UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington
D.C. 20549
SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
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CONMED
CORPORATION
(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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fee
required
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(2)
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Aggregate
number of securities to which transaction
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(3)
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Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is
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determined):
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(4)
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Proposed
maximum aggregate value of
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CONMED
CORPORATION
525
French Road
Utica,
New York 13502
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE
IS
HEREBY GIVEN that the Annual Meeting of Shareholders of CONMED Corporation
(the “Company”) will be held at the offices of the Company at 525 French Road,
Utica, New York on Tuesday, May 16, 2006 at 3:30 p.m. (New York time), for
the
following purposes:
(1)
To
elect
seven directors to serve on the Company’s Board of Directors;
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(2)
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To
ratify the appointment of independent registered public accounting
firm
for the Company for 2006;
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(3)
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To
approve the 2006 Stock Incentive Plan;
and
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(4)
To
transact such other business as may properly be brought before the meeting
or
any adjournment thereof.
The
shareholders of record at the close of business on March 31, 2006, are entitled
to notice of and
to
vote at the Annual Meeting or any adjournment thereof.
Even
if
you plan to attend the meeting in person, we request that you mark, date,
sign
and return your proxy in the enclosed self-addressed envelope as soon as
possible so that your shares may be certain of
being
represented and voted at the meeting. Any proxy given by a shareholder may
be
revoked by that shareholder
at any time prior to the voting of the proxy.
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By
Order of the Board of Directors,
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 |
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Thomas
M. Acey
Secretary
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April
14,
2006
CONMED
CORPORATION
525
French Road
Utica,
New York 13502
PROXY
STATEMENT
ANNUAL
MEETING OF SHAREHOLDERS
May
16, 2006
The
enclosed proxy is solicited by and on behalf of the Board of Directors of
CONMED
Corporation
(the “Company”) for use at the Annual Meeting of Shareholders to be held on
Tuesday, May 16,
2006,
at 3:30 p.m. (New York time), at the offices of the Company at 525 French
Road,
Utica, New York, and any adjournment thereof. The matters to be considered
and
acted upon at such meeting are described
in the foregoing notice of the meeting and this proxy statement. This proxy
statement, the related
form of proxy and the Company’s Annual Report to Shareholders are being mailed
on or about April
14,
2006, to all shareholders of record on March 31, 2006. Shares of the Company’s
common stock,
par value $.01 per share (“Common Stock”) represented in person or by proxy will
be voted as described in this proxy statement or as otherwise specified by
the
shareholder. Any proxy given by a shareholder
may be revoked by the shareholder at any time prior to the voting of the
proxy
by delivering a written
notice to the Secretary of the Company, by executing and delivering a
later-dated proxy or by attending
the meeting and voting in person.
The
persons named as proxies are Eugene R. Corasanti and Daniel S. Jonas, who
are,
respectively,
the Chief Executive Officer and Chairman of the Board, and the Vice President
-
Legal Affairs
and General Counsel of the Company. The cost of preparing, assembling and
mailing the proxy, this
proxy statement and other material enclosed, and all clerical and other expenses
of solicitations, will be
borne
by the Company. In addition to the solicitation of proxies by use of the
mails,
directors, officers and
employees of the Company and its subsidiaries may solicit proxies by telephone,
telegram or personal interview.
The Company also will request brokerage houses and other custodians, nominees
and fiduciaries
to forward soliciting material to the beneficial owners of Common Stock held
of
record by such
parties and will reimburse such parties for their expenses in forwarding
soliciting material.
Votes
at
the 2006 Annual Meeting will be tabulated by a representative of Registrar
and
Transfer Company,
which has been appointed by the Company’s Board of Directors to serve as
inspector of election.
VOTING
RIGHTS
The
holders of record of the 28,086,192 shares of Common Stock outstanding on
March
31, 2006 will
be
entitled to one vote for each share held on all matters coming before the
meeting. The holders of record
of
a majority of the outstanding shares of Common Stock present in person or
by
proxy will constitute
a quorum for the transaction of business at the meeting. Shareholders are
not
entitled to cumulative
voting rights. Under the rules of the Securities and Exchange Commission,
or the
SEC, boxes and
a
designated blank space are provided on the proxy card for shareholders if
they
wish either to abstain on
one or
more of the proposals or to withhold authority to vote for one or more nominees
for director. In accordance
with New York State law, such abstentions are not counted in determining
the
votes cast at the
meeting. With respect to Proposal (1), the director nominees who receive
the
greatest number of votes
at
the meeting will be elected to the Board of Directors of the Company. Votes
against, and votes withheld in respect of, a candidate have no legal effect.
Proposals (2) and (3) require the affirmative vote of the holders
of a majority of the votes cast at the meeting in order to be approved by
the
shareholders.
1
When
properly executed, a proxy will be voted as specified by the shareholder.
If no
choice is specified
by the shareholder, a proxy will be voted “for” all portions of items (1), (2)
and (3) and in the proxies’
discretion on any other matters coming before the meeting.
Under
the
rules of the New York Stock Exchange, Inc., which effectively govern the
voting
by any brokerage firm holding shares registered in its name or in the name
of
its nominee on behalf of a beneficial
owner, Proposals (1) and (2) are considered “discretionary” items upon which
brokerage firms may vote in their discretion on behalf of their clients if
such
clients have not furnished voting instructions within
ten days prior to the Annual Meeting.
Proposal
(3) is considered “non discretionary” and brokers who have received no
instructions from their clients do not have discretion to vote on this item.
The
broker non-votes will be treated in the same manner as votes
present.
PROPOSALS
TO BE SUBMITTED AT THE SHAREHOLDERS MEETING
There
are
three proposals expected to be submitted for shareholder approval. The first
concerns the election of directors. The second concerns ratifying the
appointment of the Company’s independent registered public accounting firm
(independent accountants). The third concerns approval of a new stock incentive
plan. These proposals are more fully described below.
PROPOSAL
ONE: ELECTION OF DIRECTORS
At
the
meeting, seven directors are to be elected to serve on the Company’s Board of
Directors. The shares represented by proxies will be voted as specified by
the
shareholder. If the shareholder does not
specify his or her choice, the shares will be voted in favor of the election
of
the nominees listed on the proxy
card, except that in the event any nominee should not continue to be available
for election, such proxies
will be voted for the election of such other persons as the Corporate Governance
and Nominating Committee
of the Board of Directors may recommend. The Company does not presently
contemplate that any
of
the nominees will become unavailable for election for any reason. The director
nominees who receive
the greatest number of votes at the meeting will be elected to the Board
of
Directors of the Company.
Votes against, and votes withheld in respect of, a candidate have no legal
effect. Shareholders are not entitled to cumulative voting rights.
The
Board
of Directors presently consists of seven directors. Directors hold office
for
terms expiring
at the next annual meeting of shareholders and until their successors are
duly
elected and qualified.
Each of the nominees proposed for election at the Annual Meeting is presently
a
member of the Board
of
Directors and has been elected by the shareholders.
The
following table sets forth certain information regarding the members of,
and
nominees for, the Board of Directors:
2
NOMINEES
FOR ELECTION AT THE 2006 ANNUAL MEETING
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Name
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Age
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Served
As
Director
Since
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Principal
Occupation or
Position
with the Company
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Eugene
R. Corasanti
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75
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1970
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Chairman
of the Board of Directors and Chief Executive Officer of the
Company.
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Joseph
J. Corasanti
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42
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1994
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President
and Chief Operating Officer of the Company; Director of the Company;
Director of II-VI, Inc. (Nasdaq: IIVI).
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Bruce
F. Daniels
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71
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1992
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Executive,
retired; former Controller of the international division of Chicago
Pneumatic Tool Company; Director of the Company. As noted below,
the Board
of Directors has determined that Mr. Daniels is independent, and
is a
financial expert.
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Jo
Ann Golden
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58
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2003
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Partner
of Dermody, Burke and Brown, CPAs, LLC (accountants); Director
of the
Company. As noted below, the Board of Directors has determined
that Ms. Golden is independent, and is a
financial expert.
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Stephen
M. Mandia
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41
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2002
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President
of East Coast Olive Oil Corp.; Director of
the Company. As noted below, the Board of Directors has determined
that
Mr. Mandia is independent.
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William
D. Matthews
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71
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1997
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Retired
Chairman of the Board of Directors and retired Chief Executive
Officer of
Oneida Ltd. (NYSE: OCQ), Chairman of the Board of Directors of
Oneida
Financial Corporation (Nasdaq: ONFC) and a former director of Coyne
Textile Services; Director of the Company. As noted below, the
Board of
Directors has determined
that Mr. Matthews is independent, and is
a financial expert.
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Stuart
J. Schwartz
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69
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1998
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Physician,
retired; Director of the Company. As noted below, the Board of
Directors
has determined that Dr. Schwartz is
independent.
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More
information concerning the directors and nominees is set forth below under
the
heading Corporate Governance Matters - Directors, Executive Officers, Senior
Officers and Nominees for the Board of Directors
The
Board of Directors recommends a vote FOR this
proposal.
3
PROPOSAL
TWO: INDEPENDENT ACCOUNTANTS
The
independent accountants for the Company have been PricewaterhouseCoopers
LLP
since 1982.
The
Audit Committee appointed PricewaterhouseCoopers LLP to be nominated as
independent accountants for 2006, subject to shareholder
ratification.
Unless
otherwise specified, shares represented by proxies will be voted for the
ratification of the appointment
of PricewaterhouseCoopers LLP as independent accountants for 2006. Neither
our
certificate
of incorporation nor our by-laws require that the shareholders ratify the
appointment of PricewaterhouseCoopers
LLP as our independent accountants. We are doing so because we believe it
is a
matter
of
good corporate governance. If the shareholders do not ratify the appointment,
the Audit Committee
will reconsider whether to retain PricewaterhouseCoopers LLP, but may elect
to
retain them. Even if the appointment is ratified, the Audit Committee in
its
discretion may change the appointment at any
time
during the year if it determines that such change would be in the best interests
of the Company and
its
shareholders.
Representatives
of PricewaterhouseCoopers LLP are expected to be present at the meeting.
Such
representatives
will have the opportunity to make a statement if they desire to do so and
are
expected to be
available to respond to appropriate questions.
The
affirmative vote of the holders of a majority of votes cast at the meeting
is
necessary for the ratification
of the appointment of PricewaterhouseCoopers LLP as independent accountants
for
the Company
for 2006.
The
Board
of
Directors recommends a vote FOR this proposal.
PROPOSAL
THREE: THE 2006
STOCK INCENTIVE PLAN
On
February 17, 2006, upon the recommendation of our Compensation Committee,
our
Board of Directors unanimously approved the 2006 Stock Incentive Plan, subject
to approval by our shareholders. The 2006 Stock Incentive Plan will be
applicable only to awards granted on or after the date the 2006 Stock Incentive
Plan is approved by shareholders (the “Effective Date”).
The
following summary of the material terms of the 2006 Stock Incentive Plan
is
qualified in its entirety by reference to the complete text of the 2006 Stock
Incentive Plan, which is attached hereto as Exhibit A.
Overview
The
purpose of the 2006 Stock Incentive Plan is to attract, retain and motivate
officers, directors, employees, consultants and others who may perform services
for the Company, to compensate them for their contributions to the long-term
growth and profits of the Company and to encourage them to acquire a proprietary
interest in the success of the Company. Awards may be made to any officer,
director, employee, consultant and to any other individual who may perform
services for the Company and its subsidiaries and affiliates selected by
the
committee that administers the 2006 Stock Incentive Plan. The 2006 Stock
Incentive Plan provides for grants of options, stock appreciation rights
(“SARs”), dividend equivalent rights, restricted stock (“Restricted Shares”),
restricted stock units (“RSUs”), and other equity-based and equity-related
awards (collectively, “Awards”).
Administration
The
2006
Stock Incentive Plan generally will be administered by the Compensation
Committee of the Board of Directors (the “Compensation Committee”) or such other
committee that the Board of Directors may select from time to time. To the
extent we decide that it is appropriate for compensation realized from Awards
to
be considered “qualified performance-based compensation” under
section 162(m) of the Code, the Committee will be a committee or
subcommittee of the Board of Directors made up of two or more directors,
each of
whom is an “outside director” within the meaning of section 162(m) of the
Code. The Board of Directors, in its sole discretion, also may grant Awards
or
administer the 2006 Stock Incentive Plan.
The
Compensation Committee will have complete control over the administration
of the
2006 Stock Incentive Plan and will have sole discretion to make all
determinations in respect of the 2006 Stock Incentive Plan (including, for
example, the ability to determine whether individual Awards may be settled
in
cash, shares of Common Stock, other securities, other Awards or other property).
4
Amendment
The
Board
of Directors may, at any time, suspend, discontinue, revise or amend the
2006
Stock Incentive Plan in any respect whatsoever, and may also suspend the
ability
of a recipient of an Award to exercise or otherwise realize the value of
his/her
Award. Any amendment that materially adversely affects a recipient, however,
requires such recipient’s prior written consent. In general, shareholder
approval of any suspension, discontinuance, revision or amendment will be
obtained only to the extent necessary to comply with any applicable law,
rule or
regulation.
Eligibility
Awards
may be made to officers, directors, employees, consultants and other individuals
who may perform services for the Company and its subsidiaries, in the sole
discretion of the Compensation Committee. As of March 31, 2006, approximately
300 officers,
directors and employees would be eligible to receive Awards under the 2006
Stock
Incentive Plan.
Shares
Subject to the Plan; Other Limitations of Awards
The
total
number of shares of Common Stock that may be delivered pursuant to Awards
granted under the 2006 Stock Incentive Plan on or after the Effective Date
initially may not exceed 1,000,000 shares. These shares may be authorized
but
unissued shares of Common Stock or authorized and issued shares of Common
Stock
held in our treasury or otherwise acquired for the purposes of the 2006 Stock
Incentive Plan. If, after the Effective Date, any Award that is granted on
or
after the Effective Date is forfeited or otherwise terminates or is canceled
without the delivery of shares of Common Stock or shares of Common Stock
are
surrendered or withheld from any Award to satisfy any obligation of the Award
recipient (including federal, state or foreign taxes) then the shares covered
by
such forfeited, terminated or canceled Award or which are equal to the number
of
shares surrendered or withheld will again become available to be delivered
pursuant to Awards granted under the 2006 Stock Incentive Plan. In addition,
any
shares of Common Stock (a) delivered by the Company, (b) with respect
to Awards which are made by the Company and (c) with respect to which the
Company becomes obligated to make Awards, in each case through the assumption
of, or in substitution for, outstanding awards previously granted by an acquired
entity, will not count against the shares of Common Stock available to be
delivered pursuant to Awards under the 2006 Stock Incentive Plan.
