DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
Proxy Statement Pursuant to
Section 14(a) of the Securities
Exchange Act of 1934
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to
§240.14a-12
CAS MEDICAL SYSTEMS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
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þ
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No fee required.
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o
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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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)
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Proposed maximum aggregate value of transaction:
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o
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Fee paid previously with preliminary materials.
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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.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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April 24, 2009
Dear Fellow Stockholder:
We will hold our 2009 annual meeting of stockholders at
10:30 a.m. on Wednesday, June 10, 2009 at The
WoodWinds, 29 Schoolground Road, Branford, Connecticut.
The notice of annual meeting, proxy statement and proxy card
accompanying this letter describe in detail the matters to be
acted upon at the meeting.
It is important that your shares be represented at the meeting.
Whether or not you plan to attend, please sign, date and return
your proxy card in the enclosed envelope as soon as possible.
We look forward to seeing you at the meeting.
Sincerely yours,
Louis P. Scheps
Chairman of the Board
TABLE OF CONTENTS
CAS
MEDICAL SYSTEMS, INC.
The annual meeting of stockholders of CAS Medical Systems, Inc.
will be held at 10:30 a.m. on Wednesday, June 10, 2009
at The WoodWinds, 29 Schoolground Road, Branford, Connecticut.
The items of business at the annual meeting are:
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1.
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Election of five directors.
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2.
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Approval of the CAS Medical Systems, Inc. Employee Stock
Purchase Plan.
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3.
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Approval of amendments to the 2003 Equity Incentive Plan
increasing the number of shares that can be issued under the
plan.
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4.
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Appointment of independent accountants for 2009.
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5.
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Such other matters as may properly come before the meeting,
including any continuation of the meeting caused by any
adjournment or any postponement of the meeting.
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April 21, 2009 is the record date for the meeting.
This Proxy Statement and accompanying proxy card are being
distributed on or about April 28, 2009.
Jeffery A. Baird
Secretary
THIS PROXY STATEMENT AND THE 2008 ANNUAL REPORT ARE AVAILABLE
AT WWW.CASMED.COM.
CAS
MEDICAL SYSTEMS, INC.
44 East Industrial Road
Branford, Connecticut 06405
PROXY
STATEMENT
The
Annual Meeting and Voting
Our board of directors is soliciting proxies to be used at the
annual meeting of stockholders to be held on Wednesday,
June 10, 2009, or at any adjournment of the meeting. This
proxy statement contains information about the items being voted
on at the annual meeting.
Who is
entitled to vote?
Record stockholders of CAS Medical Systems, Inc. (CASMED) common
stock at the close of business on April 21, 2009 (the
record date) can vote at the meeting. As of the record date,
11,376,662 shares of CASMED common stock were issued and
outstanding. Each stockholder has one vote for each share of
common stock owned as of the record date. A list of all
stockholders entitled to vote at the meeting will be available
for examination by any stockholder for any purpose germane to
the meeting at our office at 44 East Industrial Road, Branford,
Connecticut, for the
ten-day
period immediately preceding the meeting.
How do I
vote?
A form of proxy card and a return envelope for the proxy card
are enclosed. Giving your proxy means that you authorize the
persons named in the enclosed proxy card to vote your shares at
the CASMED annual meeting in the manner you direct. You may vote
by proxy or in person at the annual meeting. To vote by proxy,
if you are a registered holder, please complete, sign and return
your proxy card in the accompanying postage-paid return envelope.
If any proxy is returned without indication as to how to vote,
the CASMED common stock represented by the proxy will be voted
by the persons named on the proxy in favor of each proposal and
in accordance with their best judgment on any other matters
which may come before the meeting.
How do I
vote if my shares are held in street name?
If your broker holds your shares of CASMED common stock in
street name, you must either direct your broker on how to vote
your shares or obtain a proxy from your broker to vote in person
at the annual meeting. If your shares are held in street name,
you should check the voting form that you receive to determine
whether shares may be voted by telephone or the internet.
May I
change my vote?
You may revoke your proxy at any time before it is voted at the
meeting in several ways. You may send in a revised proxy dated
later than the first; or you may vote in person at the meeting;
or you may notify our Secretary in writing prior to the meeting
that you have revoked your proxy.
What
constitutes a quorum?
The holders of a majority of the outstanding shares entitled to
vote at the meeting, present in person or represented by proxy,
constitute a quorum. Abstentions, broker non-votes and votes
withheld from director nominees are included in the count to
determine a quorum. If a quorum is present, each of the five
director candidates who receive a majority of the votes of the
shares present in person or represented by proxy and entitled to
vote on the election of directors will be elected.
Proposals 2, 3 and 4 will be approved if a quorum is
present and a majority of the votes cast by holders present in
person or represented by proxy are cast in favor of the
applicable proposal.
What is
the effect of broker non-votes and abstentions?
Under Nasdaq rules, if your broker holds your shares in its
street name, the broker may under certain
circumstances vote your shares on the agenda items even if it
does not receive instructions from you. Because broker non-votes
and abstentions are not considered votes cast on the matters
before the meeting, neither will have an effect on the voting
for these proposals.
Stockholder
proposals for the 2010 annual meeting
Stockholder proposals intended to be presented at our 2010
annual meeting pursuant to
Securities Exchange Act
Rule 14a-8
must be received by our Secretary not later than
December 24, 2009, for inclusion in our proxy statement and
form of proxy relating to that meeting. Stockholder proposals
submitted outside the process provided in
Rule 14a-8
shall be considered untimely in accordance with
Rule 14a-5(e)
if made after March 13, 2010.
Which
stockholders own at least 5% of CASMED?
Other than a director listed in the director and officer
ownership table below, the only persons or groups known to us to
be beneficial owners of more than five percent of our
outstanding common stock as of April 21, 2009 are reflected
in the chart below. The following information is based upon
Schedules 13D and 13G respectively filed with the Securities and
Exchange Commission by the persons and entities shown as of the
respective dates appearing below or other information obtained
by the company.
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Name and Address of
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Amount and Nature of
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Beneficial Owners
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Beneficial Ownership
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Percent of Class
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BMI Capital Corporation
570 Lexington Avenue
New York, NY 10022
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2,274,580
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(a)
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20.0
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%
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J. Sanford Davis
14 Longview Terrace
Madison, CT 06443
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921,500
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8.1
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%
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Potomac Capital Management LLC
825 Third Avenue, 33rd Floor
New York, NY 10022
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712,005
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(b)
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6.3
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%
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(a) |
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Based upon information set forth in a Schedule 13G filed
with the SEC on February 18, 2009. BMI Capital Corporation
holds sole dispositive power over the indicated shares. |
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Based upon information set forth in a Schedule 13F filed
with the SEC on February 11, 2009. Potomac Capital
Management LLC, Potomac Capital Management Inc. and Paul J.
Solit hold shared voting and dispositive power over the
indicated shares. |
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How much
stock is owned by directors and executive officers?
The following table shows beneficial ownership of CASMED common
stock as of April 21, 2009 by our directors and our
executive officers named in the compensation tables in this
proxy statement. Shares issuable upon exercise of options or
warrants are shown in a separate column.
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Options
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Shares Deemed to
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and Warrants
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be Beneficially
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Exercisable
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Percent
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Name of Beneficial Owner
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Owned
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Within 60 Days (a)
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of Class
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Louis P. Scheps
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178,925
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714,401
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7.4
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%
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Jerome Baron
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112,700
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(b)
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7,500
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1.1
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%
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Lawrence S. Burstein
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90,375
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(c)
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115,000
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1.8
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%
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Evan Jones
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349,492
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(b)
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6,666
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3.1
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%
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Andrew E. Kersey
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40,658
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(d)
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150,000
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1.7
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%
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Jeffery A. Baird
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33,305
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(e)
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110,000
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1.2
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%
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Nathan B. Harris
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22,500
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(f)
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*
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All executive officers and
directors as a group (7)
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827,955
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1,103,567
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15.5
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%
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* |
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Less than one percent of the class |
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(a) |
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The director or executive officer has the right to acquire
beneficial ownership of this number of shares within
60 days of the record date for the annual meeting
(April 21, 2009) by exercising outstanding stock
options or warrants (as applicable). |
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(b) |
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Includes 1,500 shares of restricted stock. |
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(c) |
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Includes 75,000 shares held in Mr. Bursteins IRA
rollover account, 9,375 shares owned directly and
indirectly by a family member and 1,500 shares of
restricted stock. |
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Includes 20,418 shares of restricted stock. |
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Includes 16,750 shares of restricted stock. |
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Includes 20,000 shares of restricted stock. |
Section 16(a)
Beneficial Ownership Reporting Compliance
Directors and persons who are considered officers of
the company for purposes of Section 16(a) of the Securities
Exchange Act of 1934 and greater than ten percent stockholders
(referred to as reporting persons) are required to file reports
with the Securities and Exchange Commission showing their
holdings of and transactions in CASMED securities. It is
generally our practice to file the forms on behalf of our
reporting persons who are directors or officers. We believe that
all such forms have been timely filed for 2008.
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Proposal 1:
Election
of Directors
Five directors, constituting the entire board of directors of
CASMED, are to be elected at the annual meeting to serve for a
term of one year or until their respective successors are duly
elected and qualify. Information about each nominee for director
(all of whom are incumbent directors), including the
nominees age, is set forth below. Unless otherwise
indicated, each nominee has held his present position for at
least five years. The shares represented by the proxies will be
voted in favor of the election as directors of the persons named
below unless authority to do so is withheld. Should you choose
not to vote for a nominee, you may list on the proxy the name of
the nominee for whom you choose not to vote and mark your proxy
under Proposal No. 1 for all other nominees. Should
any nominee become unable to accept nomination or election as a
director (which is not now anticipated), the persons named in
the enclosed proxy will vote for a substitute nominee as may be
selected by the board of directors, unless the size of the board
is reduced.
NOMINEES
FOR ELECTION TO BOARD OF DIRECTORS
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Year First
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Principal Occupation
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Name
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Age
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Became Director
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During the Past Five Years
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Louis P. Scheps
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77
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1990
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Currently Chairman of the Board of CASMED. Mr. Scheps held the
positions of President and Chief Executive Officer of CASMED
from 1990 until March 2007 and held the position of Director of
Manufacturing of CASMED from 1986 until 1990. Prior thereto, Mr.
Scheps was employed by Posi-Seal International as Vice President
from 1969 to 1985. Mr. Scheps received his engineering degree
from Purdue University and his business education from the GE
Management Program.
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Jerome Baron
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82
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1986
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Mr. Baron has been in the securities industry since 1944. He
was a Vice President in the International Department at Loeb
Rhoades & Company, a Partner at Andreson & Company,
and Chairman and Chief Executive Officer of Foster Securities,
Inc., which he founded in 1974. In 1977, Foster Securities
merged with Brean Murray and Company, Inc. Mr. Baron is
Vice-Chairman of Brean Murray, Carret & Co. He is a
Director of Haulbowline Ltd., a private offshore company. He
attended Kings Point Merchant Marine Academy and Pace
University.
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Year First
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Principal Occupation
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Name
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Age
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Became Director
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During the Past Five Years
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Lawrence S. Burstein
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66
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1985
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Mr. Burstein has been President and principal stockholder of
Unity Venture Capital Associates, Ltd. since March 1996. Prior
thereto he was President, a director and principal stockholder
of Trinity Capital Corporation since October 1982. Mr. Burstein
is a director of four other public companies: THQ, Inc., a
manufacturer of video game cartridges, I.D. Systems, Inc., which
designs, develops and produces a wireless monitoring and
tracking system; Atrinsic, Inc., which is principally an
internet direct marketing company and American Telcom Services,
Inc., a provider of converged telecommunication services. In
addition, Mr. Burstein is a director of Millennium India
Acquisition Corporation, a publicly traded 1940 Act investment
company. Mr. Burstein received an L.L.B. from Columbia Law
School.
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Andrew E. Kersey
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48
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2007
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Mr. Kersey has been President and Chief Executive Officer of
CASMED since April 2007. Mr. Kersey has over 20 years
experience in the medical device industry and has been with
CASMED since 2001. Mr. Kersey served as Chief Operating
Officer of CASMED from 2004 until April 2007. Previously, Mr.
Kersey was Director of Engineering of CASMED. Prior to joining
CASMED, Mr. Kersey held various engineering management positions
at Novametrix Medical Systems, Inc. and Corometrics Medical
Systems.
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Year First
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Principal Occupation
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Name
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Age
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Became Director
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During the Past Five Years
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Evan Jones
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52
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2008
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Mr. Jones was a co-founder of Digene Corporation, a publicly
traded biotechnology company focused on womens health and
molecular diagnostic testing, serving as Chairman of the Board
from 1995 through 2007. Mr. Jones was CEO of Digene from 1990
to 2006, and President from 1990 to 1999. In July 2007, Mr.
Jones formed jVen Capital, LLC, a life sciences investment
company. Mr. Jones is a member of the Board of Directors
of the Childrens National Medical Center and the
Childrens Research Institute in Washington DC. He is
Chairman of the Campaign for Public Health, an independent,
not-for-profit organization dedicated to increasing funding for
the Centers for Disease Control and Prevention, and is a member
of the Board of Directors and the Executive Committee of
Research!America. Mr. Jones received a B.A. from the University
of Colorado and an M.B.A. from The Wharton School at the
University of Pennsylvania.
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The board
of directors recommends that stockholders vote FOR the nominees
described in Proposal 1.
Executive
Officers
Our executive officers are as follows:
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Name
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Age
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Position
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Andrew E. Kersey
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48
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President and Chief Executive Officer
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Jeffery A. Baird
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55
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Chief Financial Officer and Secretary
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Nathan B. Harris
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50
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Vice President Sales and Marketing
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Information
Concerning Executive Officers Who Are Not Directors
Jeffery A. Baird joined CASMED during January 2004. From
April 2003 to December 2003, Mr. Baird was CFO of QDx,
Inc., a startup venture engaged in the development of novel
medical diagnostic products. Mr. Baird was employed by
Novametrix Medical Systems, Inc. from 1988 to 2002 and held
various positions including Controller, Treasurer and CFO. Prior
to joining Novametrix, Mr. Baird was employed by Philips
Medical Systems, Inc., a medical diagnostic imaging company.
Nathan B. Harris joined CASMED during September 2008.
From
2003-2008 he
was Vice President of US Sales and Global Marketing at Salient
Surgical Technologies (formerly TissueLink), an advanced medical
technology company that develops and markets RF based surgical
products. Prior to Salient Surgical, he served as National Sales
Director of the Electrophysiology Division and Business Director
of the International Pacing Division of Medtronic, Inc. He has
also held various marketing, sales and operations positions with
Medtronic, Inc., Cardiac Pacemakers, Inc. (Guidant), and
Honeywell, Inc. Mr. Harris is
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currently a board member for Advanced Circulatory Systems, a
privately held company.
Board
Information and Committees
The board met eight times in 2008 and acted seven times by
unanimous written consent. Each incumbent director attended at
least 75 percent of the total number of board meetings and
meetings held by the board committees on which he served during
2008. The board has determined that each of our non-employee
directors (other than Mr. Scheps) currently serving on the
board or who served on the board during 2008 is independent
based upon the criteria provided by Nasdaq Stock Market rules.
Members of the board serve on one or more of the committees
described below, except for directors who are also employees of
the company, who do not serve on board committees.
