common Stock available to grant under the Plan on a
scheduled date of grant is insufficient to make all automatic grants required to
be made pursuant to the Plan on such date, then each eligible Director shall
receive an Option to purchase a pro rata number of the remaining shares of
Common Stock available under the Plan; provided further, however, that if such
proration results in fractional shares of Common Stock, then such Option shall
be rounded down to the nearest number of whole shares of Common Stock. If there
is no whole number of shares remaining to be granted, then no grants shall be
made under the Plan. In addition, the Compensation Committee may make additional
grants of Options, from time-to-time, as determined by the Compensation
Committee in accordance with the provisions of the Plan. Each Option granted
under the Plan shall be evidenced by an Agreement, in a form approved by the
Committee, which shall embody the terms and conditions of such Option and which
shall be subject to the express terms and conditions set forth in the Plan. Such
Agreement shall become effective upon execution by the Participant.
5.3 Terms and Conditions. Options shall be subject to the following terms
and conditions and to such terms and conditions as shall be determined by the
Committee, including the following:
(a) Option Period. The Option Period of each Option shall be fixed by the
Committee; provided that no Option shall be exercisable more than ten (10) years
after the date the Option is granted.
(b) Option Price. The Option Price per share of the Common Stock
purchasable under an Option shall be the Fair Market Value on the Grant Date.
(c) Exercisability. Options shall be exercisable at such time or times and
subject to such terms and conditions as shall be determined by the Committee.
Except as provided in an Agreement, an Option shall not be exercisable
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until the earlier of the day immediately preceding the date of the first
anniversary of the Grant Date, provided the Participant is a Director on that
date, and the date of the Participant's Extraordinary Termination of
Directorship. If the Committee provides that any Option is exercisable only in
installments, the Committee may at any time waive such installment exercise
provisions, in whole or in part. In addition, the Committee may at any time
accelerate the exercisability of any Option.
(d) Method of Exercise. Subject to the provisions of this Article V, a
Participant may exercise Options, in whole or in part, at any time during the
Option Period by the Participant's giving written notice of exercise on a form
provided by the Committee (if available) to the Company specifying the number of
shares of Common Stock subject to the Option to be purchased. Such notice shall
be accompanied by payment in full of the purchase price by cash or check or such
other form of payment as the Company may accept. If approved by the Committee,
payment in full or in part may also be made (i) by delivering Common Stock
already owned by the Participant for a period of at least six (6) months prior
to such payment date and having a total Fair Market Value on the date of such
delivery equal to the Option Price; (ii) by the execution and delivery of a full
recourse promissory note or other full recourse evidence of indebtedness (and
any security agreement thereunder) satisfactory to the Committee and permitted
in accordance with Section 5.3(e); (iii) by authorizing the Company to retain
shares of Common Stock already owned by the Participant for a period of at least
six (6) months prior to such payment and which would otherwise be issuable upon
exercise of the Option having a total Fair Market Value on the date of delivery
equal to the Option Price; (iv) by the delivery of cash or the extension of
credit by a broker-dealer to whom the Participant has submitted a notice of
exercise or otherwise indicated an intent to exercise an Option (in accordance
with Part 220, Chapter II, Title 12 of the Code of Federal Regulations,
so-called "cashless" exercise); or (v) by any combination of the foregoing. No
shares of Common Stock shall be issued until full payment therefor, as
determined by the Committee, has been made. A Participant shall have all of the
rights of a stockholder of the Company holding the class of Common Stock that is
subject to such Stock Option (including, if applicable, the right to vote the
shares and the right to receive dividends), when the Participant has given
written notice of exercise, has paid in full for such shares and such shares
have been recorded on the Company's official stockholder records as having been
issued and transferred.
(e) Company Loan or Guarantee. Upon the exercise of any Option and subject
to the pertinent Agreement and the discretion of the Committee, the Company may
at the request of the Participant:
(i) lend to the Participant, on a full recourse basis, an
amount equal to such portion of the Option Price as the Committee may
determine; or
(ii)guarantee a loan obtained by the Participant on a full
recourse basis from a third-party for the purpose of tendering the
Option Price.