No
more
than 1,000,000 shares of Common Stock may be delivered under the 2006 Stock
Incentive Plan pursuant to the exercise of incentive stock options granted
under
the 2006 Stock Incentive Plan.
The
maximum number of shares of Common Stock with respect to which options or
SARs
may be granted to an individual recipient in any calendar year is 200,000
shares
of Common Stock
The
Compensation Committee has the authority (but not the obligation) to adjust
the
number of shares of Common Stock issuable under the 2006 Stock Incentive
Plan
and to adjust the terms of any outstanding Awards, in any such manner as
it
deems appropriate to prevent the enlargement or dilution of rights, or otherwise
with respect to Awards, for any increase or decrease in the number of issued
shares of Common Stock (or issuance of shares of stock other than shares
of
Common Stock) resulting from certain corporate transactions that affect the
capitalization of the Company.
Types
of Awards
The
2006
Stock Incentive Plan provides for Awards in the form of options intended
to
qualify as incentive stock options under section 422 of the Code (“ISOs”),
nonqualified stock options, SARs, dividend equivalent rights, Restricted
Shares,
RSUs and other equity-based or equity-related awards pursuant to which Common
Stock, cash or other property may be delivered to the Award recipient. Each
Award will be evidenced by an award agreement (an “Award Agreement”), which will
govern that Award’s terms and conditions.
Options
entitle the recipient to purchase shares of Common Stock at the exercise
price
specified by the Compensation Committee in the recipient’s Award Agreement. A
SAR may entitle the recipient to receive shares of Common Stock, cash or
other
property equal in value to the appreciation of the Common Stock over the
exercise price specified by the Compensation Committee in the recipient’s Award
Agreement. Options and SARs will become vested and exercisable as and when
specified in the recipient’s Award Agreement. Outstanding and exercisable
options and SARs may be exercised in accordance with procedures established
by
the Compensation Committee.
A
Restricted Share is a share of Common Stock that is registered in the
recipient’s name, but that is subject to certain transfer and/or forfeiture
restrictions for a period of time as specified in the recipient’s Award
Agreement. The recipient of a Restricted Share will have the rights of a
shareholder, subject to any restrictions and conditions specified by the
Compensation Committee in the recipient’s Award Agreement.
5
A
RSU is
an unfunded, unsecured right to receive a share of Common Stock (or cash
or
other securities or property) at a future date upon satisfaction of the
conditions specified by the Compensation Committee in the recipient’s Award
Agreement.
A
dividend equivalent right represents an unfunded and unsecured promise to
pay to
the recipient an amount equal to all or any portion of the dividends that
would
be paid on a specified number of shares of Common Stock if such shares were
owned by the recipient. The conditions and restrictions for payments in
connection with dividend equivalent rights will be determined by the
Compensation Committee as specified in the recipient’s Award Agreement. A
dividend equivalent right may be granted alone or in connection with another
Award.
No
recipient of any Award under the 2006 Stock Incentive Plan will have any
of the
rights of a shareholder of the Company with respect to shares subject to
an
Award until the delivery of such shares of common stock to such person.
The
2006
Stock Incentive Plan provides that upon a “Change in Control” (as such term is
defined in the 2006 Stock Incentive Plan), each option and SAR shall accelerate
and be deemed fully vested and exercisable, the restrictions on Restricted
Shares and RSUs shall lapse, and performance conditions shall be deemed
satisfied in full.
Except
to
the extent otherwise expressly provided in an applicable Award Agreement,
no
Award (or any rights and obligations thereunder) granted to any person under
the
2006 Stock Incentive Plan may be sold, exchanged, transferred, assigned,
pledged, hypothecated, fractionalized, hedged or otherwise disposed of
(including through the use of any cash-settled instrument) other than by
will or
by the laws of descent and distribution, and all such Awards (and any rights
thereunder) shall be exercisable during the life of the recipient only by
the
recipient or by the recipient’s legal representative.
The
expiration date of each Award will be determined by the Compensation Committee
and specified in a recipient’s Award Agreement. Awards under the 2006 Stock
Incentive Plan may be granted in lieu of, or determined by reference to,
cash
bonus and/or other compensation.
New
Plan Benefits
The
amount of each participant’s Award for the 2006 calendar year will be determined
based on the discretion of the Compensation Committee and therefore cannot
be
calculated. As a result, we cannot determine the number or type of Awards
that
will be granted under the 2006 Stock Incentive Plan to any participant for
the
2006 fiscal year.
U.S.
Federal Tax Implications of Option Awards and SARs
The
following is a brief description of the U.S. federal income tax consequences
generally arising with respect to the grant of options or SARs.
The
grant
of an option or SAR will create no tax consequences for the recipient or
the
Company. A recipient will not recognize taxable income upon exercising an
ISO
(except that the alternative minimum tax may apply). Upon exercising an option
(other than an ISO) or SAR, the recipient generally will recognize ordinary
income equal to the excess of the fair market value of the freely transferable
and nonforteitable shares (and/or chase or other property) acquired on the
date
of exercise over the exercise price.
Upon
a
disposition of shares acquired upon exercise of an ISO before the end of
the
applicable ISO holding periods, the recipient generally will recognize ordinary
income equal to the lesser of (i) the excess of the fair market value of
the
shares at the date of exercise of the ISO over the exercise price, or (ii)
the
amount realized upon the disposition of the ISO shares over the exercise
price.
The amount realized upon the disposition of the ISO shares over the exercise
price. Otherwise, a recipient’s disposition of shares acquired upon the exercise
of an Option (including an ISO for which the ISO holding periods are met)
or SAR
generally will result in short-term or long-term (which will always be the
case
for ISOs if the holding periods are met) capital gain or loss measured by
the
difference between the sale price and the recipient’s tax basis in such shares
(the tax basis in option shares generally being the exercise price plus any
amount recognized as ordinary income in connection with the exercise of the
Option).
The
Company generally will be entitled to a tax deduction equal to the amount
recognized as ordinary income by the recipient in connection with the exercise
of an Option or SAR. The company generally is not entitled to a tax deduction
with respect to any amount that represents a capital gain to a recipient
or that
represents compensation in excess of $1 million paid to “covered employees” that
is not “qualified performance-based compensation” under section 162(m) of the
Code. Accordingly, the Company will not be entitled to any tax deduction
with
respect to an ISO if the recipient holds the shares for the ISO holding periods
prior to disposition of the shares and may not be entitled to any deduction
with
respect to certain Options or SARS that may be exercised by “covered
employees.”
6
The
Board of Directors recommends a vote FOR this proposal.
As
of
March 31, 2006, the closing price of a share of Common Stock on the Nasdaq
Stock
Market was $19.15.
OTHER
BUSINESS
Management
knows of no other business which will be presented for consideration at the
Annual Meeting,
but should any other matters be brought before the meeting, it is intended
that
the persons named
in
the accompanying proxy will vote such proxy at their discretion.
SHAREHOLDER
PROPOSALS FOR 2007 ANNUAL MEETING
Any
shareholder desiring to present a proposal to the shareholders at the 2007
Annual Meeting, which
currently is expected to be scheduled on or about May 15, 2007, and who desires
that such proposal
be included in the Company’s proxy statement and proxy card relating to that
meeting, must transmit such proposal to the Company so that it is received
by
the Company at its principal executive offices
on or before December 13, 2006. All such proposals should be in compliance
with
applicable SEC
regulations. The Company’s Nominating and Corporate Governance Committee will
consider nominees
for election as directors who are proposed by shareholders if the following
procedures are followed. Shareholders wishing to propose matters for
consideration at the 2007 Annual Meeting or to propose nominees for election
as
directors at the 2007 Annual Meeting must follow specified advance notice
procedures contained in the Company’s by-laws, a copy of which is available on
request to the General
Counsel of the Company, c/o CONMED Corporation, 525 French Road, Utica, New
York
13502 (Telephone
(315) 797-8375). As of the date of this proxy statement, shareholder proposals,
including director nominee proposals, must comply with the conditions set
forth
in Section 1.13 of the Company’s by-laws
and to be considered timely, notice of a proposal must be received by the
Company between February
14, 2007 and March 16, 2007.
7
CORPORATE
GOVERNANCE MATTERS
DIRECTORS,
EXECUTIVE OFFICERS, SENIOR OFFICERS AND
NOMINEES
FOR THE BOARD OF DIRECTORS
Director
Nominees
EUGENE
R.
CORASANTI (age
75) has served as Chairman of the Board of the Company since its incorporation
in 1970. Mr. Corasanti has also served as the Company’s Chief Executive Officer
since its founding,
having served as President and Chief Operating Officer from its founding
until
August 1999. Prior
to
the founding of the Company, Mr. Corasanti was an independent public accountant.
Mr. Corasanti
holds a B.B.A. degree in Accounting from Niagara University. Eugene R.
Corasanti’s son, Joseph
J.
Corasanti, is President and Chief Operating Officer and a Director of the
Company.
JOSEPH
J. CORASANTI (age
42)
has served as President and Chief Operating Officer of the Company
since August 1999 and as a Director of the Company since May 1994. Mr. Corasanti
is also a member of the Board of Directors of II-VI, Inc. (Nasdaq: IIVI),
a
manufacturer of optical and electro-optical
components and devices for infrared, e-ray, gamma-ray, telecommunication
and
other applications,
where Mr. Corasanti is a member of the audit committee. He also served as
General Counsel
and Vice President-Legal Affairs of the Company from March 1993 to August
1998
and Executive
Vice-President/General Manager of the Company from August 1998 to August
1999.
Prior to that
time
he was an Associate Attorney with the law firm of Morgan, Wenzel &
McNicholas, Los Angeles,
California from 1990 to March 1993. Mr. Corasanti holds a B.A. degree in
Political Science from
Hobart College and a J.D. degree from Whittier College School of Law. Joseph
J.
Corasanti is the son
of
Eugene R. Corasanti, Chairman and Chief Executive Officer of the
Company.
BRUCE
F.
DANIELS
(age 71) has served as a Director of the Company since August 1992.
Mr.
Daniels
is a retired executive. From August 1974 to June 1997, Mr. Daniels held various
executive positions,
including a position as Controller with Chicago Pneumatic Tool Company. Mr.
Daniels holds a B.S.
degree in Business from Utica College of Syracuse University. The Board of
Directors has determined
that Mr. Daniels is independent, and that he is an audit committee financial
expert, within the meaning of the rules of the Securities and Exchange
Commission.
JO
ANN GOLDEN
(age
58)
was elected to the Board of Directors in 2003 following the recommendation
of the Nominating and Corporate Governance Committee, which nomination was
approved
by the full Board of Directors in February 2003. Ms. Golden is a certified
public accountant and
the
managing partner of the New Hartford, New York office of Dermody Burke and
Brown, CPAs, LLC, an accounting firm. Ms. Golden is the past President of
the
New York State Society of Certified Public Accountants (the State Society),
having served previously as the Secretary and Vice President of the
State
Society. In addition, Ms. Golden is a past president of the New York State
Society’s Foundation
for Accounting Education. Ms. Golden is also a past member of the governing
Council of the American
Institute of Certified Public Accountants (AICPA), and was a member of the
AIPCPA’s Global Credential
Survey Task Force in 2001. Ms. Golden holds a B.A. from the State University
College at New Paltz, and a B.S. in Accounting from the Utica College of
Syracuse University. The Board of Directors
has determined that Ms. Golden is independent, and that she is an audit
committee financial expert,
within the meaning of the rules of the Securities and Exchange
Commission.
STEPHEN
M. MANDIA (age
41)
has served as a Director of the Company since July 2002. Mr. Mandia has been
the
President and Chief Executive Officer of East Coast Olive Oil Corp. since
1991.
Mr.
Mandia also possesses financial ownership and sits on the board of Gem Packing
Corp., Utica Plastics,
LLC, ECOO Realty Corp., Olive Transport Corp. and Northside Gourmet Corp.,
which
are all affiliated
with East Coast Olive Oil Corp. Mr. Mandia holds a B.S. Degree from Bentley
College, located in
Waltham, Massachusetts, having also undertaken undergraduate studies at Richmond
College in London.
The Board of Directors has determined that Mr. Mandia is independent within
the
meaning of the
rules
of the Securities and Exchange Commission.
8
STUART
J.
SCHWARTZ (age
69)
has served as a Director of the Company since May 1998. Dr. Schwartz
is a retired physician. From 1969 to December 1997 he was engaged in private
practice as a urologist. Dr. Schwartz holds a B.A. degree from Cornell
University and an M.D. degree from SUNY Upstate
Medical College, Syracuse. The Board of Directors has determined that Dr.
Schwartz is independent
within the meaning of the rules of the Securities and Exchange
Commission.
The
Board
of Directors has determined that Messrs. Daniels, Mandia and Matthews, Ms.
Golden and
Dr.
Schwartz have no material relationship with the Company and are independent
under the standards
of the Nasdaq Stock Market.
After
conducting a self-assessment, the Board agreed that the independent directors
would meet in executive session after at least two Board meetings each year.
Currently there is no lead director, and the independent directors designate,
on
a rotational basis, which director will preside at each executive session.
The
Company’s Directors are elected at each annual meeting of shareholders and serve
until the next annual meeting and until their successors are duly elected
and
qualified. Eugene R. Corasanti’s employment
is subject to an employment agreement which, as amended, expires on December
31,
2006, as
further described below. Joseph J. Corasanti’s employment is subject to an
amended and restated employment
agreement which expires on December 31, 2009. The Company’s other officers are
appointed
by the Board of Directors and, except as set forth in the following section,
hold office at the will
of
the Board of Directors.
Executive
Officers and Senior Officers
WILLIAM
W. ABRAHAM (age
74)
joined the Company in May 1977 as General Manager. He served
as
the Company’s Vice President-Manufacturing and Engineering from June 1983 until
October 1989. In November of 1989 he was named Executive Vice President and
in
March 1993, he was named Senior
Vice President of the Company. Mr. Abraham holds a B.S. degree in Industrial
Management from Utica College of Syracuse University.