The board has standing audit and compensation committees, but
does not have a standing nominating committee. Further
information regarding these committees and the director
nomination process is provided below.
The Audit Committee, which met five times in 2008,
monitors our financial reporting standards and practices and our
internal financial controls to ensure compliance with the
policies and objectives established by the board of directors.
The committee directly retains and recommends for stockholder
approval an independent accounting firm to conduct the annual
audit, and discusses with our independent accountants the scope
of their examinations, with particular attention to areas where
either the committee or the independent accountants believe
special emphasis should be directed. The committee reviews the
quarterly and annual financial statements and the annual
independent accountants report, invites the
accountants recommendations on internal controls and on
other matters, and reviews the evaluation given and corrective
action taken by management. It reviews the independence of the
accountants and pre-approves audit and permissible non-audit
services. It also reviews our internal accounting controls and
the scope and results of our internal auditing activities.
Members of the audit committee are Lawrence S. Burstein, Jerome
Baron and Evan Jones. Each member of the committee is
independent as defined in
Rule 10A-3
of the Securities and Exchange Commission and the listing
standards of the Nasdaq Stock Market. The board of directors has
determined that each of Lawrence S. Burstein, Jerome Baron and
Evan Jones qualifies as an audit committee financial
expert as that term is defined in
Regulation S-K
of the Securities and Exchange Commission.
The Compensation Committee, which met twice in 2008,
oversees our executive and director compensation programs,
including establishing our executive and director compensation
policies and annually reviewing all components of compensation
to ensure that our objectives are appropriately achieved. These
functions are not delegated to our officers or to third-party
professionals, although the committee may from time to time
retain third-party consultants to provide advice regarding
compensation issues. The committee also considers input from our
executive officers although final decisions regarding executive
compensation are made by the committee. The committee is also
responsible for certain administrative aspects of our
compensation plans and stock plans, and approves or recommends
changes in these plans. It also approves performance targets and
grants under our incentive plans and our stock plan for our
executive officers. The committee also reviews officers
potential for growth, and, with the chief executive officer,
will be responsible for succession planning and ensuring
management continuity. Members are Lawrence S. Burstein, Jerome
Baron and Evan Jones.
Each committee is governed by a written charter. Copies of each
committee charter are available on our website at www.casmed.com.
Director
Compensation
Director Fees. We pay our non-employee
directors an annual retainer of $25,000 to the Chairman of the
Board and $20,000 to each other director. We also pay an annual
retainer of $4,000 to the Audit Committee chairman and $2,000 to
the Compensation Committee chairman and pay an annual retainer
of $2,000 to each other Audit Committee member and $1,000 to
each other Compensation Committee member. During 2008, we paid
an annual fee of $20,000 to each of the directors, other than
those also
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serving as officers or employees, and paid a total of $12,000 in
fees to the outside directors for their participation as
committee members.
Our non-employee directors are eligible to receive options,
restricted stock and other equity-linked grants under our 2003
Equity Incentive Plan. On July 23, 2008, we granted
3,000 shares of restricted common stock under the 2003
Equity Incentive Plan to each of Messrs. Baron, Burstein
and Jones. These restricted stock grants vest in equal quarterly
installments during the twelve months from date of grant. Upon
his election to the board of directors on May 9, 2008, we
granted to Mr. Jones a non-qualified stock option pursuant
to which Mr. Jones is entitled to purchase up to
20,000 shares of CASMED common stock at an exercise price
of $2.81 per share. The option vests in three equal annual
installments beginning on May 9, 2009 and expires on
May 9, 2018.
In 2009, the board intends to grant to each non-employee
director, on the date of the annual meeting of stockholders, a
number of restricted shares equal to $10,000 divided by the
closing price of the common stock on such date. The
aforementioned grant would vest on the first anniversary of the
date of grant. This grant would be made in lieu of the annual
3,000 share grant described above.
Director Compensation Table. The following
table shows all compensation paid or granted, during or with
respect to the 2008 fiscal year to each of the non-employee
directors for services rendered to CASMED and its subsidiaries
during 2008.
2008
DIRECTOR COMPENSATION
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Fees Earned or
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Stock
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All Other
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Name (a)
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Paid in Cash ($)
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Awards ($)(b)
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Compensation ($)
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Total ($)
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Jerome Baron
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$
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25,000
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$
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14,018
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$
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0
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$
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39,018
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Lawrence S. Burstein
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$
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24,000
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$
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14,018
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$
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0
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$
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38,018
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Evan Jones
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$
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23,000
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$
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14,018
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$
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0
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$
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37,018
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Saul S. Milles, M.D. (c)
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$
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11,500
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$
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10,530
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$
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0
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|
|
$
|
22,030
|
|
Louis P. Scheps (d)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
98,077
|
|
|
$
|
98,077
|
|
|
|
|
(a) |
|
As of December 31, 2008, Mr. Baron held an option to
purchase 7,500 shares of our common stock,
Mr. Burstein held options and warrants to purchase an
aggregate of 115,000 shares of our common stock,
Dr. Milles held warrants to purchase an aggregate of
67,500 shares of our common stock and Mr. Jones held
an option to purchase an aggregate of 20,000 shares of our
common stock. As of December 31, 2008, Messrs. Baron,
Burstein and Jones each held 2,250 shares of restricted
stock. |
|
(b) |
|
Dollar amounts represent the amount recognized for financial
statement reporting purposes during 2008 in accordance with
FAS 123R with respect to the grants of shares of
restricted stock to the indicated directors during 2007 and 2008. |
|
(c) |
|
Dr. Milles resigned from the board of directors on
July 16, 2008. |
|
(d) |
|
Mr. Scheps served as a part-time employee in a senior
executive role through March 31, 2009 at an annualized
salary of $100,000. |
Communications
with Directors
In order to provide our security holders and other interested
parties with a direct and open line of communication to the
board of directors, the board of directors has adopted the
following procedures. CASMED security holders and other
interested persons may communicate with the chairmen of our
Compensation Committee or Audit Committee or with the non-
management directors as a group by sending written
correspondence to our Secretary. The correspondence should
specify which of the foregoing is the intended recipient.
Communications should be sent by mail addressed in care of the
corporate Secretary,
8
CAS Medical Systems, Inc., 44 East Industrial Road, Branford,
Connecticut 06405.
All communications received in accordance with these procedures
will be reviewed initially by our corporate Secretary. The
Secretary will relay all such communications to the appropriate
director or directors unless the Secretary determines that the
communication:
|
|
|
|
|
does not relate to the business or affairs of CASMED or the
functioning or constitution of the board of directors or any of
its committees;
|
|
|
|
relates to routine or insignificant matters that do not warrant
the attention of the board of directors;
|
|
|
|
is an advertisement or other commercial solicitation or
communication;
|
|
|
|
is frivolous or offensive; or
|
|
|
|
is otherwise not appropriate for delivery to directors.
|
The director or directors who receive any such communication
will have discretion to determine whether the subject matter of
the communication should be brought to the attention of the full
board of directors or one or more of its committees and whether
any response to the person sending the communication is
appropriate. Any response will be made only in accordance with
applicable law and regulations relating to the disclosure of
information.
Our Secretary will retain copies of all communications received
pursuant to these procedures for a period of at least one year.
The board of directors will review the effectiveness of these
procedures from time to time and, if appropriate, recommend
changes.
We have not established a formal policy regarding director
attendance at our annual meetings of stockholders, but our
directors generally do attend the annual meeting. The chairman
of the board presides at the annual meeting of stockholders, and
the board of directors generally holds one of its regular
meetings in conjunction with the annual meeting of stockholders.
Accordingly, unless one or more members of the board are unable
to attend, all members of the board are present for the annual
meeting. Each of the five members of the board at the time of
our 2008 annual meeting of stockholders attended that meeting.
Nomination
of Directors
Due to the small size of our board of directors, the board of
directors determined that it is appropriate for the full board
to act with respect to director nomination matters. Three of the
five board members are independent as set forth in the rules of
the Nasdaq Stock Market. The full board has adopted
specifications applicable to members of the board of directors,
and nominees for the board of directors recommended by the board
of directors must meet these specifications. The specifications
provide that a candidate for director should:
|
|
|
|
|
Have a reputation for industry, integrity, honesty, candor,
fairness and discretion;
|
|
|
|
Be knowledgeable in his or her chosen field of endeavor, which
field should have such relevance to our businesses as would
contribute to the companys success;
|
|
|
|
Be knowledgeable, or willing and able to become so quickly, in
the critical aspects of our businesses and operations; and
|
|
|
|
Be experienced and skillful in serving as a competent overseer
of, and trusted advisor to, senior management of a publicly held
corporation.
|
In addition, nominees for the board of directors should
contribute to the mix of skills, core competencies and
qualifications of the board through expertise in one or more of
the following areas: accounting and finance, the healthcare
industry, international business, mergers and acquisitions,
leadership, business and management, strategic planning,
government relations, investor relations, executive leadership
development, and executive compensation.
The board will consider nominees recommended by stockholders for
election at the 2010 annual meeting of stockholders that are
submitted prior to the end of 2009 to our Secretary at CAS
Medical Systems, Inc., 44 East Industrial Road, Branford,
Connecticut 06405. Any recommendation must be in writing and
must include a detailed description of the business experience
and other qualifications of the recommended nominee as well as
the signed
9
consent of the nominee to serve if nominated and elected, so
that the candidate may be properly considered. All stockholder
recommendations will be reviewed in the same manner as other
potential candidates for board membership.
The board has not received any nominees for election to the
board at the 2009 annual meeting from any stockholder or group
that has held more than 5% of our common stock for a period of
one year.
Code of
Ethics
Our board of directors has approved a Code of Ethics in
accordance with the rules of the Securities and Exchange
Commission and The Nasdaq Stock Market that governs the conduct
of each of our directors and senior executive officers,
including our principal executive officer, principal financial
officer, principal accounting officer and controller. Our Code
of Ethics is maintained on our website at www.casmed.com. Any
amendments to or waivers of the Code of Ethics that apply to our
principal executive officer, principal financial officer or
principal accounting officer and that relates to any element of
the definition of the term code of ethics, as the
term is defined by the Securities and Exchange Commission, will
be posted on our website at www.casmed.com. There are currently
no such amendments or waivers.
Executive
Officer Compensation
Executive
Contracts and Severance and Change of Control
Arrangements
Andrew E. Kersey. On March 16, 2007, we
entered into an employment agreement with Andrew E. Kersey
pursuant to which Mr. Kersey is serving as our President
and Chief Executive Officer effective April 1, 2007. Under
the terms of the employment agreement, Mr. Kersey is
employed on an at will basis, will receive an annual
base salary of two hundred fifty thousand dollars ($250,000) and
will be eligible for an annual bonus in the form of cash or
CASMED common stock as determined at the sole discretion of the
Compensation Committee of the board. Mr. Kersey will also
be entitled to participate in all of our employee benefit
programs as such programs may be in effect from time to time.
If we terminate Mr. Kerseys employment without
Serious Cause (as defined in the Employment Agreement) or
Mr. Kersey terminates his employment for Good Reason (as
defined in the Employment Agreement), we will continue to pay
Mr. Kersey his then-current base salary for a period of six
(6) months from the date of such termination and he will be
entitled to participate in our health benefit plans (with
standard employee payment not to exceed the payment level prior
to termination) for the six (6) month period. This would
represent a payment of approximately $131,750 based upon his
current salary and benefits level. In addition, if
Mr. Kersey terminates his employment for Good Reason or if
we terminate Mr. Kerseys employment without Serious
Cause, all of Mr. Kerseys equity-linked grants (such
as stock options and restricted stock) shall immediately
accelerate and vest in full. If we (or a successor company)
terminate Mr. Kerseys employment without Serious
Cause or Mr. Kersey terminates his employment for Good
Reason, within the period commencing on the date that a Change
of Control (as defined in the Employment Agreement) is formally
proposed to our board of directors and ending on the second
anniversary of the date on which such Change of Control occurs,
then Mr. Kersey will be entitled to receive his
then-current base salary for a period of one (1) year from
the date of such termination and in addition will be entitled to
participate in our health benefit plans (with standard employee
payment not to exceed the payment level prior to the change in
control) for the period of one (1) year. This would
represent a payment of approximately $263,500 based upon his
current salary and benefits level.
On December 29, 2008, we entered into an amendment to
Mr. Kerseys employment agreement to conform it to the
requirements of Section 409A of the Internal Revenue Code
(the Code). The amendment did not expand the scope
of benefits payable under the agreement. The amendment to
Mr. Kerseys employment agreement primarily clarifies
(i) the timing of the payment of discretionary annual
bonuses; (ii) the circumstances under which Mr. Kersey
may be entitled to severance benefits in the event of a
10
termination by Mr. Kersey for good reason; and
(iii) the timing of severance payments and other benefits
in the event Mr. Kersey experiences an involuntary
separation from service. Mr. Kerseys severance
benefits described in clause (iii) of the prior sentence
have also been revised so that they are only payable upon an
Involuntary Separation from Service as defined for
purposes of Code Section 409A.
Compensation
Discussion and Analysis
Our Compensation Committee, which is comprised of three
independent non-employee directors, has formulated a
compensation philosophy that is designed to enable us to
attract, retain and reward capable employees who can contribute
to the success of CASMED, principally through a combination of
(1) base salaries, (2) annual incentive opportunities
and (3) longer term incentive opportunities for senior
management. We believe that implementation of a system of
compensation that emphasizes performance-based compensation
provides a strong alignment to stockholders interests.
Five key principles serve as the guiding framework for
compensation decisions for all executive officers of CASMED:
|
|
|
|
|
To attract and retain the most highly qualified management and
employee team.
|
|
|
|
To pay competitively compared to similar companies in our
industry.
|
|
|
|
To encourage superior employee performance by aligning rewards
with stockholder interests.
|
|
|
|
To motivate senior executives to achieve CASMEDs annual
and long-term business goals by providing equity-based incentive
opportunities.
|
|
|
|
To strive for fairness in administration by emphasizing
performance related contributions as the basis for pay decisions.
|
To implement these policies, we have designed the framework for
a four-part executive compensation program consisting of base
salary, annual incentives, long-term incentive opportunities for
senior management, and other employment benefits.
Base Salary. We will seek to maintain levels
of compensation that are competitive with similar companies in
our industry. Base salary represents the fixed component of the
executive compensation program. CASMEDs philosophy
regarding base salaries is to maintain salaries for the
aggregate officer group at the competitive industry average.
Periodic increases in base salary will relate to individual
contributions evaluated against established objectives, length
of service, and the industrys annual competitive pay
practice movement. We believe that base salary for 2008 for our
chief executive officer and for the other executive officers was
generally at the competitive industry average.
Annual Incentive Program. Each year the
Compensation Committee assesses whether to pay bonuses to its
employees including its senior executives either in cash or
stock based upon performance. Payment of the performance bonuses
is at the sole discretion of the Compensation Committee and is
not based on specific metrics, although the Compensation
Committee bases its decisions on numerous factors, including
overall corporate and personal performance. No cash bonus
payments were made to the named executive officers for 2008. The
equity grants made on March 10, 2008, described under
Long-Term Incentives below, were made in part based
upon achievement of performance criteria.