The remaining terms and conditions of any loan or guarantee, including the
interest rate, and any security interest thereunder, shall be determined by the
Committee, except that (1) the term of any loan may not exceed twenty-four
months and (2) no extension of credit or guarantee shall obligate the Company
for an amount to exceed the least of the Option Price, the aggregate Fair Market
Value per share of the Common Stock on the date of exercise, less the par value
of the shares of Common Stock to be purchased upon the exercise of the Option,
or the amount permitted under applicable laws or the regulations and rules of
the Federal Reserve Board and any other governmental agency having jurisdiction.
(f) Nontransferability of Options. Except as provided herein or in an
Agreement, no Option or interest therein shall be transferable by the
Participant other than by will or by the laws of descent and distribution, and
all Options shall be exercisable during the Participant's lifetime only by the
Participant. If and to the extent transferability is permitted by Rule 16b-3 and
except as otherwise provided herein or by an Agreement, every Option granted
hereunder shall be freely transferable, but only if such transfer does not
result in liability under Section 16 of the Exchange Act to the Participant or
other Participants and is consistent with registration of the Option and sale of
Common Stock on Form S-8 (or a successor form) or the Committee's waiver of such
condition.
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5.4 Extraordinary Termination of Directorship. Unless otherwise provided
in an Agreement or determined by the Committee, if a Participant incurs an
Extraordinary Termination of Directorship, any unexpired and unexercised Option
held by such Participant shall thereafter be fully exercisable for a period of
one (1) year (or such other period or no period as the Committee may specify)
immediately following the date of such Extraordinary Termination of Directorship
or until the expiration of the Option Period, whichever period is the shorter.
5.5 Other Termination. Unless otherwise provided in an Agreement or
determined by the Committee, if a Participant incurs a Termination of
Directorship other than due to an Extraordinary Termination of Directorship, any
Option held by such Participant shall thereupon terminate, except that such
Option, to the extent then exercisable, may be exercised for the lesser of the
three (3)-month period commencing with the date of such Termination of
Directorship or until the expiration of the Option Period. The death or
Disability of a Participant after a Termination of Directorship otherwise
provided herein shall not extend the exercisability of the time permitted to
exercise an Option.
ARTICLE VI
MISCELLANEOUS
6.1 Amendments and Termination. The Board may amend, alter, or discontinue
the Plan at any time, but no amendment, alteration or discontinuation shall be
made which would (a) impair the rights of a Participant under an Option granted
without the Participant's consent, except such an amendment made to cause the
Plan to qualify for the exemption provided by Rule 16b-3 or (b) disqualify the
Plan from the exemption provided by Rule 16b-3. In addition, no such amendment
shall be made without the approval of the Company's stockholders to the extent
such approval is required by law or agreement. Notwithstanding the foregoing,
the Plan may not be amended more than once every six (6) months to change the
Plan provisions listed in Section (c)(2)(ii)(A) of Rule 16b-3, other than to
comport with changes in the Code or Rule 16b-3.
The Committee may amend the Plan at any time provided that (a) no amendment
shall impair the rights of any Participant under any Option theretofore granted
without the Participant's consent, (b) no amendment shall disqualify the Plan
from the exemption provided by Rule 16b-3, and (c) any amendment shall be
subject to the approval or rejection of the Board. Notwithstanding the
foregoing, the Plan may not be amended more than once every six (6) months to
change the Plan provisions listed in Section (c)(2)(ii)(A) of Rule 16b-3, other
than to comport with changes in the Code or Rule 16b-3.
The Committee may amend the terms of any Option theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any Participant without the Participant's consent, except such an amendment made
to cause the Plan or Option to qualify for the exemption provided by Rule 16b-3.
The Committee's discretion to amend the Plan or Agreement shall be limited to
the Plan's constituting a plan described in Section (c)(2)(ii) of Rule 16b-3.
Subject to the above provisions, the Board shall have authority to amend
this Plan to take into account changes in law and tax and accounting rules, as
well as other developments and to grant Options which qualify for beneficial
treatment under such rules without stockholder approval.
Notwithstanding the foregoing, if any right under this Plan would cause an
otherwise eligible transaction to be ineligible for pooling of interest
accounting treatment, the Committee may modify or adjust the right so that
pooling of interest accounting treatment shall be available.
6.2 Unfunded Status of Plan. It is intended that the Plan be an "unfunded"
plan of deferred compensation. The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Common Stock or make payments; provided, however, that, unless the
Committee otherwise
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determines, the existence of such trusts or other arrangements is consistent
with the "unfunded" status of the Plan.