THOMAS
M.
ACEY (age
59)
has been employed by the Company since August 1980 and has served
as
the Company’s Treasurer since August 1988 and as the Company’s Secretary since
January 1993.
Mr.
Acey holds a B.S. degree in Public Accounting from Utica College of Syracuse
University and prior
to
joining the Company was employed by the certified public accounting firm
of
Tartaglia & Benzo in
Utica,
New York.
DANIEL
S.
JONAS (age
42)
joined the Company as General Counsel in August 1998 and in addition
became the Vice President-Legal Affairs in March 1999. In September 1999
through
July 2005, Mr. Jonas assumed responsibility
for certain of the Company’s Regulatory Affairs and Quality Assurance
departments. In March
2003, Mr. Jonas also became responsible for the administration of the Company’s
ethics policy. Mr.
Jonas
is also a director and secretary of CNY MedTech Association, Inc. and CNY
MedTech Foundation,
Inc. Prior to his employment with the Company, Mr. Jonas was a partner with
the
law firm of Harter, Secrest & Emery, LLP in Syracuse from January 1998 to
August 1998, having joined the firm as
an
Associate Attorney in 1995. Prior to that he was an Associate Attorney at
Miller, Alfano & Raspanti, P.C. in Philadelphia from 1992 to 1995 as well as
an adjunct professor of law at the University of Pennsylvania Law School
from
1991 to 1995. Mr. Jonas holds an A.B. degree from Brown University and a
J.D.
from the University of Pennsylvania Law School.
JANE
E.
METCALF (age
49)
joined the Company in July 2005 as the Vice President of Corporate Regulatory
Affairs. Prior to her employment with the Company, Ms. Metcalf was the Vice
President of Quality Assurance and Regulatory Affairs at 3F Therapuetics
in Lake
Forest, California, from June 2003 through June 2005, and held the position
of
Vice President Development Systems and Vice President Quality Assurance and
Regulatory Affairs for Avail Medical in Santa Ana, California, from April
2000
through May, 2003. Prior to that, Ms. Metcalf held management positions with
Medtronic and Allergan. Ms. Metcalf holds a B.S. in Chemical Engineering
from
the University of Massachusetts, and an M.B.A. from the University of
California.
9
DAIVD
R.
MURRAY (age
58)
joined the Company in 2004 as the President of ConMed Electrosurgery
in July 2004. Mr. Murray was self-employed as a consultant to medical device
businesses from
2001
through 2004, and served as the President and Chief Executive Officer of
Cryogen, Inc. from 1996
through 2001. Mr. Murray holds a B.S. in Industrial Management from Purdue
University, and a M.B.A.
in
Finance from the Wharton School of the University of Pennsylvania.
LUKE
A.
POMILIO (age
41)
joined the Company as Controller in September 1995. In addition, in September
1999, Mr. Pomilio became a Vice President with responsibility for certain
of the
Company’s manufacturing
and research and development activities. Prior to his employment with the
Company, Mr.
Pomilio served as Controller of Rome Cable Corporation, a wire and cable
manufacturer. He was also employed as a certified public accountant for Price
Waterhouse LLP where he most recently served as an audit
manager. Mr. Pomilio graduated with a B.S. degree in Accounting and Law from
Clarkson University.
ROBERT
D.
SHALLISH, JR. (age
57)
joined the Company as Chief Financial Officer and Vice President-Finance
in December 1989 and has also served as an Assistant Secretary since March
1995.
Prior to this he was employed as Controller of Genigraphics Corporation in
Syracuse, New York since 1984. He was employed by Price Waterhouse LLP as
a
certified public accountant and senior manager from
1972
through 1984. Mr. Shallish graduated with a B.A. degree in Economics from
Hamilton College and
holds
a Master’s degree in Accounting from Syracuse University.
JOHN
J.
STOTTS (age
49)
joined the Company as Vice President-Marketing and Sales for Patient
Care
in
July 1993 and became Vice President-Marketing in December 1996. In January
2000,
Mr. Stotts became
Vice President - Marketing and Sales for Patient Care Products, a position
now
referred to as Vice
President - Patient Care. Prior to his employment with the Company, Mr. Stotts
served as Director of
Marketing and Sales for Medtronic Andover Medical, Inc. Mr. Stotts holds
a B.A.
degree in Business Administration from Ohio University.
DENNIS
M.
WERGER (age
52)
joined the Company in November 2004 as the Vice President and General Manager
of
ConMed Endoscopic Technologies (“CET”). From October 2002 until November
2004,
Mr.
Werger was the President and Chief Operating Officer of Granit Medical
Innovations, LLC in Nashua, N.H. and New York, N.Y. Prior to that, Mr. Werger
was the Vice President of Marketing for the Endoscopic
Technologies division of C.R. Bard in Billerica, MA, having held other positions
with C.R. Bard
prior to that. Mr. Werger holds a B.S. in Accounting degree from Mt. St.
Mary’s
College, and a Masters
in Business Administration from the University of Phoenix in Denver,
Colorado.
FRANK
R.
WILLIAMS (age
57)
joined the Company in 1974 as Sales Manager and Director of Marketing
and became Vice President-Marketing and Sales in June 1983. In September
1989,
Mr. Williams
was named Vice President-Business Development. In November 1995, he was named
Vice President-Technology Assessment and in January 2000, was also named
Vice
President-Research and Development and Marketing for Minimally Invasive Surgical
Products, a position now known as Vice President
- Endoscopy. Mr. Williams graduated with a B.A. degree from Hartwick College
in
1970 as a biology
major and did his graduate study in Human Anatomy at the University of Rochester
College of Medicine.
GERALD
G.
WOODARD (age
58)
joined the Company as President of Linvatec Corporation, a wholly-owned
subsidiary of the Company, in May 2000. Prior
to
his employment with the Company, Mr. Woodard served
as
the President of Elekta Holdings, Inc. from March 1998 to May 2000. Prior
to
holding this position
Mr. Woodard was the President of the Monitoring and Information Systems Division
of Marquette
Medical Systems from November 1995 to March 1998. Mr. Woodard holds a B.G.S.
degree from
Indiana University.
COMPENSATORY
ARRANGEMENTS AND RELATED
TRANSACTIONS
The
Company has outstanding agreements with certain executive employees of the
Company selected
by the Board of Directors. These agreements provide that the individuals
will
not, in the event of the commencement of steps to effect a Change of Control
(defined generally as an acquisition of 20% or more
of
the outstanding voting shares or a change in a majority of the Board of
Directors), voluntarily leave
the
employ of the Company until a third person has terminated his or her efforts
to
effect a Change of Control or until a Change of Control has
occurred.
In
the
event of a termination of the individual’s employment within two years and six
months of a Change
of
Control, the executive is entitled to three years’ compensation, including
bonus, retirement benefits
equal to the benefits he would have
10
received
had he completed three additional years of employment,
continuation of all life, accident, health, savings, or other fringe benefits
for three years, as well
as
any excise or other tax that may become due as a result of such Change of
Control.
The
Board
of Directors of the Company may terminate any such agreement upon three years
prior written
notice. The Board of Directors may also, at any time, terminate an agreement
with respect to any executive
employee who is affiliated with any group seeking or accomplishing a Change
of
Control. Messrs.
E. Corasanti, J. Corasanti, Abraham, Murray, Shallish and Woodard are each
a
party to such an agreement,
as are certain other officers of the Company and/or its
subsidiaries.
MEETINGS
OF THE BOARD OF DIRECTORS AND COMMITTEES
The
full
Board of Directors met seven times in person or by telephone conference call,
and voted by unanimous consent on two occasions during 2005. Each director
attended or acted upon 100% of the total 2005 full board meetings or
unanimous consents, except one director who was unable to attend one of the
telephone conference calls.
The
Company’s Board of Directors currently has three standing committees: the Audit
Committee,
the Nominating and Corporate Governance Committee and the Compensation
Committee
The
Audit
Committee presently consists of Messrs. Daniels, Matthews and Mandia and
Ms.
Golden.
As more fully detailed in its charter, the Audit Committee is charged with
(a)
oversight of the Company’s accounting and financial reporting principles,
policies and internal accounting controls and procedures;
(b) oversight of the Company’s financial statements and the independent audit
thereof; (c) nominating the outside auditors to be proposed for shareholder
approval; (d) evaluating and, where deemed
appropriate, replacing the independent auditors; (e) pre-approving all services
permitted by law to be performed by the independent auditors, (f) approving
all
related-party transactions; and (g) establishing procedures
for (i) the receipt, retention and treatment of complaints by the Company
regarding accounting,
internal accounting controls or auditing matters, and (ii) the confidential,
anonymous submission
by employees of the Company of concerns regarding questionable accounting
or
auditing matters.
The Audit Committee has delegated its authority to pre-approve work by the
independent auditors
and related party transactions to the Chairman of the Audit Committee, who
is
required to disclose
any such pre-approvals at the Audit Committee’s next meeting. The Audit
Committee met 11 times
during 2005. All members of the Audit Committee attended every meeting. The
current Audit Committee Charter is attached as an appendix to the 2004 proxy
statement.
The
Compensation Committee presently consists of Messrs. Matthews, Daniels and
Mandia. As set forth in its charter the Compensation Committee is charged
with
reviewing and establishing levels of salary,
bonuses, benefits and other compensation for the Company’s officers. The
Compensation Committee
met in person or by telephone conference call 8 times during 2005, and acted
by
unanimous written consent on one occasion. All members of the Compensation
Committee attended every meeting.
The current Compensation Committee
Charter is attached as an appendix to the 2004 proxy statement.
The
Nominating and Corporate Governance Committee presently consists of Messrs.
Daniels and Mandia
and Dr. Schwartz. As stated in its charter, the Nominating and Corporate
Governance committee is
responsible for recommending individuals to the full Board of Directors for
nominations as members of the
Board
of Directors, and for developing and recommending to the full Board of Directors
a set of corporate
governance principles. The Nominating and Corporate Governance Committee
will
consider, but
is
not obligated to accept, shareholder recommendations for individuals to be
nominated provided that such
recommendations are submitted in writing to the Company’s General Counsel within
the time frame for
Shareholder Proposals for the Annual Meeting. The Nominating and Corporate
Governance Committee
held three meetings in person during 2005. All members of the Nominating
and
Corporate Governance
Committee attended every meeting. The current Nominating and Corporate
Governance Committee Charter is attached as an appendix to the 2004 proxy
statement.
11
Each
Director was paid $1,000 for each of the six meetings of the full Board of
Directors personally
attended, $500 for each meeting which a director attends through telephone
conference call, and Messrs. Daniels, Mandia and Matthews, Dr. Schwartz and
Ms.
Golden, as non-employee directors, are paid $5,000
for each fiscal quarter of service on the Board of Directors. Each member
of the
Audit Committee was paid $500 for each meeting of the Audit Committee attended,
and each director is paid $500 for each committee on which he or she serves,
with the chair of each committee receiving an additional $500 per meeting,
except with respect to the Audit Committee chair, who receives an additional
$1,000 per meeting.
In addition, under the Company’s Stock Option Plan for Non-Employee Directors,
each non-employee
director (Messrs.
Daniels, Matthews, Mandia, Ms. Golden and Dr.
Schwartz in 2003) (Messrs. Daniels, Matthews, Mandia, Ms. Golden and Dr.
Schwartz in 2004 and 2005) re-elected or continuing as a director, receives
4,500 options with an option price equal to the fair market value
of
the Company’s Common Stock on the business day following each annual meeting of
the shareholders.
Fees
Paid to Directors
|
2005
|
2004
|
2003
|
||||||||
|
Eugene
R. Corasanti
|
$
|
5,000
|
$
|
5,500
|
$
|
6,000
|
||||
|
Joseph
J. Corasanti
|
$
|
5,000
|
$
|
5,500
|
$
|
6,000
|
||||
|
Bruce
F. Daniels
|
$
|
48,500
|
$
|
50,000
|
$
|
32,000
|
||||
|
Jo
Ann Golden
|
$
|
31,000
|
$
|
32,000
|
$
|
16,000
|
||||
|
Stephen
M. Mandia
|
$
|
36,000
|
$
|
36,000
|
$
|
29,000
|
||||
|
William
D. Matthews
|
$
|
37,000
|
$
|
35,000
|
$
|
28,000
|
||||
|
Stuart
Schwartz
|
$
|
26,500
|
$
|
26,500
|
$
|
25,000
|
||||
|
TOTAL
|
$
|
189,000
|
$
|
190,500
|
$
|
142,000
|
||||
The
Board
of Directors has the following committees, with the membership of each committee
as indicated:
|
Board
of Directors
|
Compensation
Committee
|
Audit
Committee
|
|
Eugene
R. Corasanti,
Chairman
|
William
D. Matthews,
Chairman
|
Bruce
F. Daniels,
Chairman
|
|
Joseph
J. Corasanti
|
Bruce
F. Daniels
|
Jo
Ann Golden
|
|
Bruce
F. Daniels
|
Stephen
M. Mandia
|
Stephen
M. Mandia
|
|
Jo
Ann Golden
|
William
D. Matthews
|
|
|
Stephen
M. Mandia
|
||
|
William
D. Matthews
Stuart
J. Schwartz
|
Nominating
and Corporate
Governance
Committee
|
|
|
Bruce
F. Daniels,
Chairman
|
||
|
Stephen
M. Mandia
Stuart
J. Schwartz
|
||
12
AUDIT
COMMITTEE REPORT
The
role
of the Audit Committee is to assist the Board of Directors in its oversight
of
the Company’s
financial reporting process. The Board of Directors, in its business judgment,
has determined that all members of the Audit Committee are “independent”, as
required by applicable listing standards of the
Nasdaq Stock Market, in that no member of the Audit Committee has received
any
payments, other than
compensation for Board services, from the Company. Although not currently
engaged professionally
in the practice of auditing or accounting, the Audit Committee and Board
of
Directors have determined
that Messrs. Daniels and Matthews qualify as “audit committee financial experts”
within the meaning
of Section 407 of the Sarbanes-Oxley Act of 2002 and the implementing
regulations. In addition,
the Audit Committee and Board of Directors have determined that Ms. Golden
qualifies as an “audit committee financial expert” within the meaning of Section
407 of the Sarbanes-Oxley Act of 2002 and
the
implementing regulations. The Audit Committee operates pursuant to a Charter
that was last amended
and restated by the Board of Directors on March 17, 2004. A copy of the amended
and restated charter is attached to the 2004 proxy statement.
