def14a
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.___)
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Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to § 240.14a-12 |
ABAXIS, 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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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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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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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
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September 15, 2010
Dear Shareholder:
This years annual meeting of shareholders will be held on
Wednesday, October 27, 2010, at
10:00 a.m. Pacific time, at our offices, located at
3240 Whipple Road, Union City, California. You are cordially
invited to attend.
The Notice of Annual Meeting of Shareholders and a Proxy
Statement, which describe the formal business to be conducted at
the meeting, follow this letter.
It is important that you use this opportunity to take part in
the affairs of Abaxis, Inc. by voting on the business to come
before this meeting. After reading the Proxy Statement, please
promptly mark, sign, date and return the enclosed proxy card in
the prepaid envelope to assure that your shares will be
represented. Regardless of the number of shares you own, your
careful consideration of, and vote on, the matters before our
shareholders is important.
A copy of Abaxis Annual Report to Shareholders is also
enclosed for your information. At the annual meeting we will
review Abaxis activities over the past year and our plans
for the future. We look forward to seeing you at the annual
meeting.
Sincerely yours,
CLINTON H. SEVERSON
Chairman of the Board, President and
Chief Executive Officer
ABAXIS,
INC.
3240 Whipple Road, Union City,
California 94587
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
To Be Held On October 27,
2010
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of
Shareholders of Abaxis, Inc., a California corporation (the
Company). The meeting will be held on Wednesday,
October 27, 2010, at 10:00 a.m. Pacific time, at
our offices, located at 3240 Whipple Road, Union City,
California 94587, for the following purposes:
1. To elect our six nominees for director to serve
for the ensuing year and until their successors are elected and
qualified.
2. To approve an amendment to the Companys
2005 Equity Incentive Plan (the 2005 Plan) to
(i) increase the aggregate number of shares of common stock
authorized for issuance under the 2005 Plan by
500,000 shares and to clarify that the Company may continue
to grant performance cash awards under the 2005 Plan and
(ii) reapprove the Internal Revenue Code
Section 162(m) performance criteria and award limits of the
2005 Plan to permit the Company to continue to grant awards to
our key officers that qualify as performance-based compensation
under Section 162(m) of the Internal Revenue Code.
3. To ratify the selection by the Audit Committee of
the Board of Directors of Burr Pilger Mayer, Inc. as the
Companys independent registered public accounting firm for
the fiscal year ending March 31, 2011.
These items of business are more fully described in the Proxy
Statement accompanying this Notice.
The record date for the Annual Meeting is August 31, 2010.
Only shareholders of record at the close of business on that
date may vote at the meeting or any adjournment thereof. For ten
days prior to the meeting, a complete list of shareholders
entitled to vote at the meeting will be available for
examination by any shareholder, for any purpose relating to the
meeting, during ordinary business hours at our offices located
at 3240 Whipple Road, Union City, California.
Important Notice Regarding the Availability of Proxy
Materials for the Shareholders Meeting to Be Held on
Wednesday, October 27, 2010, at 10:00 a.m., Pacific
time, at our offices, located at 3240 Whipple Road, Union City,
California 94587.
The proxy statement and annual report to shareholders are
available at
http://investor.abaxis.com/.
By Order of the Board of Directors
ALBERTO R. SANTA INES
Secretary
Union City, California
September 15, 2010
You are cordially invited to attend the meeting in person.
Whether or not you expect to attend the meeting, please
complete, date, sign and return the enclosed proxy, or vote over
the telephone or the Internet as instructed in these materials,
as promptly as possible in order to ensure your representation
at the meeting. A return envelope (which is postage prepaid if
mailed in the United States) is enclosed for your convenience.
Even if you have voted by proxy, you may still vote in person if
you attend the meeting. Please note, however, that if your
shares are held of record by a broker, bank or other nominee and
you wish to vote at the meeting, you must obtain a proxy issued
in your name from that record holder.
Table of
Contents
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ABAXIS,
INC.
3240 Whipple Road, Union City,
California 94587
PROXY
STATEMENT
FOR THE 2010 ANNUAL MEETING OF SHAREHOLDERS
October 27, 2010
QUESTIONS
AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
Why am I
receiving these materials?
We have sent you this proxy statement and the enclosed proxy
card because the Board of Directors of Abaxis, Inc., a
California corporation (referred to as the Company
or Abaxis), is soliciting your proxy to vote at the
2010 Annual Meeting of Shareholders, including at any
adjournments or postponements of the meeting. You are invited to
attend the annual meeting to vote on the proposals described in
this proxy statement. However, you do not need to attend the
meeting to vote your shares. Instead, you may simply complete,
sign and return the enclosed proxy card, or follow the
instructions below to submit your proxy over the telephone or on
the Internet.
The Company intends to mail this proxy statement and
accompanying proxy card on or about September 15, 2010 to
all shareholders of record entitled to vote at the annual
meeting.
How do I
attend the annual meeting?
The meeting will be held on Wednesday, October 27, 2010, at
10:00 a.m. Pacific time, at our offices, located at
3240 Whipple Road, Union City, California
94587. Directions
to the annual meeting may be found at www.abaxis.com.
Information on how to vote in person at the annual meeting is
discussed below.
Who can
vote at the annual meeting?
Only shareholders of record at the close of business on
August 31, 2010 will be entitled to vote at the annual
meeting. On this record date, there were 22,330,570 shares
of common stock outstanding and entitled to vote.
Shareholder
of Record: Shares Registered in Your Name
If on August 31, 2010 your shares were registered directly
in your name with Abaxis transfer agent, Computershare
Trust Company, N.A., then you are a shareholder of record.
As a shareholder of record, you may vote in person at the
meeting or vote by proxy. Whether or not you plan to attend the
meeting, we urge you to fill out and return the enclosed proxy
card or vote by proxy over the telephone or on the Internet as
instructed below to ensure your vote is counted.
Beneficial
Owner: Shares Registered in the Name of a Broker or
Bank
If on August 31, 2010 your shares were held, not in your
name, but rather in an account at a brokerage firm, bank,
dealer, or other similar organization, then you are the
beneficial owner of shares held in street name and
these proxy materials are being forwarded to you by that
organization. The organization holding your account is
considered to be the shareholder of record for purposes of
voting at the annual meeting. As a beneficial owner, you have
the right to direct your broker or other agent regarding how to
vote the shares in your account. You are also invited to attend
the annual meeting. However, since you are not the shareholder
of record, you may not vote your shares in person at the meeting
unless you request and obtain a valid proxy from your broker or
other agent.
What am I
voting on?
There are three matters scheduled for a vote:
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Election of six directors;
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Approval of an amendment to the Companys 2005 Equity
Incentive Plan (the 2005 Plan) to increase the
aggregate number of shares of common stock authorized for
issuance under the 2005 Plan by 500,000 shares and
otherwise as described in the Proxy Statement; and
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Ratification of Burr Pilger Mayer, Inc. as our independent
registered public accounting firm for the fiscal year ending
March 31, 2011.
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What if
another matter is properly brought before the meeting?
The Board of Directors knows of no other matters that will be
presented for consideration at the annual meeting. If any other
matters are properly brought before the meeting, it is the
intention of the persons named in the accompanying proxy to vote
on those matters in accordance with their best judgment.
How do I
vote?
You may either vote For all the nominees to the
Board of Directors or you may Withhold your vote for
any nominee you specify. For any other matters to be voted on,
you may vote For or Against or abstain
from voting. The procedures for voting are as follows:
Shareholder
of Record: Shares Registered in Your Name
If you are a shareholder of record, you may vote in person at
the annual meeting, vote by proxy using the enclosed proxy card,
vote by proxy over the telephone, or vote by proxy on the
Internet. Whether or not you plan to attend the meeting, we urge
you to vote by proxy to ensure your vote is counted. You may
still attend the meeting and vote in person even if you have
already voted by proxy.
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To vote in person, come to the annual meeting and we will give
you a ballot when you arrive.
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To vote using the proxy card, simply complete, sign and date the
enclosed proxy card and return it promptly in the envelope
provided. If you return your signed proxy card to us before the
annual meeting, we will vote your shares as you direct.
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To vote over the telephone, dial toll-free
1-800-652-VOTE,
(1-800-652-8683)
using a touch-tone phone and follow the recorded instructions.
You will be asked to provide the company number and control
number from the enclosed proxy card. Your vote must be received
by 1:00 a.m. Central time on October 27, 2010 to
be counted.
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To vote on the Internet, go to
http://www.investorvote.com/ABAX
to complete an electronic proxy card. You will be asked to
provide the company number and control number from the enclosed
proxy card. Your vote must be received by
1:00 a.m. Central time on October 27, 2010 to be
counted.
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Beneficial
Owner: Shares Registered in the Name of Broker or
Bank
If you are a beneficial owner of shares registered in the name
of your broker, bank, or other agent, you should have received a
proxy card and voting instructions with these proxy materials
from that organization rather than from Abaxis. Simply complete
and mail the proxy card to ensure that your vote is counted.
Alternatively, you may vote by telephone or over the Internet if
instructed by your broker or bank. To vote in person at the
annual meeting, you must obtain a valid proxy from your broker,
bank or other agent. Follow the instructions from your broker or
bank included with these proxy materials, or contact your broker
or bank to request a proxy form.
We provide Internet proxy voting to allow you to vote your
shares online, with procedures designed to ensure the
authenticity and correctness of your proxy vote instructions.
However, please be aware that you must bear any
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costs associated with your Internet access, such as usage
charges from Internet access providers and telephone companies.
How many
votes do I have?
On each matter to be voted upon other than the election of
directors, you have one vote for each share of common stock you
own as of August 31, 2010. For the election of directors,
cumulative voting is available. Under cumulative voting, you
would have six votes for each share of common stock you own. You
may cast all of your votes for one candidate, or you may
distribute your votes among different candidates as you choose.
However, you may cumulate votes (cast more than one vote per
share) for a candidate only if the candidate is nominated before
the voting and at least one shareholder gives notice at the
meeting, before the voting, that he or she intends to cumulate
votes. If you do not specify how to distribute your votes, by
giving your proxy you are authorizing the proxyholders (the
individuals named on your proxy card) to cumulate votes in their
discretion.
What if I
return a proxy card but do not make specific choices?
If you return a signed and dated proxy card without marking any
voting selections, your shares will be voted For the
election of all six nominees for director, For the
approval of an amendment to the Companys 2005 Equity
Incentive Plan (the 2005 Plan) to increase the
aggregate number of shares of common stock authorized for
issuance under the 2005 Plan by 500,000 shares and
otherwise as described in the Proxy Statement and
For the ratification of the appointment of Burr
Pilger Mayer, Inc. as independent registered public accounting
firm of the Company for its fiscal year ending March 31,
2011. If any other matter is properly presented at the meeting,
your proxyholder (one of the individuals named on your proxy
card) will vote your shares using his or her best judgment.
Who is
paying for this proxy solicitation?
We will pay for the entire cost of soliciting proxies. In
addition to these proxy materials, our directors and employees
and Morrow & Co., LLC at 470 West Ave, Stamford,
Connecticut 06902, (Morrow) may also solicit proxies
in person, by telephone or by other means of communication.
Directors and employees will not be paid any additional
compensation for soliciting proxies, but Morrow will be paid its
customary fee of approximately $7,500 plus
out-of-pocket
expenses if it solicits proxies. We may also reimburse brokerage
firms, banks and other agents for the cost of forwarding proxy
materials to beneficial owners.
What does
it mean if I receive more than one set of proxy
materials?
If you receive more than one set of proxy materials, your shares
may be registered in more than one name or in different
accounts. Please follow the voting instructions on each of the
proxy cards in the proxy materials to ensure that all of your
shares are voted.
Can I
change my vote after submitting my proxy?
Yes. You can revoke your proxy at any time before the final vote
at the meeting. If you are the record holder of your shares, you
may revoke your proxy in any one of three ways:
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You may submit another properly completed proxy card with a
later date.
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You may send a timely written notice that you are revoking your
proxy to Abaxis Secretary at 3240 Whipple Road, Union
City, California 94587.
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You may attend the annual meeting and vote in person. Simply
attending the meeting will not, by itself, revoke your proxy.
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If your shares are held by your broker or bank as a nominee or
agent, you should follow the instructions provided by your
broker or bank.
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When are
shareholder proposals due for next years annual
meeting?
To be considered for inclusion in next years proxy
materials, your proposal must be submitted in writing by
May 18, 2011, to Abaxis Secretary at 3240 Whipple
Road, Union City, California 94587. If you wish to bring a
matter before the shareholders at next years annual
meeting and you do not notify Abaxis before August 1, 2011,
for all proxies we receive, the proxyholders will have
discretionary authority to vote on the matter, including
discretionary authority to vote in opposition to the matter.
How are
votes counted?
Votes will be counted by the inspector of election appointed for
the meeting, who will separately count For and
Withhold votes with respect to the election of
directors and, with respect to proposals other than the election
of directors, For and Against votes,
abstentions and broker non-votes. Although abstentions and
broker non-votes are counted as present for purposes of a
quorum, they are not counted as affirmative votes for the
proposals. For Proposals 2 and 3, abstentions and broker
non-votes will have no effect, provided that the votes in favor
of such Proposal are a majority of the votes that constitute the
required quorum.
What are
broker non-votes?
Broker non-votes occur when a beneficial owner of shares held in
street name does not give instructions to the broker
or nominee holding the shares as to how to vote on matters
deemed non-routine. Generally, if shares are held in
street name, the beneficial owner of the shares is entitled to
give voting instructions to the broker or nominee holding the
shares. If the beneficial owner does not provide voting
instructions, the broker or nominee can still vote the shares
with respect to matters that are considered to be
routine, but not with respect to
non-routine matters.
How many
votes are needed to approve each proposal?
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Proposal No. 1: Election of
Directors. For the election of directors, the six nominees
receiving the most For votes (from the holders of
votes of shares present in person or represented by proxy and
entitled to vote on the election of directors) will be elected.
Only votes For or Withheld will affect
the outcome.
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Proposal No. 2: Approval of an
amendment to the 2005 Plan to increase the aggregate number of
shares of common stock authorized for issuance under the 2005
Plan by 500,000 shares and clarify that the Company may
continue to grant performance cash awards under the 2005 Plan
and reapproval of the Internal Revenue Code Section 162(m)
performance criteria and award limits of the 2005 Plan. To be
approved, Proposal No. 2 must receive For
votes from the holders of a majority of the shares present
either in person or by proxy and voting, provided that the votes
in favor of Proposal No. 2 are a majority of the votes
that constitute the required quorum. Abstentions and broker
non-votes will not be counted towards the vote total.
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Proposal No. 3: Ratification of
Selection of Independent Registered Public Accounting Firm. To
be approved, Proposal No. 3 ratifying the selection by
the Audit Committee of the Board of Directors of Burr Pilger
Mayer, Inc. as independent registered public accounting firm for
the fiscal year ending March 31, 2011 must receive
For votes from the holders of a majority of shares
present either in person or by proxy and voting, provided that
the votes in favor of Proposal No. 3 are a majority of
the votes that constitute the required quorum. Abstentions and
broker non-votes will not be counted towards the vote total.
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What is
the quorum requirement?
A quorum of shareholders is necessary to hold a valid meeting. A
quorum will be present if shareholders holding at least a
majority of the outstanding shares entitled to vote are present
at the meeting in person or represented by proxy. On the record
date, there were 22,330,570 shares outstanding and entitled
to vote. Thus, the holders of 11,165,286 shares must be
present in person or represented by proxy at the meeting or by
proxy to have a quorum.
Votes for and against, abstentions and broker
non-votes will each be counted as present for the purposes
of determining the presence of a quorum. Your shares will be
counted towards the quorum only if you submit a valid proxy (or
one is submitted on your behalf by your broker, bank or other
nominee) or if you vote in person at the
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meeting. If there is no quorum, the holders of a majority of
shares present at the meeting in person or represented by proxy
may adjourn the meeting to another date.
How can I
find out the results of the voting at the annual
meeting?
Preliminary voting results will be announced at the annual
meeting. In addition, final voting results will be published in
a current report on
Form 8-K
that we expect to file within four business days after the
annual meeting. If final voting results are not available to us
in time to file a
Form 8-K
within four business days after the meeting, we intend to file a
Form 8-K
to publish preliminary results and, within four business days
after the final results are known to us, file an additional
Form 8-K
to publish the final results.
What
proxy materials are available on the
internet?
The proxy statement and annual report to shareholders are
available at
http://investor.abaxis.com.
5
PROPOSAL 1
The authorized number of directors currently constituting the
Companys Board of Directors is five, which authorized
number will increase to six immediately prior to the annual
meeting. All of the Companys six directors are to be
elected for the ensuing year and will hold office until the next
annual meeting of shareholders and until his or her successor is
elected and qualified, or, if sooner, until the directors
death, resignation or removal. Proxies cannot be voted for a
greater number of persons than the six nominees named in this
Proposal 1. Each of the nominees listed below, except for
Michael D. Casey, is currently a director of the Company who was
previously elected by the shareholders. Mr. Casey was
recommended for election to the Companys Board by the
Board of Directors Nominating and Corporate Governance
Committee. It is the Companys policy to strongly encourage
nominees for directors to attend the Annual Meeting. All of the
Companys directors attended the 2009 Annual Meeting of
Shareholders.
The candidates receiving the highest number of affirmative votes
by the holders of shares entitled to be voted will be elected.
The persons named in the accompanying proxy will vote the shares
represented thereby for the nominees named below, but may
cumulate the votes for less than all of the nominees, as
permitted by the laws of the State of California, unless
otherwise instructed. If any nominee becomes unavailable for
election as a result of an unexpected occurrence, your shares
will be voted for the election of a substitute nominee proposed
by Abaxis. Each person nominated for election has agreed to
serve if elected. The Companys management has no reason to
believe that any nominee will be unable to serve.
NOMINEES
The nominees for election to the Board of Directors at the 2010
Annual Meeting are Clinton H. Severson, Richard J.
Bastiani, Ph.D., Michael D. Casey, Henk J. Evenhuis,
Prithipal Singh, Ph.D. and Ernest S.
Tucker, III, M.D.. Please see Directors and
Executive Officers of the Registrant below for information
concerning the nominees.
VOTE
REQUIRED AND RECOMMENDATION OF THE BOARD OF DIRECTORS
Although abstentions and broker non-votes will each
be counted as present for purposes of determining a quorum,
neither abstentions nor broker non-votes will have
any impact on the election of directors and the six candidates
for election as directors at the annual meeting who receive the
highest number of affirmative votes will be elected.
If the nominees decline to serve or become unavailable for any
reason, or if a vacancy occurs before the election (although
management knows of no reason to anticipate that this will
occur), the proxies may be voted for substitute nominees as the
Board of Directors may designate. In the event that additional
persons are nominated for election as directors, the proxy
holders intend to vote all proxies received by them in such a
manner in accordance with cumulative voting as will ensure the
election of as many of the nominees listed below as possible,
and, in such event, the specific nominees to be voted for will
be determined by the proxy holders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR THE NOMINEES NAMED ABOVE.
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DIRECTORS
AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information concerning
the Companys directors and executive officers:
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Name
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Age
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Title
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Clinton H. Severson
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62
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Chairman of the Board, President and Chief Executive Officer
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Richard J. Bastiani, Ph.D.(1)(2)(3)
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67
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Director
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Henk J. Evenhuis(1)(2)(3)
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67
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Director
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Prithipal Singh, Ph.D.(1)(2)(3)
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71
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Director
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Ernest S. Tucker, III, M.D.(1)(2)(3)
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77
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Director
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Michael D. Casey(4)
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64
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Nominee for Director
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Alberto R. Santa Ines
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63
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Chief Financial Officer and Vice President of Finance
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Kenneth P. Aron, Ph.D.
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57
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Chief Technology Officer
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Donald P. Wood
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58
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Chief Operations Officer
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Vladimir E. Ostoich, Ph.D.
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65
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Vice President of Government Affairs and Vice President of
Marketing for the Pacific Rim, Founder
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Martin V. Mulroy
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Vice President of Veterinary Sales and Marketing for North
America
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Brenton G.A. Hanlon(5)
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64
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Vice President of North American Medical Sales and Marketing
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Achim Henkel
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Managing Director of Abaxis Europe GmbH
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Member of the Audit Committee |
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Member of the Nominating and Corporate Governance Committee |
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Member of the Compensation Committee |
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Mr. Casey is expected to join the Audit and Compensation
Committees if he is elected. |
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(5) |
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Mr. Hanlon resigned from the Board of Directors and each
committee of the Board of Directors as of August 10, 2009,
and was appointed as Vice President of North American Medical
Sales and Marketing in September 2009. |
Clinton H. Severson has served as the Companys
President, Chief Executive Officer and one of our directors
since June 1996. He was appointed Chairman of the Board in May
1998. Since November 2008, Mr. Severson served on the Board
of Directors of Trinity Biotech (Nasdaq: TRIB), a biotechnology
company. Since November 2006, Mr. Severson served on
the Board of Directors of CytoCore, Inc. (OTCBB: CYOE.OB), a
biotechnology company. From February 1989 to May 1996,
Mr. Severson served as President and Chief Executive
Officer of MAST Immunosystems, Inc., a privately-held medical
diagnostic company. Mr. Severson was selected as a director
because of his in-depth knowledge of the Companys
operations, financial condition and strategy in his position as
the Companys President and Chief Executive Officer, as
well as his extensive senior management experience in medical
diagnostics and experience serving on the boards of various
public and private companies.
Richard J. Bastiani, Ph.D. joined the Board of
Directors in September 1995. Dr. Bastiani is currently
retired and serves as Chairman of the Board of Directors of
Response Biomedical Corporation (CDNX: RBM). From 1998 to 2005,
Dr. Bastiani served as Chairman of the Board of Directors
of ID Biomedical Corporation (Nasdaq: IDBE), after he was
appointed to the Board of Directors of ID Biomedical Corporation
in October 1996. Dr. Bastiani was President of Dendreon
(Nasdaq: DNDN), a biotechnology company, from September 1995 to
September 1998. From 1971 until 1995, Dr. Bastiani held a
number of positions with Syva Company, a diagnostic company,
including as President from 1991 until Syva was acquired by a
subsidiary of Hoechst AG of Germany in 1995. Dr. Bastiani
is also a member of the board of directors of three
privately-held companies. Dr. Bastiani was selected as a
director because of his extensive leadership experience in
biotechnology companies and his in-depth knowledge of the
Companys business, strategy and management team, as well
as his experience serving as Chairman of the Compensation
Committee and on the boards of various public and private
companies.
7
Henk J. Evenhuis joined the Board of Directors in
November 2002. Mr. Evenhuis is currently retired. He served
on the Board of Directors of Credence Systems Corporation
(Nasdaq: CMOS), a semiconductor equipment manufacturer, from
1993 to 2008. Mr. Evenhuis served as Executive Vice
President and Chief Financial Officer of Fair Isaac Corporation
(NYSE: FIC), a global provider of analytic software products to
the financial services, insurance and health care industries
from October 1999 to October 2002. From 1987 to 1998, he was
Executive Vice President and Chief Financial Officer of Lam
Research Corporation (Nasdaq: LRCX), a semiconductor equipment
manufacturer. Mr. Evenhuis was selected as a director
because of his financial expertise and prior senior leadership
experience as a Chief Financial Officer at global technology
companies, as well as his experience serving on the boards of
various public companies, which provide a strong foundation to
serve as Chairman of the Audit Committee.
Prithipal Singh, Ph.D. joined the Board of Directors
in June 1992. Prior to retiring, Dr. Singh was the Founder,
Chairman and Chief Executive Officer of ChemTrak Inc. (Pink
Sheets: CMTR) from 1988 to 1998. Prior to this, Dr. Singh
was an Executive Vice President of Idetec Corporation from 1985
to 1988 and a Vice President of Syva Corporation from 1977 to
1985. Dr. Singh was selected as a director because of his
insight and experience in biotechnology companies through his
prior executive leadership and management positions.
Ernest S. Tucker, III, M.D. joined the Board of
Directors in September 1995. Dr. Tucker currently serves as
a self-employed healthcare consultant after having retired as
Chief Compliance Officer for Scripps Health in San Diego in
September 2000, a position which he assumed in April 1998.
Dr. Tucker was Chairman of Pathology at Scripps Clinic and
Research Foundation from 1992 to 1998 and Chairman of Pathology
at California Pacific Medical Center in San Francisco from
1989 to 1992. Dr. Tucker was selected as a director because
of his prior leadership and management experience and in-depth
knowledge in the medical profession and his experience serving
on the boards of various hospitals, colleges and foundations.
Michael D. Casey is a nominee for Director.
Mr. Casey is currently retired. From September 1997 to
February 2002, Mr. Casey served as the Chairman, President,
Chief Executive Officer and a director of
Matrix Pharmaceutical, Inc. From November 1995 to September
1997, Mr. Casey was Executive Vice President at Schein
Pharmaceutical, Inc. (NYSE: SHP). In December 1996, he was
appointed President of the retail and specialty products
division of Schein Pharmaceutical. From June 1993 to November
1995, he served as President and Chief Operating Officer of
Genetic Therapy, Inc. Mr. Casey was President of McNeil
Pharmaceutical (a unit of Johnson & Johnson) from 1989
to June 1993 and Vice President, Sales and Marketing for Ortho
Pharmaceutical Corp. (a subsidiary of Johnson &
Johnson) from 1985 to 1989. Mr. Casey has served on the
Board of Directors of Celgene Corporation (Nasdaq: CELG) since
2002 and Durect Corp. (Nasdaq: DRRX) since 2004. Mr. Casey
previously served on the Board of Directors of AVI Biopharma,
Inc. (Nasdaq: AVII) from 2006 to 2010, Allos Therapeutics, Inc.
(Nasdaq: ALTH) from 2002 to 2010, Cholestech Corporation
(Nasdaq: CTEC) from 2001 to 2007, OrthoLogic Corporation
(Nasdaq: OLGC) from 2004 to 2007, and Bone Care International,
Inc. (Nasdaq: BCII) from 2001 to 2005. Mr. Casey was
selected to serve as director because of his extensive industry
knowledge and experience, including operational, leadership and
board experience from his executive positions at
pharmaceutical/biotechnology companies.
Alberto R. Santa Ines has served as the Companys
Chief Financial Officer and Vice President of Finance since
April 2002. Mr. Santa Ines joined us in February 2000 as
Finance Manager. In April 2001, Mr. Santa Ines was promoted
to Interim Chief Financial Officer and Director of Finance, and
in April 2002 he was promoted to his current position. From
March 1998 to January 2000, Mr. Santa Ines was a
self-employed consultant to several companies. From August 1997
to March 1998, Mr. Santa Ines was the Controller of Unisil
(Pink Sheets: USIL), a semiconductor company. From April 1994 to
August 1997, he was a Senior Finance Manager at Lam Research
Corporation (Nasdaq: LRCX), a semiconductor equipment
manufacturer.
Kenneth P. Aron, Ph.D. has served as the
Companys Chief Technology Officer since April 2008.
Dr. Aron joined us in February 2000 as Vice President of
Research and Development. From April 1998 to November 1999,
Dr. Aron was Vice President of Engineering and Technology
of Incyte Pharmaceuticals (Nasdaq: INCY), a genomic information
company. From April 1996 to April 1998, Dr. Aron was Vice
President of Research, Development and Engineering for
Cardiogenesis Corporation (Nasdaq: CGCP), a manufacturer of
laser-based cardiology surgical products.
8
Donald P. Wood has served as the Companys Chief
Operations Officer since April 2009. Mr. Wood joined us in
October 2007 as Vice President of Operations. From April 2003 to
September 2007, Mr. Wood was the Vice President of
Operations of Cholestech Corporation (Nasdaq: CTEC), a medical
products manufacturing company which was subsequently acquired
by Inverness Medical Innovations, Inc. in September 2007. From
July 2001 to March 2003, Mr. Wood served as Vice President
of Bone Health, a business unit of Quidel Corporation, a
manufacturing and marketer of
point-of-care
diagnostics, and was responsible for Bone Health Product
Operations, Device Research and Development, and Sales and
Marketing. He also served as Quidels Vice President of
Ultrasound Operations from August 1999 to July 2001. Prior to
joining Quidel, Mr. Wood was the Director of Ultrasound
Operations for Metra Biosystems Inc., a developer and
manufacturing company of
point-of-care
products for osteoporosis, from July 1998 to August 1999 prior
to Quidels acquisition of Metra Biosystems Inc.
Vladimir E. Ostoich, Ph.D., one of the
Companys co-founders, is currently the Vice President of
Government Affairs and Vice President of Marketing for the
Pacific Rim. Dr. Ostoich has served as Vice President in
various capacities at Abaxis since inception, including as Vice
President of Research and Development, Senior Vice President of
Research and Development, Vice President of Engineering and
Instrument Manufacturing and Vice President of Marketing and
Sales for the United States and Canada.
Martin V. Mulroy has served as the Companys Vice
President of Veterinary Sales and Marketing for
North America since May 2006. Mr. Mulroy joined us in
November 1997 as the Northeast Regional Sales Manager. He was
promoted to Eastern Area Director of Sales in December 1998 and,
in January 2005, he was promoted to National Sales Director for
the Domestic Veterinary market. From March 1996 to November
1997, Mr. Mulroy was Regional Sales Manager for BioCircuits
Inc., an immunoassay company in the medical market.
Mr. Mulroy was Regional Sales Manager from 1990 to 1992 and
Field Operations Manager from 1992 to 1995 for MAST
Immunosystems Inc., a privately-held medical diagnostic company.
Brenton G. A. Hanlon has served as the Companys
Vice President of North American Medical Sales and Marketing
since September 2009. Mr. Hanlon served on our Board of
Directors from November 1996 through August 2009. From January
2001 to August 2009, Mr. Hanlon was President and Chief
Executive Officer of Hitachi Chemical Diagnostics, a
manufacturer of in vitro allergy diagnostic products.
Concurrently, from December 1996 to August 2009, Mr. Hanlon
was also President and Chief Operating Officer of Tri-Continent
Scientific, a subsidiary of Hitachi Chemical, specializing in
liquid-handling products and instrument components for the
medical diagnostics and biotechnology industries. From 1989 to
December 1996, Mr. Hanlon was Vice President and General
Manager of Tri-Continent Scientific. Mr. Hanlon serves on
the board of directors of two privately-held companies.
Achim Henkel has served as the Managing Director of the
Companys European subsidiary since its incorporation in
2008. Mr. Henkel joined us in January 1998 as a consultant
to build a European distribution network. From January 2000 to
June 2008, Mr. Henkel was Sales and Marketing Manager for
Europe, the Middle East and Africa. From October 1996 to
December 1997, Mr. Henkel was a self-employed consultant to
several companies. From January 1988 to September 1996,
Mr. Henkel held a number of positions with Syva Diagnostics
Germany, including as National Sales Manager from 1991 until
Syva was acquired by a subsidiary of Hoechst AG in 1995. From
1982 to 1987, Mr. Henkel was regional sales manager for
Hoechst AG, a German pharmaceutical company.