Long-Term Incentives. We believe that
long-term incentives should provide senior executives with an
opportunity to increase their ownership and potentially gain
financially from CASMED stock price increases. By this approach,
the best interests of stockholders and senior executives will be
closely aligned. Therefore, senior executives are eligible to
receive restricted stock and are also eligible to receive stock
options, giving them the right to purchase shares of common
stock at a specified price in the future. These grants will vest
based upon the passage of time, the achievement of performance
metrics, or both. We believe that the use of restricted stock
and stock options as the basis for long-term incentive
compensation meets our defined compensation strategy and
business needs by
11
achieving increased value for stockholders and retaining key
employees.
On March 10, 2008, the Compensation Committee granted
20,000 shares and 15,000 shares, respectively, of
restricted common stock to Messrs. Kersey and Baird based
on their achievements with respect to aforementioned criteria
during 2007. Such restricted shares vest ratably over three
years from date of grant. On September 15, 2008, in
connection with his joining CASMED, Mr. Harris was granted
20,000 shares of restricted common stock vesting in two
equal annual installments from the date of grant. On the same
date, Mr. Harris was also granted an option to purchase
80,000 shares of common stock at an exercise price of $3.95
per share vesting in four equal annual installments from the
date of grant.
Other Benefits. Our philosophy is to provide
competitive health and welfare-oriented benefits to executives
and employees, but to maintain a conservative posture relative
to executive benefits. We do provide life insurance and
supplemental disability insurance to our senior executive
officers.
Compliance with Section 162(m) of the Internal Revenue
Code. Section 162(m) of the Internal Revenue
Code generally disallows a tax deduction to a public corporation
for compensation over $1 million paid to a
corporations chief executive officer and four other most
highly compensated executive officers. Qualifying
performance-based compensation will not be subject to the cap if
certain requirements are met. The salaries for our highest paid
executives will be set, in part based on independent studies, at
the competitive industry average but are not expected to reach
$1 million in the near future. We intend to structure the
overall compensation of our executive officers in a manner that
should ensure that CASMED does not lose any tax deductions
because of the $1 million compensation limit in the
foreseeable future.
Our 2003 Equity Incentive Plan incorporates maximum limitations
on individual annual stock option and restricted stock grants so
as to meet the requirements of Section 162(m). The 2003
Equity Incentive Plan also identifies performance measures to be
used if we decide to use performance-based vesting restricted
stock in the future to meet the requirements of
Section 162(m).
Compensation
Disclosure Tables
Summary Compensation Table. The following
table (Table I) shows all compensation paid or granted,
during or with respect to the 2007 and 2008 fiscal years to
(i) our chief executive officer and (ii) the two other
most highly compensated executive officers, other than the CEO,
whose total compensation during 2008 exceeded $100,000 and who
were serving as executive officers as of December 31, 2008.
(Persons in this group are referred to individually as a
named executive officer and collectively as the
named executive officers, and, unless otherwise
noted, the titles listed are the titles held as of the end of
the 2008 fiscal year.)
12
TABLE
I
2007-2008
SUMMARY COMPENSATION TABLE
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
All
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Plan
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Total
|
|
Name and Principal Position
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
($) (b)
|
|
|
($) (c)
|
|
|
($)
|
|
|
($) (d)
|
|
|
($)
|
|
|
Andrew E. Kersey
|
|
|
2008
|
|
|
$
|
245,192
|
|
|
$
|
0
|
|
|
$
|
42,567
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,535
|
|
|
$
|
290,294
|
|
President and Chief Executive Officer (a)
|
|
|
2007
|
|
|
$
|
232,500
|
|
|
$
|
0
|
|
|
$
|
12,550
|
|
|
$
|
14,450
|
|
|
$
|
0
|
|
|
$
|
2,521
|
|
|
$
|
262,021
|
|
Jeffery A. Baird
|
|
|
2008
|
|
|
$
|
196,154
|
|
|
$
|
0
|
|
|
$
|
35,445
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,457
|
|
|
$
|
235,056
|
|
Chief Financial Officer
|
|
|
2007
|
|
|
$
|
160,000
|
|
|
$
|
0
|
|
|
$
|
12,055
|
|
|
$
|
14,438
|
|
|
$
|
0
|
|
|
$
|
3,443
|
|
|
$
|
189,936
|
|
Nathan B. Harris
|
|
|
2008
|
|
|
$
|
63,500
|
|
|
$
|
0
|
|
|
$
|
11,521
|
|
|
$
|
12,775
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
87,796
|
|
Vice President Sales and Marketing (e)
|
|
|
2007
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
(a) |
|
As of April 1, 2007, Mr. Kersey has been serving as
our President and Chief Executive Officer. Prior to
April 1, 2007 he served as our Chief Operating Officer. |
|
|
|
(b) |
|
Dollar amounts set forth with regard to restricted stock grants
for each individual are those recognized for financial statement
reporting purposes during the applicable year in accordance with
FAS 123R disregarding the estimate of forfeitures related
to service-based vesting conditions. Share value utilized for
purposes of this determination is the applicable market value on
the date of grant. For a further discussion of the assumptions
underlying these amounts, reference is made to the footnotes to
CASMEDs financial statements set forth in
Form 10-K
for the fiscal year ended December 31, 2008. |
|
|
|
(c) |
|
Dollar amounts with regard to option grants for each individual
are those recognized for financial statement reporting purposes
for the applicable year in accordance with FAS 123R
disregarding the estimate of forfeitures related to
service-based vesting conditions. The amounts set forth herein
for 2007 and 2008 are based on a Black-Scholes calculation
assuming a 4.4% and 3.6% risk free interest rate, volatility of
133% and 130%, a term of seven and four years and an annual
dividend rate of zero. For a further discussion of the
assumptions underlying these amounts, reference is made to the
footnotes to CASMEDs financial statements set forth in
Form 10-K
for the fiscal year ended December 31, 2008. |
|
|
|
(d) |
|
Amounts shown consist of the cost of term life and disability
insurance for Messrs. Kersey and Baird. |
|
|
|
(e) |
|
Mr. Harris joined the Company on September 15, 2008. |
13
Grants of Plan-Based Awards Table. The
following table (Table II) shows all plan-based equity and
non-equity grants made by CASMED during the 2008 fiscal year to
the named executive officers.
TABLE
II
2008
GRANTS OF PLAN-BASED AWARDS
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
All Other
|
|
|
Exercise
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Awards:
|
|
|
or Base
|
|
|
Grant Date
|
|
|
|
|
|
|
Estimated Future Payouts Under
|
|
|
Shares of
|
|
|
Number of
|
|
|
Price of
|
|
|
Fair Value
|
|
|
|
|
|
|
Non-Equity Incentive Plan Awards
|
|
|
Stock or
|
|
|
Securities
|
|
|
Option
|
|
|
of Stock
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units (#)
|
|
|
Underlying
|
|
|
Awards
|
|
|
and Option
|
|
Name
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(a)
|
|
|
Options (#) (b)
|
|
|
($/sh)
|
|
|
Awards
|
|
|
Andrew E. Kersey
|
|
|
3/10/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
$
|
87,000
|
|
Jeffery A. Baird
|
|
|
3/10/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
$
|
65,250
|
|
Nathan B. Harris
|
|
|
9/15/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
$
|
79,000
|
|
|
|
|
9/15/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
|
|
$
|
3.95
|
|
|
$
|
165,200
|
|
|
|
|
(a) |
|
Amounts for Messrs. Kersey and Baird represent grants of
restricted stock under the 2003 Equity Incentive Plan vesting in
equal annual installments over three years from date of grant.
The amount for Mr. Harris represents a grant of restricted
stock of 20,000 shares vesting in equal annual installments
over two years from date of grant. |
|
|
|
(b) |
|
Represents a stock option grant for the purchase of
80,000 shares of CASMED common stock which vests ratably
over four years from grant date. |
Outstanding Equity Awards at Fiscal Year-End
Table. Shown in Table III below is
information with respect to outstanding equity-based awards
(consisting of unexercised options to purchase CASMED common
stock and unvested restricted CASMED common stock) held by the
named executive officers at December 31, 2008.
TABLE
III
OUTSTANDING
EQUITY AWARDS AT 2008 FISCAL YEAR END
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market Value
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Shares or Units
|
|
|
of Shares or
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
Option
|
|
|
of Stock That
|
|
|
Units of Stock
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Exercise
|
|
|
Expiration
|
|
|
Have Not
|
|
|
That Have Not
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price ($)
|
|
|
Date
|
|
|
Vested (#)
|
|
|
Vested ($) (a)
|
|
|
Andrew E. Kersey
|
|
|
50,000
|
|
|
|
0
|
|
|
$
|
0.57
|
|
|
|
10/11/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
0
|
|
|
$
|
0.70
|
|
|
|
7/17/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
0
|
|
|
$
|
1.50
|
|
|
|
6/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
0
|
|
|
$
|
2.30
|
|
|
|
2/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
0
|
|
|
$
|
3.10
|
|
|
|
6/15/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,084
|
|
|
$
|
52,543
|
|
Jeffery A. Baird
|
|
|
50,000
|
|
|
|
0
|
|
|
$
|
1.40
|
|
|
|
1/6/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
0
|
|
|
$
|
2.30
|
|
|
|
2/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
0
|
|
|
$
|
3.10
|
|
|
|
6/15/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,750
|
|
|
$
|
42,195
|
|
Nathan B. Harris
|
|
|
0
|
|
|
|
80,000
|
|
|
$
|
3.95
|
|
|
|
09/15/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
$
|
38,800
|
|
14
|
|
|
(a) |
|
These values are based on $1.94 per share, the market price of a
share of CASMED common stock as of December 31, 2008 (the
final trading day of 2008). |
Option Exercises and Stock Vested Table. The
following table (Table IV) shows information with respect
to all stock options or warrants exercised by the named
executive officers during 2008 and information regarding
restricted stock held by those persons that vested during 2008.
TABLE
IV
OPTION
EXERCISES AND STOCK VESTED TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Shares
|
|
|
Value
|
|
|
|
Shares Acquired
|
|
|
Value Realized
|
|
|
Acquired on
|
|
|
Realized on
|
|
|
|
on Exercise
|
|
|
on Exercise
|
|
|
Vesting
|
|
|
Vesting
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
Andrew E. Kersey
|
|
|
|
|
|
|
|
|
|
|
1,666
|
|
|
$
|
4,915
|
|
Jeffery A. Baird
|
|
|
|
|
|
|
|
|
|
|
1,500
|
|
|
$
|
4,425
|
|
Nathan B. Harris
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Compensation Plan Table. The following
table (Table V) sets forth general information concerning
our equity compensation plans as of December 31, 2008.
TABLE
V
EQUITY
COMPENSATION PLAN INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities
|
|
|
|
|
|
|
|
|
|
remaining available for
|
|
|
|
Number of securities
|
|
|
Weighted-average
|
|
|
issuance under equity
|
|
|
|
to be issued upon
|
|
|
exercise price of
|
|
|
compensation plans
|
|
|
|
exercise of outstanding
|
|
|
outstanding options,
|
|
|
(excluding securities
|
|
|
|
options, warrants and
|
|
|
warrants and rights
|
|
|
reflected in column (a))
|
|
Plan Category
|
|
rights (col. a)
|
|
|
($) (col. b)
|
|
|
(col. c)
|
|
|
Equity compensation plans approved by security holders: (a)
|
|
|
590,125
|
|
|
$
|
2.43
|
|
|
|
203,050
|
|
Equity compensation plans not approved by security holders: (a)
|
|
|
1,064,401
|
|
|
$
|
0.50
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,654,526
|
|
|
$
|
1.23
|
|
|
|
203,050
|
|
|
|
|
(a) |
|
The equity compensation plans not approved by security holders
consist of warrants granted to the chairman of the board of
directors, a former director, and current outside directors of
the company as compensation for services rendered to the
company. These warrants generally have no specific expiration
date and have an exercise price range of $0.30 to $1.44. Equity
compensation plans approved by security holders consist of the
1994 Employees Incentive Stock Option Plan (referred to as
the 1994 Plan) and the 2003 Equity Incentive Plan. The 1994 Plan
expired on December 31, 2003 and, as such, there are no
further options available for issuance thereunder. |
15
Audit
Committee Report
The Audit Committee reviews CASMEDs financial reporting
function on behalf of the board of directors. Management has the
primary responsibility for preparing the financial statements in
accordance with accounting standards generally accepted in the
United States and the reporting process, including the system of
internal controls. CASMEDs independent accountants are
responsible for expressing an opinion on the annual financial
statements as to whether or not they are presented in conformity
in all material respects with accounting principles generally
accepted in the United States. The Audit Committee monitors
these processes through periodic meetings with management and
the independent registered public accounting firm.
In this context, the Audit Committee has reviewed and discussed
with management and the independent accountants the audited
financial statements for the year ended December 31, 2008,
including the audit scope, internal control matters, and audit
results. The Audit Committee also met with the independent
accountants without management present. The Audit Committee has
discussed with the independent accountants the matters required
to be discussed by auditing standards. In addition, the Audit
Committee has received from the independent accountants the
written disclosures and letter required by the applicable
requirements of the Public Company Accounting Oversight Board
regarding the independent accountants communications with
the Audit Committee concerning independence, and discussed with
them their independence from CASMED and its management. The
Audit Committee has also considered whether all non-audit
services rendered by the independent accountants to CASMED are
compatible with the accountants independence.
In reliance on the reviews and discussions referred to above,
the Audit Committee recommended to the board of directors, and
the board has approved, that the financial statements for the
year ended December 31, 2008 be included for filing in
CASMEDs annual report on
Form 10-K
for the year ended December 31, 2008.
Audit Committee of the Board of Directors
Jerome Baron
Lawrence S. Burstein
Evan Jones
Audit
Committee Pre-Approval
Policy
The Audit Committee operates under a written charter. Under this
charter, the Audit Committee is responsible for selecting,
approving, compensating and overseeing the independence,
qualifications and performance of the independent accountants.
Further, the Audit Committee has adopted a pre-approval policy
pursuant to which certain permissible non-audit services may be
provided by the independent accountants. Pre-approval is
generally provided for up to one year and may be detailed as to
the particular service or category of services and may be
subject to a specific budget. The Audit Committee may also
pre-approve particular services on a
case-by-case
basis. In assessing requests for services from the independent
accountants by management, the Audit Committee considers whether
such services are consistent with the auditors
independence; whether the independent accountants are likely to
provide the most effective and efficient service based upon
their familiarity with the company; and whether the service
could enhance our ability to manage or control risk or improve
audit quality.
Notwithstanding the pre-approval policy, all of the
audit-related, tax and other services provided by UHY LLP in
fiscal year 2008 were approved in advance by the Audit Committee.
16
Proposal 2:
Approval
of Employee Stock Purchase Plan
On April 3, 2009, the board of directors adopted the CAS
Medical Systems, Inc. Employee Stock Purchase Plan (referred to
as the Stock Purchase Plan). The following summary of certain
important features of the Stock Purchase Plan is qualified by
reference to the complete text of the Stock Purchase Plan which
is attached to this proxy statement as Exhibit A.