Management
is responsible for CONMED’s internal controls, financial reporting process and
compliance
with laws and regulations. The independent accountants are responsible for
performing an integrated audit of CONMED’s consolidated financial statements and
of its internal control over financial reporting in accordance the standards
of
the Public Company of Accounting Oversight Board (PCAOB). The
Audit
Committee’s responsibility is to monitor and oversee these processes, as well as
to attend to the
matters set forth in the amended and restated charter.
In
this
context, the Audit Committee has met on several occasions and held discussions
with management
and with the independent auditors, including executive meetings without
management present.
Management represented to the Audit Committee that the Company’s consolidated
financial statements
were prepared in accordance with generally accepted accounting principles,
and
the Committee
has reviewed and discussed the consolidated financial statements with management
and the independent
auditors. The Audit Committee discussed with the independent auditors matters
required to be
discussed by Statement on Auditing Standards Nos. 61, 89 and 90 (Communication
with Audit Committees).
CONMED’s
independent auditors also provided to the Audit Committee the written
disclosures and
the
letter required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit
Committees), and the Audit Committee discussed with the independent accountants
their independence. In this regard, the Audit Committee has determined that
the
provision of non-audit services
by the independent auditors is compatible with the auditor’s independence in
light of the nature and
extent of permissible non-audit services provided to the Company.
Members
of the Audit Committee rely without independent verification on the information
provided
to them and on the representations made by management and the independent
accountants. Accordingly, the Audit Committee’s oversight does not provide an
independent basis to determine that management
has maintained appropriate accounting and financial reporting principles
or
appropriate internal
control and procedures designed to assure compliance with accounting standards
and applicable laws
and
regulations. Furthermore, the Audit Committee’s considerations and discussions
referred to above
do
not assure that the audit of the Company’s financial statements has been carried
out in accordance
with generally accepted auditing standards, that the financial statements
are
presented in accordance with generally accepted accounting principles or
that
the Company’s auditors are in fact “independent.”
Based
upon the Audit Committee’s review and discussions referred to above, and subject
to the limitations on the role and responsibilities of the Audit Committee
referred to above and in the Charter, the
Audit
Committee recommended that the Board of Directors include the Company’s audited
consolidated
financial statements in CONMED’s Annual Report on Form 10-K for the year ended
December
31, 2005 filed with the SEC.
Submitted
by the Audit Committee,
|
Bruce
F. Daniels (Chair)
|
Jo
Ann Golden
|
|
Stephen
M. Mandia
|
William
D. Matthews
|
13
CORPORATE
GOVERNANCE AND NOMINATING
COMMITTEE
REPORT
The
role
of the Corporate Governance and Nominating Committee is to recommend individuals
to the Board for nomination as members of the Board and its committees and
to
develop and recommend to the Board a set of corporate governance principles
applicable to the Company. The Board of Directors, in its business judgment,
has
determined that all members of the Corporate Governance and Nominating
Committee are “independent,” as required by applicable listing standards of the
Nasdaq Stock
Market, in that no member of the Corporate Governance and Nominating Committee
has received any
payments, other than compensation for Board services, from the Company. The
Corporate Governance
and Nominating Committee operates pursuant to a Charter that was last amended
and restated
by the Board of Directors on February 29, 2004. A copy of the amended and
restated charter is attached
to the 2004 proxy statement.
The
Corporate Governance and Nominating Committee has no fixed process for
identifying and evaluating potential candidates to be nominees. To date,
the
Corporate Governance and Nominating Committee has not retained the services
of
any third party to assist in the process of identifying or evaluating
candidates, although this could change should circumstances warrant the services
of a third party.
Likewise, the Corporate Governance and Nominating Committee has no fixed
set of
qualifications that
must
be satisfied before a candidate will be considered. Rather, the Corporate
Governance and Nominating
Committee has opted to retain the flexibility to consider such factors as
it
deems appropriate. These
factors may include judgment, skill, diversity, experience with businesses
and
other organizations of comparable size, the interplay of the candidate’s
experience with the experience of other Board members, and the extent to
which
the candidate would be a desirable addition to the Board and any committees
of the Board.
The
Committee may consider candidates proposed by management, but is not required
to
do so. As
previously disclosed, the Corporate Governance and Nominating Committee will
consider any nominees
submitted to the Company by shareholders wishing to propose nominees for
election as directors
at the 2007 Annual Meeting, provided that the shareholders proposing any
such
nominees have adhered
to specified advance notice procedures contained in the Company’s by-laws, a
copy of which is available
on request to the General Counsel of the Company, CONMED Corporation, 525
French
Road, Utica,
New York 13502 (Telephone (315) 797-8375).
Submitted
by the Corporate Governance and Nominating Committee,
|
Bruce
F. Daniels (Chair)
|
Stephen
M. Mandia
|
|
Stuart
J. Schwartz
|
SHAREHOLDER
COMMUNICATIONS WITH THE
BOARD
OF DIRECTORS
Shareholders
who wish to communicate with the Board of Directors may do so by sending
correspondence
to the attention of the General Counsel of the Company at 525 French Road,
Utica
New York 13502 with a cover letter explaining that the correspondence is
intended for the Board of Directors. At this time, no communications received
by
the Company in this manner will be screened, although this could
change without prior notice. In addition, questions may be posed to directors
during the question and
answer period at the Annual Meeting of Shareholders. The Company has no formal
policy requiring that directors attend the Annual Meeting of Shareholders,
although the Company’s expectation is that all directors
will attend absent exceptional circumstances. Historically, all directors
have
attended the Annual
Meeting of Shareholders, and all directors were present at the 2005 Annual
Meeting of Shareholders.
ETHICS
DISCLOSURE
The
Company has adopted, as of March 31, 2003, an ethics program which applies
to
all employees,
including senior financial officers and the principal executive officer.
The
ethics program is generally
available through the investor relations section of the CONMED Corporation
web
site (www.Conmed.com),
and is administered by the Company’s General Counsel. The Program codifies
standards
reasonably necessary to deter wrongdoing and to promote honest and ethical
conduct, avoidance
of conflicts of interest, full, fair, accurate, timely and understandable
disclosure, compliance with laws, prompt internal reporting of code violations
and accountability for adherence to the code and permits anonymous reporting
by
employees to an independent third-party, which will alert the Chair of
Audit
Committee of Board of Directors if and when it receives any anonymous
reports.
14
AUDIT
FEES
The
aggregate fees and expenses billed by PricewaterhouseCoopers LLP for
professional services rendered
for the audit of the Company’s annual financial statements for the years ended
December 31, 2004
and
December 31, 2005, for the reviews of the financial statements included in
the
Company’s Quarterly
Reports on Form 10-Q for those years, and for the audit of the Company’s
internal control over financial reporting as of December 31, 2004 and December
31, 2005, and all other audit related, and tax consulting and other fees
and
expenses, are set forth in the table below.
|
Fee
Summary
|
2005
|
2004
|
|||||
|
Audit
Fees and Expenses:
|
|||||||
|
Audit
of Annual Financial Statements and Interim Reviews
|
$
|
1,147,000
|
$
|
507,500
|
|||
|
Audit
of Internal Control over Financial
Reporting
|
Included
above
|
$
|
915,000
|
||||
|
SEC
Registration Statements
|
$
|
0
|
$
|
125,000
|
|||
|
Total
Audit Fees and Expenses
|
$
|
1,147,000
|
$
|
1,547,500
|
|||
|
Audit
Related:
|
|||||||
|
Benefit
Plan Audits
|
$
|
0
|
$
|
0
|
|||
|
Tax:
|
|||||||
|
Tax
Compliance and Consulting Services
|
$
|
337,000
|
$
|
364,211
|
|||
|
All
Other:
|
|||||||
|
Research
Service License
|
$
|
1,500
|
$
|
1,500
|
|||
|
Total
Fees and Expenses
|
$
|
1,485,500
|
$
|
1,913,211
|
|||
The
Audit
Committee has adopted procedures requiring prior approval of particular
engagements for
services rendered by the Company’s independent auditors. Consistent with
applicable laws, the procedures
permit one or more members of the Audit Committee to approve such services
pursuant to authority delegated by the Audit Committee, provided the Audit
Committee is informed.
COMPENSATION
OF EXECUTIVE OFFICERS
The
following information relates to all plan and non-plan compensation awarded
to,
earned by, or
paid
to (i) Eugene R. Corasanti, the Chairman of the Board of Directors and Chief
Executive Officer of the
Company (the “CEO”) and (ii) the Company’s four most highly compensated
executive officers, other than
the
CEO, who were serving as executive officers of the Company at December 31,
2005
(the CEO and
such
officers, the “Named Executive Officers”).
The
following information does not reflect any compensation awarded to or earned
by
the Named Executive
Officers subsequent to December 31, 2005, except as may otherwise be indicated.
Any compensation
awarded to or earned by the Named Executive Officers during 2006 will be
reported in the proxy statement for the Company’s 2007 Annual Meeting of
Shareholders, unless such compensation has been previously
reported.
15
Summary
Compensation Table
The
following table sets forth for the Named Executive Officers for each of the
last
three fiscal years:
(i) the name and principal position of the executive officer (column (a));
(ii)
the year covered (column
(b)); (iii) annual compensation (columns (c), (d) and (e)), including: (A)
base
salary earned during
the year covered (column (c)); (B) bonus earned during the year covered (column
(d)); and (C) other annual compensation not properly categorized as salary
or
bonus (column (e)); (iv) long-term compensation, including the sum of the
number
of stock options granted (column (f)); and all other compensation
(column (g)).
Summary
Compensation Table
|
Annual
Compensation
|
Long-Term
Compensation
Awards
|
All
Other
Compensation(3)
|
||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
|
Name
Principal
Position
|
Fiscal
Year
|
Salary
($)
|
Bonus(1)
($)
|
Other
Annual
Compensation(2)
($)
|
Options
(#)
|
($)
|
|
Eugene
R. Corasanti
Chief
Executive Officer
Chairman
of the
Board
|
2005
2004
2003
|
440,595
429,778
387,307
|
0
0
120,000
|
596,678
542,435
493,122
|
10,000
125,000
125,000
|
43,520
39,709
36,320
|
|
Joseph
J. Corasanti
President,
Chief
Operating Officer
|
2005
2004
2003
|
388,760
359,977
292,308
|
0
0
91,500
|
186,051
146,410
133,000
|
125,000
125,000
125,000
|
118,629(4)
70,545
20,319
|
|
David
R. Murray(5)
President
of
ConMed
Electrosurgery
|
2005
2004
2003
|
255,769
95,970
n/a
|
52,000
9,625
n/a
|
-
-
-
|
5,000
20,000
n/a
|
13,747
2,400
n/a
|
|
Robert
D. Shallish, Jr.
Chief
Financial Officer
|
2005
2004
2003
|
221,224
219,911
198,682
|
0
0
60,830
|
-
-
-
|
15,000
10,000
10,000
|
21,541
21,772
17,457
|
|
Gerald
G. Woodard
President
of
ConMed
Linvatec
|
2005
2004
2003
|
267,519
259,872
231,292
|
0
103,949
11,565
|
-
-
-
|
10,000
10,000
10,000
|
11,298
13,985
15,805
|
________________
|
(1)
|
Annual
Compensation - Bonus includes cash bonuses in year earned even
if paid
after the fiscal year end.
|
|
(2)
|
Amounts
represent deferred compensation and accrued interest for Messrs.
E. and J.
Corasanti. See the discussion
of the employment agreements for Messrs. E. and J. Corasanti,
below.
|
|
(3)
|
All
Other Compensation consists of company contributions, if any,
to employee
401(k) plan accounts on the same terms offered to all other employees,
payments for supplemental insurance policies and other payments
relating to automobile leases and/or allowances and dues payments.
In
addition, with respect to Mr.
J. Corasanti, All Other Compensation also includes reimbursements
for
certain insurance policies as provided for in his Amended and
Restated
Employment Agreement, which is further described below. All other
compensation does not include the costs for health insurance,
life
insurance and other benefits generally available to other employees
on the
same terms as those offered to the officers listed above.
|
|
(4)
|
Includes
$88,380 paid to Mr. J. Corasanti to pay, after the payment of
taxes, the
premium on certain life insurance policies, as discussed
below.
|
|
(5)
|
Mr.
Murray’s employment commenced as of July 20,
2004.
|
Eugene
R.
Corasanti has a five-year employment agreement (the “CEO Employment Agreement”)
with the Company, which originally extended through December 31, 2001, and
was
extended
through December 31, 2006. The CEO Employment Agreement provides for Mr. E.
Corasanti to
serve
as chief executive officer of the Company for five years at an annual salary
not
less than $300,000,
as determined by the Board of Directors. Mr. E. Corasanti also receives deferred
compensation of
$100,000 per year (which the Board increased to $200,000 for 2000 and subsequent
years) with interest at
10%
per
16
annum,
payable in 120 equal monthly installments upon his retirement or to his
beneficiaries at death, and is entitled to participate in the Company’s employee
stock option plan, pension and other employee
benefit plans and such bonus or other compensatory arrangements as may be
determined by the Board
of
Directors. In the event that the Board of Directors should fail to re-elect
Mr.
E. Corasanti as chief
executive officer or should terminate his employment for reasons other than
just
cause, Mr. E. Corasanti will become entitled to receive the greater of three
years’ base annual salary or the balance of his
base
annual salary plus the average of the bonuses, deferred compensation and
incentive compensation
awarded to Mr. E. Corasanti during the three years prior to such termination
for
the five-term employment term, and shall continue to receive other employment
benefits, for the greater of three years
or
the balance of the CEO Employment Agreement’s five-year term. In the event of
Mr. E. Corasanti’s
death or disability, Mr. E. Corasanti or his estate or beneficiaries will be
entitled to receive 100%
of
his base annual salary and other employment benefits (other than deferred
compensation) for the balance
of the CEO Employment Agreement’s term. If, during the term of Mr. E.
Corasanti’s employment
under the Employment Agreement and within two years after a Change in Control,
his employment with the Company is terminated by the Company, other than for
Cause or by him for Good Reason
(as such capitalized terms are defined in the Employment Agreement), Mr. E.