INFORMATION
REGARDING THE BOARD OF DIRECTORS AND CORPORATE
GOVERNANCE
INDEPENDENCE
OF THE BOARD OF DIRECTORS
As required under The Nasdaq Stock Market (Nasdaq)
listing standards, a majority of the members of a listed
companys Board of Directors must qualify as
independent, as affirmatively determined by the
Board of Directors. The Board consults with the Companys
counsel to ensure that the Boards determinations are
consistent with relevant securities and other laws and
regulations regarding the definition of independent,
including those set forth in pertinent listing standards of the
Nasdaq, as in effect from time to time.
9
Consistent with these considerations, after review of all
relevant transactions or relationships between each director, or
any of his or her family members, and the Company, its senior
management and its independent auditors, the Board has
affirmatively determined that each of the following persons are
independent within the meaning of the applicable Nasdaq listing
standards: Mr. Evenhuis, Dr. Bastiani, Dr. Singh,
Dr. Tucker and Mr. Casey. In making this
determination, the Board found that none of these current
directors or nominees for director had a material or other
disqualifying relationship with the Company. Mr. Severson,
the Companys President and Chief Executive Officer, is not
an independent director by virtue of his employment with the
Company. There are no family relationships among any of the
Companys directors or officers.
BOARD
LEADERSHIP STRUCTURE
The Companys Board of Directors is currently chaired by
Mr. Severson, the Companys President and Chief
Executive Officer. The Company believes that combining the
positions of Chief Executive Officer and Chairman of the Board
helps to ensure that the Board and management act with a common
purpose. In the Companys view, separating the positions of
Chief Executive Officer and Chairman has the potential to give
rise to divided leadership, which could interfere with good
decision-making or weaken the Companys ability to develop
and implement strategy. Instead, the Company believes that
combining the positions of Chief Executive Officer and Chairman
provides a single, clear chain of command to execute the
Companys strategic initiatives and business plans. In
addition, the Company believes that a combined Chief Executive
Officer/Chairman is better positioned to act as a bridge between
management and the Board, facilitating the regular flow of
information. The Company also believes that it is advantageous
to have a Chairman with an extensive history with and knowledge
of the Company, as is the case with Mr. Severson, who has
served as the Companys President, Chief Executive Officer
and a director since June 1996. The Company believes that
maintaining independence of the Board as a whole is important to
ensure the effective independent functioning of the Board in its
oversight responsibilities. As such, while the Company does not
have a lead independent director, each of the Companys
directors, other than Mr. Severson, is independent.
ROLE OF
THE BOARD IN RISK OVERSIGHT
One of the Boards key functions is informed oversight of
the Companys risk management process. Management is
responsible for identifying risk and risk controls related to
business activities. The Board implements its risk oversight
responsibilities by having management provide periodic briefing
and informational sessions on the significant voluntary and
involuntary risks that the Company faces, and how the Company is
seeking to control such risks. The Board administers this
oversight function directly through the Board as a whole, as
well as through various Board committees that address risks
inherent in their respective areas of oversight.
MEETINGS
OF THE BOARD OF DIRECTORS
The Board of Directors met four times during the fiscal year
ended March 31, 2010. Each Board member attended 75% or
more of the aggregate of the meetings of the Board and of the
committees on which he served, held during the period for which
he was a director or committee member.
As required under applicable Nasdaq listing standards, in fiscal
2010, the Companys independent directors met three times
in regularly scheduled executive sessions at which only
independent directors were present.
10
INFORMATION
REGARDING COMMITTEES OF THE BOARD OF DIRECTORS
The Board has three committees: an Audit Committee, a
Compensation Committee and a Nominating and Corporate Governance
Committee. The following table provides membership and meeting
information for fiscal 2010 for each of the Board committees:
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Nominating and
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Corporate
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Name
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Audit
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Compensation
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Governance
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Clinton H. Severson
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Richard J. Bastiani, Ph.D.
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X
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X
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*
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X
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Henk J. Evenhuis
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X
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*
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X
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X
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Prithipal Singh, Ph.D.
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X
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X
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X
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*
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Ernest S. Tucker, III, M.D.
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X
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X
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X
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Michael D. Casey
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Total meetings in fiscal 2010
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5
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1
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0
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* |
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Committee Chairperson |
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Mr. Casey is expected to join the Audit and Compensation
Committees if he is elected. |
Below is a description of each committee of the Board of
Directors. The Board of Directors has determined that each
member of each committee and Mr. Casey meets the applicable
Nasdaq rules and regulations regarding independence
and that each member and Mr. Casey is free of any
relationship that would impair his individual exercise of
independent judgment with regard to the Company.
Audit
Committee
The Audit Committee reviews and monitors the Companys
corporate financial reporting and external audits, including,
among other things, the Companys control functions, the
results and scope of the annual audit and other services
provided by the independent registered public accountants and
the Companys compliance with legal matters that have a
significant impact on its financial reports. Among other things,
the Audit Committee:
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evaluates the performance of and assesses the qualifications of
the independent auditors;
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determines and approves the engagement of the independent
auditors;
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determines whether to retain or terminate the existing
independent auditors or to appoint and engage new independent
auditors;
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reviews and approves the retention of the independent auditors
to perform any proposed permissible non-audit services;
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monitors the rotation of partners of the independent auditors on
the Companys audit engagement team as required by law;
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reviews and approves transactions between the company and any
related persons;
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confers with management and the independent auditors regarding
the effectiveness of internal controls over financial reporting;
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establishes procedures for the receipt, retention and treatment
of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters and the
confidential and anonymous submission by employees of concerns
regarding questionable accounting or auditing matters; and
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meets to review the Companys annual audited financial
statements and quarterly financial statements with management
and the independent auditor, including reviewing the
Companys disclosures under Managements
Discussion and Analysis of Financial Condition and Results of
Operations.
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11
The Audit Committee is currently composed of four directors:
Mr. Evenhuis, Dr. Bastiani, Dr. Singh and
Dr. Tucker. Mr. Evenhuis serves as Chairman of the
Audit Committee. The Audit Committee held five meetings during
the fiscal year ended March 31, 2010. For additional
information about the Audit Committee, see Report of the
Audit Committee of the Board of Directors below. The Audit
Committee has adopted a written charter that is available to
shareholders in the Investor Relations section of the
Companys website at
http://www.abaxis.com.
The Board of Directors annually reviews the Nasdaq listing
standards definition of independence for Audit Committee members
and has determined that all members of the Audit Committee are
independent (as independence is currently defined in
Rule 4350(d)(2)(A)(i) and (ii) of the Nasdaq listing
standards). Securities and Exchange Commission (SEC)
regulations require the Company to disclose whether a director
qualifying as an audit committee financial expert
serves on the Audit Committee. The Board of Directors has
determined that Mr. Evenhuis qualifies as an audit
committee financial expert, as defined in applicable SEC
rules. The Board of Directors made a qualitative assessment of
Mr. Evenhuiss level of knowledge and experience based
on a number of factors, including his formal education and
experience as a chief financial officer for public reporting
companies.
Report
of the Audit Committee of the Board of
Directors1
The Audit Committee oversees Abaxis financial reporting
process on behalf of the Board of Directors. Management has the
primary responsibility for the financial statements and the
reporting process, including internal control systems. In the
fiscal year ended March 31, 2010, Burr Pilger Mayer, Inc.
was responsible for expressing an opinion as to the conformity
of the Companys audited financial statements with
generally accepted accounting principles. Burr Pilger Mayer,
Inc. has acted in such capacity since its appointment on
August 25, 2005.
The Audit Committee has reviewed and discussed the audited
financial statements for the fiscal year ended March 31,
2010 with management of the Company. The Audit Committee has
discussed with the independent registered public accounting firm
the matters required to be discussed by the Statement on
Auditing Standards No. 61, as amended (AICPA, Professional
Standards, Vol. 1. AU section 380), as adopted by the
Public Company Accounting Oversight Board (PCAOB) in
Rule 3200T. The Audit Committee has met with Burr Pilger
Mayer, Inc., with and without management present, to discuss the
overall scope and results of Burr Pilger Mayer, Inc.s
audit and review procedures, and the overall quality of its
financial reporting. The Audit Committee has also received the
written disclosures and the letter from the independent
registered public accounting firm required by applicable
requirements of the PCAOB regarding the independent
accountants communications with the audit committee
concerning independence, and has discussed with the independent
registered public accounting firm the accounting firms
independence. Based on the review and discussions referred to
above, the Audit Committee has recommended to the Board of
Directors that Abaxis audited financial statements be
included in Abaxis Annual Report on
Form 10-K
for the fiscal year ended March 31, 2010.
THE AUDIT
COMMITTEE
Henk J.
Evenhuis, Chairman
Richard J. Bastiani, Ph.D.
Prithipal Singh, Ph.D.
Ernest S. Tucker, III, M.D.
Compensation
Committee
The Compensation Committee is currently composed of four
directors: Dr. Bastiani, Mr. Evenhuis, Dr. Singh
and Dr. Tucker. All current members of the Compensation
Committee are non-employee members of the Companys Board
of Directors and are independent (as independence is currently
defined in Rule 4200(a)(15) of the Nasdaq listing
standards). The Compensation Committee held one meeting during
the fiscal year ended March 31, 2010 for which the
directors received cash compensation. From time to time, the
Compensation
1 The
material in this report is not soliciting material,
is not deemed filed with the Securities and Exchange
Commission and is not to be incorporated by reference in any
filing of Abaxis, Inc. under the Securities Act or the Exchange
Act, whether made before or after the date hereof and
irrespective of any general incorporation language in any such
filing.
12
Committee meets jointly with the Board of Directors and although
we consider these joint meetings as Compensation Committee
meetings as well as Board of Directors meetings, the directors
are not compensated for the Compensation Committee meeting as a
separate meeting. The Compensation Committee has adopted a
written charter that is available to shareholders in the
Investor Relations section of the Companys website at
http://www.abaxis.com.
For additional information about the Compensation Committee, see
Compensation Committee Report and Executive
Compensation.
The Compensation Committee reviews and makes recommendations to
the Board of Directors regarding the Companys compensation
strategy, policies, plans and programs and all forms of
compensation to be provided to the Companys executive
officers and directors, including among other things:
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development or review and approval of corporate and individual
performance objectives relevant to the compensation of the
Companys Chief Executive Officer and evaluation of
performance in light of these stated objectives;
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review and approval of the compensation and other terms of
employment or service, including severance and
change-in-control
arrangements, of the Companys Chief Executive Officer and
the other executive officers; and
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development or review and approval of incentive-based or
equity-based compensation plans in which the Companys
executive officers and employees participate.
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The Compensation Committee also reviews with management the
Companys Compensation Discussion and Analysis and
considers whether to recommend that it be included in proxy
statements and other filings.
Compensation
Committee Processes and Procedures
Our Compensation Committee, which operates under a written
charter adopted by the Board of Directors, is primarily
responsible for reviewing and recommending to the Board of
Directors for approval the compensation arrangements for our
executive officers and directors. In carrying out these
responsibilities, the Compensation Committee shall review all
components of executive officer and director compensation for
consistency with the Compensation Committees compensation
philosophy as in effect from time to time. In connection with
their review and recommendations, our Compensation Committee
also considers the recommendations of our Chief Executive
Officer, Mr. Clinton Severson. Our Compensation Committee
gives considerable weight to Mr. Seversons
recommendations because of his direct knowledge of each
executive officers performance and contribution to our
financial performance. However, Mr. Severson does not
participate in the determination of his own compensation. No
other executive officers participate in the determination or
recommendation of the amount or form of executive officer
compensation, except the Companys Chief Financial Officer
as discussed below. Our Compensation Committee does not delegate
any of its functions in determining executive
and/or
director compensation. To date, our Compensation Committee has
not established any formal policies or guidelines for allocating
compensation between long-term and currently paid out
compensation, cash and non-cash compensation, or among different
forms of non-cash compensation.
Our Compensation Committee may discuss with our Chief Executive
Officer or Chief Financial Officer our financial, operating and
strategic business objectives, bonus targets or performance
goals. The Compensation Committee reviews and determines the
appropriateness of the financial measures and performance goals,
as well as assesses the degree of difficulty in achieving
specific bonus targets and performance goals. The Compensation
Committee then presents its recommendation for executive
compensation to the Board of Directors for final review and
approval. Typically, these recommendations are made to our Board
of Directors by the first quarter of the ensuing fiscal year.
From time to time, our Compensation Committee may engage an
independent compensation advisor to obtain competitive
compensation data. In March 2006, we retained the independent
compensation consulting firm of Top Five Data Services, Inc.
(Top Five) to, among other things, help identify
appropriate peer group companies and to obtain and evaluate
executive compensation data for these companies, and took its
recommendations into account in setting fiscal 2007 executive
compensation. We did not engage another compensation consultant,
or request additional recommendations from Top Five, in
connection with our determination of fiscal 2010 or fiscal 2011
executive compensation because our Compensation Committee and
Board of Directors determined that many of the
13
recommendations made by Top Five with respect to fiscal 2007
continued to be relevant for fiscal 2010 and fiscal 2011. In May
2008, our Compensation Committee engaged an independent
compensation consulting firm, Watson Wyatt, to prepare
competitive benchmarking studies as to, and advise the
Compensation Committee on long-term equity compensation for
executives in similarly-situated companies. Our Compensation
Committee and Board of Directors may engage compensation
consultants in the future as they deem it to be necessary or
appropriate.
The specific determinations of the Compensation Committee with
respect to executive compensation for fiscal 2010 are described
in greater detail in the Compensation Discussion and Analysis
section of this proxy statement.
Compensation
Committee Interlocks and Insider Participation
No member of the Compensation Committee has ever been an
executive officer or employee of the Company. None of the
Companys executive officers currently serves, or has
served during the last completed fiscal year, on the
Compensation Committee or board of directors of any other entity
that has one or more executive officers serving as a member of
the Companys board of directors or compensation committee.
For information with respect to related-person transactions
involving members of the Compensation Committee, see
Transactions with Related Persons.
Compensation
Committee
Report2
The Compensation Committee has reviewed and discussed with
management the disclosures contained in the Compensation
Discussion and Analysis (CD&A) contained in
this proxy statement. Based on this review and discussion, the
Compensation Committee has recommended to the Board of Directors
that the CD&A be included in this proxy statement.
THE
COMPENSATION COMMITTEE
Richard J.
Bastiani, Ph.D., Chair
Henk Evenhuis
Prithipal Singh, Ph.D.
Ernest Tucker, M.D.
Nominating
and Corporate Governance Committee
The members of the Nominating and Corporate Governance Committee
are Dr. Bastiani, Mr. Evenhuis, Dr. Singh and
Dr. Tucker. Each of the members of the Nominating and
Corporate Governance Committee are independent (as independence
is currently defined in Rule 4200(a)(15) of the Nasdaq
listing standards). The Nominating and Corporate Governance
Committee did not hold any meetings during the fiscal year ended
March 31, 2010. The Nominating and Corporate Governance
Committee has adopted a written charter that is available to
shareholders in the Investor Relations section of the
Companys website at
http://www.abaxis.com.
The Nominating and Corporate Governance Committee reviews the
results of the evaluation of the Board of Directors and its
committees, and the needs of the Board of Directors for various
skills, experience, expected contributions and other
characteristics, and the optimal size of the Board in light of
these needs, in determining the director candidates to be
nominated at the annual meeting. The Nominating and Corporate
Governance Committee will evaluate candidates for directors,
including incumbent directors and candidates proposed by
directors, shareholders or management, in light of the
Nominating and Corporate Governance Committees views of
the current needs of the Board of Directors for certain skills,
experience or other characteristics, the candidates
background, skills, experience, other characteristics and
expected contributions and the qualification standards, if any,
established by the Nominating and Corporate Governance
Committee. If the Nominating and Corporate Governance Committee
believes that the Board of Directors requires additional
candidates for nomination, the
2 The
material in this report is not soliciting material,
is not deemed filed with the Securities and Exchange
Commission and is not to be incorporated by reference in any
filing of Abaxis, Inc. under the Securities Act or the Exchange
Act, whether made before or after the date hereof and
irrespective of any general incorporation language in any such
filing.
14
Nominating and Corporate Governance Committee may poll existing
directors or management for suggestions for candidates and may
engage, as appropriate, a third party search firm to assist in
identifying qualified candidates. The process may also include
interviews and additional background and reference checks for
non-incumbent nominees, at the discretion of the Nominating and
Corporate Governance Committee. In making the determinations
regarding nominations of directors, the Nominating and Corporate
Governance Committee may take into account the benefits of
diverse viewpoints as well as the benefits of a constructive
working relationship among directors.
The Nominating and Corporate Governance Committee will consider
director nominations made by shareholders in accordance with the
requirements of Abaxis bylaws consistent with these
procedures. Any shareholder entitled to vote in the election of
directors generally may nominate one or more persons for
election as directors at a meeting only if timely notice of such
shareholders intent to make such nomination or nominations
has been given in writing to the secretary of Abaxis. To be
timely, a shareholder nomination for a director to be elected at
an annual meeting shall be received at Abaxis principal
executive offices not less than 120 calendar days in advance of
the date that Abaxis proxy statement was released to
shareholders in connection with the previous years annual
meeting of shareholders, except that if no annual meeting was
held in the previous year or the date of the annual meeting has
been changed by more than 30 calendar days from the date
contemplated at the time of the previous years proxy
statement, or in the event of a nomination for director to be
elected at a special meeting, notice by the shareholders to be
timely must be received not later than the close of business on
the tenth day following the day on which such notice of the date
of the special meeting was mailed or such public disclosure was
made. Each such notice shall set forth: (a) the name and
address of the shareholder who intends to make the nomination
and of the person or persons to be nominated; (b) a
representation that the shareholder is a holder of record of
stock of Abaxis entitled to vote for the election of directors
on the date of such notice and intends to appear in person or by
proxy at the meeting to nominate the person or persons specified
in the notice; (c) a description of all arrangements or
understandings between the shareholder and each nominee and any
other person or persons (naming such person or persons) pursuant
to which the nomination or nominations are to be made by the
shareholder; (d) such other information regarding each
nominee proposed by such shareholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules
of the SEC, had the nominee been nominated, or intended to be
nominated, by the board of directors; and (e) the consent
of each nominee to serve as a director of Abaxis if so elected.
Other than the foregoing, there are no stated minimum criteria
for director nominees, although the Nominating and Corporate
Governance Committee may also consider such other factors as it
may deem to be in the best interests of Abaxis and its
shareholders.
The Nominating and Corporate Governance Committee does not have
a policy regarding diversity. Diversity is one of a number of
factors that the committee takes into account in identifying
nominees, and the committee believes that it is essential that
Board members represent diverse viewpoints.
SHAREHOLDER
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Shareholders may communicate with the Board or any of our
directors by transmitting correspondence by mail, facsimile or
email, addressed as follows:
Chairman of
the Board
or Board of Directors
or any individual director
c/o Mr. Alberto
R. Santa Ines, Chief Financial Officer and Secretary
3240 Whipple Road
Union City, CA 94587
Fax:
510-441-6151
or
Email Address: investors@abaxis.com
The Compliance Officer shall maintain a log of such
communications and transmit as soon as practicable such
communications to the identified director addressee(s), unless
there are safety or security concerns that mitigate against
further transmission of the communication, as determined by the
Compliance Officer in consultation with Abaxis legal
counsel. The Board of Directors or individual directors so
addressed shall be advised of any
15
communication withheld for safety or security reasons as soon as
practicable. The Compliance Officer shall relay all
communications to directors absent safety or security issues.
CODE OF
BUSINESS CONDUCT AND ETHICS
The Company has adopted the Abaxis, Inc. Code of Business
Conduct and Ethics that applies to all of the Companys
executive officers, directors and employees, including without
limitation the Companys principal executive officer,
principal financial officer, principal accounting officer or
controller or persons performing similar functions. The Code of
Business Conduct and Ethics is available on our website at
www.abaxis.com under Investor Relations at
Corporate Governance. If the Company makes any
substantive amendments to the Code of Business Conduct and
Ethics or grants any waiver from a provision of the Code of
Business Conduct and Ethics to any executive officer or
director, the Company will promptly disclose the nature of the
amendment or waiver on its website. The Company intends to
satisfy the disclosure requirement under Item 5.05 of
Form 8-K
regarding any amendment to, or waiver of, any provision of the
Code of Business Conduct and Ethics by disclosing such
information on the same website.
16
In July 2005, the Board of Directors (the Board)
adopted, and the Companys shareholders subsequently
approved, the Abaxis, Inc. 2005 Equity Incentive Plan (the
2005 Plan), which was an amendment and restatement
of the Companys 1998 Stock Option Plan. Prior to any
shareholder approval of the increase in shares subject to this
Proposal 2, as of August 31, 2010, there was an
aggregate of 5,386,000 shares of common stock authorized
for issuance under the 2005 Plan. During fiscal 2010, the
Company granted restricted stock unit awards for an aggregate of
309,000 shares of common stock under the 2005 Plan. No
stock options were granted under the 2005 Plan during fiscal
2010.
Proposed
Amendment to the 2005 Plan
In July 2010, the Board approved an amendment to the 2005 Plan,
subject to shareholder approval, to (i) increase the
aggregate number of shares of common stock authorized for
issuance under the 2005 Plan by 500,000 shares to a total
of 5,886,000 shares and (ii) clarify that the Company
may continue to grant cash-based awards intended to qualify as
performance-based compensation under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the Code)
by permitting the grant of performance cash awards and
establishing a separate limitation on the maximum dollar amount
for which such awards may be granted to an employee in any
fiscal year. The Board adopted these amendments in order to
ensure that the Company can continue to grant performance cash
awards and can continue to grant stock-based awards at levels
determined appropriate by the Board.
Reapproval
of the Internal Revenue Code Section 162(m) Performance
Criteria and Award Limits
The Board is requesting that our shareholders reapprove the
Internal Revenue Code Section 162(m) performance criteria
and award limits of the 2005 Plan to permit the Company to
continue to grant awards to our key officers that qualify as
performance-based compensation under Section 162(m) of the
Code.
Section 162(m) of the Code denies a tax deduction to any
publicly-held corporation for compensation paid to certain
covered employees in a taxable year to the extent
that compensation paid to a covered employee exceeds
$1 million. Our covered employees are our Chief Executive
Officer, and our three other most highly compensated officers
(not including our Chief Financial Officer). If compensation
qualifies as performance-based for
Section 162(m) purposes, a corporation may deduct it for
federal income tax purposes even if it exceeds $1 million
in a single year. In order to permit us to grant future awards
under the 2005 Plan to our covered employees that qualify as
performance-based compensation for
Section 162(m) purposes, our shareholders must approve the
provisions to the 2005 Plan that specify the types of
performance criteria that may be used as performance factors
under the 2005 Plan and its limitations on the maximum number of
shares subject to any performance equity award and maximum
dollar amount of any cash performance award that may be granted
to any individual in any single year. It is possible if we do
not seek reapproval of the Section 162(m) performance
criteria and maximum award limitations of the 2005 Plan at this
Annual Meeting, we may not be able to deduct the entirety of the
compensation paid as performance-based compensation,
including compensation attributable to stock options that are
granted to covered employees after the date of this Annual
Meeting which, when combined with all other types of
compensation received by a covered employee from Abaxis may
exceed the $1 million limitation in any given year.
Certain kinds of compensation, including qualified
performance-based compensation, are disregarded for
purposes of the Section 162(m) $1 million deduction
limitation. In accordance with Treasury Regulations issued under
Section 162(m) of the Code, generally, compensation
attributable to stock options and stock appreciation rights will
qualify as performance-based compensation, provided that, among
other things, the maximum number of shares subject to the award
that may be granted to any employee during a specified period is
approved by the shareholders of the publicly held corporation
(the Section 162(m) Limits). Compensation
attributable to performance stock awards and performance cash
awards may qualify as performance-based
compensation, provided that, among other things, the material
terms of the compensation (including the performance criteria on
which performance goals are based) (the
Section 162(m) Performance Criteria) and the
maximum amount of
17
compensation (or a formula used to calculate the amount of
compensation to be paid to the employee if the performance goal
is attained) (also, the Section 162(m) Limits
and the Section 162(m) Limits together with the
Section 162(m) Performance Criteria, the
Section 162(m) Provisions) are approved every
five years by the shareholders of the publicly held corporation
before the compensation is paid. The 2005 Plan, including the
performance criteria were initially approved by our shareholders
at our 2005 annual meeting of shareholders and therefore will
need to be reapproved at the 2010 annual meeting of
shareholders. In order to enable us to grant stock options,
stock appreciation rights, performance stock awards and
performance cash awards or other qualified performance-based
compensation to covered employees under the 2005 Plan after the
annual meeting that is fully deductible to the Company under
Section 162(m) of the Code, our shareholders must reapprove
the Section 162(m) Provisions at the annual meeting. If our
shareholders do not re-approve the Section 162(m)
Provisions, following the annual meeting we may not grant
performance-based compensation awards under the 2005
Plan to our covered employees.
Our Board believes that it would be in the best interests of the
Company and our shareholders to allow for the grant of tax
deductible stock options, stock appreciation rights, performance
stock awards, performance cash awards and other qualified
performance-based compensation to its covered employees. As
described below in our Compensation Discussion and Analysis,
performance-based compensation and equity compensation are
important elements of our executive compensation program that we
believe are necessary to retain executive officers and to
incentivize them to build long-term shareholder value, and to
align the interests of our executive officers with our
shareholders.
Shareholders are requested in this Proposal 2 to approve
the amendments to the Companys 2005 Plan and to reapprove
the Section 162(m) Provisions of the 2005 Plan to permit
the Company to continue to grant awards to our key officers that
qualify as performance-based compensation under
Section 162(m) of the Code, as described above. The
affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and voting at the
meeting (which shares voting affirmatively also constitute at
least a majority of the required quorum) will be required to
approve the amendments to the 2005 Plan under the Plan and the
performance criteria and award limits under Section 162(m)
of the Code. For purposes of this vote, abstentions and broker
non-votes will not be counted for any purpose in determining
whether this matter has been approved.
THE BOARD
OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
The essential features of the 2005 Plan are outlined below. This
summary is qualified in its entirety by reference to the
complete text of the 2005 Plan. Shareholders are urged to read
the actual text of the 2005 Plan in its entirety, which is
appended to this proxy statement as Appendix A.
General
The 2005 Plan provides for the grant of stock options, stock
appreciation rights, stock awards (stock purchase rights and
stock bonuses), restricted stock units, performance shares,
performance units, performance cash awards and other
stock-based awards (collectively awards). Incentive
stock options granted under the 2005 Plan are intended to
qualify as incentive stock options within the
meaning of Section 422 of the Code. Nonstatutory stock
options granted under the 2005 Plan are not intended to qualify
as incentive stock options under the Code. Stock appreciation
rights granted under the 2005 Plan may be tandem rights or
freestanding rights. See Federal Income Tax
Information for a discussion of the tax treatment of
awards. To date, the Company has granted only restricted stock
units under the 2005 Plan.
Purpose
The Board adopted the 2005 Plan to provide a means by which
employees, directors and consultants of the Company may be given
an opportunity to purchase stock in the Company, to assist in
retaining the services of such persons, to secure and retain the
services of persons capable of filling such positions and to
provide incentives for such persons to exert maximum efforts for
the success of the Company. As of August 31, 2010, we had
approximately 373 employees, including eight executive
officers; four non-employee directors; and 15 consultants
18
who would be eligible to receive awards under the 2005 Plan, in
the sole discretion of the Compensation Committee or the Board,
as described below.
Administration
The 2005 Plan will be administered by the Compensation Committee
of the Board or another committee of the Board appointed to
administer the 2005 Plan, or, in the absence of such committee,
by the Board. (For purposes of this summary, the term
Committee refers to either such committee or the
Board.) Subject to the provisions of the 2005 Plan, the
Committee has the power to construe and interpret the 2005 Plan
and to determine in its discretion the persons to whom or the
dates on which awards will be granted, the number of shares of
common stock to be subject to each award, the time or times
during the term of each award within which all or a portion of
such award may be exercised, the exercise price, the type of
consideration and other terms of the award.
The Committee may, subject to certain limitations on the
exercise of its discretion required by Section 162(m),
amend or cancel any award, waive any restrictions or conditions
applicable to any award, and accelerate, extend or defer the
vesting of any award. The Committee may delegate to two or more
of its members the authority to grant awards under the 2005
Plan. The 2005 Plan provides, subject to certain limitations,
for indemnification by the company of any director or officer
against all reasonable expenses, including attorneys fees,
incurred in connection with any legal action arising from such
persons action or failure to act in administering the 2005
Plan. All awards granted under the 2005 Plan will be evidenced
by a written or electronic agreement between Abaxis and the
participant specifying the terms and conditions of the award,
consistent with the requirements of the 2005 Plan. The Committee
will interpret the 2005 Plan and awards granted thereunder, and
all determinations of the Committee will be final and binding on
all persons having an interest in the 2005 Plan or any award.
Shares Subject
to the 2005 Plan
As of August 31, 2010, restricted stock units and stock
options covering an aggregate of 1,600,040 shares of common
stock were outstanding under the 2005 Plan. Prior to the
increase discussed in this Proposal 2, an aggregate of
131,428 shares of common stock remain available as of
August 31, 2010 for future issuance under the 2005 Plan.
If awards granted under the 2005 Plan expire or otherwise
terminate for any reason without having been exercised or
settled in full, the shares of common stock not acquired
pursuant to such awards again become available for issuance
under the 2005 Plan. If shares of common stock subject to
forfeiture or repurchase issued pursuant to stock awards under
the 2005 Plan are forfeited or repurchased by the Company, the
forfeited or repurchased stock will again become available for
issuance under the 2005 Plan. To the extent an award is settled
in cash, the shares underlying such award will not be treated as
having been issued under the 2005 Plan and will therefore not
reduce the number of shares available for issuance under the
2005 Plan. Shares withheld or reacquired by the company in
satisfaction of a tax withholding obligation will not reduce the
number of shares available for issuance under the 2005 Plan.
Upon payment in shares of common stock pursuant to the exercise
of a stock appreciation right, the number of shares available
for issuance under the 2005 Plan will be reduced by the number
of shares actually issued in such payment. If shares are
tendered in payment of the exercise price of an option, or the
option is exercised by means of a net-exercise procedure, the
number of shares available under the 2005 Plan will be reduced
by the net number of shares for which the option is exercised.
Eligibility
Awards may be granted to employees, consultants and directors of
the Company or any affiliate of the Company. Incentive stock
options may be granted under the 2005 Plan only to employees
(including officers) of the Company and its affiliates.
Employees (including officers), directors and consultants of
both the Company and its affiliates are eligible to receive all
other types of awards under 2005 Plan.