6.3 General Provisions.
(a) Representation. The Committee may require each person
purchasing or receiving shares pursuant to an Option to represent to
and agree with the Company in writing that such person is acquiring the
shares without a view to the distribution thereof in violation of the
Securities Act. The certificates for such shares may include any legend
which the Committee deems appropriate to reflect any restrictions on
transfer.
(b) No Additional Obligation. Nothing contained in the Plan shall
prevent the Company or an Affiliate from adopting other or additional
compensation arrangements.
(c) Withholding. If determined to be required to protect the
Company, no later than the date as of which an amount first becomes
includable in the gross income of the Participant for Federal income
tax purposes with respect to any Option, the Participant shall pay to
the Company (or other entity identified by the Committee), or make
arrangements satisfactory to the Company or other entity identified by
the Committee regarding the payment of, any Federal, state, local or
foreign taxes of any kind required by law to be withheld with respect
to such amount required in order for the Company or an Affiliate to
obtain a current tax deduction. Unless otherwise determined by the
Committee, withholding obligations may be settled with Common Stock,
including Common Stock that is part of the Option that gives rise to
the withholding requirement provided that any applicable requirements
under Section 16 of the Exchange Act are satisfied. The obligations of
the Company under the Plan shall be conditional on such payment or
arrangements, and the Company and its Affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes from any
payment otherwise due to the Participant.
(d) Representation. The Committee shall establish such procedures
as it deems appropriate for a Participant to designate a Representative
to whom any amounts payable in the event of the Participant's death are
to be paid.
(e) Controlling Law. The Plan and all Options made and actions
taken thereunder shall be governed by and construed in accordance with
the laws of the State of Delaware (other than its law respecting choice
of law). The Plan shall be construed to comply with all applicable law,
and to avoid liability to the Company, an Affiliate or a Participant,
including, without limitation, liability under Section 16(b) of the
Exchange Act.
(f) Offset. Any amounts owed to the Company or an Affiliate by the
Participant of whatever nature may be offset by the Company from the
value of any shares of Common Stock, cash or other thing of value under
the Plan or an Agreement to be transferred to the Participant, and no
shares of Common Stock, cash or other thing of value under the Plan or
an Agreement shall be transferred unless and until all disputes between
the Company and the Participant have been fully and finally resolved
and the Participant has waived all claims to such against the Company
or an Affiliate.
(g) Fail-Safe. With respect to persons subject to Section 16 of
the Exchange Act, transactions under this Plan are intended to comply
with all applicable conditions of Rule 16b-3 or Rule 16a-1(c)(3). To
the extent any provision of the Plan or action by the Committee fails
to so comply, it shall be deemed null and void, to the extent permitted
by law and deemed advisable by the Committee. Moreover, in the event
the Plan does not include a provision required by Rule 16b-3 or Rule
16a-1(c)(3) to be stated therein, such provision (other than one
relating to eligibility requirements, or the price and amount of
Options) shall be deemed to be incorporated by reference into the Plan
with respect to Participants subject to Section 16.
6.4 Special Provisions Regarding a Change in Control.
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(a) In the event of a Change in Control, before the Plan's
approval by stockholders in accordance with Rule 16b-3, the condition
of the Plan's approval by stockholders shall be waived and the Plan and
grant of all Options shall be given effect without regard to such
condition;
(b) Notwithstanding any other provision of this Plan to the
contrary, in the event of a Change in Control, any Options outstanding
as of the date such Change in Control and not then exercisable shall
become fully exercisable.