Corasanti will be entitled to receive (a) a lump sum payment equal to three
times the sum of (i) his base salary on the date of such termination or his
base
salary in effect immediately prior to the Change in Control, whichever is
higher, plus (ii) the average of the bonuses, deferred compensation and
incentive compensation awarded to Mr. E. Corasanti during the three years prior
to such termination; (b) continued coverage under the benefit
plans in which he participates for a period of two years from the date of such
early termination; (c) a
lump
sum payment equal to the aggregate amount credited to his deferred compensation
account; and (d)
awards for the calendar year of such termination under incentive plans
maintained by the Company as though
any performance or objective criteria used in determining such awards were
satisfied. The Board of
Directors determined that Mr. E. Corasanti’s base annualized salary would be
$450,500 for 2005.
Joseph
J.
Corasanti has an employment agreement (the “COO Employment Agreement”) with the
Company,
extending from January 1, 2000 through December 31, 2009. The COO Employment
Agreement,
which was amended and restated as of November 12, 2004, provides for Mr. J.
Corasanti to serve
as
chief operating officer of the Company for at an annual salary originally not
less than $200,000, and
not
less than $375,000 since November 12, 2004, as determined by the Board of
Directors. Mr. J. Corasanti also receives deferred compensation of $100,000
per
year with interest at 10% per annum for payments
accrued through December 31, 2004, with payments of $125,000 to accrue in each
year commencing
December 31, 2005 with interest at two percent above prime per annum, payable
upon his departure or retirement, or to his beneficiaries at death. Mr. J.
Corasanti is entitled to participate in the Company’s
employee stock option plan and pension and other employee benefit plans and
such
bonus or other
compensatory arrangements as may be determined by the Board of Directors. Mr.
J.
Corasanti is also
entitled to be paid an amount sufficient after the payment of applicable taxes
to permit Mr. J. Corasanti
to purchase certain life insurance policies. In the event that the Board of
Directors should fail to re-
elect
Mr. J. Corasanti as chief operating officer or should terminate his employment
for reasons other than just
cause, Mr. J. Corasanti will become entitled to receive the greater of three
years’ base annual salary or the balance of his base annual salary plus the
average of the bonuses, deferred compensation and incentive
compensation awarded to Mr. Corasanti during the three years prior to such
termination for the remaining term of his employment contract, and shall
continue to receive other employment benefits, for the
greater of three years or the balance of the COO Employment Agreement’s term. In
the event of Mr. J. Corasanti’s
death or disability, Mr. J. Corasanti or his estate or beneficiaries will be
entitled to receive 100%
of
his base annual salary and other employment benefits (other than deferred
compensation) for the balance
of the COO Employment Agreement’s term. If, during the term of Mr. Corasanti’s
employment under
the
COO Employment Agreement and within two years after a Change in Control, his
employment with
the
Company is terminated by the Company, other than for Cause or by him for Good
Reason (as such capitalized terms are defined in the Employment Agreement),
Mr.
J. Corasanti will be entitled to receive (a) a lump sum payment equal to three
times the sum of (i) his base salary on the date of such termination or his
base
salary in effect immediately prior to the Change in Control, whichever is
higher, plus
(ii)
the average of the bonuses, deferred compensation and incentive compensation
awarded to Mr. J. Corasanti
during the three years prior to such termination; (b) continued coverage under
the benefit plans in which he participates for a period of two years from the
date of such early termination; (c) a lump sum payment equal to the aggregate
amount credited to his deferred compensation account; and (d) awards for the
calendar year of such termination under incentive plans maintained by the
Company as though any performance or objective criteria used in determining
such
awards were satisfied. During 2005, the Board of Directors determined that
Mr.
J. Corasanti’s base annualized salary would be $397,500.
17
STOCK
OPTION PLANS
1999
Long-Term Incentive Stock Plan
In
May
1999, the shareholders approved the CONMED Corporation 1999 Long-Term Incentive
Plan
(the
“1999 LTIP”). Under the 1999 LTIP, in the discretion of the Compensation
Committee of the Board
of
Directors (the “Committee”), options, performance shares and restricted stock
may be granted to employees
and/or consultants of the Company and its subsidiaries. The Committee presently
consists of Messrs.
Matthews, Daniels and Mandia.
Options
may be granted which are (i) incentive stock options within the meaning of
Internal Revenue Code Section 422, (ii) options other than incentive stock
options (i.e.,
non-qualified
options), (iii)
performance shares, and (iv) restricted stock (collectively, the “awards”). A
total of 3,500,000 shares of
Common
Stock (subject to adjustment for stock splits and other changes in the Company’s
capital structure) had been reserved against the issuance of awards to be
granted under the 1999 LTIP. Shares reserved
under an award which for any reason expires or is terminated, in whole or in
part, shall again be available
for the purposes of the 1999 LTIP. As of March 31, 2006, options relating to
3,416,118 shares of Common Stock have been granted and not terminated under
the
1999 LTIP. As of March 31, 2006, 1,539,630 of the options are exercisable.
As of
March 31, 2006, options relating to 83,882 shares of Common
Stock remain available to be granted.
The
1992 Plan
In
April
1992, the shareholders approved the CONMED Corporation 1992 Stock Option Plan
(as amended
and approved by the shareholders on May 21, 1996, the “1992 Plan”). Under the
1992 Plan, in the
discretion of the Compensation Committee of the Board of Directors, options
may
be granted to officers
and key employees of the Company and its subsidiaries for the purchase of shares
of Common Stock.
The Compensation Committee presently consists of Messrs. Matthews, Daniels
and
Mandia.
Options
may be granted which are (i) incentive stock options within the meaning of
Internal Revenue
Code Section 422 or (ii) options other than incentive stock options (i.e.,
non-qualified
options). A
total
of 3,000,000 shares of Common Stock (subject to adjustment for stock splits
and
other changes in the Company’s capital structure) had been reserved against the
exercise of options to be granted under the 1992 Plan. Shares reserved under
an
option which for any reason expires or is terminated, in whole or in part,
shall
again be available for the purposes of the 1992 Plan. No additional options
are
available to be granted
under the 1992 Plan. As of March 31, 2006, options relating to 2,913,230 shares
of Common Stock
have been granted and not terminated under the 1992 Plan, of which options
relating to 564,684 shares
of
Common Stock are still exercisable.
Stock
Option Plan for Non-Employee Directors
In
May
1995, the shareholders of the Company approved the Stock Option Plan For
Non-Employee
Directors of CONMED Corporation (the “Non-Employee Directors Plan”). All members
of the Company’s
Board of Directors who are not current or former employees of the Company or
any
of its subsidiaries
(“Non-Employee Directors”) are eligible to participate in the Non-Employee
Directors Plan. Under
the
Non-Employee Directors Plan, each Non-Employee Director elected, reelected
or
continuing as a
director receives 4,500 options (which are non-qualified stock options under
the
Internal Revenue Code of
1986)
with an option price equal to the fair market value of the Company’s Common
Stock on the business
day following each annual meeting of the shareholders.
18
A
total
of 212,500 shares of Common Stock (subject to adjustment for stock splits and
other changes
in the Company’s capital structure) had been reserved against the exercise of
options to be granted
and not terminated under the Non-Employee Directors Plan, of which options
for
155,334 shares of
Common
Stock have been granted and not terminated and options for 23,500
shares
are still exercisable.
Options relating to 57,166 shares of Common Stock remain available to be
granted. Shares issuable
under the Non-Employee Directors Plan may be authorized but unissued shares
or
treasury shares.
Shares reserved under an option which for any reason expires or is terminated,
in whole or in part, shall
again be available for the purposes of the Non-Employee Directors
Plan.
|
Plan
Category
|
Number
of Securities to
be
Issued Upon Exercise
of
Outstanding Options,
Warrants
and Rights
|
Weighted-Average
Exercise
Price of
Outstanding
Options,
Warrants
and Rights
($)
|
Number
of Securities
Remaining
Available for
Future
Issuance under
Equity
Compensation
Plans
(Excluding
Securities
Reflected in
the
Second Column)
|
|
|
Equity
Compensation
Plans approved by security holders
|
1999
Long-Term Incentive Stock Plan
|
2,437,831
|
23.17
|
83,882
|
|
1992
Stock Option Plan
|
596,886
|
17.45
|
0
|
|
|
Stock
Option Plan for Non-Employee Directors
|
46,000
|
28.87
|
23,500
|
|
|
Equity
Compensation Plans approved by security holders
|
N/A
|
19
Option
Grants Table
The
following table sets forth, with respect to grants of stock options made during
2005 to each of the
Named
Executive Officers: (i) the name of the executive officer (column (a)); (ii)
the
number of securities
underlying options granted (column (b)); (iii) the percent the grant represents
of the total options
granted to all employees during 2003; (iv) the per share exercise price of
the
options granted (column
(d)); (v) the expiration date of the options (column (e)); and (vi) the
potential realizable value of each
grant, assuming the market price of the Common Stock appreciates in value from
the date of grant to the
end
of the option term at a rate of (A) 5% per annum (column (f)) and (B) 10% per
annum (column
(g)).
Option
Grants in 2005
|
Individual
Grants
|
Potential
Realizable Value at
Assumed
Annual Rates of
Stock
Price Appreciation for
Option
Term
|
|||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
|
Name
|
Number
of
Securities
Underlying
Options
Granted
(#)
|
%
of Total
Options
Granted
to
Employees
in
2005
|
Exercise
or
Base
Price
($/Sh)
|
Expiration
Date
|
5%($)
|
10%($)
|
|
Eugene
R. Corasanti
|
10,000
|
1.99
|
31.40
|
05/17/2015
|
194,473
|
500,435
|
|
Joseph
J. Corasanti
|
125,000
|
24.83
|
31.40
|
05/17/2015
|
2,468,411
|
6,255,439
|
|
David
R. Murray
|
5,000
|
0.99
|
31.40
|
05/17/2015
|
98,736
|
250,218
|
|
Robert
D. Shallish, Jr.
|
15,000
|
2.98
|
31.40
|
05/17/2015
|
296,209
|
750,653
|
|
Gerald
G. Woodard
|
10,000
|
1.99
|
31.40
|
05/17/2015
|
197,473
|
500,435
|
Aggregated
Option Exercises and Year-End Option Value Table
The
following table sets forth, with respect to each exercise of stock options
during 2005 by each of
the
Named Executive Officers and the year-end value of unexercised options on an
aggregated basis: (i) the name of the executive officer (column (a)); (ii)
the
number of shares received upon exercise, or, if no
shares
were received, the number of securities with respect to which the options were
exercised (column
(b)); (iii) the aggregate dollar value realized upon exercise (column (c));
(iv)
the total number of securities
underlying unexercised options held at December 31, 2005, separately identifying
the exercisable
and unexercisable options (column (d)); and (v) the aggregate dollar value
of
in-the-money, unexercised
options held at December 31, 2005, separately identifying the exercisable and
unexercisable options (column (e)). The Company has not issued any stock
appreciation rights.
20
Aggregated
Option Exercises in 2005 and December
31, 2005 Option Values
|
(a)
|
(b)
|
(c)
|
Unexercised
Options at
12/31/05
(d)
|
Value
of Unexercised In-the-
Money
Options at 12/31/05 ($)(1)
(e)
|
||
|
Name
|
Shares
Acquired
on Exercise
(#)
|
Value
Realized
($)
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
|
Eugene
R. Corasanti
|
457,996
|
6,454,616.71
|
334,793
|
0
|
317,041.01
|
0
|
|
Joseph
J. Corasanti
|
82,503
|
1,263,395.64
|
694,724
|
75,000
|
2,054,048.61
|
444,000
|
|
David
Murray
|
0
|
0
|
4,000
|
21,000
|
5,480.00
|
21,920
|
|
Robert
D. Shallish, Jr.
|
18,765
|
254,978.59
|
99,532
|
41,004
|
679,752.76
|
81,637.73
|
|
Gerald
Woodard
|
17,499
|
221,190.11
|
21,506
|
31,004
|
141,174.71
|
63,877.29
|
______________________
(1)
Assumes
$23.66 per share fair market value on December 30, 2005 which was the closing
price on December 30, 2005, the last day of trading on the Nasdaq Stock Market
in 2005.
PENSION
PLANS
The
Company maintains a broadly based defined benefit pension plan (the “Pension
Plan”) for all employees. Effective January 1, 2004, the ConMed Electrosurgery
and Linvatec Retirement Income Plans were
merged into the ConMed Corporation Pension Plan “D”, with the resulting plan
being renamed the ConMed
Corporation Retirement Pension Plan.
The
Pension Plan entitles a participant to a normal monthly retirement benefit
equal
to one-twelfth
of 1.65% of five year average earnings multiplied by years of service offset
by
0.65% of social security
covered compensation multiplied by years of service to a maximum of 35 years.
The deferred compensation
for Messrs. E. and J. Corasanti is not included in the calculation of retirement
benefits. Benefits are fully vested after five years of service, starting from
date of hire. Upon reaching normal retirement age, generally age 65 with five
years of credited service, participants are entitled to receive vested
benefits under the Pension Plan in a monthly retirement benefit.
As
of
December 31, 2005, Messrs. E. Corasanti, J. Corasanti, Murray, Woodard and
Shallish had
4,
13, 4, 6 and 16 years of credited service, respectively in the Conmed Pension
Plan.
The
first table presents information concerning the annual pension payable under
the
Pension Plan based upon various assumed levels of annual compensation and years
of service.
21
CONMED
Pension Plan
Years
of Service
|
Average
Pay
|
15
|
20
|
25
|
30
|
35
|
|
$125,000
|
$26,433
|
$35,244
|
$44,055
|
$52,866
|
$61,677
|
|
$150,000
|
$32,621
|
$43,494
|
$54,368
|
$65,241
|
$76,115
|
|
$175,000
|
$38,808
|
$51,744
|
$64,680
|
$77,616
|
$90,552
|
|
$200,000
|
$44,996
|
$59,994
|
$74,993
|
$89,991
|
$104,990
|
|
$225,000(1)
|
$47,471
|
$63,294
|
$79,118
|
$94,941
|
$110,765
|
|
$250,000(1)
|
$47,471
|
$63,294
|
$79,118
|
$94,941
|
$110,765
|
|
$300,000(1)
|
$47,471
|
$63,294
|
$79,118
|
$94,941
|
$110,765
|
|
$400,000(1)
|
$47,471
|
$63,294
|
$79,118
|
$94,941
|
$110,765
|
|
$450,000(1)
|
$47,471
|
$63,294
|
$79,118
|
$94,941
|
$110,765
|
|
$500,000(1)
|
$47,471
|
$63,294
|
$79,118
|
$94,941
|
$110,765
|
(1)
2005
statutory limits are $170,000 and straight life annuity benefit payable at
age
65 and
$210,000 annual compensation taken into account in determining average
pay.