No incentive stock option may be granted under the 2005 Plan to
any person who, at the time of the grant, owns (or is deemed to
own) stock possessing more than 10% of the total combined voting
power of the Company or any affiliate of the Company, unless the
exercise price is at least 110% of the fair market value of the
stock subject to the option on the date of grant and the term of
the option does not exceed five years from the date of grant. In
addition, the aggregate fair market value, determined at the
time of grant, of the shares of common stock with respect to
which
19
incentive stock options are exercisable for the first time by a
participant during any calendar year (under the 2005 Plan and
any other such plans of the Company and its affiliates) may not
exceed $100,000.
In addition to the limitation described above on the total
number of shares of our common stock that will be authorized for
issuance under the 2005 Plan, the 2005 Plan limits the numbers
of shares that may be issued under each type of award, subject
to adjustment as described below. Subject to this
Proposal 2, no more than 5,886,000 shares may be
issued upon the exercise of incentive stock options or other
awards granted under the 2005 Plan. No more than
500,000 shares in the aggregate may be issued pursuant to
full value awards, which are stock purchase, stock
bonus or other stock-based awards under which shares are
acquired for less than their fair market value, restricted stock
units and performance share awards granted under the 2005 Plan.
In addition, no more than 5% of the maximum aggregate number of
shares authorized under the 2005 Plan may be issued pursuant to
such full value awards that provide for vesting more rapidly
than over a period of three years if vesting is based upon
continued service alone or that have a performance period of
less than 12 months if vesting is based on the attainment
of performance goals. To enable compensation in connection with
certain types of awards to qualify as
performance-based within the meaning of
Section 162(m) of the Code, the 2005 Plan establishes
limits on the maximum aggregate number of shares or dollar
amount for which any such award may be granted to an employee in
any fiscal year (the Section 162(m)
Limitations). The limits for awards intended to qualify as
performance-based are as follows:
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Stock options and stock appreciation
rights: No more than 100,000 shares.
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Stock purchase rights, stock bonuses and restricted stock
unit awards: No more than 500,000 shares.
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Performance share and performance unit
awards: No more than 500,000 shares, or
500,000 units, for each fiscal year contained in the
performance period of the award.
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Performance cash awards: No more than
$5,000,000 for each fiscal year contained in the performance
period of the award.
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Other stock-based awards: No more than
50,000 shares.
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Terms
of Restricted Stock Unit Awards
Restricted stock unit awards may be granted under the 2005 Plan
pursuant to a restricted stock unit award agreement.
Consideration. The purchase price, if any, for
restricted stock unit awards may be paid in any form of legal
consideration acceptable to the Committee, including the
provision of services.
Settlement of Awards. A restricted stock unit
award may be settled and Abaxis shall issue shares underlying
the award on the date on which restricted stock units subject to
the participants restricted stock unit award vests or on
such other date determined by the Committee, in its discretion.
Notwithstanding the foregoing, if permitted by the Committee and
set forth in the award agreement, the participant may elect in
accordance with terms specified in the award agreement to defer
receipt of all or any portion of the shares of stock or other
property otherwise issuable to the participant in connection
with settlement of the restricted stock unit award.
Vesting. Restricted stock unit awards may or
may not be subject to vesting conditions based on service or the
achievement of such performance criteria as the Committee
specifies, including without limitation the attainment of one or
more performance goals similar to those described below in
connection with performance awards below. Except as otherwise
provided in the applicable award agreement, restricted stock
unit awards that have not vested will be forfeited upon the
participants termination of service for any reason,
whether voluntary or involuntary (including the
participants death or disability).
Restrictions on Transfer. During any period in
which shares acquired pursuant to a restricted stock unit award
remain subject to vesting conditions, such shares may not be
transferred by the participant other than by will or by the laws
of descent and distribution or as otherwise provided in the
award agreement.
Voting Rights; Dividend
Equivalents. Participants holding restricted
stock unit awards shall have no rights to vote the shares until
the date of issuance of such shares. The Committee, in its
discretion, may provide for
20
participants to receive a dividend equivalent to be credited
with respect to shares covered by a restricted stock unit award
upon the grant of a cash dividend. Such additional restricted
stock units shall be subject to the same terms and conditions
and shall be settled in the same manner and at the same time (or
as soon thereafter as practicable) as the restricted stock units
originally subject to the award. The Company does not anticipate
paying cash dividends on its common stock for the foreseeable
future, however.
Terms
of Options
The following is a description of the permissible terms of
options under the 2005 Plan. Individual option grants may be
more restrictive as to any or all of the permissible terms
described below. We have not granted options under the 2005 Plan.
Exercise Price; Payment. The exercise price of
incentive stock options may not be less than 100% of the fair
market value of the stock subject to the option on the effective
date of the grant and, in some cases (see
Eligibility above), may not be less than 110% of
such fair market value. The exercise price of nonstatutory
options may not be less than 100% of the fair market value of
the stock on the effective date of grant. As of August 31,
2010, the closing price of our common stock as reported on the
Nasdaq Global Market was $18.06 per share.
The exercise price of options granted under the 2005 Plan must
be made (i) in cash, by check or in cash equivalent,
(ii) by tender to the Company of shares of common stock
owned by the participant having a fair market value not less
than the exercise price, (iii) by means of a net-exercise
procedure, (iv) by means of a broker-assisted cashless
exercise, or (v) by such other consideration as may be
approved by the Committee from time to time to the extent
permitted by applicable law. The Committee may at any time or
from time to time grant options which do not permit all of the
foregoing forms of consideration to be used in payment of the
exercise price or which otherwise restrict one or more forms of
consideration.
Vesting. Options granted under the 2005 Plan
may become exercisable in cumulative increments, or
vest, as determined by the Committee. Shares covered
by currently outstanding options under the 2005 Plan typically
vest monthly during the participants employment by, or
service as a director or consultant to, the Company or an
affiliate (collectively, service), and certain
options do not begin to vest until the first anniversary of the
grant date. Shares covered by options granted in the future
under the 2005 Plan may be subject to different vesting terms.
Tax Withholding. To the extent provided by the
terms of an option, a participant may satisfy any federal, state
or local tax withholding obligation relating to the exercise of
such option by a cash payment upon exercise, by authorizing the
Company to withhold a portion of the stock otherwise issuable to
the participant, by delivering already-owned Abaxis common stock
or by a combination of these means.
Term. The maximum term of options under the
2005 Plan is 10 years, except that in certain cases (see
Eligibility), such as an incentive stock option
granted to a 10% shareholder, the maximum term is five years.
Options will remain exercisable for such period of time
following a participants termination of service as
determined by the Committee and provided in the
participants award agreement, provided that in no case may
an option be exercised after its expiration date.
A participants option agreement may provide that if a sale
of the shares acquired upon exercise of the option within the
applicable time periods following the termination of the
participants service would result in liability under
Section 16(b) of the Securities Exchange Act of 1934 (the
Exchange Act), then the option shall remain
exercisable until the earlier of (i) the expiration of the
term of the option, (ii) the 10th day after the last
date on which such sale would result in such liability under
Section 16(b), or (iii) the 190th day after the
termination of participants service. A participants
option agreement may provide that if the exercise of the option
following the termination of the participants service
would be prohibited because the issuance of stock would violate
the registration requirements under the Securities Act, then the
option will terminate on the earlier of (i) the expiration
of the term of the option or (ii) three months after the
participant is notified by the Company that the option is
exercisable, during which the exercise of the option would not
be in violation of such registration requirements.
Restrictions on Transfer. The participant may
not transfer an option except by will or by the laws of descent
and distribution. During the lifetime of the participant, an
option may be exercised only by the participant or permitted
transferee.
21
Terms
of Stock Appreciation Rights
Stock appreciation rights may be granted under the 2005 Plan
pursuant to stock appreciation rights agreements either in
tandem with a related option (a Tandem SAR) or
independently of any option (a Freestanding SAR). No
stock appreciation rights have been granted under the 2005 Plan
to date.
Exercise. A Tandem SAR requires the option
holder to elect between the exercise of the underlying option
for shares of common stock or the surrender of the option and
the exercise of the related stock appreciation right. A Tandem
SAR is exercisable only at the time and only to the extent that
the related stock option is exercisable, while a Freestanding
SAR is exercisable at such times and subject to such terms,
conditions, performance criteria or restrictions as specified by
the Committee. The exercise price of a Tandem SAR will be the
same as the exercise price of the related option, and the
exercise price of a Freestanding SAR may not be less than the
fair market value of a share of our common stock on the date of
grant.
Each stock appreciation right is denominated in shares of common
stock equivalents. Upon the exercise of any stock appreciation
right, the participant is entitled to receive an amount equal to
the excess of the fair market value of the underlying shares of
common stock as to which the right is exercised over the
aggregate exercise price for such shares, determined by the
Committee on the date of grant.
Settlement of Awards. Payment of the
appreciation distribution amount upon the exercise of a Tandem
SAR may be made only in shares of common stock whose fair market
value on the exercise date equals the payment amount. At the
Committees discretion, payment of this amount upon the
exercise of a Freestanding SAR may be made in cash or shares of
common stock and may be paid in a lump sum or on a deferred
basis in accordance with the terms of the participants
award agreement.
Vesting. Stock appreciation rights vest and
become exercisable at the rate specified in the stock
appreciation right agreement as determined by the Committee.
Termination of Service. Upon termination of a
participants service, the participant generally may
exercise any vested stock appreciation right for such period
specified in the stock appreciation right agreement after the
date such service relationship ends. In no event may a stock
appreciation right be exercised beyond the expiration of its
term. The maximum term of any Freestanding SAR granted under the
2005 Plan is ten years.
Restrictions on Transfer. Stock appreciation
rights are generally nontransferable by the participant other
than by will or by the laws of descent and distribution, and are
generally exercisable during the participants lifetime
only by the participant. Other terms of stock appreciation
rights are generally similar to the terms of comparable stock
options.
Terms
of Restricted Stock Awards
Restricted stock awards may be granted under the 2005 Plan
pursuant to a restricted stock award agreement. No restricted
stock awards have been granted under the 2005 Plan.
Consideration. The purchase price, if any, for
shares of stock issuable under each restricted stock award and
the means of payment shall be established by the Committee in
its discretion.
Settlement of Awards. A restricted stock award
may be settled by the delivery of shares of our common stock, as
determined by the Committee.
Vesting. Shares issued pursuant to any
restricted stock award may or may not be subject to vesting
conditions based on service or the achievement of such
performance criteria as the Committee specifies, including the
attainment of one or more performance goals similar to those
described below in connection with performance awards. Unless
otherwise provided by the Committee, a participant will forfeit
any shares of stock as to which vesting conditions have not been
satisfied prior to the participants termination of service.
Restrictions on Transfer. During any period in
which shares acquired pursuant to a restricted stock award
remain subject to vesting conditions, such shares may not be
transferred by the participant other than by will or by the laws
of descent and distribution or as otherwise provided in the
award agreement.
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Voting Rights; Dividend Equivalents. Unless
otherwise determined by the Committee, participants holding
stock awards subject to vesting conditions will have the right
to vote the shares and to receive any dividends paid, except
that dividends or other distributions paid in shares will be
subject to the same restrictions as the original award.
Performance
Awards
Under the 2005 Plan, the Committee may grant performance awards
subject to such conditions and the attainment of such
performance goals over such periods as the Committee determines
in writing and sets forth in a written agreement between the
company and the participant. These awards may be designated as
performance shares, performance units or performance cash
awards. Performance shares and performance units are unfunded
bookkeeping entries generally having initial values,
respectively, equal to the fair market value, determined on the
grant date of the number of shares of common stock. Performance
cash awards are unfunded bookkeeping entries having a monetary
value established by the Committee at the time of grant.
Performance Terms. In granting a performance
award, the Committee will set a period of time (a
performance period) over which the attainment of one
or more goals (performance goals) will be measured
for the purpose of determining whether the award recipient has a
vested right in or to such stock award. Within the time period
prescribed by Section 162(m) of the Code (typically before
the 90th day of a performance period), the Committee will
establish the performance goals, based upon one or more
pre-established criteria (performance criteria)
enumerated in the 2005 Plan and described below.
Performance goals will be based on the attainment of specified
target levels with respect to one or more measures of business
or financial performance of the company
and/or any
affiliate of the Company, or any of its business units as may be
selected by the Committee. The Committee, in its discretion, may
base performance goals on one or more of the following such
measures:
revenue; sales; expenses; operating income; gross margin;
operating margin; earnings before any one or more of:
stock-based compensation expense, interest, taxes, depreciation
and amortization; pre-tax profit; net operating income; net
income; economic value added; free cash flow; operating cash
flow; stock price; earnings per share; return on shareholder
equity; return on capital; return on assets; return on
investment; employee satisfaction; employee retention; balance
of cash, cash equivalents and marketable securities; market
share; daily average revenue trades; asset gathering metrics;
number of customers; customer satisfaction; product development;
product quality; completion of a joint venture or other
corporate transaction; completion of identified special project;
and overall effectiveness of management; or other measures of
performance selected by the Committee.
The target levels with respect to these performance measures may
be expressed on an absolute basis or relative to a standard
specified by the Committee. The degree of attainment of
performance measures will be calculated in accordance with
generally accepted accounting principles, but prior to the
accrual or payment of any performance award for the same
performance period, and, according to criteria established by
the Committee, excluding the effect (whether positive or
negative) of changes in accounting standards or any
extraordinary, unusual or nonrecurring item occurring after the
establishment of the performance goals applicable to a
performance award.
Settlement of Awards. Following completion of
the applicable performance period, the Committee will certify in
writing the extent to which the applicable performance goals
have been attained and the resulting value to be paid to the
participant. To the extent earned, performance awards may be
settled in cash, shares of common stock or any combination
thereof.
Adjustments. The Committee retains the
discretion to eliminate or reduce, but not increase, the amount
that would otherwise be payable on the basis of the performance
goals attained to a participant who is a covered
employee within the meaning of Section 162(m) of the
Code. However, no such reduction may increase the amount paid to
any other participant. The Committee may make positive or
negative adjustments to performance award payments to
participants other than covered employees to reflect the
participants individual job performance or other factors
determined by the Committee. In its discretion, the Committee
may provide a participant awarded
23
performance shares with dividend equivalent rights with respect
to cash dividends paid on the companys common stock.
Termination of Service. Unless otherwise
provided by the Committee, if a participants service
terminates due to the participants death or disability
prior to completion of the applicable performance period, the
final award value will be determined at the end of the
performance period on the basis of the performance goals
attained during the entire performance period but will be
prorated for the number of months of the participants
service during the performance period. If a participants
service terminates prior to completion of the applicable
performance period for any other reason, the 2005 Plan provides
that, unless otherwise determined by the Committee, the
performance award will be forfeited.
Restrictions on Transfer. No performance award
may be sold or transferred other than by will or the laws of
descent and distribution prior to settlement.
Voting Rights; Dividend
Equivalents. Participants holding performance
share awards shall have no rights to vote the shares until the
date of issuance of such shares. The Committee, in its
discretion, may provide for participants to receive a dividend
equivalent to be credited with respect to shares covered by a
performance share award upon the grant of a cash dividend. No
deemed equivalents shall be paid with respect to performance
units.
Deferred
Compensation Awards
The 2005 Plan authorizes the Committee to establish a deferred
compensation award program. If and when implemented,
participants designated by the Committee who are officers,
directors or members of a select group of highly compensated
employees may elect to receive, in lieu of compensation
otherwise payable in cash an award of a stock bonus or deferred
stock units or in lieu of cash or shares of common stock
issuable upon the exercise or settlement of stock options, stock
appreciation rights or performance share or performance unit
awards, an award of deferred stock units. Each such stock unit
represents a right to receive one share of our common stock at a
future date determined in accordance with the participants
award agreement.
Settlement of Awards. Deferred stock units
will be settled by distribution to the participant of a number
of whole shares of common stock equal to the number of stock
units subject to the award as soon as practicable following the
earlier of the date on which the participants service
terminates or a settlement date elected by the participant at
the time of his or her election to receive the deferred stock
unit award. Participants are not required to pay any additional
consideration in connection with the payment of a stock bonus or
the settlement of deferred stock units.
Voting Rights; Dividend Equivalents. A holder
of deferred stock units has no voting rights or other rights as
a shareholder until shares of common stock are issued to the
participant in settlement of the deferred stock units. However,
participants holding deferred stock units will be entitled to
receive dividend equivalents with respect to any payment of cash
dividends on an equivalent number of shares of common stock.
Such dividend equivalents will be credited in the form of
additional whole and fractional stock units determined in
accordance with a method specified by the Committee in the
participants award agreement.
Restrictions on Transfer. Prior to settlement,
deferred stock units may not be assigned or transferred other
than by will or the laws of descent and distribution.
Other
Stock-Based Awards
The Committee may grant other stock-based awards in such amounts
and subject to such terms and conditions as the Committee
determines. Other stock-based awards will specify a number of
shares or units based on shares or other equity-related awards.
Such awards may be subject to the attainment of one or more
performance goals similar to those described above in connection
with performance awards. Settlement of other stock-based awards
may be in cash or shares of common stock, as determined by the
Committee. A participant will have no voting rights with respect
to any such award unless and until shares are issued pursuant to
the award. The committee may grant dividend equivalent rights
with respect to other stock-based awards. The effect on such
awards of the participants termination of service will be
determined by the Committee and set forth in the
participants award agreement.
24
Adjustment
Provisions
The Committee, in its discretion and to prevent dilution or
enlargement of participants rights under the 2005 Plan,
will adjust the number of shares authorized under the 2005 Plan,
the numerical limits on awards and the number and kind of shares
and exercise price subject to outstanding awards in the event of
any change in the Companys common stock through merger,
consolidation, reorganization, reincorporation,
recapitalization, reclassification, stock dividend, stock split,
reverse stock split, combination of shares, exchange of shares
or similar change in capital structure of the Company, or if the
Company makes a distribution to its shareholders in a form other
than common stock (excluding normal cash dividends) that has a
material effect on the fair market value of its common stock. In
such circumstances, the Committee also has the discretion under
the 2005 Plan to adjust the terms of outstanding awards as it
deems appropriate.
Effect
of Certain Corporate Events
In the event of a change in control, as such term is
defined by the 2005 Plan, the surviving, continuing, successor
or purchasing entity or its parent may, without the consent of
any participant, either assume or continue in effect any or all
outstanding options and stock appreciation rights or substitute
substantially equivalent options or rights for its stock. Any
options or stock appreciation rights which are not assumed or
continued in connection with a change in control or exercised
prior to the change in control will terminate effective as of
the time of the change in control. The Committee may provide for
the acceleration of vesting of any or all outstanding options or
stock appreciation rights upon such terms and to such extent as
it determines.
The 2005 Plan also authorizes the Committee, in its discretion
and without the consent of any participant, to cancel each or
any outstanding option or stock appreciation right upon a change
in control in exchange for a payment to the participant with
respect to each vested share (and each unvested share if so
determined by the Committee) subject to the cancelled award of
an amount equal to the excess of the consideration to be paid
per share of common stock in the change in control transaction
over the exercise price per share under the award. The
Committee, in its discretion, may provide in the event of a
change in control for the acceleration of vesting
and/or
settlement of any stock award, restricted stock unit award,
performance share, performance unit, performance cash award or
other stock-based award held by a participant upon such
conditions and to such extent as determined by the Committee.
The Compensation Committee, in its discretion, may provide in
the event of a change in control for the acceleration of vesting
and/or
settlement of any stock award, restricted stock unit award,
performance share, performance unit, performance cash award or
other share-based award held by a participant upon such
conditions and to such extent as determined by our Compensation
Committee. It is currently anticipated that awards granted to
executive officers will accelerate fully on a change of control.
The vesting of non-employee director awards granted under the
2005 Plan automatically will accelerate in full upon a change in
control.
Duration,
Amendment and Termination
The 2005 Plan will continue in effect until its termination by
the Committee provided that all awards shall be granted within
10 years from the effective date of its adoption upon
approval by the shareholders. The Committee may terminate or
amend the 2005 Plan at any time, provided that no amendment will
be effective unless approved by the Companys shareholders
within 12 months before or after its adoption by the Board
if the amendment would: (i) modify the requirements as to
eligibility for participation (to the extent such modification
requires shareholder approval in order for the 2005 Plan to
satisfy Section 422 of the Code, if applicable, or
Rule 16b-3
of the Exchange Act); (ii) increase the number of shares
reserved for issuance upon exercise of awards; or
(iii) change any other provision of the 2005 Plan in any
other way if such modification requires shareholder approval in
order to comply with
Rule 16b-3
of the Exchange Act or satisfy the requirements of
Section 422 of the Code or any securities exchange listing
requirements. No termination or amendment may affect any
outstanding award unless expressly provided by the Committee,
and, in any event, may not adversely affect an outstanding award
without the consent of the participant unless necessary to
comply with any applicable law, including, but not limited to,
Section 409A of the Code, providing rules regarding the
taxation of nonqualified deferred compensation plans.
25
Federal
Income Tax Information
The following is a summary of the principal United States
federal income tax consequences to employees and the Company
with respect to participation in the 2005 Plan. This summary is
not intended to be exhaustive, and does not discuss the income
tax laws of any city, state or foreign jurisdiction in which a
participant may reside.
Incentive Stock Options. Incentive stock
options under the 2005 Plan are intended to be eligible for the
favorable federal income tax treatment accorded incentive
stock options under the Code. There generally are no
federal income tax consequences to the participant or the
Company by reason of the grant or exercise of an incentive stock
option. However, the exercise of an incentive stock option may
increase the participants alternative minimum tax
liability, if any.
If a participant holds stock acquired through exercise of an
incentive stock option for more than two years from the date on
which the option was granted and more than one year after the
date the option was exercised for those shares, any gain or loss
on a disposition of those shares will be a long-term capital
gain or loss if the participant held the stock for more than one
year. Upon such a qualifying disposition, the Company will not
be entitled to any income tax deduction.
Generally, if the participant disposes of the stock before the
expiration of either of these holding periods (a
disqualifying disposition), then at the time of
disposition the participant will realize taxable ordinary income
equal to the lesser of (i) the excess of the stocks
fair market value on the date of exercise over the exercise
price, or (ii) the participants actual gain, if any,
on the purchase and sale. The participants additional gain
or any loss upon the disqualifying disposition will be a capital
gain or loss, which will be long-term or short-term depending on
whether the stock was held for more than one year.
To the extent the participant recognizes ordinary income by
reason of a disqualifying disposition, the Company will
generally be entitled (subject to the requirement of
reasonableness, the provisions of Section 162(m) of the
Code and the satisfaction of a tax reporting obligation) to a
corresponding business expense deduction in the tax year in
which the disqualifying disposition occurs.
Nonstatutory Stock Options. Nonstatutory stock
options granted under the 2005 Plan generally have the following
federal income tax consequences. There are no tax consequences
to the participant or the Company by reason of the grant. Upon
acquisition of the stock, the participant normally will
recognize taxable ordinary income equal to the excess, if any,
of the stocks fair market value on the acquisition date
over the purchase price. However, to the extent the stock is
subject to certain types of vesting restrictions, the taxable
event will be delayed until the vesting restrictions lapse
unless the participant elects to be taxed on receipt of the
stock. With respect to employees, the Company is generally
required to withhold from regular wages or supplemental wage
payments an amount based on the ordinary income recognized.
Subject to the requirement of reasonableness, the provisions of
Section 162(m) of the Code and the satisfaction of a tax
reporting obligation, Abaxis will generally be entitled to a
business expense deduction equal to the taxable ordinary income
realized by the participant.
Upon disposition of the stock, the participant will recognize a
capital gain or loss equal to the difference between the selling
price and the sum of the amount paid for such stock plus any
amount recognized as ordinary income upon acquisition (or
vesting) of the stock. Such gain or loss will be long-term or
short-term depending on whether the stock was held for more than
one year. Slightly different rules may apply to participants who
acquire stock subject to certain repurchase options or who are
subject to Section 16(b) of the Exchange Act.
Performance Awards, Restricted Stock Unit Awards and Other
Stock-Based Awards. A participant generally will
recognize no income upon the grant of a performance share,
performance unit, restricted stock unit, performance cash award
or other stock-based award. Upon the settlement of such awards,
participants normally will recognize ordinary income in the year
of settlement in an amount equal to the cash received and the
fair market value of any unrestricted shares of stock received.
If the participant is an employee, such ordinary income
generally is subject to withholding of income and employment
taxes. If the participant receives shares of restricted stock,
the participant generally will be taxed in the same manner as
described below under Stock Awards. Upon the sale of
any shares received, any gain or loss, based on the difference
between the sale price and the fair market value on the
determination date (as defined below under Stock
Awards), will be taxed as capital gain or loss. Abaxis
generally
26
should be entitled to a deduction equal to the amount of
ordinary income recognized by the participant on the
determination date, except to the extent such deduction is
limited by applicable provisions of the Code.
Stock Appreciation Rights. No taxable income
is realized upon the receipt of a stock appreciation right, but
upon exercise of the stock appreciation right the fair market
value of the shares (or cash in lieu of shares) received must be
treated as compensation taxable as ordinary income to the
participant in the year of such exercise. Generally, with
respect to employees, the Company is required to withhold from
the payment made on exercise of the stock appreciation right, or
from regular wages or supplemental wage payments, an amount
based on the ordinary income recognized. Subject to the
requirement of reasonableness, Section 162(m) of the Code
and the satisfaction of a reporting obligation, the Company will
be entitled to a business expense deduction equal to the taxable
ordinary income recognized by the participant.
Stock Awards. A participant acquiring stock by
means of a stock purchase right or stock bonus generally will
recognize ordinary income equal to the excess of the fair market
value of the shares on the determination date over
the price paid, if any, for such shares. The determination
date is the date on which the participant acquires the
shares unless the shares are subject to a substantial risk of
forfeiture and are not transferable, in which case the
determination date is the earlier of (i) the date on which
the shares become transferable or (ii) the date on which
the shares are no longer subject to a substantial risk of
forfeiture. If the determination date is after the date on which
the participant acquires the shares, the participant may elect,
pursuant to Section 83(b) of the Code, to have the date of
acquisition be the determination date by filing an election with
the Internal Revenue Service no later than 30 days after
the date on which the shares are acquired. If the participant is
an employee, such ordinary income generally is subject to
withholding of income and employment taxes. Upon the sale of
shares acquired pursuant to a stock award, any gain or loss,
based on the difference between the sale price and the fair
market value on the determination date, will be taxed as capital
gain or loss. The Company generally should be entitled to a
deduction equal to the amount of ordinary income recognized by
the participant on the determination date, except to the extent
such deduction is limited by applicable provisions of the Code.
Potential Limitation on Company
Deductions. Section 162(m) of the Code
denies a deduction to any publicly held corporation for
compensation paid to certain covered employees in a
taxable year to the extent that compensation to such covered
employee exceeds $1 million. It is possible that
compensation attributable to awards, when combined with all
other types of compensation received by a covered employee from
the Company, may cause this limitation to be exceeded in any
particular year.
Certain kinds of compensation, including qualified
performance-based compensation, are disregarded for
purposes of the deduction limitation. In accordance with
Treasury Regulations issued under Section 162(m),
compensation attributable to stock options and stock
appreciation rights will qualify as performance-based
compensation if the award is granted by a compensation committee
solely comprising outside directors and either
(i) the plan contains a per-employee limitation on the
number of shares for which such awards may be granted during a
specified period, the per-employee limitation is approved by the
shareholders, and the exercise price of the award is no less
than the fair market value of the stock on the date of grant, or
(ii) the award is granted (or exercisable) only upon the
achievement (as certified in writing by the Committee) of an
objective performance goal established in writing by the
Committee while the outcome is substantially uncertain, and the
award is approved by shareholders.
Awards to purchase restricted stock, stock bonus awards and
performance cash awards will qualify as performance-based
compensation under the Treasury Regulations only if (i) the
award is granted by a compensation committee comprised solely of
outside directors, (ii) the award is granted
(or exercisable) only upon the achievement of an objective
performance goal established in writing by the compensation
committee while the outcome is substantially uncertain,
(iii) the compensation committee certifies in writing prior
to the granting (or exercisability) of the award that the
performance goal has been satisfied and (iv) prior to the
granting (or exercisability) of the award, shareholders have
approved the material terms of the award (including the class of
employees eligible for such award, the business criteria on
which the performance goal is based, and the maximum
amount or formula used to calculate the
amount payable upon attainment of the performance
goal).
27
Securities
Authorized for Issuance Under Equity Compensation
Plans
The Company has two equity incentive plans under which its
equity securities are or have been authorized for issuance to
its employees, directors and consultants: (i) the 2005 Plan
and (ii) the 1992 Outside Directors Stock Option Plan (the
Directors Plan). Both the 2005 Plan and the
Directors Plan have been approved by the Companys
shareholders. In June 2002, the time period for granting options
under the Directors Plan expired in accordance with the terms of
the plan.
From time to time we issue warrants to purchase shares of our
common stock to non-employees, such as service providers and
purchasers of our preferred stock. As of March 31, 2010,
there were no warrants outstanding to purchase shares of common
stock.
The following table provides aggregate information as of
March 31, 2010 regarding outstanding options, unvested
restricted stock units and shares reserved under the
Companys equity compensation plans.
Equity
Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Securities to be
|
|
|
|
|
|
Number of Securities
|
|
|
|
Issued Upon
|
|
|
Weighted-Average
|
|
|
Remaining Available for
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Future Issuance Under
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
Equity Compensation
|
|
Plan Category
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
Plans(1)
|
|
|
Equity compensation plans approved by our shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
2005 Equity Incentive Plan(2)
|
|
|
1,568,000
|
|
|
$
|
9.25
|
(3)
|
|
|
454,000
|
|
1992 Outside Directors Stock Option Plan
|
|
|
16,000
|
|
|
$
|
4.88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans not approved by our
shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
1,584,000
|
|
|
$
|
9.15
|
(3)
|
|
|
454,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The shares are available for award grant purposes under the 2005
Plan and excludes shares listed under the column Number of
Securities to be Issued Upon Exercise of Outstanding Options,
Warrants and Rights. |
|
(2) |
|
The 2005 Plan amended and restated the 1998 Stock Option Plan in
October 2005. To date, share-based awards granted under the 2005
Plan includes stock options and restricted stock units. |
|
(3) |
|
Excludes outstanding and unvested restricted stock unit awards,
for which there is no exercise price. |
New
Plan Benefits
Awards under the 2005 Plan are discretionary, and we have not
approved any awards that are conditioned on shareholder approval
of the increase to the share reserve or other amendments to the
2005 Plan. Accordingly, we cannot currently determine the
benefits or number of shares subject to awards that may be
granted in the future to executive officers and employees under
the 2005 Plan.
28
The Audit Committee of the Board of Directors has selected Burr
Pilger Mayer, Inc. as the Companys independent registered
public accounting firm for the fiscal year ending March 31,
2011 and has further directed that management submit the
selection for ratification by the shareholders at the Annual
Meeting. Burr Pilger Mayer, Inc. has audited the Companys
financial statements since its appointment on August 25,
2005. A representative of Burr Pilger Mayer, Inc. is expected to
be present at the Annual Meeting, with the opportunity to make a
statement if the representative desires to do so, and is
expected to be available to respond to appropriate questions.