Purposes. The purposes of the Stock Purchase
Plan are:
|
|
|
|
|
to provide our employees with the opportunity to own our common
stock through a payroll-deduction based employee stock purchase
program thereby generating an increased incentive to contribute
to our future financial success and prosperity,
|
|
|
|
to enhance our ability to attract and retain exceptionally
qualified individuals whose efforts can affect our financial
growth and profitability, and
|
|
|
|
to align generally the interests of our employees with the
interests of our stockholders.
|
Principal Features of the Stock Purchase
Plan. The Stock Purchase Plan is intended to be a
qualified employee stock purchase plan under Section 423 of
the Internal Revenue Code of 1986, as amended. Eligible
employees participate in the Stock Purchase Plan through payroll
deductions. Unless otherwise determined by the Compensation
Committee, two six-month offering periods shall commence in each
calendar year on January 1st and July 1st,
beginning July 1, 2009. For each offering period, the last
business day of the term of the offering period shall be the
date of exercise (referred to as the Purchase Date) unless the
Compensation Committee otherwise determines. For each offering,
the purchase price per share of stock will be the average of the
high and low price of our common stock on the Nasdaq Global
Market or any other established stock exchange on which the
common stock is traded on the Purchase Date, less a 5% discount.
The Compensation Committee may, in its discretion, in advance of
an offering period reduce the discount applicable to the
offering. Each eligible employee is limited to the purchase of
1,500 shares per offering period and $25,000 of common
stock per year based upon the fair market value of the shares
determined at the time the purchase right is granted. Further,
otherwise eligible employees who would own shares
and/or hold
outstanding purchase rights to purchase stock possessing 5% or
more of the total combined voting power or value of all classes
of stock of the company immediately after the issuance of a
purchase right under the Stock Purchase Plan will not be
eligible to participate.
Administration of the Stock Purchase Plan. Our
Compensation Committee, consisting of directors chosen by our
board of directors, each of whom is a disinterested
person within the meaning of
Rule 16b-3
under the Securities Exchange Act of 1934 and an outside
director within the meaning of Section 162(m) of the
Internal Revenue Code will, among other things, administer the
Stock Purchase Plan.
Shares Available for Issuance. The maximum
number of shares of our common stock that may be available under
the Stock Purchase Plan is 150,000 shares.
New Plan Benefits. The amount or type of
grants that will be allocated to or received by any person or
group of persons cannot be determined at this time.
The board of directors recommends that stockholders vote
FOR the approval of the CAS Medical Systems, Inc.
Employee Stock Purchase Plan.
17
Proposal 3:
Approval
of Amendments to the 2003 Equity Incentive Plan Increasing the
Number of Shares That Can Be Issued Under the Plan
On April 20, 2009, the Compensation Committee of our board
of directors amended the CAS Medical Systems, Inc. 2003 Equity
Incentive Plan (referred to as the Incentive Plan), subject to
stockholder approval, to increase the number of shares that can
be issued under the Incentive Plan by 250,000. The board
believes that it is in the best interests of the company to
amend the Incentive Plan as provided herein so that the company
can continue to attract and retain the services of those persons
essential to the companys growth and financial success.
Description of the Amended Terms of the Incentive
Plan. As previously in effect, the Incentive Plan
provided for the availability of a maximum of
1,000,000 shares of our common stock, with a maximum of
250,000 shares available for delivery with respect to
awards of restricted stock and restricted stock units. We have
amended the Incentive Plan, subject to stockholder approval, to
increase the maximum number of shares of our common stock
available under the Incentive Plan by 250,000 to 1,250,000 and
the maximum number of shares of our common stock available for
delivery with respect to awards of restricted stock and
restricted stock units by 250,000 to 500,000.
Description
of the Incentive Plan, as Amended
The following is a summary of the principal features of the
Incentive Plan, as amended. The following summary of certain
important features of the Incentive Plan is qualified by
reference to the complete text of the Incentive Plan, as
amended, which is attached to this proxy statement as
Exhibit B.
Principal Features of the Incentive
Plan. Awards that may be granted under the
Incentive Plan include options, restricted stock and restricted
stock units, dividend equivalents, and other stock-based awards
(which we refer to collectively as Awards).
Administration of Incentive Plan. Our
Compensation Committee, consisting of directors chosen by our
board of directors, each of whom is a disinterested
person within the meaning of
Rule 16b-3
under the Securities Exchange Act of 1934 and each of whom are
outside directors within the meaning of
Section 162(m) of the Internal Revenue Code will, among
other things, administer the Incentive Plan, and will determine
which of our employees, officers and directors (whom we refer to
collectively as Eligible Recipients) will receive Awards and the
terms and conditions of these Awards. The number of Eligible
Recipients who may receive Awards under the Incentive Plan will
likely vary from year to year.
Shares Available for Issuance. The maximum
number of shares of our common stock that may be available under
the Incentive Plan, as amended, is 1,250,000 shares. In
addition, the number of shares of our common stock delivered
under the Incentive Plan with respect to Awards of restricted
stock and restricted stock units shall not exceed
500,000 shares. It is expected that our shares delivered
under the Incentive Plan will be authorized but unissued shares
or shares that we have reacquired. Shares of our common stock
subject to Awards that are forfeited, terminated, canceled or
settled without the delivery of our common stock under the
Incentive Plan will again be available for Awards under the
Incentive Plan. In addition, any shares of our common stock
underlying Awards granted in assumption of, or in substitution
for, outstanding awards previously granted by a company acquired
by us, or with which we combine (which we refer to as Substitute
Awards) shall not be counted against the shares available for
delivery under the Incentive Plan.
Adjustments. If a fundamental corporate event
occurs, our Compensation Committee may, as it deems appropriate,
adjust the number and kind of our shares that may be delivered
under the Incentive Plan in the future and the number and kind
of shares and the grant, exercise or conversion price, if
applicable, under all outstanding Awards to preserve, or to
prevent the enlargement of, the benefits made available under
the Incentive Plan. Cash payments may also be made.
18
Grants
Under the Incentive Plan
Stock Options. Our Compensation Committee may
grant options under the Incentive Plan in the form of
non-statutory stock options (referred to as NSOs) and incentive
stock options (referred to as ISOs). These options may contain
any terms that our Compensation Committee determines. The
exercise price shall not be less than 100% of the fair market
value on the date of grant. Our Compensation Committee shall
have the discretion to determine the terms and conditions upon
which options shall be exercisable.
Restricted Stock and Restricted Stock
Units. Our Compensation Committee may grant an
Eligible Participant restricted stock units which provide a
contractual right to receive shares of our common stock or cash
based on the fair market value of the related shares at the end
of a restricted period determined by our Compensation Committee.
Our Compensation Committee also may grant shares of restricted
stock that are nontransferable and subject to substantial risk
of forfeiture during the applicable restricted period. Our
Compensation Committee shall have the discretion to provide that
Awards of restricted stock and restricted stock units will vest,
if at all, upon the (i) continued employment or director
service during the relevant restricted period as determined by
our Compensation Committee
and/or
(ii) attainment or partial attainment of performance
objectives determined by our Compensation Committee. With
respect to any performance period, no Eligible Recipient may be
granted Awards of incentive stock or incentive units which vest
upon the achievement of performance objectives in respect of
more than 750,000 shares of our common stock or, if such
Awards are settled in cash, the fair market value of such shares
determined at the time of payment (each subject to adjustment as
described above).
With respect to any Award of restricted stock or restricted
stock units made to one of our Eligible Recipients that our
Compensation Committee determines will vest based on the
achievement of performance objectives, such performance
objectives shall relate to at least one of the following
criteria, which may be determined solely by reference to our
performance or the performance of a subsidiary or an affiliate
(or any business unit thereof) or based on comparative
performance relative to other companies: (i) net income;
(ii) earnings before income taxes; (iii) earnings per
share; (iv) return on shareholders equity;
(v) expense management; (vi) profitability of an
identifiable business unit or product; (vii) revenue
growth; (viii) earnings growth; (ix) total shareholder
return; (x) cash flow; (xi) return on assets;
(xii) pretax operating income; (xiii) net economic
profit (operating earnings minus a charge for capital);
(xiv) customer satisfaction; (xv) provider
satisfaction; (xvi) employee satisfaction;
(xvii) strategic innovation; or (xviii) any
combination of the foregoing.
Other Stock-Based Awards. The Incentive Plan
also authorizes our Compensation Committee to grant other
stock-based awards to Eligible Recipients.
Dividends and Dividend Equivalents. Our
Compensation Committee may provide that any Award shall include
dividends or dividend equivalents, payable in cash or deemed
reinvested in our common stock.
Limitation on Awards. No Eligible Recipient
may be granted Awards covering more than 750,000 shares of
our common stock in respect of any two year period in which the
Incentive Plan is in effect (subject to adjustment as described
above).
Effect of Awards on Termination of
Employment. Our Compensation Committee generally
has broad discretion as to the specific terms and conditions of
each Award and any rules applicable thereto, including but not
limited to the effect thereon of the death, retirement or other
termination of employment of the Eligible Recipient.
Change of Control. All Awards vest in full
upon a Change of Control (as such term is defined in the
Incentive Plan) of the company.
Award Agreement. The terms of each Award are
to be evidenced by a written instrument delivered to the
Eligible Recipient.
Transferability. Awards under the Incentive
Plan may not be assigned or transferred except by will or the
laws of descent and distribution.
Amendment or Termination. Our board of
directors may amend, alter, suspend, discontinue or terminate
the Incentive Plan at any time, but
19
the amendment, alteration, suspension, discontinuation or
termination will not adversely affect any Awards then
outstanding under the Incentive Plan without the approval of the
affected holder. Any amendment of the Incentive Plan would also
be subject to stockholder approval in accordance with applicable
stock exchange requirements. Our Compensation Committee may
amend the term of the Award granted, retroactively or
prospectively, but no amendment may adversely affect any Award
without the holders consent. Unless previously terminated
by action of the board, no Award may be granted under the
Incentive Plan after the tenth anniversary of the date the
Incentive Plan was approved by the Board of Directors.
Certain Federal Income Tax Consequences. The
options described above are intended to comply with the
requirements of the Internal Revenue Code regarding the
deductibility of certain performance based compensation. Under
currently applicable federal income tax law, an Eligible
Recipient will receive no taxable income upon the grant of an
NSO or an ISO. When an Eligible Recipient exercises an NSO, the
excess of the fair market value of the shares on the date of
exercise over the exercise price paid will be ordinary income to
the Eligible Recipient and his or her employer generally will be
allowed a federal income tax deduction in the same amount. When
an Eligible Recipient exercises an ISO while employed or within
three months after termination of employment (one year for
disability), no income will be recognized upon exercise of the
ISO. However, the favorable regular tax treatment that applies
to an ISO doesnt apply for alternative minimum tax (AMT)
purposes. An Eligible Recipient who exercises an ISO will
generally recognize AMT income in the year of exercise in an
amount equal to the excess of the fair market value of the stock
on the exercise date over the exercise price (unless the stock
acquired through exercise of the ISO is disposed of in the same
tax year). If the Eligible Recipient holds shares acquired for
at least one year after exercise and two years after the grant
of the ISO, the excess of the amount realized upon disposition
of the shares over the exercise price paid is treated as
long-term capital gain for the Eligible Recipient and the
Eligible Recipients employer is not allowed a federal
income tax deduction. A sale or other exchange of the underlying
stock before the end of either of the required holding periods
will be a disqualifying disposition which will
generally result in the Eligible Recipient being taxed on the
gain derived from the exercise of an ISO as though it were an
NSO and the Eligible Recipients employer generally will be
allowed a federal income tax deduction in the same amount.
Special rules apply if the exercise price is paid in shares.
New Plan Benefits. The amount or type of
grants that will be allocated to or received by any person or
group of persons cannot be determined at this time.
The board of directors recommends that stockholders vote
FOR the approval of the amendments to the 2003
Equity Incentive Plan increasing the number of shares that can
be issued under the Plan.
20
Proposal 4:
Approval
of Appointment of CASMEDs Independent
Accountants
The Audit Committee of our board of directors has selected UHY
LLP as our independent registered public accounting firm for the
year ending December 31, 2009, and has directed that the
selection of independent accountants be submitted for
ratification by stockholders at the annual meeting. A
representative of UHY LLP is expected to be present at the
annual meeting and will have an opportunity to make a statement
if he or she desires and will be available to respond to
appropriate questions.
Stockholder ratification of the selection of UHY LLP as our
independent accountants is not required by our Bylaws or
otherwise. However, the Audit Committee is submitting the
selection of UHY LLP to the stockholders for ratification as a
matter of good corporate practice. If the stockholders fail to
ratify the selection, the Audit Committee will reconsider
whether or not to retain that firm. Even if the selection were
ratified, the Audit Committee in its discretion may direct the
appointment of a different independent accounting firm at any
time during the year if the Audit Committee determines that such
a change would be in the best interests of CASMED and its
stockholders.
Through March 2009, UHY LLP had a continuing relationship with
UHY Advisors, Inc. (Advisors). Under this
relationship UHY LLP leased auditing staff who were full time,
permanent employees of Advisors. UHY LLP partners provide
non-audit services through Advisors. UHY LLP has only a few full
time employees. Therefore, few, if any, audit services performed
were provided by permanent full-time employees of UHY LLP. UHY
LLP manages and supervises the audit services and audit staff,
and is exclusively responsible for the opinion rendered in
connection with its audit.
Audit
Fees
Aggregate fees billed by UHY LLP for professional services
rendered for the audit of our annual consolidated financial
statements included in the annual report on
Form 10-K
and the review of interim consolidated financial statements
included in quarterly reports on
Form 10-Q
and the review and audit of the application of new accounting
pronouncements and SEC releases were $154,820 and $149,900 for
the years ended December 31, 2008 and 2007, respectively.
The amount of the audit fees for the year ended
December 31, 2007 has been revised from that previously
reported to reflect actual billings.
Audit-Related
Fees
The aggregate fees billed by UHY LLP for audit related services
that are not disclosed under Audit Fees above for
the years ended December 31, 2008 and 2007 were $0 and
$6,200, respectively.
Tax
Fees
Aggregate fees billed by UHY LLP for professional services
rendered to us for permissible tax compliance, tax advice and
tax planning were $30,000 for the year ended December 31,
2007. UHY LLP did not provide tax services to CASMED during 2008.
All Other
Fees
UHY LLP did not provide any services in addition to those
described above during the years ended December 31, 2008
and 2007.
The board of directors recommends that stockholders vote FOR
the appointment of UHY LLP as the companys independent
accountants for 2009.
21
Additional
Information
Solicitation
of Proxies
In addition to the use of the mails, proxies may be solicited by
the directors, officers, and employees of the company without
additional compensation in person, or by telephone, facsimile,
email or otherwise. Arrangements may also be made with brokerage
firms and other custodians, nominees, and fiduciaries for the
forwarding of solicitation material to the beneficial owners of
CASMED common stock, and we will reimburse these brokers,
custodians, nominees, and fiduciaries for reasonable
out-of-pocket expenses incurred. The cost of solicitation will
be borne entirely by CASMED.
Other
Matters
Directions to the annual meeting can be obtained by making a
written or oral request to our Secretary,
c/o CAS
Medical Systems, Inc., 44 East Industrial Road, Branford,
Connecticut 06405 or by telephone
(203-488-6056).
Management knows of no other matters which may be presented for
consideration at the meeting. However, if any other matters
properly come before the meeting, it is the intention of the
individuals named in the enclosed proxy to vote in accordance
with their judgment.
By order of the board of directors.
Jeffery A. Baird
Secretary
22
Exhibit A
CAS
MEDICAL SYSTEMS, INC.