(c) In the event of a Change in Control, if the Change in Control
is within six (6) months of the Grant Date of an Option, such Option
shall be cancelled in exchange for a payment to the Participant at the
time of the Participant's Termination of Directorship equal to the
amount by which the "Change in Control Price" (as defined in Section
6.4(d) per share of Common Stock exceeds the Option Price per share of
Common Stock, multiplied by the number of shares of Common Stock
granted under the Option to which this right applies, plus interest on
such amount at the prime rate as reported from time to time in The Wall
Street Journal, compounded annually and determined from time to time;
(d) For purposes of this Section, "Change in Control Price" means
the higher of (i) the highest reported sales price of a share of Common
Stock in any transaction reported on the principal exchange on which
such shares are listed during the sixty (60)-day period prior to and
including the date of a Change in Control, or (ii) if the Change in
Control is the result of a Corporate Transaction (as defined in Section
2.4(b) above), the highest price per share of Common Stock paid in such
tender or exchange offer or a Corporate Transaction. To the extent that
the consideration paid in any such transaction described above consists
all or in part of securities or other non-cash consideration, the value
of such securities or other non-cash consideration shall be determined
in the sole discretion of the Committee; and
(e) Notwithstanding the foregoing, if any right under this Plan
would cause a transaction to be ineligible for pooling of interest
accounting that would, but for the right hereunder, be eligible for
such accounting treatment, the Committee may modify or adjust the right
so that pooling of interest accounting shall be available, including
the substitution of Common Stock having a Fair Market Value equal to
the cash otherwise payable hereunder for the right which caused the
transaction to be ineligible for pooling of interest accounting.
6.5 Rights with Respect to Continuance as a Director. Nothing contained
herein shall be deemed to alter the relationship between the Company or an
Affiliate and a Participant, or the contractual relationship between a
Participant and the Company or an Affiliate if there is a written contract
regarding such relationship. Nothing contained herein shall be construed to
constitute a contract of employment between the Company or an Affiliate and a
Participant. The Company or an Affiliate and each of the Participants continue
to have the right to terminate the employment or service relationship at any
time for any reason, except as provided in a written contract. The Company or an
Affiliate shall have no obligation to retain the Participant in its employ or
service as a result of the Plan. There shall be no inference as to the length of
employment or service hereby, and the Company or an Affiliate reserves the same
rights to terminate the Participant's employment or service as existed prior to
the individual becoming a Participant in the Plan.
6.6 Options in Substitution for Options Granted by Other Corporations.
Options may be granted under the Plan from time to time in substitution for
awards held by employees, directors or service providers of other corporations
who are about to become Directors of the Company or an Affiliate as the result
of a merger or consolidation of the employing corporation with the Company or an
Affiliate, or the acquisition by the Company or an Affiliate of the assets of
the employing corporation, or the acquisition by the Company or Affiliate of the
stock of the employing corporation, as the result of which it becomes a
designated employer under the Plan. The terms and conditions of the Options so
granted may vary from the terms and conditions set forth in the Plan at the
13
time of such grant as the majority of the members of the Committee may deem
appropriate to conform, in whole or in part, to the provisions of the awards in
substitution for which they are granted.
6.7 Procedure for Adoption. Any Affiliate of the Company may by resolution
of such Affiliate's board of directors, with the consent of the Board of
Directors and subject to such conditions as may be imposed by the Board of
Directors, adopt the Plan for the benefit of its directors as of the date
specified in the board resolution.
6.8 Procedure for Withdrawal. Any Affiliate which has adopted the Plan
may, by resolution of the board of directors of such direct or indirect
subsidiary, with the consent of the Board of Directors and subject to such
conditions as may be imposed by the Board of Directors, terminate its adoption
of the Plan.
6.9 Delay. If at the time, the Participant is subject to "short-swing"
liability under Section 16 of the Exchange Act, any time period provided for
under the Plan to the extent necessary to avoid the imposition of liability
shall be suspended and delayed during the period the Participant would be
subject to such liability.
6.10 Headings. The headings contained in the Plan are for reference
purposes only and shall not affect the meaning or interpretation of the Plan.
6.11 Severability. If any provision of the Plan shall for any reason be
held to be invalid or unenforceable, such invalidity or unenforceability shall
not effect any other provision hereby, and the Plan shall be construed as if
such invalid or unenforceable provision were omitted.
6.12 Successors and Assigns. The Plan shall inure to the benefit of and be
binding upon each successor and assign of the Company. All obligations imposed
upon a Participant, and all rights granted to the Company hereunder, shall be
binding upon the Participant's heirs, legal representatives and successors.
6.13 Entire Agreement. The Plan and the Agreement constitute the entire
agreement with respect to the subject matter hereof and thereof, provided that
in the event of any inconsistency between the Plan and the Agreement, the terms
and conditions of the Plan shall control.
Executed on this ____ day of ________, 1995.
KENSEY NASH CORPORATION
By:
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Title:
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