Neither the Companys Bylaws nor other governing documents
or law require shareholder ratification of the selection of Burr
Pilger Mayer, Inc. as the Companys independent registered
public accounting firm. However, the Audit Committee of the
Board of Directors is submitting the selection of Burr Pilger
Mayer, Inc. to the shareholders for ratification as a matter of
good corporate practice. If the shareholders fail to ratify the
selection, the Audit Committee of the Board of Directors will
reconsider whether or not to retain that firm. Even if the
selection is ratified, the Audit Committee of the Board of
Directors in its discretion may direct the appointment of a
different independent registered public accounting firm at any
time during the year if they determine that such a change would
be in the best interests of the Company and its shareholders.
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
For the fiscal years ended March 31, 2010 and 2009, our
independent registered public accounting firm, Burr Pilger
Mayer, Inc. billed the approximate fees set forth below. All
fees included below were approved by the Audit Committee.
|
|
|
|
|
|
|
|
|
|
|
Year Ended March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
Audit Fees(1)
|
|
$
|
640,000
|
|
|
$
|
606,000
|
|
Audit-Related Fees(2)
|
|
|
43,000
|
|
|
|
78,000
|
|
Tax Fees
|
|
|
|
|
|
|
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total All Fees
|
|
$
|
683,000
|
|
|
$
|
684,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Audit fees represent fees for professional services provided in
connection with the audit of our financial statements and review
of our quarterly financial statements, including attestation
services related to Section 404 of the Sarbanes-Oxley Act
of 2002. |
|
(2) |
|
Audit-related fees represent fees for assurance and related
services that are reasonably related to the performance of the
audit or review of our financial statements and are not reported
under Audit Fees. In fiscal 2010, these services
include
agreed-upon
procedures and attestation services related to Abaxis tax
deferral savings plan. In fiscal 2009, these services include
due diligence services pertaining to potential acquisitions and
attestation services related to Abaxis tax deferral
savings plan. |
PRE-APPROVAL
POLICIES AND PROCEDURES
The Audit Committee has adopted a policy for the pre-approval of
all audit and non-audit services to be performed for the Company
by the independent registered public accounting firm. The Audit
Committee has considered the role of Burr Pilger Mayer, Inc. in
providing audit and audit-related services to Abaxis and has
concluded that such services are compatible with Burr Pilger
Mayer, Inc.s role as Abaxis independent registered
public accounting firm.
29
VOTE
REQUIRED AND RECOMMENDATION OF THE BOARD OF DIRECTORS
The affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and voting at the
annual meeting (which shares voting affirmatively also
constitute at least a majority of the required quorum) will be
required to ratify the selection of Burr Pilger Mayer, Inc..
Although abstentions and broker non-votes are
counted as present for purposes of a quorum, they will not be
counted for any purpose in determining whether this matter has
been approved.
THE BOARD
OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 3.
30
SECURITY
OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect
to the beneficial ownership of our common stock as of
August 31, 2010 by (i) each of the Named Executive
Officers in the Summary Compensation Table appearing in this
proxy statement; (ii) each of our directors and nominee for
director; (iii) all of our executive officers and directors
as a group and (iv) four holders of at least five percent
of our common stock. The persons named in the table have sole or
shared voting and investment power with respect to all shares of
common stock shown as beneficially owned by them, subject to
community property laws where applicable and to the information
contained in the footnotes to this table.
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of Abaxis
|
|
|
|
|
Common Stock
|
|
|
Shares Beneficially
|
|
Beneficially
|
Name and Address of Beneficial Owner
|
|
Owned
|
|
Owned(1)
|
|
Five Percent Holders:
|
|
|
|
|
|
|
|
|
Brown Capital Management, Inc.(3)
|
|
|
2,525,782
|
|
|
|
11.3
|
%
|
Kayne Anderson Rudnick Investment Management, LLC(4)
|
|
|
1,743,638
|
|
|
|
7.8
|
%
|
BlackRock, Inc.(5)
|
|
|
1,666,521
|
|
|
|
7.5
|
%
|
Neuberger Berman Group LLC, Neuberger Berman LLC and Neuberger
Berman Management LLC(6)
|
|
|
1,472,304
|
|
|
|
6.6
|
%
|
Executive Officers:(2)
|
|
|
|
|
|
|
|
|
Clinton H. Severson(7)
|
|
|
710,637
|
|
|
|
3.2
|
%
|
Vladimir E. Ostoich, Ph.D.(8)
|
|
|
410,101
|
|
|
|
1.8
|
%
|
Alberto R. Santa Ines(9)
|
|
|
139,455
|
|
|
|
*
|
|
Kenneth P. Aron, Ph.D.(10)
|
|
|
80,551
|
|
|
|
*
|
|
Donald P. Wood(11)
|
|
|
4,561
|
|
|
|
*
|
|
Outside Directors:(2)
|
|
|
|
|
|
|
|
|
Richard J. Bastiani, Ph.D.(12)
|
|
|
83,700
|
|
|
|
*
|
|
Prithipal Singh, Ph.D.(13)
|
|
|
32,700
|
|
|
|
*
|
|
Henk J. Evenhuis(14)
|
|
|
24,700
|
|
|
|
*
|
|
Ernest S. Tucker, III, M.D.(15)
|
|
|
8,000
|
|
|
|
*
|
|
Nominee for Director:
|
|
|
|
|
|
|
|
|
Michael D. Casey(16)
|
|
|
|
|
|
|
|
|
Executive officers and directors as a group
(12 persons)(17)
|
|
|
1,572,541
|
|
|
|
6.9
|
%
|
|
|
|
* |
|
Less than one percent. |
|
(1) |
|
The percentages shown in this column are calculated based on
22,330,570 shares of common stock outstanding on
August 31, 2010 and includes shares of common stock that
such person or group had the right to acquire on or within sixty
days after that date, including, but not limited to, upon the
exercise of options. |
|
(2) |
|
The business address of the beneficial owners listed is
c/o Abaxis,
Inc., 3240 Whipple Road, Union City, CA 94587. |
|
(3) |
|
Based on information set forth in a Schedule 13G/A filed
with the SEC on January 27, 2010 by Brown Capital
Management, Inc., reporting sole power to vote and dispose of
1,138,734 and 2,525,782 shares, respectively. The business
address for Brown Capital Management, Inc. is 1201 North Calvert
Street, Baltimore, MD 21202. |
|
(4) |
|
Based on information set forth in a Schedule 13G/A filed
with the SEC on February 9, 2010 by Kayne Anderson
Rudnick Investment Management, LLC, reporting sole power to vote
and dispose of 1,743,638 shares. The business address for
Kayne Anderson Rudnick Investment Management, LLC is 1800 Avenue
of the Stars, Second Floor, Los Angeles, CA 90067. |
|
(5) |
|
Based on information set forth in a Schedule 13G filed with
the SEC on January 29, 2010 by BlackRock, Inc., reporting
sole power to vote and dispose of 1,666,521 shares. The
business address for BlackRock, Inc. is 40 East 52nd
Street, New York, NY 10022. |
31
|
|
|
(6) |
|
Based on information set forth in a Schedule 13G/A filed
with the SEC on May 6, 2010 by Neuberger Berman Group LLC,
reporting shared power to vote and dispose of 1,125,884 and
1,472,304 shares, respectively; by Neuberger Berman LLC,
reporting shared power to vote and dispose of 1,125,884 and
1,472,304 shares, respectively; and by Neuberger Berman
Management LLC, reporting shared power to vote and dispose of
1,117,300 shares. The business address for Neuberger Berman
Group LLC, Neuberger Berman LLC and Neuberger Berman Management
LLC is 605 Third Avenue, New York, NY 10158. |
|
(7) |
|
Includes: |
|
|
|
|
|
500,220 shares held by Mr. Severson; and |
|
|
|
210,417 shares subject to stock options exercisable by
Mr. Severson within sixty days of August 31, 2010. |
|
|
|
|
|
173,268 shares held by Dr. Ostoich; |
|
|
|
26,355 shares held by Dr. Ostoichs IRA; |
|
|
|
22,400 shares held by Mrs. Ostoichs IRA; |
|
|
|
116,578 shares held by the Vladimir Ostoich and Liliana
Ostoich Trust Fund, for the benefit of Dr. Ostoich and
his wife; and |
|
|
|
71,500 shares subject to stock options exercisable by
Dr. Ostoich within sixty days of August 31, 2010. |
|
|
|
|
|
37,023 shares held by Mr. Santa Ines; and |
|
|
|
102,432 shares subject to stock options exercisable by
Mr. Santa Ines within sixty days of August 31, 2010. |
|
|
|
|
|
36,051 shares held by Dr. Aron; and |
|
|
|
44,500 shares subject to stock options exercisable by
Dr. Aron within sixty days of August 31, 2010. |
|
|
|
|
|
4,561 shares held by Mr. Wood. |
|
|
|
|
|
63,700 shares held by Dr. Bastiani; and |
|
|
|
20,000 shares subject to stock options exercisable by
Dr. Bastiani within sixty days of August 31, 2010. |
|
|
|
|
|
24,700 shares held by Dr. Singh; and |
|
|
|
8,000 shares subject to stock options exercisable by
Dr. Singh within sixty days of August 31, 2010. |
|
|
|
|
|
6,700 shares held by Mr. Evenhuis; and |
|
|
|
18,000 shares subject to stock options exercisable by
Mr. Evenhuis within sixty days of August 31, 2010. |
|
|
|
|
|
8,000 shares subject to stock options exercisable by
Dr. Tucker within sixty days of August 31, 2010. |
|
|
|
(16) |
|
There were no shares beneficially owned by Mr. Casey as of
August 31, 2010. If Mr. Casey is elected as director,
the Company expects to grant an award of 2,200 restricted stock
units. Subject to Mr. Caseys continued service with
us through the applicable vesting date, each restricted stock
unit award will vest in full 12 months after the grant date. |
|
(17) |
|
Includes: |
|
|
|
|
|
1,063,151 shares held by all executive officers and
directors as a group; and |
|
|
|
509,390 shares subject to stock options exercisable by all
executive officers and directors as a group within sixty days of
August 31, 2010. |
32
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive
officers, directors and persons who beneficially own more than
10% of our equity securities to file initial reports of
ownership and reports of changes in ownership with the SEC. Such
persons are required by SEC regulations to furnish us with
copies of all Section 16(a) forms filed by such persons.
Based solely on our review of the copies of Forms 3, 4 and
5 and amendments thereto received by us, we believe that during
the period from April 1, 2009 through March 31, 2010,
our executive officers, directors and greater than 10%
shareholders complied with all applicable filing requirements
applicable to these executive officers, directors and greater
than 10% shareholders, except with respect to the following late
report filings: one late filing by Mr. Brenton Hanlon; four
late filings by Mr. Achim Henkel; and one late filing by
Mr. Clinton Severson.
33
EXECUTIVE
COMPENSATION
COMPENSATION
DISCUSSION AND ANALYSIS
Overview
The goals of our executive compensation program are to attract,
retain, motivate and reward executive officers who contribute to
our success and to incentivize these executives on both a
short-term and long-term basis to achieve our business
objectives. This program combines cash and equity awards in the
proportions that we believe will motivate our executive officers
to increase shareholder value over the long-term.
Our executive compensation program is designed to achieve the
following objectives:
|
|
|
|
|
to align our executive compensation with our strategic business
objectives;
|
|
|
|
to align the interests of our executive officers with both
short-term and long-term shareholder interests; and
|
|
|
|
to place a substantial portion of our executives
compensation at risk such that actual compensation depends on
both overall company performance and individual performance.
|
Executive
Compensation Program Objectives and Framework
Our executive compensation program has three primary components:
(1) base salary, (2) annual cash incentive bonus and
(3) equity grants. Base salaries for our executive officers
are a minimum fixed level of compensation consistent with or
below competitive market practice. Annual cash incentive bonuses
awarded to our executive officers are intended to incentivize
and reward achievement of financial, operating and strategic
objectives during the fiscal year. Equity grants awarded to our
executive officers are designed to ensure that incentive
compensation is linked to our long-term company performance,
promote retention and to align our executives long-term
interests with shareholders long-term interests. Our
executive officers total potential cash compensation is
heavily weighted toward annual cash incentive bonuses, because
our Compensation Committee and Board of Directors believe this
weighting best aligns the interests of our executive officers
with that of shareholders generally.
Executive compensation is reviewed annually by our Compensation
Committee and Board of Directors, and adjustments are made to
reflect company objectives and competitive conditions. We also
offer our executive officers participation in our 401(k) plan,
health care insurance, flexible spending accounts and certain
other benefits available generally to all full-time employees.
Role
of Our Compensation Committee
Our Compensation Committee, which operates under a written
charter adopted by the Board of Directors, is primarily
responsible for reviewing and recommending to the Board of
Directors for approval the compensation arrangements for our
executive officers and directors. In carrying out these
responsibilities, the Compensation Committee shall review all
components of executive officer and director compensation for
consistency with the Compensation Committees compensation
philosophy as in effect from time to time. In connection with
their review and recommendations, our Compensation Committee
also considers the recommendations of our Chief Executive
Officer, Mr. Clinton Severson. Our Compensation Committee
gives considerable weight to Mr. Seversons
recommendations because of his direct knowledge of each
executive officers performance and contribution to our
financial performance. However, Mr. Severson does not
participate in the determination of his own compensation. No
other executive officers participate in the determination or
recommendation of the amount or form of executive officer
compensation, except the Companys Chief Financial Officer
as discussed below. Our Compensation Committee does not delegate
any of its functions in determining executive
and/or
director compensation. To date, our Compensation Committee has
not established any formal policies or guidelines for allocating
compensation between long-term and currently paid out
compensation, cash and non-cash compensation, or among different
forms of non-cash compensation.
Our Compensation Committee may discuss with our Chief Executive
Officer or Chief Financial Officer our financial, operating and
strategic business objectives, bonus targets or performance
goals. The Compensation Committee reviews and determines the
appropriateness of the financial measures and performance goals,
as well as
34
assesses the degree of difficulty in achieving specific bonus
targets and performance goals. The Compensation Committee then
presents its recommendation for executive compensation to the
Board of Directors for final review and approval. Typically,
these recommendations are made to our Board of Directors by the
first quarter of the ensuing fiscal year.
From time to time, our Compensation Committee may engage an
independent compensation advisor to obtain competitive
compensation data. In March 2006, we retained the independent
compensation consulting firm of Top Five Data Services,
Inc. (Top Five) to, among other things, help
identify appropriate peer group companies and to obtain and
evaluate executive compensation data for these companies, and
took its recommendations into account in setting fiscal 2007
executive compensation. We did not engage another compensation
consultant, or request additional recommendations from Top Five,
in connection with our determination of fiscal 2010 or fiscal
2011 executive compensation because our Compensation Committee
and Board of Directors determined that many of the
recommendations made by Top Five with respect to fiscal 2007
continued to be relevant for fiscal 2010 and fiscal 2011. In May
2008, our Compensation Committee engaged an independent
compensation consulting firm, Watson Wyatt, to prepare
competitive benchmarking studies as to, and advise the
Compensation Committee on long-term equity compensation for
executives in similarly-situated companies. Our Compensation
Committee and Board of Directors may engage compensation
consultants in the future as they deem it to be necessary or
appropriate.
Competitive
Benchmarking
In April 2006, Top Five, in consultation with our Compensation
Committee, compared our senior management compensation to the
senior management compensation at a group of 19 companies
(the Compensation Peer Group). This Compensation
Peer Group represented similarly-situated medical device and
diagnostic companies that were identified by Top Five as
companies with similar financial growth and as competitors for
executive talent. The following companies comprised the
Compensation Peer Group:
|
|
|
|
|
Abiomed
|
|
Conceptus
|
|
Palomar Medical Technologies
|
Adeza Biomedical
|
|
Cutera
|
|
Surmodics
|
Angiodynamics
|
|
Digene
|
|
Thoratec
|
Aspect Medical Systems
|
|
Intralase
|
|
Vivus
|
ATS Medical
|
|
Kensey Nash
|
|
VNUS Medical Technologies
|
Biosite
|
|
Meridian Bioscience
|
|
|
Cholestech
|
|
Orasure Technologies
|
|
|
Top Five measured our relative performance against the
Compensation Peer Group over one and three year periods based on
the following three financial metrics:
|
|
|
|
|
total shareholder return;
|
|
|
|
revenue; and
|
|
|
|
EBITDA (earnings before income tax, depreciation and
amortization).
|
The market data obtained regarding the Compensation Peer Group
was considered by the Compensation Committee in its fiscal 2010
executive compensation decisions.
Compensation
Determinations
The Compensation Committee did not target executive compensation
in fiscal 2010 to any specific benchmarks against the
Compensation Peer Group, but did generally target total
compensation to be competitive with companies in the
Compensation Peer Group with similar financial growth rates
based on the compensation information for the Compensation Peer
Group in fiscal 2006. However, our executive officers
total potential cash compensation is more heavily weighted
toward annual cash incentive bonuses than most companies in the
Compensation Peer Group. In addition to any competitive
benchmarks the Compensation Committee deems relevant, the
Compensation Committee also considers the recommendations from
our Chief Executive Officer regarding the compensation of our
executive officers who report directly to him. These
recommendations generally
35
include annual adjustments to compensation levels, an assessment
of each executive officers overall individual
contribution, scope of responsibilities and level of experience.
Elements
of Compensation
Base
Salary
We provide an annual base salary to each of our executive
officers, including each of the named executive officers listed
on the Summary Compensation Table below (the Named
Executive Officers). Each base salary is reviewed annually
by the Compensation Committee and adjusted for the ensuing year
based on both (i) an evaluation of individual job
performance during the prior year, and (ii) an evaluation
of the compensation levels of similarly-situated executive
officers at the Compensation Peer Group and in our industry
generally.
In determining fiscal 2010 and 2011 base salaries for our Named
Executive Officers, our Compensation Committee generally
targeted salaries to be between the 25th and
50th percentile of the Compensation Peer Group. Our
Compensation Committee considered this 25th and
50th percentile range as a general guideline for the
appropriate level of potential salaries, but did not attempt to
specifically match this or any other percentile. Our
Compensation Committee also considered the recommendations of
the Chief Executive Officer regarding the compensation of each
of the Named Executive Officers who reported directly to him.
However, the Compensation Committee and our Board of Directors
did not base their considerations on any single factor but
rather considered a mix of factors and evaluated individual
salaries against that mix.
Our Board of Directors set salaries for fiscal 2010 and 2011
after considering a peer company analysis of total compensation
for executive officers prepared in April 2006 by Top Five and
the recommendations of the Compensation Committee. In
determining fiscal 2010 base salaries for our Named Executive
Officers, our Compensation Committee recommended to the Board of
Directors not to increase executive base salaries for fiscal
2010 due to the global economic downturn, except for
Mr. Wood, who received an increase of 5.3% in his base
salary upon his promotion to Chief Operations Officer. For
fiscal 2011, our Compensation Committee recommended that we
increase base salaries in amounts designed to reward each of the
Named Executive Officers for their performance in the prior year
while maintaining base salaries at an appropriately competitive
level. Our Compensation Committee did not use any specific
formula based on the factors described above to determine the
final base salary levels for each Named Executive Officer.
Based on the recommendations of the Compensation Committee, our
Board of Directors approved the following base salaries
(effective July 2009 for fiscal 2010 and July 2010 for fiscal
2011) for our Named Executive Officers:
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2010
|
|
Fiscal 2011
|
Named Executive Officer
|
|
Base Salary
|
|
Base Salary
|
|
Clinton H. Severson
|
|
$
|
360,000
|
|
|
$
|
375,000
|
|
Alberto R. Santa Ines
|
|
$
|
200,000
|
|
|
$
|
208,000
|
|
Kenneth P. Aron, Ph.D.
|
|
$
|
210,000
|
|
|
$
|
218,000
|
|
Vladimir E. Ostoich, Ph.D.
|
|
$
|
210,000
|
|
|
$
|
218,000
|
|
Donald P. Wood
|
|
$
|
200,000
|
|
|
$
|
208,000
|
|
Fiscal 2010 and 2011 base salary increases for the Named
Executive Officers were as follows:
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2010
|
|
Fiscal 2011
|
|
|
Percent Increase in
|
|
Percent Increase in
|
Named Executive Officer
|
|
Base Salary
|
|
Base Salary
|
|
Clinton H. Severson
|
|
|
|
%
|
|
|
4.2
|
%
|
Alberto R. Santa Ines
|
|
|
|
%
|
|
|
4.0
|
%
|
Kenneth P. Aron, Ph.D.
|
|
|
|
%
|
|
|
3.8
|
%
|
Vladimir E. Ostoich, Ph.D.
|
|
|
|
%
|
|
|
3.8
|
%
|
Donald P. Wood
|
|
|
5.3
|
%
|
|
|
4.0
|
%
|
36
Annual
Cash Incentive Bonus
Our annual cash incentive bonus program is an
at-risk compensation arrangement designed to provide
market competitive cash incentive opportunities that reward our
executive officers for the achievement of key financial
performance goals that we believe are important for us in
creating long-term shareholder value. Most importantly, the
program is structured to achieve our overall objective of tying
this element of compensation to the attainment of company
performance goals that will contribute to our financial success
and create shareholder value.
Our annual cash incentive bonus paid to each executive officer,
including each of our Named Executive Officers, is primarily
based upon Abaxis achieving two equally-weighted financial
performance goals, quarterly net sales and quarterly pre-tax
income. Additionally, the bonus targets established by the
Compensation Committee are set to be achievable, yet are at a
level of difficulty which does not assure that the goals will be
met. The bonus targets require executive officers to increase
annual corporate financial performance during the applicable
fiscal year, compared to our previous years actual
financial results. Accordingly, meeting the bonus targets,
especially given the global business environment, requires
executive officers to improve financial performance on a
year-over-year
basis and, thus, a substantial portion of our executive
officers compensation is at risk if corporate financial
results are not achieved during a particular fiscal year. In
addition to meeting financial goals, we must not exceed a
certain failure rate on our reagents discs in order for cash
incentives to be paid to our executive officers. However, our
Compensation Committee has the discretion to grant bonuses even
if these performance goals are not met.
For fiscal 2010 and 2011, our Compensation Committee generally
targeted total cash compensation to be at or above the
75th percentile of the Compensation Peer Group. Our
Compensation Committee considered this 75th percentile
target as a general guideline for the appropriate level of
potential cash bonus compensation, but did not attempt to
specifically match this or any other percentile. Due to the
global economic downturn, the Compensation Committee recommended
to our Board of Directors that for fiscal 2010 target bonuses,
we maintain the target bonuses from fiscal 2009 for the Named
Executive Officers. In April 2009, our Board of Directors
approved the fiscal 2010 target bonus levels for our executive
officers. The following table summarizes the fiscal 2010 target
bonus amounts and the bonus amounts awarded for fiscal 2010 for
our Named Executive Officers:
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2010
|
|
Fiscal 2010
|
Named Executive Officer
|
|
Target Bonus
|
|
Bonus Awarded
|
|
Clinton H. Severson
|
|
$
|
525,000
|
|
|
$
|
611,600
|
|
Alberto R. Santa Ines
|
|
$
|
300,000
|
|
|
$
|
349,500
|
|
Kenneth P. Aron, Ph.D.
|
|
$
|
300,000
|
|
|
$
|
349,500
|
|
Vladimir E. Ostoich, Ph.D.
|
|
$
|
300,000
|
|
|
$
|
349,500
|
|
Donald P. Wood
|
|
$
|
300,000
|
|
|
$
|
349,500
|
|
Payment of the target bonus is equally weighted between
achievement of our quarterly net sales performance goal and our
quarterly pre-tax income performance goal. For fiscal 2010,
bonuses were earned only if we achieved at least 90% of one or
more of our pre-established quarterly net sales
and/or
quarterly pre-tax income goals. After the initial threshold is
met, the amount of the target bonus paid is based on a sliding
scale relative to the proportionate achievement of the
performance goals. If we achieve 90% of only one performance
goal, the payout would be limited to 25% of the aggregate target
bonus. For each 1% above 90% of that performance goal, the
payout would increase by 2.5% for the aggregate target bonus.
The target bonus will be fully earned if at least 100% of both
performance goals are achieved. For each 1% above 100% of a
performance goal, the payout would increase by 1.5% for the
aggregate target bonus. The maximum potential bonus payout is
200% of the target bonus, provided we achieve greater than 133%
of at least one of the performance goals. Assuming targets are
reached, the bonus payments are paid as follows: 15% of the
applicable bonus amount for the first quarter, 25% in the second
and third quarters, and 35% in the fourth quarter. At the end of
the fourth quarter, the final amount of the bonus earned will be
adjusted to reflect overall performance against the year. For
the Named Executive Officers, the financial targets for fiscal
2010 were based on the companys total annual net sales of
$121.1 million and total annual pre-tax income goals of
$19.6 million. Based on these pre-established goals, our
Named Executive Officers received 116.5% of their target bonus
awards for fiscal 2010.
For fiscal 2011, our Compensation Committee recommended to our
Board of Directors that we maintain the target bonuses from
fiscal 2010 for the Named Executive Officers. The target bonus
level for the Named Executive
37
Officers is designed to maintain total compensation at an
appropriately competitive level in the industry. In April 2010,
our Board of Directors approved the fiscal 2011 target bonus
levels for our executive officers. The following table
summarizes the fiscal 2011 target bonus amounts for our Named
Executive Officers:
|
|
|
|
|
|
|
Fiscal 2011
|
Named Executive Officer
|
|
Target Bonus
|
|
Clinton H. Severson
|
|
$
|
525,000
|
|
Alberto R. Santa Ines
|
|
$
|
300,000
|
|
Kenneth P. Aron, Ph.D.
|
|
$
|
300,000
|
|
Vladimir E. Ostoich, Ph.D.
|
|
$
|
300,000
|
|
Donald P. Wood
|
|
$
|
300,000
|
|
We expect payment of the target bonus, as identified above, to
continue to be equally weighted at 50% for achievement of our
quarterly net sales performance goal and 50% for achievement of
our quarterly pre-tax income performance goal. For fiscal 2011,
bonuses will only be earned if we achieve at least 90% of one or
more of our pre-established quarterly net sales
and/or
quarterly pre-tax income goals during fiscal 2011. After the
initial threshold is met, the amount of the target bonus paid
will be based on a sliding scale relative to the proportionate
achievement of the performance goals. If we achieve 90% of only
one performance goal, the payout would be limited to 25% of the
aggregate target bonus. For each 1% above 90% of that
performance goal, the payout would increase by 2.5% for the
aggregate target bonus. The target bonus will be fully earned if
at least 100% of both performance goals are achieved. For each
1% above 100% of a performance goal, the payout would increase
by 1.5% for the aggregate target bonus. The maximum potential
bonus payout is 200% of the target bonus, provided we achieve
greater than 133% of at least one of the performance goals.
Assuming targets are reached, we expect that the bonus payments
will be paid as follows: 15% of the applicable bonus amount for
the first quarter, 25% in the second and third quarters, and 35%
in the fourth quarter. At the end of the fourth quarter of
fiscal 2011, the final payment will be adjusted to reflect
overall performance against the year. Our Compensation Committee
and Board of Directors have the discretion to adjust the
parameters and performance goals for payment of these annual
performance bonuses.
We do not currently have a formal policy regarding adjustments
or recovery of awards or payments following a restatement of
financial performance targets. In such a circumstance, the
Compensation Committee would evaluate whether compensation
adjustments were appropriate based upon the facts and
circumstances surrounding the restatement.
Long-term
Equity Incentive Compensation
Under our 2005 Equity Incentive Plan, we are permitted to award
stock options, stock appreciation rights, restricted stock
awards, restricted stock units, performance shares, performance
units, deferred compensation awards or other share-based awards.
Beginning in fiscal 2007, we began granting restricted stock
units to our executive officers in lieu of other forms of
equity-based grants. Prior to fiscal 2007, equity-based grants
to our executive officers comprised solely of stock options.
Equity grants to our Named Executive Officers in fiscal 2010 and
fiscal 2011 are discussed below. We do not currently have stock
ownership guidelines for our executive officers.
Stock
Options
Prior to fiscal 2007, a substantial portion of our executive
compensation arrangement consisted of long-term incentive
grants, comprising of stock options. We granted stock options
with an exercise price equal to the fair market value of our
common stock on the grant date. Accordingly, our executive
officers only realize actual compensation value if our
shareholders realize value. In addition, we believe the stock
options granted to executive officers created retention
incentives as the stock options vested over a period of four
years based on cliff-vesting terms only as long as executive
officers remained an employee with us.
Restricted
Stock Units
Fiscal 2010 Restricted Stock Unit Grants. In
fiscal 2007, we granted restricted stock units with performance
acceleration. Our Board of Directors believed that this form of
long-term equity incentive will help ensure executive retention
and more directly link executive pay to company financial
performance. The four-year time-based vesting of the restricted
stock units granted in fiscal 2007 accelerates if certain
performance criteria are exceeded during the
38
performance period. For a discussion of the performance
criteria, see the table entitled Outstanding Equity Awards
at Fiscal Year End 2010 below. The Compensation Committee
approves all restricted stock unit grants to our Named Executive
Officers and other executive officers.
In April 2009, after considering an analysis of long-term equity
incentives conducted by Watson Wyatt in fiscal 2009, for our
Named Executive Officers and upon the recommendation of the
Compensation Committee, our Board of Directors granted 55,000
restricted stock units to our Chief Executive Officer and 25,000
restricted stock units to each of our other Named Executive
Officers. The value of these equity grants was approximately
$833,250 for our Chief Executive Officer and approximately
$378,750 for each of our other Named Executive Officers. The
Compensation Committee believed that these grants of restricted
stock units were appropriate based on our financial performance
over the prior year. The four-year time-based vesting terms of
the fiscal 2010 restricted stock unit awards are as follows:
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five percent vesting after the first year of continuous
employment;
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additional ten percent after the second year of continuous
employment;
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|
additional 15 percent after the third year of continuous
employment; and
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the remaining 70 percent after the fourth year of
continuous employment.
|
Time-based vesting terms is intended to provide retention for
our executive officers as the awards vest based on continuous
employment. Unlike the fiscal 2007 restricted stock units, these
restricted stock units are not subject to performance-based
acceleration. Our Compensation Committee believed that retention
of the Named Executive Officers was key to our success and that
these additional restricted stock units would be more likely,
given the time-based vesting schedule of the restricted stock
units, to maximize retention of our Named Executive Officers
without performance-based acceleration milestones.