COMPENSATION
COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
Pursuant
to the terms of the CEO and COO Employment Agreements,
Compensation Committee and the Board of Directors establish the annual salary
of
Eugene R. Corasanti and Joseph J. Corasanti. The Compensation
Committee establishes the compensation plans and specific compensation levels
for the Company’s
other executive and senior officers. The Compensation Committee administers
the
Company’s
stock option plans. The Compensation Committee is presently composed of Messrs.
Matthews,
Daniels and Mandia.
The
Compensation Committee and the Board of Directors believe that the compensation
plans for all officers, including the Chief Executive Officer and the President,
must seek
to
strike a balance between financial goals and targets and regulatory compliance
and ethical behavior. As a matter of corporate policy, compensation plans are
to
be drafted to include short-term financial goals, long term growth, aligning
the
interests of management and key employees with those of shareholders and
rewarding management and employees for creation of shareholder value, and a
recognition that Conmed is a medical device manufacturer and a public company.
Compensation plans for management have three components: the annual salary,
a
year-end bonus plan, and equity (stock option) compensation. As a matter of
corporate policy, each component of compensation must depend on the employee’s
level of compliance with regulatory and ethics requirements.
Consistent
with this compensation policy, the Board of Directors believes that compensation
of Eugene R. Corasanti, the Company’s Chairman
and Chief Executive Officer, should be heavily influenced by company
performance, long-term growth
and strategic positioning, as well as regulatory and ethics compliance.
Therefore, although there is necessarily some subjectivity in setting the
CEO’s
salary, major elements of the compensation package are directly tied to company
performance, long-term growth and strategic positioning. This philosophy is
reflected in Mr. E. Corasanti’s current five-year
employment contract, which provides for a base annual salary of $300,000 and
permits the Board
of
Directors, in its discretion, to establish a higher salary for him. The current
annualized base salary
for Mr. E. Corasanti is $450,500, with annual deferred compensation of $200,000
per annum before
interest.
The
Board
of Directors believes that the compensation of Joseph J. Corasanti, the
President and Chief
Operating Officer (“COO”), should also be heavily influenced by company
performance, long-term growth
and strategic positioning,
as well
as regulatory and ethics compliance.
This
philosophy is reflected in the employment contract for the COO which
is
generally similar to the contract provided to the CEO, and which provides for
a
base annual salary
on
a prospective basis of $375,000 and permits the Board of Directors to determine
a higher salary for
the
COO in its discretion. The current base salary for Mr. J. Corasanti is $397,500
plus annual deferred
compensation of $125,000 per annum before interest.
During
2003, the Company continued its focus on internal growth, through the
introduction of a number
of
new products and an increase in the number of sales representatives representing
its orthopedic products.
In addition, the Company completed strategic acquisitions and continued to
integrate completed
acquisitions. The Company experienced record revenues and net
22
income,
before certain charges. Further, the Company lowered its debt to total
capitalization ratio despite one significant acquisition
at the beginning of the year, and reduced its interest cost for outstanding
debt. Moreover, the Company
resolved significant litigation on favorable terms. In light of the continued
trend toward increasing
revenues and earnings, as well as the improvements to the Company’s balance
sheet, the Board of
Directors, with Messrs. E. Corasanti and J. Corasanti abstaining, approved
an
increase in base compensation
for Mr. E. Corasanti to $400,000, and approved an increase in base compensation
for Mr. J. Corasanti
to $305,000. These increases were effective as of May 26, 2003. In addition,
in
light of the
uncertainty surrounding split-dollar life insurance premiums following the
enactment of the Sarbanes-
Oxley
Act of 2002 and its implementing regulations, and because the Company had a
prior contractual commitment
to provide such insurance, the Company agreed to provide payments to Mr. J.
Corasanti in an amount sufficient to allow him to continue to pay the premiums
due on a split-dollar life insurance policy
in
which the Company no longer has any interest. In light of the Company’s year-end
results, a bonus of $120,000 was awarded to Mr. E. Corasanti and a bonus of
$91,500 was awarded to Mr. J. Corasanti.
Likewise, certain other officers were awarded bonuses in light of the final
year-end performance.
During
2004, the Company maintained its focus on internal growth, through the
introduction of a number of new products. In addition, the Company completed
a
significant distribution arrangement and completed
a significant acquisition which added a new division and sales force. The
Company experienced
record revenues, net income and cash flow, before certain charges. Further,
the
Company reduced its interest cost for outstanding debt through the issuance
of
convertible notes at a lower, fixed interest rate. In light of the continued
trend toward increasing revenues and earnings, as well as the improvements
to
the Company’s balance sheet, following the recommendation of the Compensation
Committee, the Board of Directors, with Messrs. E. Corasanti and J. Corasanti
abstaining, approved an increase in base compensation for Mr. E. Corasanti
to
$425,000, and approved an increase in base compensation
for Mr. J. Corasanti to $375,000. These increases were effective as of May
24,
2004. With
respect to Mr. J. Corasanti’s employment contract, the Committee determined
that, in light of the increase in the size of the organization which Mr. J.
Corasanti was managing, as well as the record of consistent growth in revenues
and earnings, it was appropriate to extend the term of the contract for an
additional
five year period with a base salary of $375,000, a base deferred compensation
level of $125,000,
and certain other benefits with respect to certain life insurance policies
as
reflected in the Amended and Restated Employment Agreement. In addition, the
Committee concluded that, in light of the
current interest rate environment, additional deferred compensation payments
should accrue interest at a
rate
equal to the prime rate plus two percent, rather than a fixed rate of 10
percent. Following the recommendation
of the Compensation Committee, the Board of Directors, with Messrs. E. Corasanti
and J. Corasanti abstaining, approved the Amended and Restated Employment
Agreement upon the terms as described
above.
During
2005, the
Company maintained its focus on internal growth, through the introduction of
a
number of new products. The Company also focused on the integration of the
Conmed Endoscopic Technologies business, while also making investments in the
Company’s future in the form of a corporate quality initiative and through
expanded research and development efforts. While revenues increased overall
during 2005, the growth in revenues was somewhat offset by the costs associated
with the research and development and corporate quality initiatives, as well
as
increases in costs for petroleum-based components and materials and the expenses
associated with the Company’s antitrust suit against Johnson & Johnson.
Although the Company made significant progress in several operational matters
during the course of 2005, in light of the year-end results proving to
be
lower
than expected, no bonuses were paid to Messrs. E. Corasanti and J. Corasanti.
Likewise, no officers
were awarded any bonus in light of the final year-end performance with the
exception of four officers whose bonus plan was contingent on specific
performance criteria that were satisfied.
The
Compensation Committee has adopted similar policies with respect to compensation
of the other
executive officers of the Company. The Company’s performance, long-term growth
and strategic positioning and the individual’s past performance and future
potential are considered in establishing the base salaries of executive
officers,
as well
as regulatory and ethics compliance.
The
policy regarding other elements of the compensation package for executive
officers is similar to the CEO’s in that the package is tied to achievement of
performance targets.
In light of the Company’s performance during 2005, and in deference to his
specific request that he be granted fewer options than the Compensation
Committee might otherwise have contemplated, Mr. E. Corasanti was granted
options relating
to 10,000 shares. Mr. J. Corasanti was granted options relating to 125,000
shares in 2005, and the
Compensation Committee also granted options to certain other executive
officers.
Stock
options are granted to the Company’s executive officers primarily based on the
executive’s ability
to influence the Company’s long-term growth and profitability. The number of
options granted is determined
by using the same subjective criteria. All options are granted at the current
market price. Since the
value
of an option bears a direct relationship to the Company’s stock
23
price,
it
is an effective incentive for
managers to create value for shareholders. The Committee therefore views stock
options as an important
component of its long-term, performance-based compensation
philosophy.
Although
the Company’s Board of Directors, including its Compensation Committee, retains
full discretion to structure executive compensation in the best overall
interests of the Company, the Board of Directors
will consider the implications of Section 162(m) of the Internal Revenue Code
of
1986, as amended, and the regulations thereunder in structuring and managing
executive compensation. The Board’s consideration of Section 162(m) may include,
among other things, structuring compensation as qualified performance-based
compensation, requesting that executive officers defer compensation in
excess
of
$1 million per year, and requesting that executive officers delay the exercise
of stock options if such
exercise would lead to the related compensation being non-deductible under
Section 162(m).
BOARD
OF DIRECTORS INTERLOCKS AND INSIDER PARTICIPATION;
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The
Company’s Board of Directors, which is presently composed of Eugene R.
Corasanti, Joseph
J.
Corasanti, Bruce F. Daniels, Jo Ann Golden, William D. Matthews, Stuart J.
Schwartz, and Stephen
M. Mandia establishes the compensation plans and specific compensation levels
for Eugene R. Corasanti directly (with Messrs. E. Corasanti and J. Corasanti
abstaining) and for other executive officers through
the Compensation Committee, and administers the Company’s stock option plans
through the Compensation
Committee. As disclosed above, Eugene R. Corasanti, the Chairman of the Board
of
Directors,
is the Chief Executive Officer of the Company and also serves as an officer
of
the Company’s subsidiaries.
Joseph J. Corasanti, a director of the Company, is the President and Chief
Operating Officer of
the
Company, and also serves as an officer of several of the Company’s subsidiaries
and is the son of Eugene
R.
Corasanti.
During
2005, the Company made aggregate payments of $121,168 to George A. Nole &
Son, Inc., a
construction company, in connection with certain renovations being made to
the
Company’s Central New
York
facilities. The sole shareholder of George A. Nole & Son, Inc., a New York
corporation, is Angelo
Nole, who is the brother-in-law of Eugene R. Corasanti. The contracts were
awarded following a competitive bidding process, except for certain contracts
the expected value of which was under $40,000. This work was pre-approved
pursuant to the procedures of the Audit Committee.
Together
with other health-care oriented companies with operations in Central New York,
CONMED
is
a founder of both CNY MedTech Association, Inc., and CNY MedTech Foundation,
Inc., whose
purposes are generally to promote medical device companies and technologies
in
Central New York.
During 2005, CONMED contributed $10,000 in membership dues to CNY MedTech
Association, as well as $63,550 for various Company employees to attend training
and other events at market-competitive rates. Daniel Jonas is a director on
the
Board of Directors of both entities. Mr. Jonas receives no compensation for
serving as a director of either entity.
The
Company employs the following persons, who are related to certain officers
of
the Company in
the
manner indicated below. Employees who are related to officers and/or directors
whose total compensation
is less than $60,000 are not listed below.
|
Employee
Name and Position
|
Officer(s)
and/or Directors to whom Employee is Related
|
Relationship
of Employee to Officer
|
|
David
Corasanti,
Program Sales
Manager,
Endosurgery
|
Eugene
R. Corasanti
|
Son
|
|
Joseph
J. Corasanti
|
Brother
|
|
|
Paul
Sandock,
Marketing
Manager,
Endosurgery
|
William
W. Abraham
|
Son-in-law
|
|
Alan
Rust,
Manager, Purchasing
and
Logistics
|
William
W. Abraham
|
Son-in-law
|
Compensation
for the above-referenced employees, consisting solely of salary and bonus,
ranged from $95,000
to $130,000 during 2005. Option grants to these each of these employees did
not
exceed 5,000 shares during
2005.
Prior
to
December 31, 2001, the Company had paid all premiums on certain split-dollar
life insurance policies with face amounts totaling $4,397,567 for the benefit
of
Eugene R. Corasanti. The Company
did not pay or accrue premiums in the fiscal
24
year
ended December 31, 2005. Premiums paid by the
Company in prior years are treated by the Company as a loan to Mr. Eugene
Corasanti, and at December
31, 2005, the aggregate amount due the Company from Mr. E. Corasanti related
to
these split-dollar
life insurance policies is $835,825. This amount (and loans, if any, for future
premiums) will be repaid
to
the Company on Mr. E. Corasanti’s death and the balance of the policy will be
paid to Mr. E. Corasanti’s
estate or beneficiaries
The
Company likewise had historically paid certain premiums associated with a
split-dollar life insurance policies with face amounts totaling $2,000,000
for
the benefit of Joseph J. Corasanti. The Company did not pay or accrue premiums
in the fiscal year ended December 31, 2005. Premiums paid by the Company in
prior years are treated by the
Company as a loan to Mr. J. Corasanti, and at December 31, 2005, the aggregate
amount due the Company
from Mr. J. Corasanti related to these split-dollar life insurance policies
is
$36,390. This amount
(and loans, if any, for future premiums) will be repaid to the Company on Mr.
J.
Corasanti’s death
and
the balance of the policy will be paid to Mr. J. Corasanti’s estate or
beneficiaries.
In
connection with the enactment of the Sarbanes-Oxley Act of 2002 (the “Act”) and
the general prohibition
against loans to officers, subject to an exception for certain pre-existing
loan
arrangements, the
Board
of Directors and management opted, as of October 2002, to stop making the
premium payments which
previously had been accounted for as loans pending further clarification of
the
regulations and interpretation of the Act. The policies for which the Company
had previously been funding premium payments
have cash balances sufficient to permit the payment of premiums. The Board
of
Directors and management may, however, elect to resume such payments if
management and the Board of Directors conclude
that the obligation to make such payments was maintained by the Company on
the
date of the enactment
of the Act and was not materially modified pursuant to Section 402 of the Act
and the implementing
regulations, or if such payments are otherwise permitted.
25
INSURANCE
FOR DIRECTORS AND OFFICERS
The
Company has entered into directors and officers insurance policies with National
Union Fire Insurance
Company of Pittsburgh, PA and certain excess insurers covering the period from
March 31, 2006 through March 30, 2007 at a total cost of $456,750 which covers
directors and officers of the Company
and its subsidiaries.