EMPLOYEE
STOCK PURCHASE PLAN
The CAS Medical Systems, Inc. Employee Stock Purchase Plan (the
Plan) is designed to provide Eligible Employees with
the opportunity to own common stock (Common Stock)
of CAS Medical Systems, Inc. (the Company) through a
payroll-deduction based employee stock purchase plan, thereby
stimulating Eligible Employees interest in the growth and
prosperity of the Company.
The Plan is intended to be a qualified employee stock purchase
plan under Section 423 of the Internal Revenue Code of
1986, as amended (the Code), or any successor
provision thereto, and the Plan shall be construed in accordance
with such purpose.
An Eligible Employee is any person (i) who is
an employee of the Company or a U.S. subsidiary of the
Company designated as a participating subsidiary
(each such entity being referred to as a Participating
Employer) by the Companys Compensation Committee
(the Committee) and (ii) who is customarily
employed for at least twenty (20) hours a week as of the
Initial Payroll Deduction Date (as defined below). An Eligible
Employee shall be eligible to purchase Common Stock under this
Plan in accordance with the terms of the Plan.
Any provision of this Plan to the contrary notwithstanding, no
otherwise Eligible Employee shall be granted a Purchase Right
under this Plan:
(a) if, immediately after the grant such Eligible Employee
would own shares
and/or hold
outstanding Purchase Rights to purchase stock possessing five
percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or any subsidiary of the
Company; or
(b) that permits the Eligible Employee to purchase more
than $25,000 worth of Common Stock (or such greater amount as
may be then permitted by Section 423, or any successor
provision, of the Code), based on the Fair Market Value of the
Shares determined at the time such Purchase Right is granted,
for each calendar year in which such Purchase Rights are
outstanding under all employee stock purchase plans of the
Company and its subsidiaries; or
(c) that permits the Eligible Employee to purchase more
than 1,500 shares during any Offering Period.
An Eligible Employee who elects to participate as provided in
Paragraph 4 shall be a referred to as a
Participant.
While the Plan is in effect, two Offering Periods shall commence
in each calendar year, unless otherwise determined by the
Committee. The Offering Periods shall consist of the six-month
periods commencing on each January 1 and July 1, except
that the first offering period shall, unless otherwise
determined by the Committee, commence on July 1, 2009 and
extend through December 31, 2009. The first day of the
Offering Period shall be known as the Offering Date.
For each Offering Period, the last business day of the term of
the Offering Period shall be the date of exercise (the
Purchase Date) unless the Committee determines
otherwise. For each Offering, the purchase price per share of
stock (the Purchase Price or Exercise
Price) will be the average of the high and low price of
the Common Stock on the Nasdaq Global Market or any other
established stock exchange on which the Common Stock is traded
(the Average Price) on the Purchase Date, less five
A-1
percent (5%) (the Discount). Notwithstanding the
foregoing, the Committee may determine in its discretion and in
advance of the commencement of the Offering Period that a
smaller Discount shall apply. In no event shall the Committee
determine a Purchase Price that is less than the lowest price
that employee stock purchase plans are permitted to establish
under Section 423 (or any successor provision) of the Code
nor shall a Purchase Right granted under this Plan be
exercisable for a period of time longer than that permitted
under Section 423 (or any successor provision) of the Code.
The Committee shall in its discretion determine the terms and
conditions under which each Offering shall be made and shall
authorize and determine in advance of the Offering the aggregate
number of shares of Common Stock that may be issued pursuant to
each Offering. The Committee shall determine the exact number of
shares of Common Stock utilized in each Offering and shall
report such information to the Treasurer or his or her delegate.
The terms of such Offering shall comply in all respects with
Section 423 of the Code, including the Purchase Price and
the duration of the exercise period for such Offering.
Notice of each Offering will be given to Eligible Employees with
full details as to the aggregate number of shares offered, the
Purchase Price per share for the Offering, the restrictions on
the maximum number of shares purchasable by the Participant with
respect to each Offering Period, the amount of payroll
deductions to be made, and any pro rata reduction required in
accordance with Paragraph 5.
Under the terms of this Plan, all Eligible Employees granted a
Purchase Right pursuant to an Offering shall have the same
rights and privileges with respect to such Purchase Right,
except that the number of shares of Common Stock that may be
purchased by any Eligible Employee will be based on his or her
total Payroll Deductions during the Offering Period.
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4.
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Payroll Deductions; Purchase of Common Stock
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An Eligible Employee may become a Participant in the Plan by
filing on or before the Offering Date of an Offering a completed
Stock Purchase form provided by the Company (i) authorizing
Payroll Deductions (as described herein) and
(ii) subscribing to purchase that number of shares of
Common Stock purchasable based on the total Payroll Deductions
deducted with respect to the Offering Period and the Purchase
Price determined in accordance with Paragraph 3. Any such
Stock Purchase form pursuant to this Paragraph 4 shall
remain in effect for subsequent Offerings unless such
Participant completes and files a new Stock Purchase form and
Payroll Deduction authorization, which shall be applied only to
future Offerings. A Participant may cancel his or her
participation in any Offering in accordance with
Paragraph 8.
(a) Eligible Employees may elect to authorize their
Participating Employer to make Payroll Deductions from
Compensation in terms of either whole percentage amounts or
whole dollar amounts (subject to any minimum percentage or
dollar amount per payroll period that the Committee shall
establish); provided, however, that no Payroll
Deduction for any Offering Period shall exceed ten percent (10%)
percent of a Participants Compensation during the period
that begins on the Offering Date and ends on the Purchase Date.
Compensation shall mean a Participants
base salary earnings for the Offering Period, except that, with
respect to Participants paid partially or entirely on
commission, Compensation shall mean such
Participants Average Benefit Base Rate of compensation for
the Offering Period. Average Benefit Base Rate shall
equal an amount, determined by taking the prior years year
regular earnings from January 1 through August 31 of such year,
plus commissions for the same period, divided by 8 and
multiplied by the number of months in the Offering Period.
(b) Unless the Committee shall specify otherwise,
deductions shall begin in the first pay period commencing after
the Offering Date (the Initial Payroll Deduction
Date). All Payroll Deductions may be used by the Company
for general corporate purposes. A separate bookkeeping account
(Book Account) shall be maintained by the Company
for each Participant, and the amount of each Participants
Payroll Deductions shall be credited to such account. Except as
provided in Paragraph 9,
A-2
no interest shall be paid on the balance of the Employees
Book Account. Payroll Deductions shall not be held in any
segregated account or trust fund and may be commingled with the
general assets of the Company and used for general corporate
purposes.
(c) Unless the Committee shall specify otherwise, each
Participant will be granted an allotment for the number of
shares of Common Stock which are purchasable, computed as the
aggregate Payroll Deduction designated by such Participant on
such Participants Stock Purchase form to be deducted
during the term of the Offering divided by the Purchase Price
(determined in accordance with Paragraph 3), subject to the
provisions of Paragraph 5 below. If such amount does not
result in a whole number of shares of Common Stock, the number
of shares will be decreased to the next lowest whole number.
(d) Unless an Employee exercises his right to cancel and
makes a request of the Committee prior to the Purchase Date to
withdraw his Book Account in cash, the amount of an
Employees Book Account shall automatically be used to
exercise his Purchase Right on the Purchase Date. The
Employees Purchase Right will be exercised, in purchases
of whole shares of Common Stock, to the extent of the amount in
the Employees Book Account; provided,
however, the Employee is not limited in the exercise of
his Purchase Right to the amount credited to his Book Account.
The Employee may supplement the amount of his Book Account to
exercise his Purchase Right (for the number of shares of Common
Stock that the Employee had elected to purchase during the
Offering Period pursuant to Paragraph 4) by paying
cash and/or
tendering Shares (if permitted) to the Plan Administrator.
(e) Any Payroll Deductions not applied to the purchase of
Shares on the Purchase Date (because not sufficient to purchase
whole Shares) shall remain in the Participants Book
Account for the purchase of shares of Common Stock under the
next Offering, unless such Participant withdraws from such next
Offering, or is not eligible to participate in such Offering
(including because of his or her premature disposition of Shares
acquired under the Plan under subparagraph (f) below), in
which case such amount shall be distributed in cash to the
Participant after the Purchase Date without interest. Any
Payroll Deductions not applied to the purchase of shares of
Common Stock by reason of the limitation on the maximum number
of Shares purchasable by an Employee on the Purchase Date shall
be promptly returned in cash to the Employee without interest.
(f) If a Participant Disposes of Shares acquired under this
Plan prior to having held such Shares for a twelve
(12) month period from the Purchase Date, then the
Participant shall be ineligible to purchase additional shares
under any Offering in effect as of the date of disposition, any
Payroll Deductions taken with respect to the Offering Period for
such Offering shall be returned in accordance subparagraph (e),
and the Participant shall further be ineligible to participate
in the purchase of Shares during the next succeeding Offering
Period.
In the event the number of shares for which subscriptions are
received exceeds the number of shares offered as determined
under Paragraph 3, the number of shares allotted to each
Participant will be proportionately reduced.
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6.
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Rights as a Stockholder
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A Participant will have none of the rights or privileges of a
stockholder of the Company until the full purchase price of such
Participants shares has been paid and such shares of
Common Stock have been issued to the Participant and recorded in
the books of the Company (or its transfer agent).
Unless a Participant cancels such Participants Purchase
Right as provided below, it will be exercised and become an
obligation to take the shares of Common Stock as of the Purchase
Date. Within a reasonable time after the Purchase Date, the
number of shares purchased by a Participant, determined as
provided in Paragraph 4, will be credited to such
Participant.
A-3
The shares will be issued in the name of the employee or, upon
such employees request, jointly in such employees
name and that of a family member as specified on such
employees Stock Purchase Registration form.
The Committee, in its discretion, may impose restrictions on the
transferability of shares of Common Stock acquired pursuant to
this Plan, and may cause to be placed on all stock certificates,
other evidences of ownership, legends or other indicators
setting forth any such restrictions on transferability
instructing the transfer agent to notify the Company of any
transfer of such shares, and may require that any shares
acquired pursuant to the Plan be held in the Participants
Book Accounts until the expiration of any restrictions. Such
restrictions, if any, shall apply uniformly to all Participants
with respect to any Offering.
Prior to the final Payroll Deduction to be made pursuant to any
Offering, a Participant may cancel all or any part of such
Participants right to purchase by filing a notice of
cancellation with the Company. Promptly after the Companys
receipt of such notice, the Participant will receive the Payroll
Deductions then credited to his or her Book Account, without
interest thereon. Rights to purchase which have been canceled
pursuant to this Paragraph may not be reinstated at a later
date. However, the Participant may participate with respect to
future Offerings, provided he or she remains an Eligible
Employee.
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9.
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Termination of Employment
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If a Participant (i) dies, (ii) retires on or after
reaching age 55 with 10 years of service, or
(iii) terminates due to disability (as defined in the
Companys long-term disability plan) prior to such
Participants final Payroll Deduction for an Offering, such
Participant or such Participants legal representative may,
within a period of three (3) months following the
Participants death or retirement either:
(a) cancel such Participants Purchase Right and
request payment in cash of the entire amount which has been
deducted under the Plan plus interest as computed below, or
(b) receive the number of full shares of Common Stock which
the Payroll Deductions will purchase, at the Purchase Price, and
receive the balance, if any, in cash.
Notice of choice between (a) and (b) above shall be
given to the Company in writing and if such notice is not
received within the prescribed period, the Company shall act in
accordance with (a) above.
If a Participants employment is otherwise terminated, such
Participants only right will be to receive in cash the
amount which has been deducted under the Plan, together with
interest, calculated at the average passbook rate (or such other
rate as the Committee shall determine), on the average balance
of Payroll Deductions credited to such Participants Book
Account during the during the Offering Period up to the
Participants termination date.
A Participant who remains an employee, but whose name is
temporarily taken off the payroll because of leave of absence,
temporary disability, temporary layoff, military service or for
service with another organization to the mutual benefit of the
Company and the employee, may cancel such Participants
right to purchase and receive the amounts accumulated to such
Participants credit, or make special arrangements to
continue payments, or to suspend them. In the event that the
Participants Payroll Deductions are suspended pursuant to
this paragraph, but the Participant nevertheless wishes to
exercise his Purchase Right in full, then payment of the
Purchase Price must be made not later than the Purchase Date.
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10.
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Designation of Beneficiary
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(a) A Participant may file a written designation of a
beneficiary who is to receive any shares of Common Stock
and/or cash,
if any from the Participants Book Account under the Plan
in the event of
A-4
such Participants death subsequent to the end of an
Offering but prior to delivery to the Participant of such shares
of Common Stock or cash. In addition, a Participant may file a
written designation of a beneficiary who is to receive any cash
from the Participants Book Account under the Plan in the
event of such Participants death during an Offering.
(b) The Participant may change such beneficiary designation
at any time by written notice to the Committee. In the event of
the death of the Participant and in the absence of a validly
designated, surviving, beneficiary under the Plan, the Company
shall deliver such shares of Common Stock
and/or cash
to the executor or administrator of the estate of the
Participant, or if none has been appointed, then to the
surviving spouse of the Participant or, if none, to such other
person as the Company may designate.
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11.
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Rights not Transferable
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No right under this Plan, other than stock issued pursuant to
the terms of the Plan not otherwise subject to restrictions on
transfer (Released Stock), shall be assignable,
alienable, saleable, or transferable by a Participant other than
by will or by the laws of descent and distribution. Each right
under this Plan shall be exercisable during the
Participants lifetime only by the Participant, or, if
permissible under applicable law, by the Participants
guardian or legal representative. No right hereunder (other than
Released Stock) may be pledged, alienated, attached, or
otherwise encumbered and any purported pledge, alienation,
attachment, or encumbrance thereof shall be void and
unenforceable against the Company or any affiliate.
The Plan shall be administered by the Compensation Committee
(the Committee) designated by the Board of Directors
of the Company to administer the Plan, which committee shall be
composed of persons then serving as Directors of the Company.
The Committee shall have full authority to:
(i) determine when and how Purchase Rights shall be granted
and the provisions of each Offering of such Purchase Rights;
(ii) designate from time to time which subsidiaries of the
Company shall be eligible to participate in the Plan;
(iii) construe and interpret the Plan and Purchase Rights
granted under the Plan;
(iv) establish rules for the administration of the Plan and
make administrative decisions regarding the Plan; and
(v) remedy any defect, or omission or inconsistency in the
Plan in a manner and to the extent necessary or expedient to
make the Plan fully effective.
All designations, determinations, interpretations, and other
decisions made by the Committee under or with respect to the
Plan shall be final, conclusive, and binding upon all persons,
including the Company, any affiliate, any Participant, any
holder or beneficiary of any right of participation, and any
employee of the Company or of any affiliate.
The Committee may delegate any one or more of its administrative
functions (other than those set forth in (i) and
(ii) above) to any individual(s) of its choice, in which
case the use of the term Committee when used in
reference to such functions under the Plan shall refer to such
delegatee.
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13.
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Adjustment Upon Changes in Securities; Corporate
Transactions
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(a) In the event a stock dividend, extraordinary cash
dividend, spin-off,
split-up,
combination, exchange of shares, merger, consolidation,
reorganization, recapitalization, or other similar corporate
event affects the Common Stock such that an adjustment is
required in order to preserve the benefits or potential benefits
intended to be made available under the Plan, then the Committee
shall, in its sole discretion, and in such manner as the
Committee may deem equitable, adjust the maximum number of
shares available under the Plan, the number and kind of shares
subject to outstanding rights
A-5
to purchase, and the terms relating to the purchase price with
respect to such outstanding rights and take such other actions
as the Committee, in its opinion, deems appropriate under the
circumstances.