Fiscal 2011 Restricted Stock Unit Grants. In
April 2010, after considering an analysis of total compensation
for our Named Executive Officers and upon the recommendation of
the Compensation Committee, our Board of Directors granted
55,000 restricted stock units to our Chief Executive Officer and
25,000 restricted stock units to each of our other Named
Executive Officers. The Compensation Committee believed that
these grants of restricted stock units were appropriate based on
our financial performance over the prior year. The fiscal 2011
restricted stock unit awards vest, based on time-based vesting
terms, in the same manner as the fiscal 2010 restricted stock
unit awards discussed above. The fiscal 2011 restricted stock
units are also not subject to performance-based acceleration.
Our Compensation Committee believed that retention of the Named
Executive Officers was key to our success and that these
additional restricted stock units would be more likely, given
the time-based vesting schedule of the restricted stock units,
to maximize retention of our Named Executive Officers without
performance-based acceleration milestones.
Other
Compensation and Benefits
We do not provide any of our executive officers with any
material perquisites. Currently, all benefits offered to our
executive officers, including an opportunity to participate in
our 401(k) plan, medical, dental, vision, life insurance,
disability coverage and flexible spending accounts, are also
available on a non-discriminatory basis to other full-time
employees. We also provide vacation and other paid holidays to
all full-time employees, including our Named Executive Officers.
Employment
Agreements
In August 2005, we entered into an employment agreement with
Clinton H. Severson, our President and Chief Executive Officer,
which provides Mr. Severson with a severance payment equal
to two years of salary, bonus and benefits if his employment
with us is terminated for any reason other than cause. Certain
severance benefits provided pursuant to the Severance Plan
(described below in Change in Control Agreements)
with respect to a change of control supersede those provided
pursuant to the employment agreement. None of our other
executives has an employment agreement with us.
39
Change in
Control Agreements
In July 2006, our Board of Directors, after considering a change
of control program analysis from the Compensation Peer Group
prepared by Top Five and upon the recommendation of our
Compensation Committee, approved and adopted the Abaxis, Inc.
Executive Change of Control Severance Plan (the Severance
Plan). The Severance Plan was adopted by our Board of
Directors to reduce the distraction of executives and potential
loss of executive talent that could arise from a potential
change of control. Participants in the Severance Plan include
Abaxis senior managers who are selected by the Board of
Directors. In December 2008, our Board of Directors amended the
Severance Plan to ensure its compliance with Section 409A
of the Internal Revenue Code of 1986, as amended (the
Code) and designated the following current executive
officers as participants in the Severance Plan: Clinton H.
Severson, our Chairman, President and Chief Executive Officer;
Alberto R. Santa Ines, our Chief Financial Officer and Vice
President of Finance; Kenneth P. Aron, Ph.D., our Chief
Technology Officer; Vladimir E. Ostoich, Ph.D., our Vice
President of Government Affairs and Vice President of Marketing
for the Pacific Rim; Donald P. Wood, our Chief Operations
Officer; and Martin V. Mulroy, our Vice President of Veterinary
Sales and Marketing for North America. In October 2009, our
Board of Directors also designated the following executive
officers as participants in the Severance Plan: Brenton G.A.
Hanlon, our Vice President of Medical Sales and Marketing for
North America and Achim Henkel, our Managing Director of Abaxis
Europe GmbH.
The Severance Plan provides that upon the occurrence of a change
of control a participants outstanding stock option(s) and
other unvested equity-based instruments will accelerate in full,
and any such stock awards shall become immediately exercisable.
In addition, the Severance Plan provides that, if the
participants employment is terminated by us (or any
successor of Abaxis) for any reason other than cause, death, or
disability within 18 months following the change of control
date and such termination constitutes a separation in service,
the participant is eligible to receive severance benefits as
follows:
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on the 60th day after the termination date, a lump sum cash
payment equal to two times the sum of the participants
annual base salary and the participants target annual
bonus amount for the year in which the change of control occurs;
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|
payment of up to 24 months of premiums for medical, dental
and vision benefits, provided, however, that if the participant
becomes eligible to receive comparable benefits under another
employers plan, the Companys benefits shall be
secondary to those provided under such other plan;
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reimbursement, on a monthly basis, of up to 24 months of
premiums for disability and life insurance benefits if the
participant elects to convert his or her disability
and/or life
insurance benefits under the Companys plans into
individual policies following termination; and
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payment of an amount equal to any excise tax imposed under
Section 4999 of the Code, provided, however, that payment
of such amount is capped at $1,000,000 per participant.
|
Payment of the foregoing severance benefits is conditioned upon
the participants execution of a valid and effective
release of claims against us.
Tax
Considerations
Deductibility
of Executive Compensation
We have considered the provisions of Section 162(m) of the
Code and related Treasury Regulations that restrict
deductibility of executive compensation paid to our Named
Executive Officers and our other executive officers holding
office at the end of any year to the extent such compensation
exceeds $1,000,000 for any of such officers in any year and does
not qualify for an exception under the statute or regulations.
The Compensation Committee endeavors to maximize deductibility
of compensation under Section 162(m) of the Code to the
extent practicable while maintaining a competitive,
performance-based compensation program. However, tax
consequences, including tax deductibility, are subject to many
factors (such as changes in the tax laws and regulations or
interpretations thereof and the timing of various decisions by
officers regarding stock options) which are beyond the control
of both the Company and our Compensation Committee. In addition,
our Compensation Committee believes that it is
40
important to retain maximum flexibility in designing
compensation programs that meet its stated business objectives.
For these reasons, our Compensation Committee, while considering
tax deductibility as a factor in determining compensation, will
not limit compensation to those levels or types of compensation
that will be deductible. Our Compensation Committee will
continue to consider alternative forms of compensation,
consistent with its compensation goals that preserve
deductibility.
Summary
Compensation Table
The following table sets forth for fiscal 2010, 2009 and 2008,
the compensation awarded or paid to, or earned by, Abaxis
Chief Executive Officer, Chief Financial Officer and the three
other most highly compensated executive officers at
March 31, 2010 (collectively, the Named Executive
Officers).
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Non-Equity
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Stock
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Option
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Incentive Plan
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All Other
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Fiscal
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Salary
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Bonus
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Awards
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Awards
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Compensation
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Compensation
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Total
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Name and Principal Position
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Year
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($)
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($)
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($)(1)
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($)
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($)(2)
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($)(3)
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($)
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Clinton H. Severson
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2010
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360,000
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833,250
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611,626
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12,168
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(4)
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1,817,044
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President, Chief
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2009
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355,770
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1,250,000
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226,406
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9,311
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(4)
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1,841,487
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Executive Officer and
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2008
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336,500
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1,056,500
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456,000
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11,535
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(4)
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1,860,535
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Chairman of the Board
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Alberto R. Santa Ines
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2010
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200,000
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378,750
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349,500
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11,456
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(5)
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939,706
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Chief Financial Officer and
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2009
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197,115
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500,000
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129,375
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8,949
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(5)
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835,439
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Vice President of Finance
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2008
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183,846
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422,600
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261,250
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10,972
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(5)
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878,668
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Kenneth P. Aron, Ph.D.
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2010
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210,000
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378,750
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349,500
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22,471
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(6)
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960,721
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Chief Technology Officer
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2009
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206,730
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500,000
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129,375
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19,585
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(6)
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855,690
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2008
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192,077
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422,600
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261,250
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20,753
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(6)
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896,680
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Vladimir E. Ostoich, Ph.D.
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2010
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210,000
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378,750
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349,500
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17,917
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(7)
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956,167
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Vice President of Government
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2009
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208,654
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500,000
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129,375
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14,552
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(7)
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852,581
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Affairs and Vice President of
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2008
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202,077
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422,600
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261,250
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16,599
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(7)
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902,526
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Marketing for the Pacific Rim
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Donald P. Wood
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2010
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196,923
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378,750
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349,500
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17,934
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(9)
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943,107
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Chief Operations Officer(8)
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(1) |
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Awards consist of restricted stock units granted to the Named
Executive Officer in the fiscal year specified. Amounts listed
in this column represent the grant date fair value of the awards
granted in the fiscal year indicated as computed in accordance
with Accounting Standards Codification (ASC) 718,
Compensation-Stock Compensation (ASC
718). Amounts shown do not reflect whether the Named
Executive Officer has actually realized a financial benefit from
the awards (such as by vesting in a restricted stock unit
award). For a discussion of the assumptions used in determining
the fair value of awards of restricted stock units in the above
table, see Note 11 of the Notes to Consolidated Financial
Statements included in our Annual Report on
Form 10-K
filed with the SEC on June 14, 2010. |
|
(2) |
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Represents aggregate cash performance bonuses earned during each
fiscal year based on achievement of corporate financial
performance goals, as described under Executive
Compensation Compensation Discussion and
Analysis above. These bonuses were paid in four quarterly
installments within one month following the end of the
applicable quarter upon achieving the established quarterly net
sales and quarterly pre-tax income goals for that quarter.
Amounts do not include bonuses paid during a fiscal year, with
respect to bonuses earned in a prior fiscal year. |
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(3) |
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Amounts listed are based upon our actual costs expensed in
connection with such compensation. |
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(4) |
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In fiscal 2010, consists of $4,769 in supplemental health plan
expenses reimbursed by us, $648 in group life insurance paid by
us, $626 in disability insurance premiums paid by us and $6,125
in matching contributions made by us to Mr. Seversons
401(k) account. In fiscal 2009, consists of $4,652 in
supplemental health plan expenses reimbursed by us, $648 in
group life insurance paid by us, $626 in disability insurance
premiums paid by us and $3,385 in matching contributions made by
us to Mr. Seversons 401(k) account. In fiscal 2008, |
41
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consists of $4,378 in supplemental health plan expenses
reimbursed by us, $780 in group life insurance paid by us, $752
in disability insurance premiums paid by us and $5,625 in
matching contributions made by us to Mr. Seversons
401(k) account. |
|
(5) |
|
In fiscal 2010, consists of $4,419 in supplemental health plan
expenses reimbursed by us, $432 in group life insurance paid by
us, $480 in disability insurance premiums paid by us and $6,125
in matching contributions made by us to Mr. Santa
Ines 401(k) account. In fiscal 2009, consists of $4,652 in
supplemental health plan expenses reimbursed by us, $432 in
group life insurance paid by us, $480 in disability insurance
premiums paid by us and $3,385 in matching contributions made by
us to Mr. Santa Ines 401(k) account. In fiscal 2008,
consists of $4,490 in supplemental health plan expenses
reimbursed by us, $420 in group life insurance paid by us, $437
in disability insurance premiums paid by us and $5,625 in
matching contributions made by us to Mr. Santa Ines
401(k) account. |
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(6) |
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In fiscal 2010, consists of $15,388 in supplemental health plan
expenses reimbursed by us, $454 in group life insurance paid by
us, $504 in disability insurance premiums paid by us and $6,125
in matching contributions made by us to Dr. Arons
401(k) account. In fiscal 2009, consists of $14,959 in
supplemental health plan expenses reimbursed by us, $451 in
group life insurance paid by us, $502 in disability insurance
premiums paid by us and $3,673 in matching contributions made by
us to Dr. Arons 401(k) account. In fiscal 2008,
consists of $14,222 in supplemental health plan expenses
reimbursed by us, $444 in group life insurance paid by us, $462
in disability insurance premiums paid by us and $5,625 in
matching contributions made by us to Dr. Arons 401(k)
account. |
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(7) |
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In fiscal 2010, consists of $10,897 in supplemental health plan
expenses reimbursed by us, $454 in group life insurance paid by
us, $504 in disability insurance premiums paid by us and $6,062
in matching contributions made by us to Dr. Ostoichs
401(k) account. In fiscal 2009, consists of $10,599 in
supplemental health plan expenses reimbursed by us, $451 in
group life insurance paid by us, $502 in disability insurance
premiums paid by us and $3,000 in matching contributions made by
us to Dr. Ostoichs 401(k) account. In fiscal 2008,
consists of $10,043 in supplemental health plan expenses
reimbursed by us, $444 in group life insurance paid by us, $487
in disability insurance premiums paid by us and $5,625 in
matching contributions made by us to Dr. Ostoichs
401(k) account. |
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(8) |
|
Mr. Wood was not a Named Executive Officer for fiscal 2008
or 2009. |
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(9) |
|
In fiscal 2010, consists of $10,897 in supplemental health plan
expenses reimbursed by us, $432 in group life insurance paid by
us, $480 in disability insurance premiums paid by us and $6,125
in matching contributions made by us to Mr. Woods
401(k) account. |
Salary and Bonus in Proportion to Total
Compensation. The following table sets forth the
percentage of base salary and annual cash incentive bonus earned
by each Named Executive Officer as a percentage of total
compensation for fiscal 2010.
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Annual Cash
|
|
|
Base Salary
|
|
Incentive Bonus
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As a Percentage of
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As a Percentage of
|
Named Executive Officer
|
|
Total Compensation
|
|
Total Compensation
|
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Clinton H. Severson
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20
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%
|
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34
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%
|
Alberto R. Santa Ines
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|
21
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%
|
|
|
37
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%
|
Kenneth P. Aron, Ph.D.
|
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22
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%
|
|
|
36
|
%
|
Vladimir E. Ostoich, Ph.D.
|
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22
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%
|
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37
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%
|
Donald P. Wood
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21
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%
|
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37
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%
|
CEO Employment Agreement. In August 2005, we
entered into an employment agreement with
Clinton H. Severson, our President and Chief Executive
Officer, which provides Mr. Severson with a severance
payment equal to two years of salary, bonus and benefits if his
employment with us is terminated for any reason other than
cause. Certain severance benefits provided pursuant to the
Severance Plan (described above in Change of Control
Agreements) with respect to a change of control supersede
those provided pursuant to the employment agreement. None of our
other executives have employment agreements with us.
42
Grants of
Plan-Based Awards in Fiscal 2010
The following table sets forth the grants of plan-based awards
to our Named Executive Officers during fiscal 2010.
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|
All Other
|
|
Grant
|
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|
Stock
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Date
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Awards:
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Fair
|
|
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|
Estimated Future Payouts
|
|
Estimated Future Payouts
|
|
Number of
|
|
Value of
|
|
|
|
|
Under Non-Equity Incentive
|
|
Under Equity Incentive
|
|
Shares of
|
|
Stock and
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|
|
|
|
Plan Awards(1)
|
|
Plan Awards
|
|
Stock or
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|
Option
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|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
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Maximum
|
|
Units
|
|
Awards
|
Name
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Grant Date
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|
($)
|
|
($)
|
|
($)
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|
(#)
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|
(#)
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|
(#)
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(#)(2)
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($)(3)
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|
Clinton H. Severson
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|
5/1/2009
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|
131,250
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525,000
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|
|
1,050,000
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|
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55,000
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|
833,250
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Alberto R. Santa Ines
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5/1/2009
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75,000
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|
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300,000
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|
600,000
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|
|
|
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25,000
|
|
|
|
378,750
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|
Kenneth P. Aron, Ph.D.
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|
5/1/2009
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|
75,000
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|
|
|
300,000
|
|
|
|
600,000
|
|
|
|
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|
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25,000
|
|
|
|
378,750
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|
Vladimir E. Ostoich, Ph.D.
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5/1/2009
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|
75,000
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|
|
|
300,000
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|
|
|
600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
378,750
|
|
Donald P. Wood
|
|
|
5/1/2009
|
|
|
|
75,000
|
|
|
|
300,000
|
|
|
|
600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
378,750
|
|
|
|
|
(1) |
|
Actual cash performance bonuses, which were approved by the
Board of Directors upon recommendation by the Compensation
Committee based on achievement of corporate financial
performance goals for fiscal 2010, were paid in four quarterly
installments within one month following the end of the
applicable quarter upon achieving the established quarterly net
sales and quarterly pre-tax income goals. Actual cash
performance bonuses are shown in the Non-Equity Incentive
Plan Compensation column of the Summary Compensation
Table above. |
|
(2) |
|
Each of the equity-based awards reported in the Grants of
Plan-Based Awards table was granted under, and is subject
to, the terms of our 2005 Equity Incentive Plan. The time-based
vesting schedule of restricted stock unit grants during fiscal
2010 is described above in Restricted Stock Units. |
|
(3) |
|
Represents the fair value of the restricted stock unit award on
the date of grant, pursuant to ASC 718. See Note 11 of
the Notes to Consolidated Financial Statements included in our
Annual Report on
Form 10-K
filed with the SEC on June 14, 2010 for additional
information. |
43
Outstanding
Equity Awards at Fiscal Year End 2010
The following table shows, for the fiscal year ended
March 31, 2010, certain information regarding outstanding
equity awards at fiscal year end for our Named Executive
Officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
Equity Incentive
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Market
|
|
Plan Awards:
|
|
Plan Awards:
|
|
|
Securities
|
|
Number of
|
|
|
|
|
|
Number of
|
|
Value of
|
|
Number of
|
|
Market or Payout
|
|
|
Underlying
|
|
Securities
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
Unearned Shares,
|
|
Value of Unearned
|
|
|
Unexercised
|
|
Underlying
|
|
|
|
|
|
Units of
|
|
Units of
|
|
Units or Other
|
|
Shares, Units or
|
|
|
Options
|
|
Unexercised
|
|
Option
|
|
|
|
Stock
|
|
Stock
|
|
Rights
|
|
Other Rights
|
|
|
(#)
|
|
Options
|
|
Exercise
|
|
Option
|
|
That Have
|
|
That Have
|
|
That Have
|
|
That Have
|
|
|
Exercisable
|
|
(#)
|
|
Price
|
|
Expiration
|
|
Not Vested
|
|
Not Vested
|
|
Not Vested
|
|
Not Vested
|
Name
|
|
(1)
|
|
Unexercisable
|
|
($)(2)
|
|
Date
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)(3)
|
|
Clinton H. Severson
|
|
|
150,000
|
|
|
|
|
|
|
|
4.87
|
|
|
|
4/24/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,417
|
|
|
|
|
|
|
|
3.85
|
|
|
|
4/22/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
(4)
|
|
|
|
|
|
|
21.65
|
|
|
|
4/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,000
|
(5)
|
|
|
761,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
(5)
|
|
|
951,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,500
|
(6)
|
|
|
1,155,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,500
|
(6)
|
|
|
1,291,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,000
|
(6)
|
|
|
1,495,450
|
|
Alberto R. Santa Ines
|
|
|
37,432
|
|
|
|
|
|
|
|
3.00
|
|
|
|
7/23/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
3.85
|
|
|
|
4/22/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(4)
|
|
|
|
|
|
|
21.65
|
|
|
|
4/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,000
|
(5)
|
|
|
380,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,000
|
(6)
|
|
|
462,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,000
|
(6)
|
|
|
516,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(6)
|
|
|
679,750
|
|
Kenneth P. Aron, Ph.D.
|
|
|
40,625
|
|
|
|
|
|
|
|
6.31
|
|
|
|
10/31/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,500
|
|
|
|
|
|
|
|
5.47
|
|
|
|
7/24/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(4)
|
|
|
|
|
|
|
21.65
|
|
|
|
4/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,000
|
(5)
|
|
|
380,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,000
|
(6)
|
|
|
462,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,000
|
(6)
|
|
|
516,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(6)
|
|
|
679,750
|
|
Vladimir E. Ostoich, Ph.D.
|
|
|
9,500
|
|
|
|
|
|
|
|
5.47
|
|
|
|
7/24/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
|
|
3.85
|
|
|
|
4/22/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,000
|
(4)
|
|
|
|
|
|
|
21.65
|
|
|
|
4/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,000
|
(5)
|
|
|
380,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,000
|
(6)
|
|
|
462,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,000
|
(6)
|
|
|
516,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(6)
|
|
|
679,750
|
|
Donald P. Wood
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,000
|
(6)
|
|
|
462,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,000
|
(6)
|
|
|
516,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(6)
|
|
|
679,750
|
|
|
|
|
(1) |
|
Options granted to the Named Executive Officers expire ten years
after the grant date. All options vest
one-fourth
on the first anniversary date of grant and vests at a rate of
1/48th for each full month thereafter, except as otherwise noted. |
|
(2) |
|
Represents the fair value of our common stock on the grant date
of the option. |
|
(3) |
|
The value of the equity award is based on the closing price of
our common stock of $27.19 on March 31, 2010, as reported
on the NASDAQ Global Select Market. |
|
(4) |
|
These options were accelerated in full by our Board of Directors
and became fully vested on December 5, 2005. However,
pursuant to a
lock-up and
consent agreement entered into with each of our Named Executive
Officers, these options may not be exercised prior to the date
on which the exercise would have been permitted under the
vesting schedule set forth in footnote 1, or earlier upon the
Named Executive Officers last day of employment or a
change in control. On April 20, 2008, the restrictions
under the
lock-up and
consent agreements expired and 100% of these shares became
exercisable. |
44
|
|
|
(5) |
|
The four-year time-based vesting terms of the restricted stock
units is as follows, assuming continuous employment: five
percent of the shares vest on April 25, 2007; ten percent
of the shares vest on April 25, 2008; 15 percent of
the shares vest on April 25, 2009; and 70 percent of
the shares vest on April 25, 2010. Additionally, these
restricted stock unit awards are also subject to accelerated
vesting upon achieving the following performance-based
milestones: |
|
|
|
upon attainment of certain pre-tax income goals by
March 31, 2007, vesting will accelerate to an aggregate of
25% within one year from grant date; by March 31, 2008,
vesting will accelerate to an aggregate of 25% within two years
from grant date; by March 31, 2009, vesting will accelerate
to an aggregate of 30%, within three years of grant date; hence,
meeting pre-tax income goals in each of the fiscal years ended
March 31, 2007, 2008 and 2009 can result in a cumulative
vesting of 80% over three years;
|
|
|
|
upon attainment of certain product development
objectives prior to June 30, 2007, an additional vesting of
10% would be awarded;
|
|
|
|
upon satisfaction of certain regulatory requirements
prior to March 31, 2008, an additional vesting of 10% would
be awarded; or
|
|
|
|
upon attainment of a certain level of operating
income per share for any fiscal year during the four-year
vesting period, the restricted stock units will accelerate in
full.
|
|
|
|
To date, none of the foregoing performance-based milestones
required for acceleration has been achieved. In each case,
vesting of the equity award is conditioned upon the Named
Executive Officers continuous employment through the
applicable vesting date. |
|
(6) |
|
The four-year time-based vesting terms of the restricted stock
units is as follows, assuming continuous employment: five
percent of the shares vest after the first year; ten percent of
the shares vest after the second year; 15 percent of the
shares vest after the third year; and 70 percent of the
shares vest after the fourth year. |
Option
Exercises and Stock Vested in Fiscal 2010
The following table shows all shares of common stock acquired
upon exercise of stock options and value realized upon exercise,
and all stock awards vested and value realized upon vesting,
held by our Named Executive Officers during fiscal 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
Shares
|
|
Value
|
|
Shares
|
|
Value
|
|
|
Acquired on
|
|
Realized on
|
|
Acquired on
|
|
Realized on
|
|
|
Exercise
|
|
Exercise
|
|
Vesting
|
|
Vesting
|
Name
|
|
(#)
|
|
($)(1)
|
|
(#)
|
|
($)(2)
|
|
Clinton H. Severson
|
|
|
|
|
|
|
|
|
|
|
21,000
|
|
|
|
320,725
|
|
Alberto R. Santa Ines
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
91,930
|
|
Kenneth P. Aron, Ph.D.
|
|
|
12,484
|
|
|
|
259,103
|
|
|
|
6,000
|
|
|
|
91,930
|
|
Vladimir E. Ostoich, Ph.D.
|
|
|
16,000
|
|
|
|
288,560
|
|
|
|
6,000
|
|
|
|
91,930
|
|
Donald P. Wood
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
62,800
|
|
|
|
|
(1) |
|
The value realized equals the difference between the option
exercise price and the fair market value of our common stock on
the date of exercise, as reported on the NASDAQ Global Select
Market, multiplied by the number of shares for which the option
was exercised. |
|
(2) |
|
The value realized on vesting of restricted stock units equals
the fair market value of our common stock on the settlement
date, multiplied by the number of shares that vested. |
Severance
and Change in Control Agreements
Employment
Agreement
In August 2005, we entered into an employment agreement with
Clinton H. Severson, our President and Chief Executive
Officer, which provides Mr. Severson with a severance
payment equal to two years of salary, bonus and benefits if his
employment with us is terminated for any reason other than
cause. Certain severance benefits
45
provided pursuant to the Severance Plan (described below in
Executive Change of Control Severance Plan) with
respect to a change of control supersede those provided pursuant
to the employment agreement. None of our other executives has an
employment agreement with us.
Executive
Change of Control Severance Plan
In July 2006, our Board of Directors, after considering a change
of control program analysis from the Compensation Peer Group
prepared by Top Five and upon the recommendation of our
Compensation Committee, approved and adopted the Abaxis, Inc.
Executive Change of Control Severance Plan (the Severance
Plan). The Severance Plan was adopted by our Board of
Directors to reduce the distraction of executives and potential
loss of executive talent that could arise from a potential
change of control. Participants in the Severance Plan include
Abaxis senior managers who are selected by the Board of
Directors. In December 2008, our Board of Directors amended the
Severance Plan to ensure its compliance with Section 409A
of the Code and designated the following current executive
officers as participants in the Severance Plan: Clinton H.
Severson, our Chairman, President and Chief Executive Officer;
Alberto R. Santa Ines, our Chief Financial Officer and Vice
President of Finance; Kenneth P. Aron, Ph.D., our
Chief Technology Officer; Vladimir E. Ostoich, Ph.D., our
Vice President of Government Affairs and Vice President of
Marketing for the Pacific Rim; Donald P. Wood, our Chief
Operations Officer; and Martin V. Mulroy, our Vice President of
Veterinary Sales and Marketing for North America. In October
2009, our Board of Directors also designated the following
executive officers as participants in the Severance Plan:
Brenton G.A. Hanlon, our Vice President of Medical Sales and
Marketing for North America and Achim Henkel, our Managing
Director of Abaxis Europe GmbH.
The Severance Plan provides that upon the occurrence of a change
of control a participants outstanding stock option(s) and
other unvested equity-based instruments will accelerate in full,
and any such stock awards shall become immediately exercisable.
In addition, the Severance Plan provides that, if the
participants employment is terminated by us (or any
successor of Abaxis) for any reason other than cause, death, or
disability within 18 months following the change of control
date and such termination constitutes a separation in service,
the participant is eligible to receive severance benefits as
follows:
|
|
|
|
|
on the 60th day after the termination date, a lump sum cash
payment equal to two times the sum of the participants
annual base salary and the participants target annual
bonus amount for the year in which the change of control occurs;
|
|
|
|
payment of up to 24 months of premiums for medical, dental
and vision benefits, provided, however, that if the participant
becomes eligible to receive comparable benefits under another
employers plan, the Companys benefits shall be
secondary to those provided under such other plan;
|
|
|
|
reimbursement, on a monthly basis, of up to 24 months of
premiums for disability and life insurance benefits if the
participant elects to convert his or her disability
and/or life
insurance benefits under the Companys plans into
individual policies following termination; and
|
|
|
|
payment of an amount equal to any excise tax imposed under
Section 4999 of the Code, provided, however, that payment
of such amount is capped at $1,000,000 per participant.
|
Payment of the foregoing severance benefits is conditioned upon
the participants execution of a valid and effective
release of claims against us.
Incentive
Plans
Under our 2005 Equity Incentive Plan, (the 2005
Plan), in the event of a change in control, as
such term is defined by the 2005 Plan, the surviving,
continuing, successor or purchasing entity or its parent may,
without the consent of any participant, either assume or
continue in effect any or all outstanding options and stock
appreciation rights or substitute substantially equivalent
options or rights for its stock. Any options or stock
appreciation rights which are not assumed or continued in
connection with a change in control or exercised prior to the
change in control will terminate effective as of the time of the
change in control. Our Compensation Committee may provide
46
for the acceleration of vesting of any or all outstanding
options or stock appreciation rights upon such terms and to such
extent as it determines. The 2005 Plan also authorizes our
Compensation Committee, in its discretion and without the
consent of any participant, to cancel each or any outstanding
option or stock appreciation right upon a change in control in
exchange for a payment to the participant with respect to each
vested share (and each unvested share if so determined by our
Compensation Committee) subject to the cancelled award of an
amount equal to the excess of the consideration to be paid per
share of common stock in the change in control transaction over
the exercise price per share under the award. The Compensation
Committee, in its discretion, may provide in the event of a
change in control for the acceleration of vesting
and/or
settlement of any stock award, restricted stock unit award,
performance share or performance unit, cash-based award or other
share-based award held by a participant upon such conditions and
to such extent as determined by our Compensation Committee. It
is currently anticipated that awards granted to executive
officers will accelerate fully on a change of control. The
vesting of non-employee director awards granted under the 2005
Plan automatically will accelerate in full upon a change in
control.
All outstanding stock options under our 1992 Outside
Directors Stock Option Plan (the Directors
Plan) are fully vested and no additional options will be
granted under the Directors Plan. Our Directors Plan provides
that, in the event of a transfer of control of the company, the
surviving, continuing, successor or purchasing corporation or a
parent corporation thereof, as the case may be, shall either
assume our rights and obligations under stock option agreements
outstanding under our option plans or substitute options for the
acquiring corporations stock for such outstanding options.
Any options which are neither assumed by the acquiring
corporation, nor exercised as of the date of the transfer of
control, shall terminate effective as of the date of the
transfer of control.
As described above, certain additional compensation is payable
to a Named Executive Officer (i) if his employment was
involuntarily terminated without cause, (ii) upon a change
in control or (iii) if his employment was terminated
involuntarily following a change in control. The amounts shown
in the table below assume that such termination was effective as
of March 31, 2010, and do not include amounts in which the
Named Executive Officer had already vested as of March 31,
2010. The actual compensation to be paid can only be determined
at the time of the change in control
and/or a
Named Executive Officers termination of employment.
Potential
Payments Upon Termination or Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Involuntary
|
|
|
|
Termination without
|
Executive Benefits and
|
|
Termination without
|
|
Change in Control
|
|
Cause Following a
|
Payments upon Separation
|
|
Cause(1)
|
|
(No Termination)
|
|
Change in Control(2)
|
|
Clinton H. Severson
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary and bonus
|
|
$
|
1,853,077
|
|
|
|
|
|
|
$
|
1,853,077
|
|
Vesting of restricted stock units(3)
|
|
|
|
|
|
$
|
5,655,520
|
|
|
$
|
5,655,520
|
|
Health and welfare benefits(4)
|
|
$
|
12,086
|
|
|
|
|
|
|
$
|
12,086
|
|
Excise tax reimbursement(5)
|
|
|
|
|
|
|
|
|
|
$
|
62,436
|
|
Total
|
|
$
|
1,865,163
|
|
|
$
|
5,655,520
|
|
|
$
|
7,583,119
|
|
Alberto R. Santa Ines
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary and bonus
|
|
|
|
|
|
|
|
|
|
$
|
1,046,154
|
|
Vesting of restricted stock units(3)
|
|
|
|
|
|
$
|
2,039,250
|
|
|
$
|
2,039,250
|
|
Health and welfare benefits(4)
|
|
|
|
|
|
|
|
|
|
$
|
10,662
|
|
Excise tax reimbursement(5)
|
|
|
|
|
|
|
|
|
|
$
|
309,084
|
|
Total
|
|
|
|
|
|
$
|
2,039,250
|
|
|
$
|
3,405,150
|
|
Kenneth P. Aron, Ph.D.