26
PERFORMANCE
GRAPH
The
graph
below compares the yearly percentage change in the Company’s Common Stock with
the
cumulative total return of the Center for Research for Stock Performance
(“CRSP”) Total Return Index
for
the NASDAQ Stock Market and the cumulative total return of the Standard &
Poor’s Medical Products
and Supplies Industry Group Index. In each case, the cumulative total return
assumes reinvestment
of dividends into the same class of equity securities at the frequency with
which dividends are
paid
on such securities during the applicable fiscal year.
ANNUAL
REPORT
The
annual report for the fiscal year ended December 31, 2005, including financial
statements, is
being
furnished with this proxy statement to shareholders of record on March 31,
2006.
The annual report
does not constitute a part of the proxy soliciting material and is not deemed
“filed” with the SEC.
27
III.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL
OWNERS AND MANAGEMENT
The
following table sets forth certain information with respect to the beneficial
ownership of the Company’s Common Stock as of, by each shareholder known by the
Company to be the beneficial owner of
more
than 5% of its outstanding Common Stock, by each director and nominee director,
by each of the Named
Executive Officers (as defined above) and by all directors and executive
officers as a group.
|
Name
of Beneficial Owner
|
Amount
and Nature
of
Beneficial Ownership
|
Percent
of Class
|
|
Eugene
R. Corasanti
(1)
|
657,676
|
2.34
|
|
Joseph
J. Corasanti
(2)
|
744,124
|
2.65
|
|
Bruce
F. Daniels
(3)
|
14,062
|
*
|
|
Jo
Ann Golden
(4)
|
11,562
|
*
|
|
Stephen
M. Mandia
(5)
|
8,250
|
*
|
|
William
D. Matthews
(6)
|
13,500
|
*
|
|
David
R. Murray
(7)
|
5,000
|
*
|
|
Stuart
J. Schwartz (8)
|
14,775
|
*
|
|
Robert
D. Shallish (9)
|
124,302
|
*
|
|
Gerald
Woodard (10)
|
32,510
|
*
|
|
Directors
and executive officers as a group
(18
persons) (11)
|
2,105,197
|
7.0
|
|
Wellington
Management Company, LLP (12)
75
State Street
Boston,
Massachusetts 02109
|
1,626,100
|
5.79
|
|
FMR
Corp. (13)
82
Devonshire Street
Boston,
MA 02109
|
3,837,294
|
13.66
|
|
Barclay’s
Global Investors, N.A. (14)
45
Fremont Street
San
Francisco, California 94105
|
3,867,331
|
13.77
|
• Unless
otherwise set forth above, the address of each of the above listed shareholders
is c/o
CONMED
Corporation, 525 French
Road, Utica, New York 13502.
• * Less
than 1%.
|
(1)
|
Includes
334,793 options, exercisable within 60 days. Also includes 63,787
shares
owned beneficially
by the wife of Eugene R. Corasanti. Eugene R. Corasanti disclaims
beneficial ownership of these shares.
|
|
(2)
|
Includes
719,724 shares subject to options, exercisable within 60 days.
Also
includes 750 shares owned beneficially byt he wife of Joseph J.
Corasanti.
Joseph J. Corasanti is the son of Eugene R. Corasanti.
|
|
(3)
|
Includes
13,500 shares subject to options, exercisable within 60 days. Also
includes 562 shares owned
beneficially by the wife of Bruce Daniels. Bruce Daniels disclaims
beneficial ownership of these shares.
|
|
(4)
|
Includes
10,000 shares subject to options, exercisable within 60
days.
|
|
(5)
|
Includes
4,500 shares subject to options, exercisable within 60
days.
|
|
(6)
|
Includes
4,500 shares subject to options, exercisable within 60
days.
|
|
(7)
|
Includes
5,000 shares subject to options, exercisable within 60
days.
|
|
(8)
|
Includes
13,500 shares subject to options, exercisable within 60
days.
|
|
(9)
|
Includes
113,536 shares subject to options, exercisable within 60
days.
|
|
(10)
|
Includes
32,510 shares subject to options, exercisable within 60
days.
|
28
|
(11)
|
Includes
1,638,024 shares subject to options, exercisable within 60 days,
held by
Eugene
R. Corasanti, Joseph J. Corasanti, Bruce F. Daniels, Jo Ann Golden,
William D.
Matthews, Stuart J. Schwartz, David R. Murray and Gerald Woodard,
and
executive officers of the Company. Such 1,638,024 shares are equal
to
approximately 6.0% of the Common Stock outstanding.
As of March 31, 2006 the Company’s directors and executive officers as a
group (18
persons) are the beneficial owners of 467,173 shares, which is
approximately 1.67% of the Common
Stock outstanding.
|
|
(12)
|
An
amendment to a Schedule 13G filed with the SEC by Wellington Management
Company, LLP
on January 10, 2006 indicates that Wellington Management Company,
LLP may
be deemed
to beneficially own 1,626,100 shares of Common Stock that are held
of
record by its clients by virtue of having shared voting power over
1,492,550 shares and shared dispositive power
over 1,605,800 shares in its capacity as an investment
adviser.
|
|
(13)
|
An
amendment to a Schedule 13G filed with the SEC by FMR Corp. on
February
14, 2006 indicates
that FMR Corp. may be deemed
to beneficially own 3,837,294 shares of Common Stock that are held
of
record by its clients by virtue of having sole voting power over
515,119
shares and sole dispositive power
over 3,837,294 shares in its capacity as an investment
adviser.
|
|
(14)
|
A
Schedule 13G filed with the SEC by Barclays Global Investors, N.A.
on
January 25, 2006 indicates that Barclays Global Investors, N.A.
and
Barclays Global Fund Advisors beneficially own 3,867,331 shares
of Common
Stock by virtue of having sole voting power over 3,545,565 shares
of Common Stock and sole dispositive power over 3,867,331 shares
of Common
Stock in their
roles as investment advisors for certain funds.
|
|
On
March 31, 2006, there were 6,557 shareholders of record of the
Company’s
Common Stock.
|
29
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant
to regulations promulgated by the Securities and Exchange Commission, the
Company is required to identify, based solely on a review of reports filed
under
Section 16(a) of the Securities Exchange
Act of 1934, and furnished to the Company pursuant to Rule 16a-3(c) thereunder,
each person who,
at
any time during its fiscal year ended December 31, 2005, was a director, officer
or beneficial owner
of
more than 10% of the Company’s Common Stock that failed to file on a timely
basis any such reports.
Based on such reports, the Company is not aware of any such failure to file
on a
timely basis any such
reports by any such person that has not previously been disclosed, except with
respect to the following: A Form 4 reflecting a gift of stock was filed 10
days
late.
30
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CONMED
CORPORATION
2006
STOCK INCENTIVE PLAN
ARTICLE
I
GENERAL
|
1.1
|
Purpose
|
The
purpose of Conmed Corporation 2006 Stock Incentive Plan is to attract, retain
and motivate officers, directors, employees, consultants and others who may
perform services for Conmed Corporation and its successors (the “Company”) and
its subsidiaries and affiliates, to compensate them for their contributions
to
the long-term growth and profits of the Company, and to encourage them to
acquire a proprietary interest in the success of the Company.
|
1.2
|
Definitions
of Certain Terms
|
1.2.1
“Award”
means an award made pursuant to the Plan.
1.2.2 “Award
Agreement” means the written document by which each Award is
evidenced.
1.2.3 “Board”
means the Board of Directors of the Company.
1.2.4 “Certificate”
means a stock certificate (or other appropriate document or evidence of
ownership) representing shares of Common Stock.
1.2.5 “Code”
means the Internal Revenue Code of 1986, as amended from time to time, and
the
applicable rulings and regulations thereunder.
1.2.6 “Committee”
means the Compensation Committee of the Board of Directors, or such other
committee of the Board as the Board may select from time to time to administer
the Plan pursuant to Section 1.3.
1.2.7 “Common
Stock” means common stock of the Company.
1.2.8
“Employment”
means a grantee’s performance of services for the Company or its subsidiaries or
affiliates, in any form whether as an employee, consultant or otherwise as
determined by the Committee. The terms “employ” and “employed” shall have their
correlative meanings.
1.2.9
“Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to time,
and the applicable rules and regulations thereunder.
i
1.2.10 “Fair
Market Value” means, with respect to a share of Common Stock on any day, the
closing price of the Common Stock on the principal securities exchange on which
the shares of Common Stock are then traded, or, if not traded, the price set
by
the Committee.
1.2.11 “Plan”
means the Conmed Corporation 2006 Stock Incentive Plan, as described herein
and
as hereafter amended from time to time.
|
1.3
|
Administration
|
1.3.1
Subject
to Section 1.3.4, the Plan shall be administered by the Committee. To the extent
required for transactions under the Plan to qualify for the exemptions available
under Rule 16b-3 promulgated under the Exchange Act, all actions relating to
Awards to persons subject to Section 16 of the Exchange Act may be taken by
the
Board or a committee or subcommittee of the Board composed of three (3) or
more
members, each of whom is a “non-employee director” within the meaning of
Exchange Act Rule 16b-3. To the extent required for compensation realized from
Awards under the Plan to be deductible by the Company pursuant to Section 162(m)
of the Code, such Awards may be granted by a committee or subcommittee of the
Board composed of three (3) or more members, each of whom is an “outside
director” within the meaning of Code Section 162(m).
1.3.2 The
Committee shall have complete control over the administration of the Plan and
shall have the authority in its sole discretion to (a) exercise all of the
powers granted to it under the Plan, (b) construe, interpret and implement
the
Plan and all Award Agreements, (c) prescribe, amend and rescind rules and
regulations relating to the Plan, including rules governing its own operations,
(d) make all determinations necessary or advisable in administering the Plan,
(e) correct any defect, supply any omission and reconcile any inconsistency
in the Plan, (f) amend the Plan to reflect changes in applicable law, (g)
grant Awards and determine who shall receive Awards, (h) amend any outstanding
Award Agreement to accelerate the time or times at which the Award becomes
vested, unrestricted or may be exercised, or to waive or amend any goals,
restrictions or conditions set forth in such Award Agreement, or reflect a
change in the grantee’s circumstances (e.g.,
a
change to part-time employment status), and (i) determine whether, to what
extent and under what circumstances and method or methods (1) Awards may be
(A)
settled in cash, shares of Common Stock, other securities, other Awards or
other
property, (B) exercised or (C) canceled, forfeited or suspended (including,
without limitation, canceling underwater options without any payment to the
grantee), (2) shares of Common Stock, other securities, other Awards or other
property and other amounts payable with respect to an Award may be deferred
either automatically or at the election of the grantee thereof or of the
Committee and (3) Awards may be settled by the Company, any of its
subsidiaries or affiliates or any of its or their designees;
provided, however, that, except in connection with a stock split, dividend,
recapitalization, merger, consolidation, spinoff, combination or other exchange
of shares affecting all holders of Common Stock, the Committee shall not be
permitted to reprice (as defined under rules of any national exchange upon
which
the Company’s shares of Common Stock may be listed) options or stock
appreciation rights without the consent of the Company's
shareholders.
ii
1.3.3
Actions
of the Committee may be taken by the vote of a majority of its members present
at a meeting (which may be held telephonically). Any action may be taken by
a
written instrument signed by a majority of the Commit-tee members, and action
so
taken shall be fully as effective as if it had been taken by a vote at a
meeting. The determination of the Committee on all matters relating to the
Plan
or any Award Agreement shall be final, binding and conclusive. The Committee
may
allocate among its members and delegate to any person who is not a member of
the
Committee any of its adminis-trative responsibilities.
1.3.4
Notwithstanding anything to the contrary contained herein, the Board may, in
its
sole discretion, at any time and from time to time, grant Awards or administer
the Plan. The Board shall have all of the authority and responsibility granted
to the Committee herein.
1.3.5 No
Liability
No
member
of the Board or the Committee or any employee of the Company or its subsidiaries
or affiliates (each such person, a “Covered Person”) shall have any liability to
any person (including any grantee) for any action taken or omitted to be taken
or any determination made in good faith with respect to the Plan or any Award.
Each Covered Person shall be indemnified and held harmless by the Company
against and from (a) any loss, cost, liability or expense (including attorneys’
fees) that may be imposed upon or incurred by such Covered Person in connection
with or resulting from any action, suit or proceeding to which such Covered
Person may be a party or in which such Covered Person may be involved by reason
of any action taken or omitted to be taken under the Plan or any Award Agreement
and (b) any and all amounts paid by such Covered Person, with the Company’s
approval, in settlement thereof, or paid by such Covered Person in satisfaction
of any judgment in any such action, suit or proceeding against such Covered
Person, provided
that the
Company shall have the right, at its own expense, to assume and defend any
such
action, suit or proceeding and, once the Company gives notice of its intent
to
assume the defense, the Company shall have sole control over such defense with
counsel of the Company’s choice. The foregoing right of indemnification shall
not be available to a Covered Person to the extent that a court of competent
jurisdiction in a final judgment or other final adjudication, in either case
not
subject to further appeal, determines that the acts or omissions of such Covered
Person giving rise to the indemnification claim resulted from such Covered
Person’s bad faith, fraud or willful criminal act or omission. The foregoing
right of indemnification shall not be exclusive of any other rights of
indemnification to which Covered Persons may be entitled under the Company’s
Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or
any
other power that the Company may have to indemnify such persons or hold them
harmless.
|
1.4
|
Persons
Eligible for Awards
|
Awards
under the Plan may be made to such officers, directors, employees, consultants
and other individuals who may perform services for the Company and its
subsidiaries and affiliates, as the Committee may select.
|
1.5
|
Types
of Awards Under Plan
|
iii
Awards
may be made under the Plan in the form of (a) options, (b) stock
appreciation rights, (c) dividend equivalent rights, (d) restricted stock,
(e)
restricted stock units and (f) other equity-based or equity-related Awards
which the Committee determines to be consistent with the purpose of the Plan
and
the interests of the Company.
|
1.6
|
Shares
Available for Awards
|
1.6.1
Total
shares available.