(b) In the event of a Corporate Transaction, then
(i) any surviving or acquiring entity may continue or
assume the Purchase Rights outstanding under the Plan or may
substitute similar rights (including a right to acquire the same
consideration paid to stockholders in the Corporate Transaction)
for those outstanding under the Plan, or (ii) if any
surviving or acquiring entity does not assume such Purchase
Rights or substitute similar rights for Purchase Rights
outstanding under the Plan, then the Participants
accumulated Payroll Deductions shall be used to purchase shares
of Common Stock immediately prior to the Corporate Transaction
under the then ongoing Offering, and the Participants
Purchase Rights under the ongoing Offering shall terminate
immediately after such purchase.
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14.
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Amendment or Termination
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The Board of Directors of the Company may, from time to time
amend, suspend or discontinue this Plan for the purpose of
meeting any changes in legal requirements or for any other
purpose permitted by law; provided however that shareholder
approval will be required for any amendment that
(i) increases the number of shares of Common Stock that can
be issued under the Plan (except for any adjustment authorized
in Paragraph 13(a)), or (ii) changes the corporations
whose employees may be offered Purchase Rights under the Plan
(except for changes authorized in Paragraph 2(i)). The
Committee may also amend or alter the Plan from time to time in
a manner not inconsistent with the Boards power to amend,
suspend or discontinue the Plan.
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15.
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Shares of Common Stock Subject to the Plan; Shareholder
Approval
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(a) The number of shares of Common Stock that may be
purchased through the exercise of Purchase Rights under the Plan
shall not exceed one hundred fifty-thousand (150,000) shares.
The shares subject to purchase under the Plan may consist, in
whole or in part, of authorized but unissued shares, not
reserved for any other purpose, or shares acquired by the Plan
Administrator in the market. If any Purchase Right or portion
thereof terminates for any reason without being exercised, then
the shares not purchased under such Purchase Right shall again
become available for issuance under the Plan.
(b) The Plan will be submitted for the approval of the
Companys shareholders within twelve (12) months
before or after the Effective Date. No Purchase Rights may be
exercised prior to such shareholder approval. If Company
shareholders do not grant such approval, this Plan shall be
rendered void and without effect and any Payroll Deductions
collected from Participants shall be refunded.
Whenever used herein, the following terms shall have the
respective meanings set forth below:
Board means the Board of Directors of the
Company. Any power reserved to the Board hereunder may be
exercised by the Committee or by any other duly authorized
committee of the Board that the Board may designate from time to
time.
Committee means the Compensation Committee,
or a successor committee, appointed by the Board in accordance
with Paragraph 12.
Company means CAS Medical Systems, Inc. and
any successor thereto.
Corporate Transaction means the occurrence,
in a singe transaction or in a series of related transactions of
any one or more of the following events:
(i) a sale, lease, license or other disposition of all or
substantially all of the assets of the Company;
(ii) a sale or other disposition of more than 50% of the
outstanding securities of the Company;
A-6
(iii) a merger, consolidation or similar transaction
following which the Company is the surviving corporation, but
the shares of Common Stock outstanding immediately preceding
such transaction are converted or exchanged by virtue of the
merger, consolidation or similar transaction into other
property, whether in the form of cash, securities, or otherwise;
or
(iv) a merger, consolidation or similar transaction
following which the Company is not the surviving corporation.
Disposes means, for purposes of
Paragraph 4(f), any sale or disposition of Shares or the
withdrawal of Shares from the Book Account maintained for a
Participant by the Plan Administrator.
Effective Date means July 1, 2009.
Fair Market Value means, on any date, the
average of the high and the low price of a share of Common Stock
as reported on the Nasdaq Global Market, or any other
established stock exchange on which the Common Stock is traded.
Offering means the grant to Eligible
Employees of Purchase Rights to purchase shares of Common Stock
under the Plan.
Offering Date means the date selected by the
Committee for an Offering to commence, which unless otherwise
specified by the Committee shall be January 1 and
July 1 of each year. The Offering Date shall be the date on
which the Purchase Right is granted in accordance with Treasury
Regulation Section 1.421-7(c)(1).
Plan Administrator means the Committee,
unless the Committee has delegated the particular administrative
function to another person in accordance with Paragraph 12,
in which case Plan Administrator shall refer to that
person as regards that particular function.
Purchase Date means the date on which
Purchase Rights granted under the Plan shall be exercised and as
of which purchases of shares of Common Stock shall be carried
out in accordance with such Offering.
Purchase Right means a right to purchase
shares of Common Stock granted pursuant to the Plan.
Dated as of April 3, 2009
A-7
Exhibit B
CAS
MEDICAL SYSTEMS, INC. 2003 EQUITY INCENTIVE PLAN
Section 1. Purpose.
The purposes of this CAS Medical Systems, Inc. 2003 Equity
Incentive Plan (the Plan) are (1) to
make available to key employees and directors certain
compensatory arrangements related to the growth in value of the
common stock of the Company so as to generate an increased
incentive to contribute to the Companys future financial
success and prosperity, (2) to enhance the ability of the
Company and its Affiliates to attract and retain exceptionally
qualified individuals whose efforts can affect the financial
growth and profitability of the Company, and (3) to align
generally the interests of key employees and directors of the
Company and its Affiliates with the interests of the
Companys stockholders.
Section 2. Definitions.
As used in the Plan, the following terms shall have the meanings
set forth below:
(a) Affiliate shall mean (i) any
entity that, directly or through one or more intermediaries, is
controlled by the Company or (ii) any entity in which the
Company has a significant equity interest, as determined by the
Committee.
(b) Award shall mean any Option,
Restricted Stock Award, Restricted Stock Unit, Dividend
Equivalent, Other Stock-Based Award, Performance Award or
Substitute Award, granted under the Plan.
(c) Award Agreement shall mean any
written agreement, contract, or other instrument or document
evidencing any Award granted under the Plan.
(d) Board of Directors shall mean the
Board of Directors of the Company as it may be composed from
time to time.
(e) Code shall mean the Internal Revenue
Code of 1986, as amended from time to time, or any successor
code thereto.
(f) Committee shall mean the Board of
Directors, excluding any director who is not a
Non-Employee Director within the meaning of
Rule 16b-3,
or any such other committee designated by the Board of Directors
to administer the Plan, which committee shall be composed of not
less than the minimum number of members of the Board of
Directors from time to time required by
Rule 16b-3
or any applicable law, each of whom is a Non-Employee Director
within the meaning of
Rule 16b-3.
(g) Company shall mean CAS Medical
Systems, Inc., or any successor thereto.
(h) Company Service shall mean any
service with the Company or any Affiliate in which the Company
have at least a 51% ownership interest.
(i) Covered Award means an Award, other
than an Option or other Award with an exercise price per Share
not less than the Fair Market Value of a Share on the date of
grant of such Award, to a Covered Employee, if it is designated
as such by the Committee at the time it is granted. Covered
Awards are subject to the provisions of Section 13 of this
Plan.
(j) Covered Employees means Participants
who are designated by the Committee prior to the grant of an
Award who are, or are expected to be at the time taxable income
will be realized with respect to the Award, covered
employees within the meaning of Section 162(m).
(k) Dividend Equivalent shall mean any
right granted under Section 6(c) of the Plan.
B-1
(l) Effective Date shall mean the date
that the Plan was approved by the Board of Directors of the
Company.
(m) Employee shall mean any employee or
employee director of the Company or of any Affiliate.
(n) Fair Market Value shall mean, with
respect to any property (including, without limitation, any
Shares or other securities), the fair market value of such
property determined by such methods, or procedures as shall be
established from time to time by the Committee.
(o) Incentive Stock Option or
ISO shall mean an option granted under
Section 6(a) of the Plan that is intended to meet the
requirements of Section 422 of the Code, or any successor
provision thereto.
(p) Non-Qualified Stock Option shall
mean an option granted under Section 6(a) of the Plan that
is not intended to be an Incentive Stock Option.
(q) Option shall mean an Incentive Stock
Option or a Non-Qualified Stock Option.
(r) Other Stock-Based Award shall mean
any Award granted under Section 6(d) of the Plan.
(s) Participant shall mean an Employee
or member of the Board of Directors who is granted an Award
under the Plan.
(t) Performance Award shall mean any
Award granted hereunder that complies with Section 6(e)(ii)
of the Plan.
(u) Performance Goals means one or more
objective performance goals, established by the Committee at the
time an Award is granted, and based upon the attainment of
targets for one or any combination of the following criteria,
which may be determined solely by reference to the
Companys performance or the performance of a subsidiary or
an Affiliate (or any business unit thereof) or based on
comparative performance relative to other companies:
(i) net income; (ii) earnings before income taxes;
(iii) earnings per share; (iv) return on
stockholders equity; (v) expense management;
(vi) profitability of an identifiable business unit or
product; (vii) revenue growth; (viii) earnings growth;
(ix) total stockholder return; (x) cash flow;
(xi) return on assets; (xii) pre-tax operating income;
(xiii) net economic profit (operating earnings minus a
charge for capital); (xiv) customer satisfaction;
(xv) provider satisfaction; (xvi) employee
satisfaction; (xvii) strategic innovation; or
(xviii) any combination of the foregoing. Performance Goals
shall be set by the Committee within the time period prescribed
by Section 162(m).
(v) Person shall mean any individual,
corporation, partnership, association, joint-stock company,
trust, unincorporated organization, or government or political
subdivision thereof.
(w) Released Securities shall mean
securities that were Restricted Securities with respect to which
all applicable restrictions have expired, lapsed, or been waived.
(x) Restricted Securities shall mean
Awards of Restricted Stock or other Awards under which issued
and outstanding Shares are held subject to certain restrictions.
(y) Restricted Stock shall mean any
Share granted under Section 6(b) of the Plan.
(z) Restricted Stock Unit shall mean any
right granted under Section 6(b) of the Plan that is
denominated in Shares.
(aa) Rule 16b-3
shall mean
Rule 16b-3
promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934 as amended, or any successor
rule and the regulation thereto.
(bb) Section 162(m) means
Section 162(m) of the Code or any successor thereto, and
the Treasury Regulations thereunder.
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(cc) Share or Shares
shall mean share(s) of the common stock of the Company, and
such other securities or property as may become the subject of
Awards pursuant to the adjustment provisions of
Section 4(c).
(dd) Substitute Award shall mean an
Award granted in assumption of, or in substitution for, an
outstanding award previously granted by a company acquired by
the Company or with which the Company combines.
Section 3. Administration.
(a) The Plan shall be administered by the Committee.
Subject to the terms of the Plan and applicable law, the
Committee shall have full power and authority to designate
Participants and:
(i) determine the type or types of Awards to be granted to
each Participant under the Plan;
(ii) determine the number of Shares to be covered by (or
with respect to which payments, rights, or other matters are to
be calculated in connection with) Awards;
(iii) determine the terms and conditions of any Award;
(iv) determine whether, to what extent, and under what
circumstances Awards may be settled or exercised in cash,
Shares, other securities, other Awards, or other property, or to
what extent, and under what circumstances Awards may be
canceled, forfeited, or suspended, and the method or methods by
which Awards may be settled, exercised, canceled, forfeited, or
suspended;
(v) determine whether, to what extent, and under what
circumstances cash, Shares, other securities, other Awards,
other property, and other amounts payable with respect to an
Award under the Plan shall be deferred either automatically or
at the election of the holder thereof or of the Committee;
(vi) interpret and administer the Plan and any instrument
or agreement relating to the Plan, or any Award made under the
Plan, including any Award Agreement;
(vii) establish, amend, suspend, or reconcile such rules
and regulations and appoint such agents as it shall deem
appropriate for the proper administration of the Plan; and
(viii) make any other determination and take any other
action that the Committee deems necessary or desirable for the
administration of the Plan.
(b) Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations, and other
decisions under or with respect to the Plan, any Award, or any
Award Agreement, shall be within the sole discretion of the
Committee, may be made at any time, and shall be final,
conclusive, and binding upon all Persons, including the Company,
any Affiliate, any Participant, any holder or beneficiary of any
Award, and any employee of the Company or of any Affiliate.
(c) The Committee may delegate to one or more executive
officers of the Company or to a committee of executive officers
of the Company the authority to grant Awards to Employees who
are not officers or directors of the Company and to amend,
modify, cancel or suspend Awards to such employees, subject to
Sections 7 and 9.
Section 4. Shares
Available For Awards.
(a) Maximum Shares Available. The
maximum number of Shares that may be issued to Participants
pursuant to Awards under the Plan shall be 1,250,000 Shares
(the Plan Maximum), subject to adjustment as
provided in Section 4(c) below. Only 500,000 Shares
may be issued pursuant to Awards of Restricted Stock and
Restricted Stock Units under Section 6(b) of the Plan.
Pursuant to any Awards, the Company may in its discretion issue
treasury Shares or authorized but previously
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unissued Shares pursuant to Awards hereunder. For the purpose of
accounting for Shares available for Awards under the Plan, the
following shall apply:
(i) Only Shares relating to Awards actually issued or
granted hereunder shall be counted against the Plan Maximum.
Shares corresponding to Awards that by their terms expired, or
that are forfeited, canceled or surrendered to the Company
without full consideration paid therefor shall not be counted
against the Plan Maximum.
(ii) Shares that are forfeited by a Participant after
issuance, or that are reacquired by the Company after issuance
without full consideration paid therefor, shall be deemed to
have never been issued under the Plan and accordingly shall not
be counted against the Plan Maximum.
(iii) Awards not denominated in Shares shall be counted
against the Plan Maximum in such amount and at such time as the
Committee shall determine under procedures adopted by the
Committee consistent with the purposes of the Plan.
(iv) Substitute Awards shall not be counted against the
Plan Maximum, and clauses (i) and (ii) of this Section
shall not apply to such Awards.
(v) The maximum number of Shares that may be the subject of
Awards made to a single Participant in any two year period shall
be 750,000.
(vi) With respect to any performance period no Participant
may be granted Awards of incentive stock or incentive units that
vest upon the achievement of performance objectives in respect
of more than 750,000 Shares of common stock or, if such
Awards are settled in cash, the fair market value thereof
determined at the time of payment, each subject to adjustment as
provided in Section 4(c) below.
(b) Shares Available for ISOs. The
maximum number of Shares for which ISOs may be granted under the
Plan shall not exceed the Plan Maximum as defined in
Section 4(a) above, subject to adjustment as provided in
Section 4(c) below.
(c) Adjustments to Avoid
Dilution. Notwithstanding paragraphs
(a) and (b) above, in the event of a stock or
extraordinary cash dividend,
split-up or
combination of Shares, merger, consolidation, reorganization,
recapitalization, or other change in the corporate structure or
capitalization affecting the outstanding common stock of the
Company, such that an adjustment is determined by the Committee
to be appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available
under the Plan or any Award, then the Committee may make
appropriate adjustments to (i) the number or kind of Shares
available for the future granting of Awards hereunder,
(ii) the number and type of Shares subject to outstanding
Awards, and (iii) the grant, purchase, or exercise price
with respect to any Award; or if it deems such action
appropriate, the Committee may make provision for a cash payment
to the holder of an outstanding Award; provided, however,
that with respect to any ISO no such adjustment shall be
authorized to the extent that such would cause the ISO to
violate Code Section 422 or any successor provision
thereto. The determination of the Committee as to the
adjustments or payments, if any, to be made shall be conclusive.