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary and bonus
|
|
|
|
|
|
|
|
|
|
$
|
1,068,462
|
|
Vesting of restricted stock units(3)
|
|
|
|
|
|
$
|
2,039,250
|
|
|
$
|
2,039,250
|
|
Health and welfare benefits(4)
|
|
|
|
|
|
|
|
|
|
$
|
32,692
|
|
Excise tax reimbursement(5)
|
|
|
|
|
|
|
|
|
|
$
|
105,715
|
|
Total
|
|
|
|
|
|
$
|
2,039,250
|
|
|
$
|
3,246,119
|
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Involuntary
|
|
|
|
Termination without
|
Executive Benefits and
|
|
Termination without
|
|
Change in Control
|
|
Cause Following a
|
Payments upon Separation
|
|
Cause(1)
|
|
(No Termination)
|
|
Change in Control(2)
|
|
Vladimir E. Ostoich, Ph.D.
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary and bonus
|
|
|
|
|
|
|
|
|
|
$
|
1,068,462
|
|
Vesting of restricted stock units(3)
|
|
|
|
|
|
$
|
2,039,250
|
|
|
$
|
2,039,250
|
|
Health and welfare benefits(4)
|
|
|
|
|
|
|
|
|
|
$
|
23,710
|
|
Excise tax reimbursement(5)
|
|
|
|
|
|
|
|
|
|
$
|
125,079
|
|
Total
|
|
|
|
|
|
$
|
2,039,250
|
|
|
$
|
3,256,501
|
|
Donald P. Wood
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary and bonus
|
|
|
|
|
|
|
|
|
|
$
|
1,015,045
|
|
Vesting of restricted stock units(3)
|
|
|
|
|
|
$
|
1,658,590
|
|
|
$
|
1,658,590
|
|
Health and welfare benefits(4)
|
|
|
|
|
|
|
|
|
|
$
|
23,618
|
|
Excise tax reimbursement(6)
|
|
|
|
|
|
|
|
|
|
$
|
362,570
|
|
Total
|
|
|
|
|
|
$
|
1,658,590
|
|
|
$
|
3,059,823
|
|
|
|
|
(1) |
|
Amounts relate to payments to Mr. Severson equal to two
years of salary, bonus and benefits if his employment with us is
terminated for any reason other than cause (as defined in
Mr. Seversons employment agreement). |
|
(2) |
|
Amounts assume that the Named Executive Officer was terminated
without cause or due to constructive termination during the
18-month
period following a change in control. |
|
(3) |
|
The value of the restricted stock unit assumes that the market
price per share of our common stock on the date of termination
of employment was equal to the closing price of our common stock
of $27.19 on March 31, 2010, as reported on the NASDAQ
Global Select Market. |
|
(4) |
|
Health and welfare benefits include payment of 24 months of
premiums for medical, dental, vision, disability and life
insurance benefits. |
|
(5) |
|
For purposes of computing the excise tax reimbursement payments,
base amount calculations are based on the Named Executive
Officers taxable wages for fiscal years 2006 through 2010. |
|
(6) |
|
For purposes of computing the excise tax reimbursement payments,
base amount calculations are based on Mr. Woods
taxable wages for fiscal years 2008 through 2010, when he joined
us in fiscal 2008. |
DIRECTOR
COMPENSATION
Director
Compensation Table
The table below summarizes the compensation paid to our
non-employee directors for fiscal 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
Stock
|
|
Option
|
|
All Other
|
|
|
|
|
Paid in Cash
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Total
|
Name(1)
|
|
($)
|
|
($)(2)(3)
|
|
($)(4)
|
|
($)
|
|
($)
|
|
Richard J. Bastiani, Ph.D.
|
|
|
23,000
|
|
|
|
33,330
|
|
|
|
|
|
|
|
|
|
|
|
56,330
|
|
Henk J. Evenhuis
|
|
|
27,000
|
|
|
|
33,330
|
|
|
|
|
|
|
|
|
|
|
|
60,330
|
|
Prithipal Singh, Ph.D.
|
|
|
21,000
|
|
|
|
33,330
|
|
|
|
|
|
|
|
|
|
|
|
54,330
|
|
Ernest S. Tucker, III, M.D.
|
|
|
22,000
|
|
|
|
33,330
|
|
|
|
|
|
|
|
|
|
|
|
55,330
|
|
|
|
|
(1) |
|
Clinton H. Severson, our Chief Executive Officer and Director,
is not included in this table as he is an employee of the
Company and receives no compensation for his services as a
director. The compensation received by Mr. Severson as an
employee is shown in the Summary Compensation Table
above. |
|
(2) |
|
Each non-employee director listed in the table above was granted
an award of 2,200 restricted stock units on May 1, 2009
under our 2005 Plan. Amounts listed in this column represent the
grant date fair value of the awards in accordance with
ASC 718. Amounts shown do not reflect whether the
non-employee director has |
48
|
|
|
|
|
actually realized a financial benefit from the awards (such as
by vesting in a restricted stock unit award). For a discussion
of the assumptions used in determining the fair value of awards
of restricted stock units in the above table, see Note 11
of the Notes to Consolidated Financial Statements in our Annual
Report on
Form 10-K
filed with the SEC on June 14, 2010. No stock awards were
forfeited by our non-employee directors during fiscal 2010,
except for Mr. Hanlon, upon his resignation as director in
August 2009. |
|
(3) |
|
As of March 31, 2010, each of our non-employee directors
held 2,200 shares of unvested restricted stock units. |
|
(4) |
|
No options were awarded to our non-employee directors in fiscal
2010, 2009 or 2008. As of March 31, 2010, the non-employee
directors held the following number of outstanding options:
Dr. Bastiani, 20,000; Mr. Evenhuis, 18,000;
Dr. Singh, 16,000; and Dr. Tucker, 8,000 shares. |
Cash
Compensation Paid to Board Members
During fiscal 2010, all non-employee directors received an
annual retainer of $12,000. The non-employee Chairs of our Audit
Committee and Compensation Committee received an annual
supplement of $5,000 and $2,000, respectively. Our non-employee
directors each received $1,250 per board meeting attended and
$1,000 per committee meeting attended. We also reimburse our
non-employee directors for reasonable travel expenses incurred
in connection with attending board and committee meetings.
Directors who are employees receive no compensation for their
service as directors.
Equity
Compensation Paid to Board Members
Non-employee directors are eligible to receive awards under the
2005 Plan, but such awards are discretionary and not automatic.
In fiscal 2010, 2009 and 2008, each non-employee director
received an annual equity award of 2,200, 1,500 and 1,500,
respectively, restricted stock units granted under the 2005
Plan. Each award of restricted stock units represents the right
of the participant to receive, without payment of monetary
consideration, on the vesting date, a number of shares of common
stock equal to the number of units vesting on such date. Subject
to the directors continued service with us through the
applicable vesting date, each restricted stock unit award will
vest in full 12 months after the grant date. Under the
terms of the 2005 Plan, the vesting of each non-employee
director restricted stock unit award will also be accelerated in
full in the event of a change in control, as defined
in the 2005 Plan.
TRANSACTIONS
WITH RELATED PERSONS
Certain
Relationships and Related Transactions
During the fiscal year ended March 31, 2010, there was not,
nor is there any currently proposed transaction or series of
similar transactions to which Abaxis was or is to be a party in
which the amount involved exceeds $120,000 and in which any
executive officer, director or holder of more than 5% of any
class of voting securities of Abaxis and members of that
persons immediate family had or will have a direct or
indirect material interest, other than as set forth in the
Summary Compensation Table above.
Indemnification
Agreements
The Company has entered into indemnity agreements with certain
officers and directors which provide, among other things, that
the Company will indemnify such officer or director, under the
circumstances and to the extent provided for therein, for
expenses, damages, judgments, fines and settlements he or she
may be required to pay in actions or proceedings which he or she
is or may be made a party by reason of his or her position as a
director, officer or other agent of the Company, and otherwise
to the fullest extent permitted under applicable law.
Related-Person
Transactions Policy and Procedures
Pursuant to the requirements set forth in the charter of our
Audit Committee, our Audit Committee is responsible for
reviewing and approving any related-party transactions, after
reviewing each such transaction for potential conflicts of
interests and other improprieties. We do not have any additional
written procedures governing the process for addressing
related-person transactions. However, in approving or rejecting
proposed transactions, our audit committee generally considers
the relevant facts and circumstances available and deemed
relevant,
49
including, but not limited to the risks, costs and benefits to
us, the terms of the transaction, the availability of other
sources for comparable services or products, and, if applicable,
the impact on a directors independence.
As required under the NASDAQ listing standards, a majority of
the members of a listed companys Board of Directors must
qualify as independent, as affirmatively determined
by the Board of Directors. The Board consults with the
Companys counsel to ensure that the Boards
determinations are consistent with relevant securities and other
laws and regulations regarding the definition of
independent, including those set forth in the NASDAQ
listing standards, as in effect time to time. Consistent with
these considerations, after review of all relevant transactions
or relationships between each director, or any of his or her
family members, and the Company, its senior management, and its
independent registered public accounting firm, the Board has
affirmatively determined that the following four directors are
independent directors within the meaning of the applicable
NASDAQ listing standards: Mr. Evenhuis and
Drs. Bastiani, Singh and Tucker. In making this
determination, the Board found that none of the directors had a
material or other disqualifying relationship with the Company.
Mr. Severson, the Companys Chairman, President and
Chief Executive Officer, is not an independent director by
virtue of his employment with the Company.
HOUSEHOLDING
OF PROXY MATERIALS
The SEC has adopted rules that permit companies and
intermediaries (e.g., brokers) to satisfy the delivery
requirements for annual meeting materials with respect to two or
more shareholders sharing the same address by delivering a
single set of annual meeting materials addressed to those
shareholders. This process, which is commonly referred to as
householding, potentially means extra convenience
for shareholders and cost savings for companies.
This year, a number of brokers with account holders who are
Abaxis shareholders may be householding proxy
materials. A single set of annual meeting materials may be
delivered to multiple shareholders sharing an address unless
contrary instructions have been received from the affected
shareholders. Once you have received notice from your broker
that they will be householding communications to
your address, householding will continue until you
are notified otherwise or until you revoke your consent. If, at
any time, you no longer wish to participate in
householding and would prefer to receive a separate
set of annual meeting materials, please notify your broker.
Direct your written request to Abaxis, Inc., Alberto R. Santa
Ines, Chief Financial Officer and Secretary, 3240 Whipple Road,
Union City, California 94587 or contact Alberto R. Santa Ines at
1-510-675-6500. Shareholders who currently receive multiple
copies of the annual meeting materials at their addresses and
would like to request householding of their
communications should contact their brokers.
OTHER
MATTERS
The Board of Directors knows of no other matters that will be
presented for consideration at the Annual Meeting. If any other
matters are properly brought before the meeting, it is the
intention of the persons named in the accompanying proxy to vote
on such matters in accordance with their best judgment.
By Order of the Board of Directors
ALBERTO R. SANTA INES
Chief Financial Officer and Secretary
September 15, 2010
A copy of the Companys Annual Report to the Securities and
Exchange Commission on
Form 10-K
for the fiscal year ended March 31, 2010 is available
without charge upon written request to: Investor Relations,
Abaxis, Inc., 3240 Whipple Road, Union City, California
94587.
50
APPENDIX A
ABAXIS,
INC.
2005 EQUITY INCENTIVE PLAN
Table
of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
|
|
1.
|
|
|
ESTABLISHMENT, PURPOSE AND TERM OF PLAN
|
|
|
A-1
|
|
|
|
|
|
1.1 Establishment
|
|
|
A-1
|
|
|
|
|
|
1.2 Purpose
|
|
|
A-1
|
|
|
|
|
|
1.3 Term of Plan
|
|
|
A-1
|
|
|
2.
|
|
|
DEFINITIONS AND CONSTRUCTION
|
|
|
A-1
|
|
|
|
|
|
2.1 Definitions
|
|
|
A-1
|
|
|
|
|
|
2.2 Construction
|
|
|
A-5
|
|
|
3.
|
|
|
ADMINISTRATION
|
|
|
A-5
|
|
|
|
|
|
3.1 Administration by the Committee
|
|
|
A-5
|
|
|
|
|
|
3.2 Administration with Respect to Insiders
|
|
|
A-5
|
|
|
|
|
|
3.3 Committee Complying with Section 162(m)
|
|
|
A-5
|
|
|
|
|
|
3.4 Powers of the Committee
|
|
|
A-5
|
|
|
|
|
|
3.5 Option or SAR Repricing
|
|
|
A-6
|
|
|
|
|
|
3.6 Indemnification
|
|
|
A-6
|
|
|
4.
|
|
|
SHARES SUBJECT TO PLAN
|
|
|
A-7
|
|
|
|
|
|
4.1 Maximum Number of Shares Issuable
|
|
|
A-7
|
|
|
|
|
|
4.2 Adjustments for Changes in Capital Structure
|
|
|
A-7
|
|
|
5.
|
|
|
ELIGIBILITY AND AWARD LIMITATIONS
|
|
|
A-7
|
|
|
|
|
|
5.1 Persons Eligible for Awards
|
|
|
A-7
|
|
|
|
|
|
5.2 Participation
|
|
|
A-7
|
|
|
|
|
|
5.3 Incentive Stock Option Limitations
|
|
|
A-8
|
|
|
|
|
|
5.4 Award Limits
|
|
|
A-8
|
|
|
6.
|
|
|
TERMS AND CONDITIONS OF OPTIONS
|
|
|
A-9
|
|
|
|
|
|
6.1 Exercise Price
|
|
|
A-9
|
|
|
|
|
|
6.2 Exercisability and Term of Options
|
|
|
A-9
|
|
|
|
|
|
6.3 Payment of Exercise Price
|
|
|
A-9
|
|
|
|
|
|
6.4 Effect of Termination of Service
|
|
|
A-10
|
|
|
|
|
|
6.5 Transferability of Options
|
|
|
A-10
|
|
|
7.
|
|
|
TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
|
|
|
A-10
|
|
|
|
|
|
7.1 Types of SARs Authorized
|
|
|
A-10
|
|
|
|
|
|
7.2 Exercise Price
|
|
|
A-10
|
|
|
|
|
|
7.3 Exercisability and Term of SARs
|
|
|
A-10
|
|
|
|
|
|
7.4 Deemed Exercise of SARs
|
|
|
A-10
|
|
|
|
|
|
7.5 Effect of Termination of Service
|
|
|
A-11
|
|
|
|
|
|
7.6 Nontransferability of SARs
|
|
|
A-11
|
|
|
8.
|
|
|
TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS
|
|
|
A-11
|
|
|
|
|
|
8.1 Types of Restricted Stock Awards Authorized
|
|
|
A-11
|
|
|
|
|
|
8.2 Purchase Price
|
|
|
A-11
|
|
|
|
|
|
8.3 Purchase Period
|
|
|
A-11
|
|
|
|
|
|
8.4 Vesting and Restrictions on Transfer
|
|
|
A-11
|
|
|
|
|
|
8.5 Voting Rights; Dividends and Distributions
|
|
|
A-11
|
|
|
|
|
|
8.6 Effect of Termination of Service
|
|
|
A-11
|
|
|
|
|
|
8.7 Nontransferability of Restricted Stock Award
Rights
|
|
|
A-12
|
|
A-i
|
|
|
|
|
|
|
|
|
|
|
|
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|
Page
|
|
|
|
9.
|
|
|
TERMS AND CONDITIONS OF PERFORMANCE AWARDS
|
|
|
A-12
|
|
|
|
|
|
9.1 Types of Performance Awards Authorized
|
|
|
A-12
|
|
|
|
|
|
9.2 Initial Value of Performance Shares and
Performance Units
|
|
|
A-12
|
|
|
|
|
|
9.3 Establishment of Performance Period, Performance
Goals and Performance Award Formula
|
|
|
A-12
|
|
|
|
|
|
9.4 Performance Cash Awards
|
|
|
A-12
|
|
|
|
|
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9.5 Measurement of Performance Goals
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9.6 Settlement of Performance Awards
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9.7 Voting Rights; Dividend Equivalent Rights and
Distributions
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9.8 Effect of Termination of Service
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9.9 Nontransferability of Performance Awards
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10.
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TERMS AND CONDITIONS OF RESTRICTED STOCK UNIT AWARDS
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10.1 Grant of Restricted Stock Unit Awards
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10.2 Vesting
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10.3 Voting Rights, Dividend Equivalent Rights and
Distributions
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10.4 Effect of Termination of Service
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10.5 Settlement of Restricted Stock Unit Awards
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10.6 Nontransferability of Restricted Stock Unit Awards
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11.
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DEFERRED COMPENSATION AWARDS
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11.1 Establishment of Deferred Compensation Award Programs
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11.2 Terms and Conditions of Deferred Compensation Awards
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12.
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OTHER STOCK-BASED AWARDS
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13.
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CHANGE IN CONTROL
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13.1 Effect of Change in Control on Options and SARs
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13.2 Effect of Change in Control on Restricted Stock Awards
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13.3 Effect of Change in Control on Performance Awards
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13.4 Effect of Change in Control on Restricted Stock Unit
Awards
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13.5 Effect of Change in Control on Deferred Compensation
and Other Stock-Based Awards
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14.
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COMPLIANCE WITH SECURITIES LAW
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15.
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TAX WITHHOLDING
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15.1 Tax Withholding in General
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15.2 Withholding in Shares
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16.
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AMENDMENT OR TERMINATION OF PLAN
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17.
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MISCELLANEOUS PROVISIONS
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17.1 Repurchase Rights
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17.2 Provision of Information
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17.3 Rights as Employee, Consultant or Director
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17.4 Rights as a Shareholder
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17.5 Fractional Shares
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17.6 Severability
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17.7 Beneficiary Designation
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17.8 Unfunded Obligation
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17.9 Choice of Law
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A-ii
ABAXIS,
INC.
2005
EQUITY INCENTIVE PLAN
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1.
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Establishment,
Purpose and Term of
Plan.
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1.1 Establishment. The Abaxis,
Inc. 2005 Equity Incentive Plan (the
Plan) is hereby established effective
as of its approval by the shareholders of the Company (the
Effective Date). The Plan is the successor to the
Companys 1998 Stock Option Plan and its share reserve.
1.2 Purpose. The purpose of the
Plan is to advance the interests of the Participating Company
Group and its shareholders by providing an incentive to attract
and retain the best qualified personnel to perform services for
the Participating Company Group, by motivating such persons to
contribute to the growth and profitability of the Participating
Company Group, by aligning their interests with interests of the
Companys shareholders, and by rewarding such persons for
their services by tying a significant portion of their total
compensation package to the success of the Company. The Plan
seeks to achieve this purpose by providing for Awards in the
form of Options, Stock Appreciation Rights, Restricted Stock
Awards, Performance Shares, Performance Units, Performance Cash
Awards, Restricted Stock Units, Deferred Compensation Awards and
other Stock-Based Awards as described below.
1.3 Term of Plan. The Plan shall
continue in effect until the earlier of its termination by the
Board or the date on which all of the shares of Stock available
for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan and the
agreements evidencing Awards granted under the Plan have lapsed.
However, all Awards shall be granted, if at all, within ten
(10) years from the Effective Date.
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2.
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Definitions
and
Construction.
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2.1 Definitions. Whenever used
herein, the following terms shall have their respective meanings
set forth below:
(a) Affiliate means (i) an
entity, other than a Parent Corporation, that directly, or
indirectly through one or more intermediary entities, controls
the Company or (ii) an entity, other than a Subsidiary
Corporation, that is controlled by the Company directly, or
indirectly through one or more intermediary entities. For this
purpose, the term control (including the term
controlled by) means the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of the relevant entity, whether through
the ownership of voting securities, by contract or otherwise; or
shall have such other meaning assigned such term for the
purposes of registration on
Form S-8
under the Securities Act.
(b) Award means any Option, SAR,
Restricted Stock Award, Performance Share, Performance Unit,
Performance Cash Award, Restricted Stock Unit or Deferred
Compensation Award or other Stock-Based Award granted under the
Plan.
(c) Award Agreement means a
written agreement between the Company and a Participant setting
forth the terms, conditions and restrictions of the Award
granted to the Participant.
(d) Board means the Board of
Directors of the Company.
(e) Change in Control means,
unless otherwise defined by the Participants Award
Agreement or contract of employment or service, an Ownership
Change Event or a series of related Ownership Change Events
(collectively, the Transaction) wherein the
shareholders of the Company immediately before the Transaction
do not retain immediately after the Transaction, in
substantially the same proportions as their ownership of shares
of the Companys voting stock immediately before the
Transaction, direct or indirect beneficial ownership of more
than fifty percent (50%) of the total combined voting power of
the outstanding voting stock of the Company or the corporation
or corporations to which the assets of the Company were
transferred (the Transferee Corporation(s)), as the
case may be. For purposes of the preceding sentence, indirect
beneficial ownership shall include, without limitation, an
interest resulting from ownership of the voting stock of one or
more corporations which, as a result of the Transaction, own the
Company or the Transferee Corporation(s), as the case may be,
either directly or through one or more subsidiary corporations.
A-1
The Board shall have the right to determine whether multiple
sales or exchanges of the voting stock of the Company or
multiple Ownership Change Events are related, and its
determination shall be final, binding and conclusive.
(f) Code means the Internal
Revenue Code of 1986, as amended, and any applicable regulations
promulgated thereunder.
(g) Committee means the
Compensation Committee or other committee of the Board
consisting of at least two members of the Board that has been
duly appointed to administer the Plan and having such powers as
shall be specified by the Board. If no committee of the Board
has been appointed to administer the Plan, the Board shall
exercise all of the powers of the Committee granted herein, and,
in any event, the Board may in its discretion exercise any or
all of such powers.
(h) Company means Abaxis, Inc., a
California corporation, or any successor corporation thereto.
(i) Consultant means a person
engaged to provide consulting or advisory services (other than
as an Employee or a member of the Board) to a Participating
Company, provided that the identity of such person, the nature
of such services or the entity to which such services are
provided would not preclude the Company from offering or selling
securities to such person pursuant to the Plan in reliance on
registration on a
Form S-8
Registration Statement under the Securities Act.
(j) Deferred Compensation Award
means an award of Stock Units granted to a Participant pursuant
to Section 11 of the Plan.
(k) Director means a member of
the Board.
(l) Disability means the
permanent and total disability of the Participant, within the
meaning of Section 22(e)(3) of the Code.
(m) Dividend Equivalent means a
credit, made at the discretion of the Committee or as otherwise
provided by the Plan, to the account of a Participant in an
amount equal to the cash dividends paid on one share of Stock
for each share of Stock represented by an Award held by such
Participant.
(n) Employee means any person
treated as an employee (including an Officer or a member of the
Board who is also treated as an employee) in the records of a
Participating Company and, with respect to any Incentive Stock
Option granted to such person, who is an employee for purposes
of Section 422 of the Code; provided, however, that neither
service as a member of the Board nor payment of a
directors fee shall be sufficient to constitute employment
for purposes of the Plan. The Company shall determine in good
faith and in the exercise of its discretion whether an
individual has become or has ceased to be an Employee and the
effective date of such individuals employment or
termination of employment, as the case may be. For purposes of
an individuals rights, if any, under the Plan as of the
time of the Companys determination, all such
determinations by the Company shall be final, binding and
conclusive, notwithstanding that the Company or any court of law
or governmental agency subsequently makes a contrary
determination.
(o) Exchange Act means the
Securities Exchange Act of 1934, as amended.
(p) Fair Market Value means, as
of any date, the value of a share of Stock or other property as
determined by the Committee, in its discretion, or by the
Company, in its discretion, if such determination is expressly
allocated to the Company herein, subject to the following:
(i) Except as otherwise determined by the Committee,
if, on such date, the Stock is listed on a national or regional
securities exchange or market system, the Fair Market Value of a
share of Stock shall be the closing price of a share of Stock as
quoted on the New York Stock Exchange or such other national or
regional securities exchange or market system constituting the
primary market for the Stock, as reported in The Wall Street
Journal or such other source as the Company deems reliable.
If the relevant date does not fall on a day on which the Stock
has traded on such securities exchange or market system, the
date on which the Fair Market Value shall be established shall
be the last day on which the Stock was so traded prior to the
relevant date, or such other appropriate day as shall be
determined by the Committee, in its discretion.
A-2
(ii) Notwithstanding the foregoing, the Committee
may, in its discretion, determine the Fair Market Value of a
share of Stock in good faith and in a manner that complies with
Sections 409A and 422 of the Code.
(q) Incentive Stock Option means
an Option intended to be (as set forth in the Award Agreement)
and which qualifies as an incentive stock option within the
meaning of Section 422(b) of the Code.
(r) Insider means an Officer, a
Director or any other person whose transactions in Stock are
subject to Section 16 of the Exchange Act.
(s) Net-Exercise means a
procedure by which the Participant will be issued a number of
shares of Stock determined in accordance with the following
formula:
X = Y(A-B)/A, where
X = the number of shares of Stock to be issued to the
Participant upon exercise of the Option;
Y = the total number of shares with respect to which the
Participant has elected to exercise the Option;
A = the Fair Market Value of one (1) share of Stock;
B = the exercise price per share (as defined in the
Participants Award Agreement).
(t) Nonemployee Director means a
Director who is not an Employee.
(u) Nonstatutory Stock Option
means an Option not intended to be (as set forth in the Award
Agreement) an incentive stock option within the meaning of
Section 422(b) of the Code.
(v) Officer means any person
designated by the Board as an officer of the Company.
(w) Option means the right to
purchase Stock at a stated price for a specified period of time
granted to a Participant pursuant to Section 6 of the Plan.
An Option may be either an Incentive Stock Option or a
Nonstatutory Stock Option.
(x) Option Expiration Date means
the date of expiration of the Options term as set forth in
the Award Agreement.
(y) Ownership Change Event shall
be deemed to have occurred if any of the following occurs with
respect to the Company:
(i) the direct or indirect sale or exchange in a
single or series of related transactions by the shareholders of
the Company of more than fifty percent (50%) of the voting stock
of the Company;
(ii) a merger or consolidation in which the Company
is a party;
(iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company; or
(iv) a liquidation or dissolution of the Company.
(z) Parent Corporation means any
present or future parent corporation of the Company,
as defined in Section 424(e) of the Code.
(aa) Participant means any
eligible person who has been granted one or more Awards.
(bb) Participating Company means
the Company or any Parent Corporation, Subsidiary Corporation or
Affiliate.
(cc) Participating Company Group
means, at any point in time, all entities collectively which are
then Participating Companies.
(dd) Performance Award means an
Award of Performance Shares, Performance Units or a Performance
Cash Award.
A-3
(ee) Performance Award Formula
means, for any Performance Award, a formula or table established
by the Committee pursuant to Section 9.3 of the Plan which
provides the basis for computing the value of a Performance
Award at one or more threshold levels of attainment of the
applicable Performance Goal(s) measured as of the end of the
applicable Performance Period.
(ff) Performance Cash Award means
an award granted pursuant to the terms and conditions of
Section 9.4 representing a right granted to a Participant
to receive a payment equal to a specified amount of cash, as
determined by the Committee, based on performance.
(gg) Performance Goal means a
performance goal established by the Committee pursuant to
Section 9.3 of the Plan.
(hh) Performance Period means a
period established by the Committee pursuant to Section 9.3
of the Plan at the end of which one or more Performance Goals
are to be measured.
(ii) Performance Share means a
bookkeeping entry representing a right granted to a Participant
pursuant to Section 9 of the Plan to receive a payment
equal to the value of a Performance Share, as determined by the
Committee, based on performance.
(jj) Performance Unit means a
bookkeeping entry representing a right granted to a Participant
pursuant to Section 9 of the Plan to receive a payment
equal to the value of a Performance Unit, as determined by the
Committee, based upon performance.
(kk) Restricted Stock Award means
an Award of Restricted Stock.
(ll) Restricted Stock Unit
or Stock Unit means a
bookkeeping entry representing a right granted to a Participant
pursuant to Section 10 or Section 11 of the Plan,
respectively, to receive a share of Stock on a date determined
in accordance with the provisions of Section 10 or
Section 11, as applicable, and the Participants Award
Agreement.
(mm) Restriction Period means the
period established in accordance with Section 8.4 of the
Plan during which shares subject to a Restricted Stock Award are
subject to Vesting Conditions.
(nn) Retirement means termination
as an Employee of a Participating Company at age 55 or
older, provided that the Participant was an Employee for at
least five consecutive years prior to the date of such
termination.
(oo) Rule 16b-3
means
Rule 16b-3
under the Exchange Act, as amended from time to time, or any
successor rule or regulation.
(pp) SAR or Stock
Appreciation Right means a bookkeeping entry
representing, for each share of Stock subject to such SAR, a
right granted to a Participant pursuant to Section 7 of the
Plan to receive payment in any combination of shares of Stock or
cash of an amount equal to the excess, if any, of the Fair
Market Value of a share of Stock on the date of exercise of the
SAR over the exercise price.
(qq) Section 162(m) means
Section 162(m) of the Code.
(rr) Securities Act means the
Securities Act of 1933, as amended.
(ss) Service means a
Participants employment or service with the Participating
Company Group, whether in the capacity of an Employee, a
Director or a Consultant. A Participants Service shall not
be deemed to have terminated merely because of a change in the
capacity in which the Participant renders such Service or a
change in the Participating Company for which the Participant
renders such Service, provided that there is no interruption or
termination of the Participants Service. Furthermore, a
Participants Service shall not be deemed to have
terminated if the Participant takes any military leave, sick
leave, or other bona fide leave of absence approved by the
Company. However, if any such leave taken by a Participant
exceeds ninety (90) days, then on the ninety-first (91st)
day following the commencement of such leave any Incentive Stock
Option held by the Participant shall cease to be treated as an
Incentive Stock Option and instead shall be treated thereafter
as a Nonstatutory Stock Option, unless the Participants
right to return to Service with the Participating Company Group
is guaranteed by statute or contract. Notwithstanding the
foregoing, unless otherwise
A-4
designated by the Company or required by law, a leave of absence
shall not be treated as Service for purposes of determining
vesting under the Participants Award Agreement. A
Participants Service shall be deemed to have terminated
either upon an actual termination of Service or upon the entity
for which the Participant performs Service ceasing to be a
Participating Company. Subject to the foregoing, the Company, in
its discretion, shall determine whether the Participants
Service has terminated and the effective date of such
termination.
(tt) Stock means the common stock
of the Company, as adjusted from time to time in accordance with
Section 4.2 of the Plan.