(d) Other Plans. Shares issued
under other plans of the Company shall not be counted against
the Plan Maximum under the Plan.
Section 5. Eligibility.
Any director of the Company or any Employee shall be eligible to
be designated a Participant.
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Section 6. Awards.
(a) Options. The Committee is
hereby authorized to grant Options to Participants with the
following terms and conditions and with such additional terms
and conditions, not inconsistent with the provisions of the
Plan, as the Committee shall determine:
(i) Exercise Price. The exercise price
per Share under an Option shall be determined by the Committee;
provided, however, that except in the case of Substitute Awards,
no Option granted hereunder may have an exercise price of less
than 100% of Fair Market Value of a Share on the date of grant.
(ii) Times and Method of Exercise. The
Committee shall determine the time or times at which an Option
may be exercised in whole or in part; in no event, however,
shall the period for exercising an Option extend more than
10 years from the date of grant. The Committee shall also
determine the method or methods by which Options may be
exercised, and the form or forms (including without limitation,
cash, Shares, other Awards, or other property, or any
combination thereof, having a Fair Market Value on the exercise
date equal to the relevant exercise price), in which payment of
the exercise price with respect thereto may be made or deemed to
have been made.
(iii) Incentive Stock Options. The terms
of any Incentive Stock Option granted under the Plan shall
comply in all respects with the provisions of Section 422
of the Code, or any successor provision thereto, and any
regulations promulgated thereunder.
(iv) Termination. In the event that a Participant
terminates employment or director status or becomes disabled,
Options granted hereunder shall be exercisable only as specified
below:
(A) Disability or Death. Except as
otherwise provided in an employment agreement with a Participant
or as the Committee may otherwise provide, if a Participant
becomes disabled or dies, any outstanding Option granted to such
a Participant, whether or not full or partial vesting has
occurred with respect to such Option at the time of the
disability or death, shall be exercisable during the ten
(10) year period beginning on the date of grant (or during
such shorter period if the original term is less than ten
(10) years) even though the disability or death occurs
prior to the last day of such option term. Any vesting
requirements under the Option shall be deemed to be satisfied as
of the date of disability or death.
(B) Termination for Reasons Other Than Death or
Disability. Except as otherwise provided in an
employment agreement with a Participant or as the Committee may
otherwise provide, if a Participant terminates employment or
director status for reasons other than death or disability, any
vested, unexercised portion of an Option that is at least
partially vested at the time of the termination shall be
forfeited in its entirety if not exercised by the Participant
within three (3) months of the date of termination of
employment or director status, unless the Committee has in its
sole discretion established an additional exercise period (but
in any case not longer than the original option term). Any
portion of such partially vested Option that is not vested at
the time of termination shall be forfeited unless the Committee
has in its sole discretion established that a Participant may
continue to satisfy the vesting requirements beyond the date of
his or her termination of employment or director status. Except
as otherwise provided in an employment agreement with a
Participant, any outstanding Option granted to a Participant
terminating employment or director status other than for death
or disability, for which no vesting has occurred at the time of
the termination shall be forfeited on the date of termination
and the Committee shall have no discretion to extend the
exercise period of such Option.
(C) Sale of Business. Except as
otherwise provided in an employment agreement with a Participant
or as the Committee may otherwise provide, in the event the
business unit, (defined as a division,
subsidiary, unit or other delineation that the Committee in its
sole discretion may determine) for which the Participant
performs substantially all of his or her
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services is assigned, sold, outsourced or otherwise transferred,
including an asset, stock or joint venture transaction, to an
unrelated third party such that after such transaction the
Company owns or controls directly or indirectly less than 51% of
the business unit, the affected Participant shall become 100%
vested in all outstanding Options as of the date of the closing
of such transaction, whether or not fully or partially vested,
and such Participant shall be entitled to exercise such Options
during the three (3) months following the closing of such
transaction, unless the Committee has in its sole discretion
established an additional exercise period (but in any case not
longer than the original option term). Except as otherwise
provided in an employment agreement with a Participant or as the
Committee may otherwise provide, all Options which are
unexercised at the end of such three (3) months shall be
automatically forfeited.
(D) Conditions Imposed on Unvested
Options. Notwithstanding the foregoing provisions
describing the additional exercise periods for Options upon
termination of employment or director status, the Committee may
in its sole discretion condition the right of a Participant to
exercise any portion of a partially vested Option for which the
Committee has established an additional exercise period on the
Participants agreement to adhere to such conditions and
stipulations which the Committee may impose, including, but not
limited to, restrictions on the solicitation of employees or
independent contractors, disclosure of confidential information,
covenants not to compete, refraining from denigrating through
adverse or disparaging communication, written or oral, whether
or not true, the operations, business, management, products or
services of the Company or its current or former employees and
directors, including without limitation, the expression of
personal views, opinions or judgements. The unvested Options of
any Participant for whom the Committee has given an additional
exercise period subject to such conditions subsequent as set
forth in this Section 6(a)(iv)(D) shall be forfeited
immediately upon a breach of such conditions.
(E) Forfeiture for Gross
Misconduct. Notwithstanding anything to the
contrary herein, any Participant who engages in Gross
Misconduct, as defined herein, (including any
Participant who may otherwise qualify for disability status)
shall forfeit all outstanding, unexercised Options, whether
vested or unvested, as of the date such Gross Misconduct occurs.
For purposes of the Plan, Gross Misconduct shall be defined to
mean (i) the Participants conviction of a felony (or
crime of similar magnitude in
non-U.S. jurisdictions)
in connection with the performance or nonperformance of the
Participants duties or (ii) the Participants
willful act or failure to act in a way that results in material
injury to the business or reputation of the Company or employees
of the Company.
(F) Vesting. For purposes of the Plan,
any reference to the vesting of an Option
shall mean any events or conditions which, if satisfied, entitle
a Participant to exercise an Option with respect to all or a
portion of the shares covered by the Option. The complete
vesting of an Option shall be subject to Section 6(a)(iv)(E)
hereof. Such vesting events or conditions may be set forth in
the Notice of Grant or otherwise be determined by the Committee.
(b) Restricted Stock and Restricted Stock
Units. The Committee is hereby authorized to
grant Awards of Restricted Stock and or Restricted Stock Units
to Participants with the following terms and conditions.
(i) Restrictions. Shares of Restricted
Stock and Restricted Stock Units shall be subject to such
restrictions as the Committee may impose (including, without
limitation, continued employment or director service over a
specified period or the attainment of specified Performance
Objectives (as defined in Section 6(e)(ii)(B)) or
Performance Goals, in accordance with Section 13), which
restrictions may lapse separately or concurrently at such time
or times, in such installments or otherwise, as the Committee
may deem appropriate.
(ii) Registration. Any Restricted Stock
granted under the Plan may be evidenced in such manner as the
Committee may deem appropriate including, without limitation,
book-entry registration or
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issuance of a stock certificate or certificates. In the event
any stock certificate is issued in respect of Shares of
Restricted Stock granted under the Plan, such certificate shall
be registered in the name of the Participant and shall bear an
appropriate legend referring to the terms, conditions, and
restrictions applicable to such Restricted Stock.
(iii) Termination. Except as otherwise
provided in an employment agreement with a Participant or as the
Committee may otherwise provide, upon termination of employment
or director service of a Participant for any reason during the
applicable restriction period, all Restricted Stock and all
Restricted Stock Units, or portion thereof, still subject to
restriction shall be forfeited and reacquired by the Company;
provided, however, that in the event termination of employment
or director service is due to the death or disability of the
Participant, the Committee may waive in whole or in part any or
all remaining restrictions with respect to Restricted Stock or
Restricted Stock Units.
(c) Dividend Equivalents. The
Committee may grant to Participants Dividend Equivalents under
which the holders thereof shall be entitled to receive payments
equivalent to dividends with respect to a number of Shares
determined by the Committee, and the Committee may provide that
such amounts shall be deemed to have been reinvested in
additional Shares or otherwise reinvested. Subject to the terms
of the Plan, such Awards may have such terms and conditions as
the Committee shall determine.
(i) Termination. Except as otherwise
provided in an employment agreement with a Participant or as the
Committee may otherwise provide, upon termination of the
Participants employment or director service for any reason
during the term of a Dividend Equivalent, the right of a
Participant to payment under a Dividend Equivalent shall
terminate as of the date of termination; provided, however, that
in the event the Participants employment or director
service terminates because of the death or disability of a
Participant the Committee may determine that such right
terminates at a later date.
(d) Other Stock-Based Awards. The
Committee is hereby authorized to grant to Participants such
other Awards that are denominated or payable in, valued in whole
or in part by reference to, or otherwise based on or related to
Shares (including without limitation securities convertible into
Shares), as are deemed by the Committee to be consistent with
the purposes of the Plan; provided, however, that such grants
must comply with
Rule 16b-3
and applicable law.
(i) Consideration. If applicable, Shares
or other securities delivered pursuant to a purchase right
granted under this Section 6(d) shall be purchased for such
consideration, which may be paid by such method or methods and
in such form or forms, including without limitation cash,
Shares, other securities, other Awards or other property, or any
combination thereof, as the Committee shall determine; provided,
however, that except in the case of Substitute Awards, no
derivative security (as defined in
Rule 16b-3)
awarded hereunder may have an exercise price of less than 100%
of Fair Market Value of a Share on the date of grant.
(ii) Termination. In granting any
Stock-Based Award pursuant to this Section 6(d) the
Committee shall also determine what effect the termination of
employment or director service of the Participant holding such
Award shall have on the rights of the Participant pursuant to
the Award.
(e) General. The following general
provisions shall apply to all Awards granted hereunder, subject
to the terms of other sections of this Plan or any Award
Agreement.
(i) Award Agreements. Each Award granted
under this Plan shall be evidenced by an Award Agreement which
shall specify the relevant material terms and conditions of the
Award and which shall be signed by the Participant receiving
such Award, if so indicated by the Award.
(ii) Performance Awards. Subject to the
other terms of this Plan, the payment, release or exercisability
of any Award, in whole or in part, may be conditioned upon the
achievement of such Performance Objectives (as defined below)
during such performance periods as are specified by the
Committee. Hereinafter in this Section 6(e)(ii) the terms
payment, pay, and paid also refer to the release or
exercisability of a Performance Award, as the case may require.
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(A) Terms. The Committee shall establish
the terms and conditions of any Performance Award including the
Performance Objectives (as defined below) to be achieved during
any performance period, the length of any performance period,
any event the occurrence of which will entitle the holder to
payment, and the amount of any Performance Award granted.
(B) Performance Objectives. The Committee
shall establish Performance Objectives the
achievement of which shall entitle the Participant to payment
under a Performance Award. Performance Objectives may be any
measure of the business performance of the Company, or any of
its divisions or Affiliates, including but not limited to the
growth in book or market value of capital stock, the increase in
the earnings in total or per share, or any other financial or
non-financial indicator specified by the Committee.
(C) Fulfillment of Conditions and
Payment. The Committee shall determine in a
timely manner whether all or part of the conditions to payment
of a Performance Award have been fulfilled and, if so, the
amount, if any, of the payment to which the Participant is
entitled.
(iii) Rule 16b-3
Six Month Limitations. To the extent required in
order to render the grant of an Award, the exercise of an Award
or any derivative security, or the sale of securities
corresponding to an Award, an exempt transaction under
Section 16(b) of the Securities Exchange Act of 1934 only,
any equity security granted under the Plan to a Participant must
be held by such Participant for at least six months from the
date of grant, or in the case of a derivative security granted
pursuant to the Plan to a Participant, at least six months must
elapse from the date of acquisition of the derivative security
to the date of disposition of the derivative security (other
than upon exercise or conversion) or its underlying equity
security. Terms used in the preceding sentence shall, for the
purposes of such sentence only, have the meanings if any,
assigned or attributed to them under
Rule 16b-3.
(iv) Limits on Transfer of Awards. No
Award (other than Released Securities), and no right under any
such Award shall be assignable, alienable, pledgeable,
attachable, encumberable, saleable, or transferable by a
Participant other than by will or by the laws of descent and
distribution or pursuant to a domestic relations order (or, in
the case of Awards that are forfeited or canceled, to the
Company); and any purported assignment, sale, transfer, thereof
shall be void and unenforceable against the Company or
Affiliate. If the Committee so indicates in writing to a
Participant, he or she may designate one or more beneficiaries
who may exercise the rights of the Participant and receive any
property distributable with respect to any Award upon the death
of the Participant.
(v) Exercisability. Each Award, and each
right under any Award, shall be exercisable, during the
Participants lifetime only by the Participant or, if
permissible under applicable law, by the Participants
guardian or legal representative or by a transferee receiving
such Award pursuant to a domestic relations order referred to
above.
(vi) No Cash Consideration for
Awards. Awards may be granted for no cash
consideration, or for such minimal cash consideration as the
Committee may specify, or as may be required by applicable law.
(vii) Awards May Be Granted Separately or
Together. Awards may, in the discretion of the
Committee, be granted either alone or in addition to, in tandem
with, or in substitution for any other Award or any award
granted under any other plan of the Company or any Affiliate.
Awards granted in addition to or in tandem with other Awards or
in addition to or in tandem with awards granted under any other
plan of the Company or any Affiliate may be granted either at
the same time as or at a different time from the grant of such
other Awards or awards. Performance Awards and Awards which are
not Performance Awards may be granted to the same Participant.
(viii) Forms of Payment Under
Awards. Subject to the terms of the Plan and of
any applicable Award Agreement, payments or transfers to be made
by the Company or an Affiliate upon the grant, exercise, or
payment of an Award may be made in such form or forms as the
Committee shall determine, including, without limitation, cash,
Shares, other securities, other Awards, or other property, or
any combination thereof, and may be made in a single payment or
transfer, in installments, or on a
B-8
deferred basis, in each case in accordance with rules and
procedures established by the Committee. Such rules and
procedures may include, without limitation, provisions for the
payment or crediting of reasonable interest on installment or
deferred payments or the grant or crediting of Dividend
Equivalents in respect of installment or deferred payments.
(ix) Term of Awards. Except as provided
in Sections 6(a)(ii) or 6(a)(iv), the term of each Award
shall be for such period as may be determined by the Committee.
(x) Share Certificates. All certificates
for Shares or other securities delivered under the Plan pursuant
to any Award or the exercise thereof shall be subject to such
stop transfer orders and other restrictions as the Committee may
deem advisable under the Plan or the rules, regulations, and
other requirements of the Securities and Exchange Commission,
any stock exchange upon which such Shares or other securities
are then listed, and any applicable Federal or state securities
laws, and the Committee may cause a legend or legends to be put
on any such certificates to make appropriate reference to such
restrictions. Unrestricted certificates representing Shares,
evidenced in such manner as the Committee shall deem
appropriate, shall be delivered to the holder of Restricted
Stock, Restricted Stock Units or any other relevant Award
promptly after such related Shares shall become Released
Securities.
Section 7. Amendment
and Termination of Awards.
Except to the extent prohibited by applicable law and unless
otherwise expressly provided in an Award Agreement or in the
Plan, the following shall apply to all Awards.