(uu) Stock-Based Awards means any
award that is valued in whole or in part by reference to, or is
otherwise based on, the Stock, including dividends on the Stock,
but excluding those Awards described in Sections 6 through
11 of the Plan.
(vv) Subsidiary Corporation means
any present or future subsidiary corporation of the
Company, as defined in Section 424(f) of the Code.
(ww) Ten Percent Owner means a
Participant who, at the time an Option is granted to the
Participant, owns stock possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of a
Participating Company (other than an Affiliate) within the
meaning of Section 422(b)(6) of the Code.
(xx) Vesting Conditions mean
those conditions established in accordance with Section 8.4
or Section 10.2 of the Plan prior to the satisfaction of
which shares subject to a Restricted Stock Award or Restricted
Stock Unit Award, respectively, remain subject to forfeiture or
a repurchase option in favor of the Company upon the
Participants termination of Service.
2.2 Construction. Captions and
titles contained herein are for convenience only and shall not
affect the meaning or interpretation of any provision of the
Plan. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include
the singular. Use of the term or is not intended to
be exclusive, unless the context clearly requires otherwise.
3.1 Administration by the
Committee. The Plan shall be administered by
the Committee. All questions of interpretation of the Plan or of
any Award shall be determined by the Committee, and such
determinations shall be final and binding upon all persons
having an interest in the Plan or such Award.
3.2 Administration with Respect to
Insiders. With respect to participation by
Insiders in the Plan, at any time that any class of equity
security of the Company is registered pursuant to
Section 12 of the Exchange Act, the Plan shall be
administered in compliance with the requirements, if any, of
Rule 16b-3.
3.3 Committee Complying with
Section 162(m). While the Company is a
publicly held corporation within the meaning of
Section 162(m), the Board may establish a Committee of
outside directors within the meaning of
Section 162(m) to approve the grant of any Award which
might reasonably be anticipated to result in the payment of
employee remuneration that would otherwise exceed the limit on
employee remuneration deductible for income tax purposes
pursuant to Section 162(m).
3.4 Powers of the Committee. In
addition to any other powers set forth in the Plan and subject
to the provisions of the Plan, the Committee shall have the full
and final power and authority, in its discretion:
(a) to determine the persons to whom, and the time
or times at which, Awards shall be granted and the number of
shares of Stock or units to be subject to each Award;
(b) to determine the type of Award granted and to
designate Options as Incentive Stock Options or Nonstatutory
Stock Options;
(c) to determine the Fair Market Value of shares of
Stock or other property;
(d) to determine the terms, conditions and
restrictions applicable to each Award (which need not be
identical) and any shares acquired pursuant thereto, including,
without limitation, (i) the exercise or purchase
A-5
price of shares purchased pursuant to any Award, (ii) the
method of payment for shares purchased pursuant to any Award,
(iii) the method for satisfaction of any tax withholding
obligation arising in connection with Award, including by the
withholding or delivery of shares of Stock, (iv) the
timing, terms and conditions of the exercisability or vesting of
any Award or any shares acquired pursuant thereto, (v) the
Performance Award Formula and Performance Goals applicable to
any Award and the extent to which such Performance Goals have
been attained, (vi) the time of the expiration of any
Award, (vii) the effect of the Participants
termination of Service on any of the foregoing, and
(viii) all other terms, conditions and restrictions
applicable to any Award or shares acquired pursuant thereto not
inconsistent with the terms of the Plan;
(e) to determine whether an Award will be settled in
shares of Stock, cash, or in any combination thereof;
(f) to approve one or more forms of Award Agreement;
(g) to amend, modify, extend, cancel or renew any
Award or to waive any restrictions or conditions applicable to
any Award or any shares acquired pursuant thereto;
(h) to accelerate, continue, extend or defer the
exercisability or vesting of any Award or any shares acquired
pursuant thereto, including with respect to the period following
a Participants termination of Service;
(i) without the consent of the affected Participant
and notwithstanding the provisions of any Award Agreement to the
contrary, to unilaterally substitute at any time a Stock
Appreciation Right providing for settlement solely in shares of
Stock in place of any outstanding Nonstatutory Stock Option,
provided that such Stock Appreciation Right covers the same
number of shares of Stock and provides for the same exercise
price (subject in each case to adjustment in accordance with
Section 4.2) as the replaced Nonstatutory Stock Option and
otherwise provides substantially equivalent terms and conditions
as the replaced Nonstatutory Stock Option, as determined by the
Committee;
(j) to prescribe, amend or rescind rules, guidelines
and policies relating to the Plan, or to adopt
sub-plans or
supplements to, or alternative versions of, the Plan, including,
without limitation, as the Committee deems necessary or
desirable to comply with the laws or regulations of or to
accommodate the tax policy, accounting principles or custom of,
foreign jurisdictions whose citizens may be granted Awards;
(k) to correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Award Agreement
and to make all other determinations and take such other actions
with respect to the Plan or any Award as the Committee may deem
advisable to the extent not inconsistent with the provisions of
the Plan or applicable law; and
(l) to delegate to the Chief Executive Officer or
the Chief Financial Officer the authority with respect to
ministerial matters regarding the Plan and Awards made under the
Plan.
3.5 Option or SAR
Repricing. Without the affirmative vote of
holders of a majority of the shares of Stock cast in person or
by proxy at a meeting of the shareholders of the Company at
which a quorum representing a majority of all outstanding shares
of Stock is present or represented by proxy, the Board shall not
approve a program providing for either (a) the cancellation
of outstanding Options or SARs and the grant in substitution
therefore of new Options or SARs having a lower exercise price
or (b) the amendment of outstanding Options or SARs to
reduce the exercise price thereof. This paragraph shall not be
construed to apply to issuing or assuming a stock option
in a transaction to which section 424(a) applies,
within the meaning of Section 424 of the Code.
3.6 Indemnification. In addition
to such other rights of indemnification as they may have as
members of the Board or the Committee or as officers or
employees of the Participating Company Group, members of the
Board or the Committee and any officers or employees of the
Participating Company Group to whom authority to act for the
Board, the Committee or the Company is delegated shall be
indemnified by the Company against all reasonable expenses,
including attorneys fees, actually and necessarily
incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken
or failure to act under or in connection with the Plan, or any
right granted hereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by
independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall
be adjudged in such action, suit or proceeding that such person
is
A-6
liable for gross negligence, bad faith or intentional misconduct
in duties; provided, however, that within
sixty (60) days after the institution of such action,
suit or proceeding, such person shall offer to the Company, in
writing, the opportunity at its own expense to handle and defend
the same.
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4.
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Shares Subject
to
Plan.
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4.1 Maximum Number of
Shares Issuable. Subject to adjustment
as provided in Section 4.2, the maximum aggregate number of
shares of Stock that may be issued under the Plan shall be five
million eight hundred eighty-six thousand (5,886,000) and shall
consist of authorized but unissued or reacquired shares of Stock
or any combination thereof. If an outstanding Award for any
reason expires or is terminated or canceled without having been
exercised or settled in full, or if shares of Stock acquired
pursuant to an Award subject to forfeiture or repurchase are
forfeited or repurchased by the Company, the shares of Stock
allocable to the terminated portion of such Award or such
forfeited or repurchased shares of Stock shall again be
available for issuance under the Plan. Shares of Stock shall not
be deemed to have been issued pursuant to the Plan (a) with
respect to any portion of an Award that is settled in cash or
(b) to the extent such shares are withheld or reacquired by
the Company in satisfaction of tax withholding obligations
pursuant to Section 15.2. Upon payment in shares of Stock
pursuant to the exercise of an SAR, the number of shares
available for issuance under the Plan shall be reduced only by
the number of shares actually issued in such payment. If the
exercise price of an Option is paid by tender to the Company, or
attestation to the ownership, of shares of Stock owned by the
Participant, or by means of a Net-Exercise, the number of shares
available for issuance under the Plan shall be reduced only by
the net number of shares for which the Option is exercised.
4.2 Adjustments for Changes in Capital
Structure. Subject to any required action by
the shareholders of the Company, in the event of any change in
the Stock effected without receipt of consideration by the
Company, whether through merger, consolidation, reorganization,
reincorporation, recapitalization, reclassification, stock
dividend, stock split, reverse stock split,
split-up,
split-off, spin-off, combination of shares, exchange of shares,
or similar change in the capital structure of the Company, or in
the event of payment of a dividend or distribution to the
shareholders of the Company in a form other than Stock
(excepting normal cash dividends) that has a material effect on
the Fair Market Value of shares of Stock, appropriate
adjustments shall be made in the number and kind of shares
subject to the Plan and to any outstanding Awards, in the Award
limits set forth in Section 5.4, and in the exercise or
purchase price per share under any outstanding Award in order to
prevent dilution or enlargement of Participants rights
under the Plan. For purposes of the foregoing, conversion of any
convertible securities of the Company shall not be treated as
effected without receipt of consideration by the
Company. Any fractional share resulting from an adjustment
pursuant to this Section 4.2 shall be rounded down to the
nearest whole number. The Committee in its sole discretion, may
also make such adjustments in the terms of any Award to reflect,
or related to, such changes in the capital structure of the
Company or distributions as it deems appropriate, including
modification of Performance Goals, Performance Award Formulas
and Performance Periods. The adjustments determined by the
Committee pursuant to this Section 4.2 shall be final,
binding and conclusive.
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5.
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Eligibility
and Award
Limitations.
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5.1 Persons Eligible for
Awards. Awards other than Incentive Stock
Options may be granted to Employees, Directors and Consultants;
provided, however, Nonstatutory Stock Options and SARs may not
be granted to Employees, Directors and Consultants who are
providing Service only to any parent of the Company,
as such term is defined in Rule 405 promulgated under the
Securities Act, unless the stock underlying such Awards is
treated as service recipient stock under
Section 409A of the Code because the Awards are granted
pursuant to a corporate transaction (such as a spin off
transaction) or unless such Awards comply with the distribution
requirements of Section 409A of the Code.
5.2 Participation. Awards other
than Nonemployee Director Awards are granted solely at the
discretion of the Committee. Eligible persons may be granted
more than one Award. However, excepting Nonemployee Director
Awards, eligibility in accordance with this Section shall not
entitle any person to be granted an Award, or, having been
granted an Award, to be granted an additional Award.
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5.3 Incentive Stock Option Limitations.
(a) Persons Eligible. An Incentive
Stock Option may be granted only to a person who, on the
effective date of grant, is an Employee of the Company, a Parent
Corporation or a Subsidiary Corporation (each being an
ISO-Qualifying
Corporation).
(b) Fair Market Value
Limitation. To the extent that options
designated as Incentive Stock Options (granted under all stock
option plans of the Participating Company Group, including the
Plan) become exercisable by a Participant for the first time
during any calendar year for stock having a Fair Market Value
greater than One Hundred Thousand Dollars ($100,000), the
portion of such options which exceeds such amount shall be
treated as Nonstatutory Stock Options. For purposes of this
Section, options designated as Incentive Stock Options shall be
taken into account in the order in which they were granted, and
the Fair Market Value of stock shall be determined as of the
time the option with respect to such stock is granted. If the
Code is amended to provide for a limitation different from that
set forth in this Section, such different limitation shall be
deemed incorporated herein effective as of the date and with
respect to such Options as required or permitted by such
amendment to the Code. If an Option is treated as an Incentive
Stock Option in part and as a Nonstatutory Stock Option in part
by reason of the limitation set forth in this Section, the
Participant may designate which portion of such Option the
Participant is exercising. In the absence of such designation,
the Participant shall be deemed to have exercised the Incentive
Stock Option portion of the Option first. Upon exercise, shares
issued pursuant to each such portion shall be separately
identified.
5.4 Award Limits.
(a) Maximum Number of Shares Issuable Pursuant
to Incentive Stock Options. Subject to
adjustment as provided in Section 4.2, the maximum
aggregate number of shares of Stock that may be issued under the
Plan pursuant to the exercise of Incentive Stock Options shall
not exceed five million eight hundred eighty-six thousand
(5,886,000) shares.
(b) Aggregate Limit on Full Value
Awards. Subject to adjustment as provided in
Section 4.2, in no event shall more than five hundred
thousand (500,000) shares in the aggregate be issued under the
Plan pursuant to the exercise or settlement of Restricted Stock
Awards, Restricted Stock Unit Awards and Performance Awards
(Full Value Awards). Except with respect to a
maximum of five percent (5%) of the shares of Stock authorized
in this Section 5.4(b), any Full Value Awards which vest on
the basis of the Participants continued Service shall not
provide for vesting which is any more rapid than annual pro rata
vesting over a three (3) year period and any Full Value
Awards which vest upon the attainment of Performance Goals shall
provide for a Performance Period of at least twelve
(12) months.
(c) Section 162(m) Award
Limits. The following limits shall apply to
the grant of any Award if, at the time of grant, the Company is
a publicly held corporation within the meaning of
Section 162(m).
(i) Options and SARs. Subject to
adjustment as provided in Section 4.2, no Employee shall be
granted within any fiscal year of the Company one or more
Options or Freestanding SARs which in the aggregate are for more
than 100,000 shares.
(ii) Restricted Stock and Restricted Stock Unit
Awards. Subject to adjustment as provided in
Section 4.2, no Employee shall be granted within any fiscal
year of the Company one or more Restricted Stock Awards or
Restricted Stock Unit Awards, subject to Vesting Conditions
based on the attainment of Performance Goals, for more than
500,000 shares.
(iii) Performance Share and Performance Unit
Awards. Subject to adjustment as provided in
Section 4.2, no Employee shall be granted
(1) Performance Shares which could result in such Employee
receiving more than 500,000 shares for each full fiscal
year of the Company contained in the Performance Period for such
Award, or (2) Performance Units which could result in such
Employee receiving value equal to more than 500,000 shares
for each full fiscal year of the Company contained in the
Performance Period for such Award.
(iv) Performance Cash Awards. In
any calendar year, the Committee may not grant a Performance
Cash Award that has a maximum value that may be paid to any
Participant in excess of five million dollars ($5,000,000).
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(v) Performance Award
Limitation. No Participant may be granted
more than one Performance Award for the same Performance Period.
(vi) Stock-Based Awards. Subject
to adjustment as provided in Section 4.2, no Employee may
be granted Stock-Based Awards which could result in the Employee
receiving more than 50,000 shares (or equivalent value) in
any fiscal year of the Company.
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6.
|
Terms
and Conditions of
Options.
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Options shall be evidenced by Award Agreements specifying the
number of shares of Stock covered thereby, in such form as the
Committee shall from time to time establish. No Option or
purported Option shall be a valid and binding obligation of the
Company unless evidenced by a fully executed Award Agreement.
Award Agreements evidencing Options may incorporate all or any
of the terms of the Plan by reference and shall comply with and
be subject to the following terms and conditions:
6.1 Exercise Price. The exercise
price for each Option shall be established in the discretion of
the Committee; provided, however, that (a) the exercise
price per share shall be not less than the Fair Market Value of
a share of Stock on the effective date of grant of the Option
and (b) no Incentive Stock Option granted to a Ten Percent
Owner shall have an exercise price per share less than one
hundred ten percent (110%) of the Fair Market Value of a share
of Stock on the effective date of grant of the Option.
Notwithstanding the foregoing, an Option (whether an Incentive
Stock Option or a Nonstatutory Stock Option) may be granted with
an exercise price lower than the minimum exercise price set
forth above if such Option is granted pursuant to an assumption
or substitution for another option in a manner qualifying under
the provisions of Section 424(a) of the Code.
6.2 Exercisability and Term of
Options. Options shall be exercisable at such
time or times, or upon such event or events, and subject to such
terms, conditions, performance criteria and restrictions as
shall be determined by the Committee and set forth in the Award
Agreement evidencing such Option; provided, however, that
(a) no Option shall be exercisable after the expiration of
ten (10) years after the effective date of grant of such
Option, and (b) no Incentive Stock Option granted to a Ten
Percent Owner shall be exercisable after the expiration of five
(5) years after the effective date of grant of such Option.
Subject to the foregoing, unless otherwise specified by the
Committee in the grant of an Option, any Option granted
hereunder shall terminate ten (10) years after the
effective date of grant of the Option, unless earlier terminated
in accordance with its provisions.
6.3 Payment of Exercise Price.
(a) Forms of Consideration
Authorized. Except as otherwise provided
below, payment of the exercise price for the number of shares of
Stock being purchased pursuant to any Option shall be made
(i) in cash, by check or in cash equivalent, (ii) by
tender to the Company, or attestation to the ownership, of
shares of Stock owned by the Participant having a Fair Market
Value not less than the exercise price, (iii) by delivery
of a properly executed notice of exercise together with
irrevocable instructions to a broker providing for the
assignment to the Company of the proceeds of a sale or loan with
respect to some or all of the shares being acquired upon the
exercise of the Option (including, without limitation, through
an exercise complying with the provisions of Regulation T
as promulgated from time to time by the Board of Governors of
the Federal Reserve System) (a Cashless
Exercise), (iv) by delivery of a properly
executed notice of exercise electing a Net-Exercise, (v) by
such other consideration as may be approved by the Committee
from time to time to the extent permitted by applicable law, or
(vi) by any combination thereof. The Committee may at any
time or from time to time grant Options which do not permit all
of the foregoing forms of consideration to be used in payment of
the exercise price or which otherwise restrict one or more forms
of consideration.
(b) Limitations on Forms of Consideration.
(i) Tender of
Stock. Notwithstanding the foregoing, an
Option may not be exercised by tender to the Company, or
attestation to the ownership, of shares of Stock to the extent
such tender or attestation would constitute a violation of the
provisions of any law, regulation or agreement restricting the
redemption of the Companys stock.
(ii) Cashless Exercise. The
Company reserves, at any and all times, the right, in the
Companys sole and absolute discretion, to establish,
decline to approve or terminate any program or procedures for
the exercise of
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Options by means of a Cashless Exercise, including with respect
to one or more Participants specified by the Company
notwithstanding that such program or procedures may be available
to other Participants.
6.4 Effect of Termination of Service.
(a) Option Exercisability. Subject
to earlier termination of the Option as otherwise provided
herein and unless otherwise provided by the Committee, an Option
shall be exercisable after a Participants termination of
Service only during the applicable time periods provided in the
Award Agreement.
(b) Extension if Exercise Prevented by
Law. Notwithstanding the foregoing, unless
the Committee provides otherwise in the Award Agreement, if the
exercise of an Option within the applicable time periods is
prevented by the provisions of Section 14 below, the Option
shall remain exercisable until three (3) months (or such
longer period of time as determined by the Committee, in its
discretion) after the date the Participant is notified by the
Company that the Option is exercisable, but in any event no
later than the Option Expiration Date.
(c) Extension if Participant Subject to
Section 16(b). Notwithstanding the
foregoing, if a sale within the applicable time periods of
shares acquired upon the exercise of the Option would subject
the Participant to suit under Section 16(b) of the Exchange
Act, the Option shall remain exercisable until the earliest to
occur of (i) the tenth (10th) day following the date on
which a sale of such shares by the Participant would no longer
be subject to such suit, (ii) the one hundred and ninetieth
(190th) day after the Participants termination of Service,
or (iii) the Option Expiration Date.
6.5 Transferability of
Options. During the lifetime of the
Participant, an Option shall be exercisable only by the
Participant or the Participants guardian or legal
representative. Prior to the issuance of shares of Stock upon
the exercise of an Option, the Option shall not be subject in
any manner to anticipation, alienation, sale, exchange,
transfer, assignment, pledge, encumbrance, or garnishment by
creditors of the Participant or the Participants
beneficiary, except transfer by will or by the laws of descent
and distribution.
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7.
|
Terms
and Conditions of Stock Appreciation
Rights.
|
Stock Appreciation Rights shall be evidenced by Award Agreements
specifying the number of shares of Stock subject to the Award,
in such form as the Committee shall from time to time establish.
No SAR or purported SAR shall be a valid and binding obligation
of the Company unless evidenced by a fully executed Award
Agreement. Award Agreements evidencing SARs may incorporate all
or any of the terms of the Plan by reference and shall comply
with and be subject to the following terms and conditions:
7.1 Types of SARs Authorized. SARs
may be granted in tandem with all or any portion of a related
Option (a Tandem SAR) or may be
granted independently of any Option (a Freestanding
SAR). A Tandem SAR may be granted either
concurrently with the grant of the related Option or at any time
thereafter prior to the complete exercise, termination,
expiration or cancellation of such related Option.
7.2 Exercise Price. The exercise
price for each SAR shall be established in the discretion of the
Committee; provided, however, that (a) the exercise price
per share subject to a Tandem SAR shall be the exercise price
per share under the related Option and (b) the exercise
price per share subject to a Freestanding SAR shall be not less
than the Fair Market Value of a share of Stock on the effective
date of grant of the SAR.
7.3 Exercisability and Term of SARs.
(a) Tandem SARs. Tandem SARs shall
be exercisable only at the time and to the extent, and only to
the extent, that the related Option is exercisable, subject to
such provisions as the Committee may specify where the Tandem
SAR is granted with respect to less than the full number of
shares of Stock subject to the related Option.
(b) Freestanding
SARs. Freestanding SARs shall be exercisable
at such time or times, or upon such event or events, and subject
to such terms, conditions, performance criteria and restrictions
as shall be determined by the Committee and set forth in the
Award Agreement evidencing such SAR; provided, however, that no
Freestanding SAR shall be exercisable after the expiration of
ten (10) years after the effective date of grant of such
SAR.
7.4 Deemed Exercise of SARs. If,
on the date on which an SAR would otherwise terminate or expire,
the SAR by its terms remains exercisable immediately prior to
such termination or expiration and, if so exercised,
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would result in a payment to the holder of such SAR, then any
portion of such SAR which has not previously been exercised
shall automatically be deemed to be exercised as of such date
with respect to such portion.
7.5 Effect of Termination of
Service. Subject to earlier termination of
the SAR as otherwise provided herein and unless otherwise
provided by the Committee in the grant of an SAR and set forth
in the Award Agreement, an SAR shall be exercisable after a
Participants termination of Service only as provided in
the Award Agreement.
7.6 Nontransferability of
SARs. During the lifetime of the Participant,
an SAR shall be exercisable only by the Participant or the
Participants guardian or legal representative. Prior to
the exercise of an SAR, the SAR shall not be subject in any
manner to anticipation, alienation, sale, exchange, transfer,
assignment, pledge, encumbrance, or garnishment by creditors of
the Participant or the Participants beneficiary, except
transfer by will or by the laws of descent and distribution.
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8.
|
Terms
and Conditions of Restricted Stock
Awards.
|
Restricted Stock Awards shall be evidenced by Award Agreements
specifying the number of shares of Stock subject to the Award,
in such form as the Committee shall from time to time establish.
No Restricted Stock Award or purported Restricted Stock Award
shall be a valid and binding obligation of the Company unless
evidenced by a fully executed Award Agreement. Award Agreements
evidencing Restricted Stock Awards may incorporate all or any of
the terms of the Plan by reference and shall comply with and be
subject to the following terms and conditions:
8.1 Types of Restricted Stock Awards
Authorized. Restricted Stock Awards may or
may not require the payment of cash compensation for the stock.
Restricted Stock Awards may be granted upon such conditions as
the Committee shall determine, including, without limitation,
upon the attainment of one or more Performance Goals described
in Section 9.5. If either the grant of a Restricted Stock
Award or the lapsing of the Restriction Period is to be
contingent upon the attainment of one or more Performance Goals,
the Committee shall follow procedures substantially equivalent
to those set forth in Sections 9.3 through 9.6(a).
8.2 Purchase Price. The purchase
price, if any, for shares of Stock issuable under each
Restricted Stock Award and the means of payment shall be
established by the Committee in its discretion.
8.3 Purchase Period. A Restricted
Stock Award requiring the payment of cash consideration shall be
exercisable within a period established by the Committee.
8.4 Vesting and Restrictions on
Transfer. Shares issued pursuant to any
Restricted Stock Award may or may not be made subject to Vesting
Conditions based upon the satisfaction of such Service
requirements, conditions, restrictions or performance criteria,
including, without limitation, Performance Goals as described in
Section 9.5, as shall be established by the Committee and
set forth in the Award Agreement evidencing such Award. During
any Restriction Period in which shares acquired pursuant to a
Restricted Stock Award remain subject to Vesting Conditions,
such shares may not be sold, exchanged, transferred, pledged,
assigned or otherwise disposed of other than as provided in the
Award Agreement or as provided in Section 8.7. Upon request
by the Company, each Participant shall execute any agreement
evidencing such transfer restrictions prior to the receipt of
shares of Stock hereunder and shall promptly present to the
Company any and all certificates representing shares of Stock
acquired hereunder for the placement on such certificates of
appropriate legends evidencing any such transfer restrictions.
8.5 Voting Rights; Dividends and
Distributions. Except as provided in this
Section, Section 8.4 and any Award Agreement, during the
Restriction Period applicable to shares subject to a Restricted
Stock Award, the Participant shall have all of the rights of a
shareholder of the Company holding shares of Stock, including
the right to vote such shares and to receive all dividends and
other distributions paid with respect to such shares. However,
in the event of a dividend or distribution paid in shares of
Stock or any other adjustment made upon a change in the capital
structure of the Company as described in Section 4.2, any
and all new, substituted or additional securities or other
property (other than normal cash dividends) to which the
Participant is entitled by reason of the Participants
Restricted Stock Award shall be immediately subject to the same
Vesting Conditions as the shares subject to the Restricted Stock
Award with respect to which such dividends or distributions were
paid or adjustments were made.
8.6 Effect of Termination of
Service. Unless otherwise provided by the
Committee in the grant of a Restricted Stock Award and set forth
in the Award Agreement, if a Participants Service
terminates for any reason,
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whether voluntary or involuntary (including the
Participants death or disability), then the Participant
shall forfeit to the Company any shares acquired by the
Participant pursuant to a Restricted Stock Award which remain
subject to Vesting Conditions as of the date of the
Participants termination of Service in exchange for the
payment of the purchase price, if any, paid by the Participant.
The Company shall have the right to assign at any time any
repurchase right it may have, whether or not such right is then
exercisable, to one or more persons as may be selected by the
Company.
8.7 Nontransferability of Restricted Stock Award
Rights. Prior to the issuance of shares of
Stock pursuant to a Restricted Stock Award, rights to acquire
such shares shall not be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge,
encumbrance or garnishment by creditors of the Participant or
the Participants beneficiary, except transfer by will or
the laws of descent and distribution. All rights with respect to
a Restricted Stock Award granted to a Participant hereunder
shall be exercisable during his or her lifetime only by such
Participant or the Participants guardian or legal
representative.
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9.
|
Terms
and Conditions of Performance
Awards.
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Performance Awards shall be evidenced by Award Agreements in
such form as the Committee shall from time to time establish. No
Performance Award or purported Performance Award shall be a
valid and binding obligation of the Company unless evidenced by
a fully executed Award Agreement. Award Agreements evidencing
Performance Awards may incorporate all or any of the terms of
the Plan by reference and shall comply with and be subject to
the following terms and conditions:
9.1 Types of Performance Awards
Authorized. Performance Awards may be in the
form of either Performance Shares, Performance Units or a
Performance Cash Award. Each Award Agreement evidencing a
Performance Award shall specify the number of Performance Shares
or Performance Units subject thereto, the Performance Award
Formula, the Performance Goal(s) and Performance Period
applicable to the Award, and the other terms, conditions
and restrictions of the Award.
9.2 Initial Value of Performance Shares and
Performance Units. Unless otherwise provided
by the Committee in granting a Performance Award, each
Performance Share shall have an initial value equal to the Fair
Market Value of one (1) share of Stock, subject to
adjustment as provided in Section 4.2, on the effective
date of grant of the Performance Share. Each Performance Unit
shall have an initial value determined by the Committee. The
final value payable to the Participant in settlement of a
Performance Award determined on the basis of the applicable
Performance Award Formula will depend on the extent to which
Performance Goals established by the Committee are attained
within the applicable Performance Period established by the
Committee.
9.3 Establishment of Performance Period, Performance
Goals and Performance Award Formula. In
granting each Performance Award, the Committee shall establish
in writing the applicable Performance Period, Performance Award
Formula and one or more Performance Goals which, when measured
at the end of the Performance Period, shall determine on the
basis of the Performance Award Formula the final value of the
Performance Award to be paid to the Participant. To the extent
compliance with the requirements under Section 162(m) with
respect to performance-based compensation is
desired, the Committee shall establish the Performance Goal(s)
and Performance Award Formula applicable to each Performance
Award no later than the earlier of (a) the date ninety
(90) days after the commencement of the applicable
Performance Period or (b) the date on which 25% of the
Performance Period has elapsed, and, in any event, at a time
when the outcome of the Performance Goals remains substantially
uncertain. Once established, the Performance Goals and
Performance Award Formula shall not be changed during the
Performance Period. The Company shall notify each Participant
granted a Performance Award of the terms of such Award,
including the Performance Period, Performance Goal(s) and
Performance Award Formula.
9.4 Performance Cash Awards. A
Performance Cash Award is a cash award with a targeted specified
dollar amount that may be paid contingent upon the attainment
during a Performance Period of certain Performance Goals. A
Performance Cash Award may also require the completion of a
specified period of Service. At the time of grant of a
Performance Cash Award, the length of any Performance Period,
the Performance Goals to be achieved during the Performance
Period, and the measure of whether and to what degree such
Performance Goals have been attained shall be conclusively
determined by the Committee, in its sole discretion. The Board
may provide for or,
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subject to such terms and conditions as the Board may specify
and in compliance with the requirements of Section 409A of
the Code, may permit a Participant to elect for, the payment of
any Performance Cash Award to be deferred to a specified date or
event. The Committee may specify the form of payment of
Performance Cash Awards, which may be cash or other property, or
may provide for a Participant to have the option for his or her
Performance Cash Award, or such portion thereof as the Board may
specify, to be paid in whole or in part in cash or other
property.
9.5 Measurement of Performance
Goals. Performance Goals shall be established
by the Committee on the basis of targets to be attained
(Performance Targets) with respect to
one or more measures of business or financial performance (each,
a Performance Measure), subject to the
following:
(a) Performance
Measures. Performance Measures shall have the
same meanings as used in the Companys financial
statements, or, if such terms are not used in the Companys
financial statements, they shall have the meaning applied
pursuant to generally accepted accounting principles, or as used
generally in the Companys industry. Performance Measures
shall be calculated with respect to the Company and each
Subsidiary Corporation consolidated therewith for financial
reporting purposes or such division or other business unit as
may be selected by the Committee. For purposes of the Plan, the
Performance Measures applicable to a Performance Award shall be
calculated in accordance with generally accepted accounting
principles, but prior to the accrual or payment of any
Performance Award for the same Performance Period and excluding
the effect (whether positive or negative) of any change in
accounting standards or any extraordinary, unusual or
nonrecurring item, as determined by the Committee, occurring
after the establishment of the Performance Goals applicable to
the Performance Award. Each such adjustment, if any, shall be
made solely for the purpose of providing a consistent basis from
period to period for the calculation of Performance Measures in
order to prevent the dilution or enlargement of the
Participants rights with respect to a Performance Award.
Performance Measures may be one or more of the following, as
determined by the Committee: revenue; sales; expenses; operating
income; gross margin; operating margin; earnings before any one
or more of: stock-based compensation expense, interest, taxes,
depreciation and amortization; pre-tax profit; net operating
income; net income; economic value added; free cash flow;
operating cash flow; stock price; earnings per share; return on
shareholder equity; return on capital; return on assets; return
on investment; employee satisfaction; employee retention;
balance of cash, cash equivalents and marketable securities;
market share; daily average revenue trades; asset gathering
metrics; number of customers; customer satisfaction; product
development; product quality; completion of a joint venture or
other corporate transaction; completion of identified special
project; and overall effectiveness of management; or such other
measures as determined by the Committee consistent with this
Section 9.5(a).
(b) Performance
Targets. Performance Targets may include a
minimum, maximum, target level and intermediate levels of
performance, with the final value of a Performance Award
determined under the applicable Performance Award Formula by the
level attained during the applicable Performance Period. A
Performance Target may be stated as an absolute value or as a
value determined relative to a standard selected by the
Committee.
9.6 Settlement of Performance Awards.
(a) Determination of Final
Value. As soon as practicable following the
completion of the Performance Period applicable to a Performance
Award, the Committee shall certify in writing the extent to
which the applicable Performance Goals have been attained and
the resulting final value of the Award earned by the Participant
and to be paid upon its settlement in accordance with the
applicable Performance Award Formula.
(b) Discretionary Adjustment of Award
Formula. In its discretion, the Committee
may, either at the time it grants a Performance Award or at any
time thereafter, provide for the positive or negative adjustment
of the Performance Award Formula applicable to a Performance
Award that is not intended to constitute qualified
performance based compensation to a covered
employee within the meaning of Section 162(m) (a
Covered Employee) to reflect such
Participants individual performance in his or her position
with the Company or such other factors as the Committee may
determine. With respect to a Performance Award intended to
constitute qualified performance-based compensation to a Covered
Employee, the Committee shall have the discretion to reduce some
or all of the value of the Performance Award that would
otherwise be paid to the Covered Employee upon its settlement
notwithstanding the attainment of any Performance Goal and the
resulting value of the Performance Award determined in
accordance with the Performance Award Formula.
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(c) Payment in Settlement of Performance
Awards. As soon as practicable following the
Committees determination and certification in accordance
with Sections 9.6(a) and (b), payment shall be made to each
eligible Participant (or such Participants legal
representative or other person who acquired the right to receive
such payment by reason of the Participants death) of the
final value of the Participants Performance Award. Payment
of such amount shall be made in cash, shares of Stock, or a
combination thereof as determined by the Committee.
9.7 Voting Rights; Dividend Equivalent Rights and
Distributions. Participants shall have no
voting rights with respect to shares of Stock represented by
Performance Share Awards until the date of the issuance of such
shares, if any (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of
the Company). However, the Committee, in its discretion, may
provide in the Award Agreement evidencing any Performance Share
Award that the Participant shall be entitled to receive Dividend
Equivalents with respect to the payment of cash dividends on
Stock having a record date prior to the date on which the
Performance Shares are settled or forfeited. Such Dividend
Equivalents, if any, shall be credited to the Participant in the
form of additional whole Performance Shares as of the date of
payment of such cash dividends on Stock. The number of
additional Performance Shares (rounded to the nearest whole
number) to be so credited shall be determined by dividing
(a) the amount of cash dividends paid on such date with
respect to the number of shares of Stock represented by the
Performance Shares previously credited to the Participant by
(b) the Fair Market Value per share of Stock on such date.
Dividend Equivalents may be paid currently or may be accumulated
and paid to the extent that Performance Shares become
nonforfeitable, as determined by the Committee. Settlement of
Dividend Equivalents may be made in cash, shares of Stock, or a
combination thereof as determined by the Committee, and may be
paid on the same basis as settlement of the related Performance
Share as provided in Section 9.6. Dividend Equivalents
shall not be paid with respect to Performance Units. In the
event of a dividend or distribution paid in shares of Stock or
any other adjustment made upon a change in the capital structure
of the Company as described in Section 4.2, appropriate
adjustments shall be made in the Participants Performance
Share Award so that it represents the right to receive upon
settlement any and all new, substituted or additional securities
or other property (other than normal cash dividends) to which
the Participant would entitled by reason of the shares of Stock
issuable upon settlement of the Performance Share Award, and all
such new, substituted or additional securities or other property
shall be immediately subject to the same Performance Goals as
are applicable to the Award.
9.8 Effect of Termination of
Service. Unless otherwise provided by the
Committee in the grant of a Performance Award and set forth in
the Award Agreement, the effect of a Participants
termination of Service on the Performance Award shall be as
follows:
(a) Death or Disability. If the
Participants Service terminates because of the death or
Disability of the Participant before the completion of the
Performance Period applicable to the Performance Award, the
final value of the Participants Performance Award shall be
determined by the extent to which the applicable Performance
Goals have been attained with respect to the entire Performance
Period and shall be prorated based on the number of months of
the Participants Service during the Performance Period.
Payment shall be made following the end of the Performance
Period in any manner permitted by Section 9.6.
(b) Other Termination of
Service. If the Participants Service
terminates for any reason except death or Disability before the
completion of the Performance Period applicable to the
Performance Award, such Award shall be forfeited in its entirety.
9.9 Nontransferability of Performance
Awards. Prior to settlement in accordance
with the provisions of the Plan, no Performance Award shall be
subject in any manner to anticipation, alienation, sale,
exchange, transfer, assignment, pledge, encumbrance, or
garnishment by creditors of the Participant or the
Participants beneficiary, except transfer by will or by
the laws of descent and distribution. All rights with respect to
a Performance Award granted to a Participant hereunder shall be
exercisable during his or her lifetime only by such Participant
or the Participants guardian or legal representative.
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10.
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Terms
and Conditions of Restricted Stock Unit
Awards.
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Restricted Stock Unit Awards shall be evidenced by Award
Agreements specifying the number of Restricted Stock Units
subject to the Award, in such form as the Committee shall from
time to time establish. No Restricted Stock Unit Award or
purported Restricted Stock Unit Award shall be a valid and
binding obligation of the Company
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unless evidenced by a fully executed Award Agreement. Award
Agreements evidencing Restricted Stock Units may incorporate all
or any of the terms of the Plan by reference and shall comply
with and be subject to the following terms and conditions:
10.1 Grant of Restricted Stock Unit
Awards. Restricted Stock Unit Awards may be
granted upon such conditions as the Committee shall determine,
including, without limitation, upon the attainment of one or
more Performance Goals described in Section 9.5. If either
the grant of a Restricted Stock Unit Award or the Vesting
Conditions with respect to such Award is to be contingent upon
the attainment of one or more Performance Goals, the Committee
shall follow procedures substantially equivalent to those set
forth in Sections 9.3 through 9.6(a).
10.2 Vesting. Restricted Stock
Units may or may not be made subject to Vesting Conditions based
upon the satisfaction of such Service requirements, conditions,
restrictions or performance criteria, including, without
limitation, Performance Goals as described in Section 9.5,
as shall be established by the Committee and set forth in the
Award Agreement evidencing such Award.
10.3 Voting Rights, Dividend Equivalent Rights and
Distributions. Participants shall have no
voting rights with respect to shares of Stock represented by
Restricted Stock Units until the date of the issuance of such
shares (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the
Company). However, the Committee, in its discretion, may provide
in the Award Agreement evidencing any Restricted Stock Unit
Award that the Participant shall be entitled to receive Dividend
Equivalents with respect to the payment of cash dividends on
Stock having a record date prior to the date on which Restricted
Stock Units held by such Participant are settled. Such Dividend
Equivalents, if any, shall be paid by crediting the Participant
with additional whole Restricted Stock Units as of the date of
payment of such cash dividends on Stock. The number of
additional Restricted Stock Units (rounded to the nearest whole
number) to be so credited shall be determined by dividing
(a) the amount of cash dividends paid on such date with
respect to the number of shares of Stock represented by the
Restricted Stock Units previously credited to the Participant by
(b) the Fair Market Value per share of Stock on such date.
Such additional Restricted Stock Units shall be subject to the
same terms and conditions and shall be settled in the same
manner and at the same time (or as soon thereafter as
practicable) as the Restricted Stock Units originally subject to
the Restricted Stock Unit Award. In the event of a dividend or
distribution paid in shares of Stock or any other adjustment
made upon a change in the capital structure of the Company as
described in Section 4.2, appropriate adjustments shall be
made in the Participants Restricted Stock Unit Award so
that it represents the right to receive upon settlement any and
all new, substituted or additional securities or other property
(other than normal cash dividends) to which the Participant
would entitled by reason of the shares of Stock issuable upon
settlement of the Award, and all such new, substituted or
additional securities or other property shall be immediately
subject to the same Vesting Conditions as are applicable to the
Award.
10.4 Effect of Termination of
Service. Unless otherwise provided by the
Committee in the grant of a Restricted Stock Unit Award and set
forth in the Award Agreement, if a Participants Service
terminates for any reason, whether voluntary or involuntary
(including the Participants death or disability), then the
Participant shall forfeit to the Company any Restricted Stock
Units pursuant to the Award which remain subject to Vesting
Conditions as of the date of the Participants termination
of Service.
10.5 Settlement of Restricted Stock Unit
Awards. The Company shall issue to a
Participant on the date on which Restricted Stock Units subject
to the Participants Restricted Stock Unit Award vest or on
such other date determined by the Committee, in its discretion,
and set forth in the Award Agreement one (1) share of Stock
(and/or any other new, substituted or additional securities or
other property pursuant to an adjustment described in
Section 10.3) for each Restricted Stock Unit then becoming
vested or otherwise to be settled on such date, subject to the
withholding of applicable taxes. Notwithstanding the foregoing,
if permitted by the Committee and set forth in the Award
Agreement, the Participant may elect in accordance with terms
specified in the Award Agreement to defer receipt of all or any
portion of the shares of Stock or other property otherwise
issuable to the Participant pursuant to this Section.
10.6 Nontransferability of Restricted Stock Unit
Awards. Prior to the issuance of shares of
Stock in settlement of a Restricted Stock Unit Award, the Award
shall not be subject in any manner to anticipation, alienation,
sale, exchange, transfer, assignment, pledge, encumbrance, or
garnishment by creditors of the Participant or the
Participants beneficiary, except transfer by will or by
the laws of descent and distribution. All rights
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with respect to a Restricted Stock Unit Award granted to a
Participant hereunder shall be exercisable during his or her
lifetime only by such Participant or the Participants
guardian or legal representative.
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11.
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Deferred
Compensation
Awards.
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11.1 Establishment of Deferred Compensation Award
Programs. This Section 11 shall not be
effective unless and until the Committee determines to establish
a program pursuant to this Section. The Committee, in its
discretion and upon such terms and conditions as it may
determine, may establish one or more programs pursuant to the
Plan that is exempt from or compliant with the requirements of
Section 409A of the Code and under which:
(a) Participants designated by the Committee who are
Insiders or otherwise among a select group of highly compensated
Employees may irrevocably elect, prior to a date specified by
the Committee, to reduce such Participants compensation
otherwise payable in cash (subject to any minimum or maximum
reductions imposed by the Committee) and to be granted
automatically at such time or times as specified by the
Committee one or more Awards of Stock Units with respect to such
numbers of shares of Stock as determined in accordance with the
rules of the program established by the Committee and having
such other terms and conditions as established by the Committee.
(b) Participants designated by the Committee who are
Insiders or otherwise among a select group of highly compensated
Employees may irrevocably elect, prior to a date specified by
the Committee, to be granted automatically an Award of Stock
Units with respect to such number of shares of Stock and upon
such other terms and conditions as established by the Committee
in lieu of:
(i) shares of Stock otherwise issuable to such
Participant upon the exercise of an Option;
(ii) cash or shares of Stock otherwise issuable to
such Participant upon the exercise of an SAR; or
(iii) cash or shares of Stock otherwise issuable to
such Participant upon the settlement of a Performance Award or
Performance Unit.
11.2 Terms and Conditions of Deferred Compensation
Awards. Deferred Compensation Awards granted
pursuant to this Section 11 shall be evidenced by Award
Agreements in such form as the Committee shall from time to time
establish. No such Deferred Compensation Award or purported
Deferred Compensation Award shall be a valid and binding
obligation of the Company unless evidenced by a fully executed
Award Agreement. Award Agreements evidencing Deferred
Compensation Awards may incorporate all or any of the terms of
the Plan by reference and shall comply with and be subject to
the following terms and conditions:
(a) Vesting Conditions. Deferred
Compensation Awards shall not be subject to any vesting
conditions.
(b) Terms and Conditions of Stock Units.
(i) Voting Rights; Dividend Equivalent Rights and
Distributions. Participants shall have no
voting rights with respect to shares of Stock represented by
Stock Units until the date of the issuance of such shares (as
evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company). However,
a Participant shall be entitled to receive Dividend Equivalents
with respect to the payment of cash dividends on Stock having a
record date prior to date on which Stock Units held by such
Participant are settled. Such Dividend Equivalents shall be paid
by crediting the Participant with additional whole
and/or
fractional Stock Units as of the date of payment of such cash
dividends on Stock. The method of determining the number of
additional Stock Units to be so credited shall be specified by
the Committee and set forth in the Award Agreement. Such
additional Stock Units shall be subject to the same terms and
conditions and shall be settled in the same manner and at the
same time (or as soon thereafter as practicable) as the Stock
Units originally subject to the Stock Unit Award. In the event
of a dividend or distribution paid in shares of Stock or any
other adjustment made upon a change in the capital structure of
the Company as described in Section 4.2, appropriate
adjustments shall be made in the Participants Stock Unit
Award so that it represent the right to receive upon settlement
any and all new, substituted or additional securities or other
property (other than normal cash dividends) to which the
Participant would be entitled by reason of the shares of Stock
issuable upon settlement of the Award.
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(ii) Settlement of Stock Unit
Awards. A Participant electing to receive an
Award of Stock Units pursuant to this Section 11, shall
specify at the time of such election a settlement date with
respect to such Award. The Company shall issue to the
Participant as soon as practicable following the earlier of the
settlement date elected by the Participant or the date of
termination of the Participants Service, a number of whole
shares of Stock equal to the number of whole Stock Units subject
to the Stock Unit Award. Such shares of Stock shall be fully
vested, and the Participant shall not be required to pay any
additional consideration (other than applicable tax withholding)
to acquire such shares. Any fractional Stock Unit subject to the
Stock Unit Award shall be settled by the Company by payment in
cash of an amount equal to the Fair Market Value as of the
payment date of such fractional share.
(iii) Nontransferability of Stock Unit
Awards. Prior to their settlement in
accordance with the provision of the Plan, no Stock Unit Award
shall be subject in any manner to anticipation, alienation,
sale, exchange, transfer, assignment, pledge, encumbrance, or
garnishment by creditors of the Participant or the
Participants beneficiary, except transfer by will or by
the laws of descent and distribution. All rights with respect to
a Stock Unit Award granted to a Participant hereunder shall be
exercisable during his or her lifetime only by such Participant
or the Participants guardian or legal representative.
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12.
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Other
Stock-Based
Awards.
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In addition to the Awards set forth in Sections 6 through
11 above, the Committee, in its sole discretion, may carry out
the purpose of this Plan by awarding Stock-Based Awards as it
determines to be in the best interests of the Company and
subject to such other terms and conditions as it deems necessary
and appropriate.
Notwithstanding any other provision of the Plan, any
unexercisable or unvested portion of each outstanding Award held
by a Nonemployee Director or an officer and any shares acquired
upon the exercise thereof shall be immediately exercisable and
vested in full as of the date ten (10) days prior to the
date of a Change in Control but conditioned upon the
consummation of the Change in Control.
13.1 Effect of Change in Control on Options and
SARs.
(a) Accelerated
Vesting. Notwithstanding any other provision
of the Plan to the contrary except as provided in this
Section 13, the Committee, in its sole discretion, may
provide in any Award Agreement or, in the event of a Change in
Control, may take such actions as it deems appropriate to
provide for the acceleration of the exercisability and vesting
in connection with such Change in Control of any or all
outstanding Options and SARs and shares acquired upon the
exercise of such Options and SARs upon such conditions and to
such extent as the Committee shall determine.
(b) Assumption or Substitution. In
the event of a Change in Control, the surviving, continuing,
successor, or purchasing entity or parent thereof, as the case
may be (the Acquiror), may, without the consent of
any Participant, either assume the Companys rights and
obligations under outstanding Options and SARs or substitute for
outstanding Options and SARs substantially equivalent options
and SARs (as the case may be) for the Acquirors stock. Any
Options or SARs which are not assumed by the Acquiror in
connection with the Change in Control nor exercised as of the
time of consummation of the Change in Control shall terminate
and cease to be outstanding effective as of the time of
consummation of the Change in Control.
(c) Cash-Out of Options. The
Committee may, in its sole discretion and without the consent of
any Participant, determine that, upon the occurrence of a Change
in Control, each or any Option or SAR outstanding immediately
prior to the Change in Control shall be canceled in exchange for
a payment with respect to each vested share of Stock subject to
such canceled Option or SAR in (i) cash, (ii) stock of
the Company or of a corporation or other business entity a party
to the Change in Control, or (iii) other property which, in
any such case, shall be in an amount having a Fair Market Value
equal to the excess of the Fair Market Value of the
consideration to be paid per share of Stock in the Change in
Control over the exercise price per share under such Option or
SAR (the Spread). In the event such determination is
made by the Committee, the Spread (reduced by applicable
withholding taxes, if
A-17
any) shall be paid to Participants in respect of their canceled
Options and SARs as soon as practicable following the date of
the Change in Control.
13.2 Effect of Change in Control on Restricted Stock
Awards. The Committee may, in its discretion,
provide in any Award Agreement evidencing a Restricted Stock
Award that, in the event of a Change in Control, the lapsing of
the Restriction Period applicable to the shares subject to the
Restricted Stock Award held by a Participant whose Service has
not terminated prior to the Change in Control shall be
accelerated effective immediately prior to the consummation of
the Change in Control to such extent as specified in such Award
Agreement. Any acceleration of the lapsing of the Restriction
Period that was permissible solely by reason of this
Section 13.2 and the provisions of such Award Agreement
shall be conditioned upon the consummation of the Change in
Control.
13.3 Effect of Change in Control on Performance
Awards. The Committee may, in its discretion,
provide in any Award Agreement evidencing a Performance Award
that, in the event of a Change in Control, the Performance Award
held by a Participant whose Service has not terminated prior to
the Change in Control or whose Service terminated by reason of
the Participants death or Disability shall become payable
effective as of the date of the Change in Control to such extent
as specified in such Award Agreement.
13.4 Effect of Change in Control on Restricted Stock
Unit Awards. The Committee may, in its
discretion, provide in any Award Agreement evidencing a
Restricted Stock Unit Award that, in the event of a Change in
Control, the Restricted Stock Unit Award held by a Participant
whose Service has not terminated prior to such date shall be
settled effective as of the date of the Change in Control to
such extent as specified in such Award Agreement.
13.5 Effect of Change in Control on Deferred
Compensation and Other Stock-Based
Awards. The Committee may, in its discretion,
provide in any Award Agreement evidencing a Deferred
Compensation Award or other Stock-Based Award that, in the event
of a Change in Control, the amounts payable pursuant to such
Award shall be settled effective as of the date of the Change in
Control to such extent as specified in such Award Agreement and
in compliance with the requirements of Section 409A of the
Code, to the extent applicable.
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14.
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Compliance
with Securities
Law.
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The grant of Awards and the issuance of shares of Stock pursuant
to any Award shall be subject to compliance with all applicable
requirements of federal, state and foreign law with respect to
such securities and the requirements of any stock exchange or
market system upon which the Stock may then be listed. In
addition, no Award may be exercised or shares issued pursuant to
an Award unless (a) a registration statement under the
Securities Act shall at the time of such exercise or issuance be
in effect with respect to the shares issuable pursuant to the
Award or (b) in the opinion of legal counsel to the
Company, the shares issuable pursuant to the Award may be issued
in accordance with the terms of an applicable exemption from the
registration requirements of the Securities Act. The inability
of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Companys
legal counsel to be necessary to the lawful issuance and sale of
any shares hereunder shall relieve the Company of any liability
in respect of the failure to issue or sell such shares as to
which such requisite authority shall not have been obtained. As
a condition to issuance of any Stock, the Company may require
the Participant to satisfy any qualifications that may be
necessary or appropriate, to evidence compliance with any
applicable law or regulation and to make any representation or
warranty with respect thereto as may be requested by the Company.
15.1 Tax Withholding in
General. The Company shall have the right to
deduct from any and all payments made under the Plan, or to
require the Participant, through payroll withholding, cash
payment or otherwise, including by means of a Cashless Exercise
or Net Exercise of an Option, to make adequate provision for,
the federal, state, local and foreign taxes, if any, required by
law to be withheld by the Participating Company Group with
respect to an Award or the shares acquired pursuant thereto. The
Company shall have no obligation to deliver shares of Stock, to
release shares of Stock from an escrow established pursuant to
an Award Agreement, or to make any payment in cash under the
Plan until the Participating Company Groups tax
withholding obligations have been satisfied by the Participant.
A-18
15.2 Withholding in Shares. The
Company shall have the right, but not the obligation, to deduct
from the shares of Stock issuable to a Participant upon the
exercise or settlement of an Award, or to accept from the
Participant the tender of, a number of whole shares of Stock
having a Fair Market Value, as determined by the Company, equal
to all or any part of the tax withholding obligations of the
Participating Company Group. The Fair Market Value of any shares
of Stock withheld or tendered to satisfy any such tax
withholding obligations shall not exceed the amount determined
by the applicable minimum statutory withholding rates.
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16.
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Amendment
or Termination of
Plan.
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The Board or the Committee may amend, suspend or terminate the
Plan at any time. However, without the approval of the
Companys shareholders, there shall be (a) no increase
in the maximum aggregate number of shares of Stock that may be
issued under the Plan (except by operation of the provisions of
Section 4.2), (b) no change in the class of persons
eligible to receive Incentive Stock Options, and (c) no
other amendment of the Plan that would require approval of the
Companys shareholders under any applicable law, regulation
or rule. No amendment, suspension or termination of the Plan
shall affect any then outstanding Award unless expressly
provided by the Board or the Committee. In any event, no
amendment, suspension or termination of the Plan may adversely
affect any then outstanding Award without the consent of the
Participant unless necessary to comply with any applicable law,
regulation or rule, including Section 409A of the Code.
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17.
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Miscellaneous
Provisions.
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17.1 Repurchase Rights. Shares
issued under the Plan may be subject to one or more repurchase
options, or other conditions and restrictions as determined by
the Committee in its discretion at the time the Award is
granted. The Company shall have the right to assign at any time
any repurchase right it may have, whether or not such right is
then exercisable, to one or more persons as may be selected by
the Company. Upon request by the Company, each Participant shall
execute any agreement evidencing such transfer restrictions
prior to the receipt of shares of Stock hereunder and shall
promptly present to the Company any and all certificates
representing shares of Stock acquired hereunder for the
placement on such certificates of appropriate legends evidencing
any such transfer restrictions.
17.2 Provision of
Information. Each Participant shall be given
access to information concerning the Company equivalent to that
information generally made available to the Companys
common shareholders.
17.3 Rights as Employee, Consultant or
Director. No person, even though eligible
pursuant to Section 5, shall have a right to be selected as
a Participant, or, having been so selected, to be selected again
as a Participant. Nothing in the Plan or any Award granted under
the Plan shall confer on any Participant a right to remain an
Employee, Consultant or Director or interfere with or limit in
any way any right of a Participating Company to terminate the
Participants Service at any time. To the extent that an
Employee of a Participating Company other than the Company
receives an Award under the Plan, that Award shall in no event
be understood or interpreted to mean that the Company is the
Employees employer or that the Employee has an employment
relationship with the Company.
17.4 Rights as a Shareholder. A
Participant shall have no rights as a shareholder with respect
to any shares covered by an Award until the date of the issuance
of such shares (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of
the Company). No adjustment shall be made for dividends,
distributions or other rights for which the record date is prior
to the date such shares are issued, except as provided in
Section 4.2 or another provision of the Plan.
17.5 Fractional Shares. The
Company shall not be required to issue fractional shares upon
the exercise or settlement of any Award.
17.6 Severability. If any one or
more of the provisions (or any part thereof) of this Plan shall
be held invalid, illegal or unenforceable in any respect, such
provision shall be modified so as to make it valid, legal and
enforceable, and the validity, legality and enforceability of
the remaining provisions (or any part thereof) of the Plan shall
not in any way be affected or impaired thereby.
17.7 Beneficiary
Designation. Subject to local laws and
procedures, each Participant may file with the Company a written
designation of a beneficiary who is to receive any benefit under
the Plan to which the Participant
A-19
is entitled in the event of such Participants death before
he or she receives any or all of such benefit. Each designation
will revoke all prior designations by the same Participant,
shall be in a form prescribed by the Company, and will be
effective only when filed by the Participant in writing with the
Company during the Participants lifetime. If a married
Participant designates a beneficiary other than the
Participants spouse, the effectiveness of such designation
may be subject to the consent of the Participants spouse.
If a Participant dies without an effective designation of a
beneficiary who is living at the time of the Participants
death, the Company will pay any remaining unpaid benefits to the
Participants legal representative.
17.8 Unfunded
Obligation. Participants shall have the
status of general unsecured creditors of the Company. Any
amounts payable to Participants pursuant to the Plan shall be
unfunded and unsecured obligations for all purposes, including,
without limitation, Title I of the Employee Retirement
Income Security Act of 1974. No Participating Company shall be
required to segregate any monies from its general funds, or to
create any trusts, or establish any special accounts with
respect to such obligations. The Company shall retain at all
times beneficial ownership of any investments, including trust
investments, which the Company may make to fulfill its payment
obligations hereunder. Any investments or the creation or
maintenance of any trust or any Participant account shall not
create or constitute a trust or fiduciary relationship between
the Committee or any Participating Company and a Participant, or
otherwise create any vested or beneficial interest in any
Participant or the Participants creditors in any assets of
any Participating Company. The Participants shall have no claim
against any Participating Company for any changes in the value
of any assets which may be invested or reinvested by the Company
with respect to the Plan. Each Participating Company shall be
responsible for making benefit payments pursuant to the Plan on
behalf of its Participants or for reimbursing the Company for
the cost of such payments, as determined by the Company in its
sole discretion. In the event the respective Participating
Company fails to make such payment or reimbursement, a
Participants (or other individuals) sole recourse
shall be against the respective Participating Company, and not
against the Company. A Participants acceptance of an Award
pursuant to the Plan shall constitute agreement with this
provision.
17.9 Choice of Law. Except to the
extent governed by applicable federal law, the validity,
interpretation, construction and performance of the Plan and
each Award Agreement shall be governed by the laws of the State
of California, without regard to its conflict of law rules.
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Electronic Voting Instructions |
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You can vote by Internet or telephone!
Available 24 hours a day, 7 days a week! |
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Instead of mailing your proxy, you may choose one of the two voting methods outlined
below to vote your proxy. |
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VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. |
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Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Central Time,
on October 27, 2010. |
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Vote by Internet |
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www.investorvote.com/ABAX |
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Follow the steps outlined on the secured website. |
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Vote by telephone |
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Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada any time on a
touch tone telephone. There is NO CHARGE to you for the call |
Using a black ink pen, mark your votes with an X as shown in
this example. Please do not write outside the designated areas.
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Follow the instructions provided by the recorded message. |
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Annual Meeting Proxy Card
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IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
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A Proposals
The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposal 2 and Proposal 3.
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1. |
Election of Directors: |
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For |
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Withhold |
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For |
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Withhold |
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For |
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Withhold |
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01 - Clinton H. Severson *
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02 - Richard J. Bastiani, Ph.D. * |
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03 - Michael D. Casey * |
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04 - Henk J. Evenhuis *
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05 - Prithipal Singh, Ph.D. * |
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06 - Ernest S. Tucker III, M.D. * |
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* each to serve until the 2011 Annual Meeting of Shareholders or until their respective successors are elected and qualified. |
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For |
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Against |
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Abstain |
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For |
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Against |
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Abstain |
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2. |
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To approve and ratify the adoption of the 2005 Equity
Incentive Plan, as amended to increase the number of
shares of Common Stock issuable thereunder by 500,000 and otherwise as described in the Proxy Statement.
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To ratify the appointment of Burr Pilger Mayer, Inc. as the
independent registered public accounting firm of Abaxis, Inc.
for the fiscal year ending March 31, 2011.
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B Non-Voting Items |
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Change of Address
Please print your new address below. |
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Comments
Please print your comments below. |
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Meeting Attendance |
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Mark the box to the right
if you plan to attend the
Annual Meeting.
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C Authorized Signatures This section
must be completed for your vote to be counted. Date and Sign Below |
Please sign here exactly as your name(s) appears on your stock certificate. If shares of stock are held jointly, both or all of such persons should sign. Corporate or partnership proxies should be signed in full corporate name by an authorized person. Persons signing in a fiduciary capacity should indicate their full titles in such capacity. Please date the Proxy.
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Date (mm/dd/yyyy) Please
print date below. |
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Signature 1 Please keep signature within the
box. |
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Signature 2 Please keep signature within the
box. |
/ / |
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IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
Proxy Abaxis, Inc.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 27, 2010
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Clinton H. Severson and Alberto R. Santa Ines, and each of them, with full power of
substitution, to represent the undersigned and to vote all of the shares of stock in Abaxis, Inc. a California corporation,
which the undersigned is entitled to vote at the Annual Meeting of Shareholders of Abaxis to be held at the principal offices of
Abaxis at 3240 Whipple Road, Union City, California 94587, on Wednesday, October 27, 2010, at 10:00 a.m. local time, and at any
adjournment or postponement thereof (1) as hereinafter specified upon the proposals listed on the reverse side and as more
particularly described in the Proxy Statement for the 2010 Annual Meeting of Abaxis Shareholders (the Proxy Statement),
receipt of which is hereby acknowledged, and (2) in their discretion upon such other matters as may properly come before the
meeting.
THE SHARES REPRESENTED HEREBY SHALL BE VOTED AS SPECIFIED. IF
NO SPECIFICATION IS MADE, SUCH SHARES SHALL BE VOTED FOR ALL NOMINEES UNDER PROPOSAL 1 AND FOR PROPOSAL 2 AND
PROPOSAL 3.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE
URGED TO SIGN AND PROMPTLY MAIL THIS PROXY IN THE RETURN ENVELOPE SO THAT YOUR STOCK MAY BE REPRESENTED AT THE MEETING.