(a) Amendments to Awards. Subject
to Section 6(b)(i), the Committee may waive any conditions
or rights under, amend any terms of, or amend, alter, suspend,
discontinue, cancel or terminate, any Award heretofore granted
without the consent of any relevant Participant or holder or
beneficiary of an Award; provided, however, that no such
amendment, alteration, suspension, discontinuance, cancellation
or termination that would be adverse to the holder of such Award
may be made without such holders consent. Notwithstanding
the foregoing, the Committee shall not amend any outstanding
Option to change the exercise price thereof to any price that is
lower than the original exercise price thereof except in
connection with an adjustment authorized under Section 4(c).
(b) Adjustments of Awards Upon Certain
Acquisitions. In the event the Company or an
Affiliate shall issue Substitute Awards, the Committee may make
such adjustments, not inconsistent with the terms of the Plan,
in the terms of Awards as it shall deem appropriate in order to
achieve reasonable comparability or other equitable relationship
between the assumed awards and the Substitute Awards granted
under the Plan.
(c) Adjustments of Awards Upon the Occurrence of
Certain Unusual or Nonrecurring Events. The
Committee shall be authorized to make adjustments in the terms
and conditions of, and the criteria included in, Awards in
recognition of unusual or nonrecurring events (including,
without limitation, the events described in Section 4(c)
hereof) affecting the Company, any Affiliate, or the financial
statements of the Company or any Affiliate, or of changes in
applicable laws, regulations, or accounting principles, whenever
the Committee determines that such adjustments are appropriate
in order to prevent dilution or enlargement of the benefits or
potential benefits to be made available under the Plan or an
Award Agreement.
(d) Correction of Defects, Omissions, and
Inconsistencies. The Committee may correct
any defect, supply any omission, or reconcile any inconsistency
in any Award Agreement in the manner and to the extent it shall
deem desirable to carry the Plan into effect.
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Section 8. Acceleration
upon a Change of Control. In the event of a
Change of Control (as defined in Section 8(b) below) the
following shall apply:
(a) Effect on Awards.
(i) Options. In the event of a Change of
Control, (1) all Options outstanding on the date of such
Change of Control shall become immediately and fully exercisable
without regard to any vesting schedule provided for in the
Option.
(ii) Restricted Stock and Restricted Stock
Units. In the event of a Change of Control, all
restrictions applicable to any Restricted Stock or Restricted
Stock Unit shall terminate and be deemed to be fully satisfied
for the entire stated restricted period of any such Award, and
the total number of underlying Shares shall become Released
Securities. The Participant shall immediately have the right to
the prompt delivery of certificates reflecting such Released
Securities.
(iii) Dividend Equivalents. In the event
of a Change of Control, the holder of any outstanding Dividend
Equivalent shall be entitled to surrender such Award to the
Company and to receive payment of an amount equal to the amount
that would have been paid over the remaining term of the
Dividend Equivalent, as determined by the Committee.
(iv) Other Stock-Based Awards. In the
event of a Change of Control, all outstanding Other Stock-Based
Awards of whatever type shall become immediately vested and
payable in an amount that assumes that the Awards were
outstanding for the entire period stated therein, as determined
by the Committee.
(v) Performance Awards. In the event of a
Change of Control, Performance Awards for all performance
periods, including those not yet completed, shall immediately
become fully vested and payable in accordance with the following:
(A) Non-Financial Performance
Objectives. The total amount of Performance
Awards conditioned on nonfinancial Performance Objectives and
those conditioned on financial performance shall be immediately
payable (or exercisable or released, as the case may be) as if
the Performance Objectives had been fully achieved for the
entire performance period.
(B) Financial Performance Objectives. For
Performance Awards conditioned on financial Performance
Objectives and payable in cash, the Committee shall determine
the amount payable under such Award by taking into consideration
the actual level of attainment of the Performance Objectives
during that portion of the performance period that had occurred
prior to the date of the Change of Control, and with respect to
the part of the performance period that had not occurred prior
to the date of the Change of Control, the Committee shall
determine an anticipated level of attainment taking into
consideration available historical data and the last projections
made by the Companys Chief Financial Officer prior to the
Change of Control. The amount payable shall be the present value
of the amount so determined by the Committee discounted using a
factor that is the Prime Rate as established by Chase Manhattan
Bank, N.A. as of the date of the Change of Control.
(vi) Determination Final. The
Committees determination of amounts payable under this
Section 8(a) shall be final. Except as otherwise provided
in Section 8(a)(1), any amounts due under this
Section 8(a) shall be paid to Participants within
30 days after such Change of Control.
(vii) Exclusion. The provisions of this
Section 8(a) shall not be applicable to any Award granted
to a Participant if any Change of Control results from such
Participants beneficial ownership (within the meaning of
Rule 13d-3
under the Securities and Exchange Act of 1934, as amended (the
Exchange Act)) of Shares or other Company
common stock or Company voting securities.
(b) Change of Control
Defined. A Change of
Control shall be deemed to have occurred if:
(i) there is an acquisition, in any one transaction or a
series of transactions, other than from the Company, by any
individual, entity or group (within the meaning of
Section 13(d)(3) or
B-10
14(d)(2) of the Exchange Act), of beneficial ownership (within
the meaning of Rule 13(d)(3) promulgated under the Exchange
Act) of 50% or more of either the then outstanding shares of
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, but excluding, for this
purpose, any such acquisition by the Company or any of its
subsidiaries, or any employee benefit plan (or related trust) of
the Company or its subsidiaries, or any corporation with respect
to which, following such acquisition, more than 50% of the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities
of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly,
by the individuals and entities who were the beneficial owners,
respectively, of the common stock and voting securities of the
Company immediately prior to such acquisition in substantially
the same proportion as their ownership, immediately prior to
such acquisition, of the then outstanding shares of 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, as the case may be; or
(ii) individuals who, as of March 1, 2003, constitute
the Board (as of such date, the Incumbent
Board) cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a
director subsequent to March 1, 2003 whose election, or
nomination for election by the Companys stockholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office is in connection with an actual or
threatened election contest relating to the election of the
directors of the Company (as such terms are used in
Rule 14(a)(11) or Regulation 14A promulgated under the
Exchange Act); or
(iii) there occurs either (A) the consummation of a
reorganization, merger or consolidation, in each case, with
respect to which the individuals and entities who were the
respective beneficial owners of the common stock and voting
securities of the Company immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of
the corporation resulting from such reorganization, merger or
consolidation, or (B) an approval by the stockholders of
the Company of a complete liquidation of dissolution of the
Company or of the sale or other disposition of all or
substantially all of the assets of the Company.
Section 9. Amendment
and Termination of the Plan.
Except to the extent prohibited by applicable law and unless
otherwise expressly provided in an Award Agreement or in the
Plan, the Board of Directors may amend, alter, suspend,
discontinue, or terminate the Plan, including without limitation
any such action to correct any defect, supply any omission or
reconcile any inconsistency in the Plan, without the consent of
any stockholder, Participant, other holder or beneficiary of an
Award, or Person; provided that any such amendment, alteration,
suspension, discontinuation, or termination that would impair
the rights of any Participant, or any other holder or
beneficiary of any Award heretofore granted shall not be
effective without the approval of the affected Participant(s);
and provided further, that, notwithstanding any other
provision of the Plan or any Award Agreement, without the
approval of the stockholders of the Company no such amendment,
alteration, suspension, discontinuation or termination shall be
made that would increase the total number of Shares available
for Awards under the Plan, except as provided in Section 4
hereof.
Section 10. General
Provisions
(a) No Rights to Awards. No
Employee, Participant or other Person shall have any claim to be
granted any Award under the Plan, and there is no obligation for
uniformity of treatment of
B-11
Employees, Participants, or holders or beneficiaries of Awards
under the Plan. The terms and conditions of Awards need not be
the same with respect to each recipient.
(b) Withholding. The Company or
any Affiliate shall be authorized to withhold from any Award
granted or any payment due or transfer made under any Award or
under the Plan the amount (in cash, Shares, other securities,
other Awards, or other property) of withholding taxes due in
respect of an Award, its exercise, or any payment or transfer
under such Award or under the Plan and to take such other action
as may be necessary in the opinion of the Company or Affiliate
to satisfy all obligations for the payment of such taxes.
(c) No Limit on Other Compensation
Agreements. Nothing contained in the Plan
shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation
arrangements and such arrangements may be either generally
applicable or applicable only in specific cases.
(d) No Right to Employment. The
grant of an Award shall not be construed as giving a Participant
the right to be retained in the employ of the Company or any
Affiliate. Further, the Company or an Affiliate may at any time
dismiss a Participant from employment, free from any liability
or any claim under the Plan, unless otherwise expressly provided
in the Plan or in any Award Agreement.
(e) Governing Law. The validity,
construction, and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in
accordance with the laws of the State of Delaware and applicable
Federal law.
(f) Severability. If any provision
of the Plan or any Award is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction, or as to
any Person or Award, or would disqualify the Plan or any Award
under any law deemed applicable by the Committee, such provision
shall be construed or deemed amended to conform to applicable
laws, or if it cannot be so construed or deemed amended without,
in the determination of the Committee, materially altering the
intent of the Plan or the Award, such provision shall be
stricken as to such jurisdiction, Person, or Award and the
remainder of the Plan and any such Award shall remain in full
force and effect.
(g) No Trust or
Fund Created. Neither the Plan nor any
Award shall create or be construed to create a trust or separate
fund of any kind or a fiduciary relationship between the Company
or any Affiliate and a Participant or any other Person. To the
extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right
shall be that of an unsecured general creditor of the Company or
any Affiliate.
(h) No Fractional Shares. No
fractional Share shall be issued or delivered pursuant to the
Plan or any Award, and the Committee shall determine whether
cash, other securities, or other property shall be paid or
transferred in lieu of any fractional Shares, or whether such
fractional Shares, or whether such fractional Shares or any
rights thereto shall be canceled, terminated, or otherwise
eliminated.
(i) Headings. Headings are given
to the sections and subsections of the Plan solely as a
convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
Section 11. Effective
Date of the Plan.
The Plan shall be effective as of the date of its approval by
the Board of Directors of the Company.
Section 12. Term
of the Plan.
No Award shall be granted under the Plan after the tenth
anniversary of the effective date hereof. However, unless
otherwise expressly provided in the Plan or in an applicable
Award Agreement, any Award theretofore granted may extend beyond
such date, and the authority of the Committee
B-12
hereunder to amend, alter, adjust, suspend, discontinue, or
terminate any such Award, or to waive any conditions or rights
under any such Award, and the authority of the Board of
Directors of the Company to amend the Plan, shall extend beyond
such date.
Section 13. Participants
Subject to Section 162(m).
(a) Applicability. The provisions
of this Section 13 shall be applicable to all Covered
Awards. Covered Awards shall be made subject to the achievement
of one or more preestablished Performance Goals, in accordance
with procedures to be established by the Committee from time to
time. Notwithstanding any provision of the Plan to the contrary,
the Committee shall not, other than upon a Change of Control,
have discretion to waive or amend such Performance Goals or to,
except as provided in Section 4(c), increase the number of
Shares subject to Covered Awards or the amount payable pursuant
to Covered Awards after the Performance Goals have been
established; provided, however, that the Committee may, in its
sole discretion, reduce the number of Shares subject to Covered
Awards or the amount which would otherwise be payable pursuant
to Covered Awards; and provided, further, that the provisions of
Section 8 shall override any contrary provision of this
Section 13.
(b) Certification. No shares shall
be delivered and no payment shall be made pursuant to a Covered
Award unless and until the Committee shall have certified in
writing that the applicable Performance Goals have been attained.
(c) Procedures. The Committee may
from time to time establish procedures pursuant to which Covered
Employees will be permitted or required to defer receipt of
amounts payable under Awards made under the Plan.
(d) Committee. Notwithstanding any
other provision of the Plan, for all purposes involving Covered
Awards, the Committee shall consist of at least two members of
the Board of Directors, each of whom is an outside
director within the meaning of Section 162(m).
Section 14. Code
§409A Compliance.
To the extent any Award hereunder provides for a deferral of
compensation (within the meaning of Code § 409A and
related regulations), the material terms of the deferral, to the
extent required under Treasury Regulation
§ 1.409A-1(c)(3) to establish a deferred compensation
plan, shall be set forth in the written Award documentation
(including by incorporation by reference, if applicable) prior
to the effective date of such Award. Such provisions may include
a requirement that if any payment or acceleration of a payment
is made upon a change of control, the definition of change of
control for purposes of such award also complies with the
requirements of Treasury Regulation § 1.409A-3(i)(5).
In addition, whenever it is provided in this Plan or in any
Award made hereunder that a payment or delivery is to be made
promptly after a given event, such payment or
delivery shall be made within 10 days of the event and the
recipient shall have no right to designate the taxable year of
payment or delivery.
Effective as of October 29, 2003; Amended February 2007,
December 29, 2008 and April 20, 2009.
B-13
ANNUAL MEETING OF STOCKHOLDERS OF
CAS MEDICAL SYSTEMS, INC.
June 10, 2009
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Notice of
Meeting, proxy statement and proxy card are available at
www.casmed.com
Please sign, date and mail your proxy card in the envelope provided as soon as possible.
Please detach along perforated line and mail in the envelope provided.
20533030000000000000 1 061009
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND
FOR PROPOSALS 2 AND 3.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN
BLUE OR BLACK INK AS SHOWN HERE x
FOR AGAINST ABSTAIN
1. Election of Directors. 2. Approval of the CAS Medical Systems, Inc. Employee Stock
Purchase Plan.
NOMINEES:
3.
Approval of Amendments to
the 2003 Equity Incentive |
FOR ALL NOMINEES O Jerome Baron
O Plan increasing the number of shares that can be issued
Lawrence S. Burstein
O Evan Jones under the Plan.
WITHHOLD AUTHORITY
FOR ALL NOMINEES O Andrew E. Kersey
4.
To ratify the selection of
UHY LLP as independent
auditors
O Louis P. Scheps
FOR ALL EXCEPT for the Companys fiscal year ending December 31, 2009. (See instructions below)
To transact such other business
as may properly come before the
annual meeting.
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark FOR ALL EXCEPT
This proxy, when properly executed, will be voted in the manner and fill in the circle next to
each nominee you wish to withhold, as shown here: directed by the undersigned stockholder. If no
direction is made, thisproxy will be voted FOR proposals 1 and 2. Please sign exactly as
name appears on the left.
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
To change the address on your account, please check
the box at right and indicate your new address in the
address space above. Please note that changes to the
registered name(s) on the account may not be
submitted via this method.
Signature of Stockholder Date: Signature of Stockholder Date:
Note: Please sign exactly as your name or names appear on this Proxy. When shares are held
jointly, each holder should sign. When signing as executor, administrator, attorney, trustee
or guardian, please give full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person. |
0
CAS MEDICAL SYSTEMS, INC.
44 East Industrial Road, Branford, Connecticut 06405 This Proxy
is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Louis P. Scheps and Andrew E. Kersey, and each of them,
as the true and lawful attorneys, agents and proxies of the undersigned, each with full power
of substitution, to represent and vote all shares of common stock of CAS Medical Systems,
Inc. held of record by the undersigned on April 21, 2009 at the Annual Meeting of
Stockholders to be held on June 10, 2009 and at any adjournment thereof, as specified on the
reverse side of this proxy card and in their discretion upon such other matters as may
properly come before such Annual Meeting and at any adjournment thereof. Any and all proxies
heretofore given are hereby revoked.
(Continued and to be signed on the reverse side)
14475 |