Subject
to adjustment pursuant to Section 1.6.2, the total number of shares of Common
Stock which may be delivered pursuant to Awards granted under the Plan shall
not
exceed the sum of 1,000,000 shares that will be available for grants and awards
under the Plan. If any Award is forfeited or otherwise terminates or is canceled
without the delivery of shares of Common Stock or shares of Common Stock are
surrendered or withheld from any Award to satisfy a grantee’s income tax or
other withholding obligations, then the shares covered by such forfeited,
terminated or canceled Award or which are equal to the number of shares
surrendered or withheld shall again become available to be delivered pursuant
to
Awards granted or to be granted under this Plan. Notwithstanding the foregoing,
but subject to adjustment pursuant to Section 1.6.2, no more than 1,000,000
shares of Common Stock shall be delivered pursuant to the exercise of incentive
stock options. The maximum number of shares of Common Stock with respect to
which options and stock appreciation rights may be granted to an individual
grantee in any calendar year is 200,000 shares of Common Stock, subject to
adjustment pursuant to Section 1.6.2. The maximum number of shares of Common
Stock with respect to which restricted stock, restricted stock units or
performance shares that are intended to qualify as performance-based
compensation under Section 162(m) of the Code may be granted to an individual
grantee in any calendar year is 200,000 shares of Common Stock, subject to
adjustment pursuant to Section 1.6.2. Any shares of Common Stock (a) delivered
by the Company, (b) with respect to which Awards are made by the Company and
(c)
with respect to which the Company becomes obligated to make Awards, in each
case
through the assumption of, or in substitution for, outstanding awards previously
granted by an acquired entity, shall not be counted against the shares of Common
Stock available for Awards under this Plan. Shares of Common Stock which may
be
delivered pursuant to Awards may be authorized but unissued Common Stock or
authorized and issued Common Stock held in the Company’s treasury or otherwise
acquired for the purposes of the Plan.
1.6.2
Adjustments.
The
Committee shall have the authority (but not the obligation) to adjust the number
of shares of Common Stock authorized pursuant to Section 1.6.1 and to adjust
(including, without limitation, by payment of cash) the terms of any outstanding
Awards (including, without limitation, the number of shares of Common Stock
covered by each outstanding Award, the type of property to which the Award
relates and the exercise or strike price of any Award), in such manner as it
deems appropriate to prevent the enlargement or dilution of rights, or otherwise
deems it appropriate, for any increase or decrease in the number of issued
shares of Common Stock (or issuance of shares of stock other than shares of
Common Stock) resulting from a recapitalization, stock split, reverse stock
split, stock dividend, spinoff, splitup, combination or reclassification or
exchange of the shares of Common Stock, merger, consolidation, rights offering,
separation, reorganization or any other change in corporate structure or event
the Committee determines in its sole discretion affects the capitalization
of
the Company, including any extraordinary dividend or distribution. After any
adjustment made
iv
pursuant
to this Section 1.6.2, the number of shares of Common Stock subject to each
outstanding Award shall be rounded up or down to the nearest whole number,
as
determined by the Committee.
1.6.3
Except
as provided in this Section 1.6 or under the terms of any applicable Award
Agreement, there shall be no limit on the number or the value of shares of
Common Stock that may be subject to Awards to any individual under the
Plan.
1.6.4 There
shall
be no limit on the amount of cash, securities (other than shares of Common
Stock
as provided in Section 1.6.1, as adjusted by 1.6.2) or other property that
may
be delivered pursuant to any Award.
ARTICLE
II
AWARDS
UNDER THE PLAN
|
2.1
|
Agreements
Evidencing Awards
|
Each
Award granted under the Plan shall be evidenced by an Award Agreement which
shall contain such provisions and conditions as the Committee deems appropriate.
The Committee may grant Awards in tandem with or in substitution for any other
Award or Awards granted under this Plan or any award granted under any other
plan of the Company. By accepting an Award pursuant to the Plan, a grantee
thereby agrees that the Award shall be subject to all of the terms and
provisions of the Plan and the applicable Award Agreement.
|
2.2
|
No
Rights as a Shareholder
|
No
grantee of an Award (or other person having rights pursuant to an Award) shall
have any of the rights of a shareholder of the Company with respect to shares
of
Common Stock subject to an Award until the delivery of such shares. Except
as
otherwise provided in Section 1.6.2, no adjustments shall be made for dividends
or distributions (whether ordinary or extraordinary, and whether in cash, Common
Stock, other securities or other property) on, or other events relating to,
shares of Common Stock subject to an Award for which the record date is prior
to
the date such shares are delivered.
|
2.3
|
Grant
of Options and Stock Appreciation
Rights
|
The
Committee may grant (a) options to purchase shares of Common Stock from the
Company and (b) stock appreciation rights, in such amounts and subject to such
terms and conditions as the Committee may determine.
|
2.4
|
Exercise
of Options and Stock Appreciation
Rights
|
2.4.1
Any
acceptance by the Committee of an optionee’s written notice of exercise of an
option shall be conditioned upon payment for the shares being purchased.
Such
v
.payment
may be made in cash or by such other method as the Committee may from time
to
time prescribe
2.4.2
After
receiving payment from the optionee of the full option exercise price, or after
receiving notice from the grantee of the exercise of a stock appreciation right
for which payment will be made by the Company partly or entirely in shares
of
Common Stock, the Company shall, subject to the provisions of the Plan or any
Award Agreement, deliver the shares of Common Stock.
|
2.5
|
Grant
of Restricted Stock
|
The
Committee may grant or offer for sale restricted shares of Common Stock in
such
amounts and subject to such terms and conditions as the Committee shall
determine. Upon the delivery of such shares, the grantee shall have the rights
of a shareholder with respect to the restricted stock, subject to any
restrictions and conditions as the Committee may include in the applicable
Award
Agreement. In the event that a Certificate is issued in respect of restricted
shares of Common Stock, such Certificate may be registered in the name of the
grantee but shall be held by the Company or its designated agent until the
time
the restrictions lapse.
|
2.6
|
Grant
of Restricted Stock Units
|
The
Committee may grant Awards of restricted stock units in such amounts and subject
to such terms and conditions as the Committee shall determine. A grantee of
a
restricted stock unit will have only the rights of a general unsecured creditor
of the Company until delivery of shares of Common Stock, cash or other
securities or property is made as specified in the applicable Award Agreement.
On the delivery date, the grantee of each restricted stock unit not previously
forfeited shall receive one share of Common Stock, or cash, securities or other
property equal in value to a share of Common Stock or a combination thereof,
as
specified by the Committee.
|
2.7
|
Other
Stock-Based Awards
|
The
Committee may grant other types of equity-based or equity-related Awards
(including the grant or offer for sale of unrestricted shares of Common Stock
and performance shares) in such amounts and subject to such terms and
conditions, as the Committee shall determine. Such Awards may entail the
transfer of actual shares of Common Stock to Plan participants, or payment
in
cash or otherwise of amounts based on the value of shares of Common
Stock.
|
2.8
|
Grant
of Dividend Equivalent Rights
|
The
Committee may include in the Award Agreement with respect to any
Award a dividend equivalent right entitling the grantee to receive amounts
equal
to all or any portion of the dividends that would be paid on the shares of
Common Stock covered by such Award if such shares had been delivered pursuant
to
such Award. The grantee of a dividend equivalent right
vi
will
have
only the rights of a general unsecured creditor of the Company until payment
of
such amounts is made as specified in the applicable Award Agreement. In the
event such a provision is included in an Award Agreement, the Committee shall
determine whether such payments shall be made in cash, in shares of Common
Stock
or in another form, whether they shall be conditioned upon the exercise of
the
Award to which they relate, the time or times at which they shall be made,
and
such other terms and conditions as the Committee shall deem
appropriate.
|
2.9
|
Performance
Goals
|
The
Committee may establish performance goals with respect to any Award using one
or
more of the following goals: (a) market share (including, without limitation,
the market share of trading volume in certain types of securities), (b)
earnings, (c) earnings per share, (d) operating profit, (e) operating margin,
(f) return on equity, (g) return on assets, (h) total return to stockholders,
(i) technology improvements, (j) return on investment capital, (k) revenue
growth, (l) cash flow, (m) reliability (n) revenue growth (o) quality objectives
and (p) such other objectiuves or performance mwasures as the Committee may
select. In addition, Awards may be subject to comparisons of the performance
of
other companies, such performance to be measured by one or more of the foregoing
business criteria.
ARTICLE
III
MISCELLANEOUS
|
3.1
|
Amendment
of the Plan
|
The
Board
may from time to time suspend, discontinue, revise or amend the Plan in any
respect whatsoever, and may also suspend the ability of a recipient of an Award
to exercise or otherwise realize the value of such Award, provided,
however,
that,
except with respect to the foregoing, no amendment shall materially adversely
affect a grantee without such person’s prior written consent.
|
3.2
|
Tax
Withholding
|
3.2.1
As
a
condition to the delivery of any shares of Common Stock, other property or
cash
pursuant to any Award or the lifting or lapse of restrictions on any Award,
or
in connection with any other event that gives rise to a federal or other
governmental tax withholding obligation on the part of the Company or any of
its
subsidiaries or affiliates relating to an Award (including, without limitation,
FICA tax), (a) the Company may deduct or withhold (or cause to be deducted
or
withheld) from any payment or distribution to a grantee whether or not pursuant
to the Plan or (b) the Committee shall be entitled to require that the grantee
remit cash to the Company or any of its subsidiaries or affiliates (through
payroll deduction or otherwise), or (c) the Company or any its of subsidiaries
or affiliates may enter into any other suitable arrangements to withhold in
each
case in an amount sufficient in the opinion of the Company to satisfy such
withholding obligation.
vii
3.2.2
If
the
event giving rise to the withholding obligation involves a transfer of shares
of
Common Stock, then, unless the applicable Award Agreement provides otherwise,
at
the discretion of the Committee, the grantee may satisfy the withholding
obligation described under Section 3.2.1 by electing to have the Company
withhold shares of Common Stock (which withholding will be at a rate not in
excess of the statutory minimum rate) or by tendering previously owned shares
of
Common Stock, in each case having a Fair Market Value equal to the amount of
tax
to be withheld (or by any other mechanism as may be required or appropriate
to
conform with local tax and other rules). For this purpose, Fair Market Value
shall be determined as of the date on which the amount of tax to be withheld
is
determined (and the Company may cause any fractional share amount to be settled
in cash).
|
3.3
|
Required
Consents and Legends
|
3.3.1
If
the
Committee shall at any time determine that any consent (as hereinafter defined)
is necessary or desirable as a condition of, or in connection with, the granting
of any Award, the delivery of shares of Common Stock or the delivery of any
cash, securities or other property under the Plan, or the taking of any other
action thereunder (each such action being hereinafter referred to as a “plan
action”), then such plan action shall not be taken, in whole or in part, unless
and until such consent shall have been effected or obtained to the full
satisfaction of the Committee. The Committee may direct that any Certificate
evidencing shares delivered pursuant to the Plan shall bear a legend setting
forth such restrictions on transferability as the Committee may determine to
be
necessary or desirable, and may advise the transfer agent to place a stop order
against any legended shares.
3.3.2
The
term
“consent” as used herein with respect to any plan action includes (a) any and
all listings, registrations or qualifications in respect thereof upon any
securities exchange or under any federal, state, or local law, or law, rule
or
regulation of a jurisdiction outside the United States, (b) any and all
written agreements and representations by the grantee with respect to the
disposition of shares, or with respect to any other matter, which the Committee
may deem necessary or desirable to comply with the terms of any such listing,
registration or qualification or to obtain an exemption from the requirement
that any such listing, qualification or registration be made, (c) any and all
other consents, clearances and approvals in respect of a plan action by any
governmental or other regulatory body or any stock exchange or self-regulatory
agency, (d) any and all consents by the grantee to (i) the Company’s supplying
to any third party recordkeeper of the Plan such personal information as the
Committee deems advisable to administer the Plan, (ii) the Company, or its
applicable subsidiary or affiliate, deducting amounts from the grantee’s wages,
or another arrangement satisfactory to the Committee, to reimburse the Company,
or its applicable subsidiary or affiliate, for advances made on the grantee’s
behalf to satisfy certain withholding and other tax obligations in connection
with an Award and (iii) the Company imposing sales and transfer procedures
and
restrictions and hedging restrictions on shares of Common Stock delivered under
the Plan and (e) any and all consents or authorizations required to comply
with, or required to be obtained under, applicable local law or otherwise
required by the Committee. Nothing herein shall require the Company to list,
register or qualify the shares of Common Stock on any securities
exchange.
viii
|
3.4
|
Right
of Offset
|
The
Company and its subsidiaries and affiliates shall have the right to offset
against its obligation to deliver shares of Common Stock (or other property
or
cash) under the Plan or any Award Agreement any outstanding amounts (including,
without limitation, travel and entertainment or advance account balances, loans,
repayment obligations under any Awards, or amounts repayable to the Company
or
its subsidiaries or affiliates pursuant to tax equalization, housing, automobile
or other employee programs) the grantee then owes to the Company or its
subsidiaries or affiliates and any amounts the Committee otherwise deems
appropriate pursuant to any tax equalization policy or agreement.
|
3.5
|
Nonassignability
|
Except
to
the extent otherwise expressly provided in the applicable Award Agreement,
no
Award (or any rights and obligations thereunder) granted to any person under
the
Plan may be sold, exchanged, transferred, assigned, pledged, hypothecated,
fractionalized, hedged or otherwise disposed of (including through the use
of
any cash-settled instrument), whether voluntarily or involuntarily, other than
by will or by the laws of descent and distribution, and all such Awards (and
any
rights thereunder) shall be exercisable during the life of the grantee only
by
the grantee or the grantee’s legal representative. Notwithstanding the preceding
sentence, the Committee may permit, under such terms and conditions that it
deems appropriate in its sole discretion, a grantee to transfer any Award to
any
person or entity that the Committee so determines. Any sale, transfer,
assignment, pledge, hypothecation, fractionalization, hedge or other disposition
in violation of the provisions of this Section 3.5 shall be void. All of the
terms and conditions of this Plan and the Award Agreements shall be binding
upon
any such permitted successors and assigns.
|
3.6
|
Requirement
of Consent and Notification of Election Under Section 83(b) of the
Code or Similar Provision
|
No
election under Section 83(b) of the Code (to include in gross income in the
year
of transfer the amounts specified in Code Section 83(b)) or under a similar
provision of the law of a jurisdiction outside the United States may be made
unless expressly permitted by the terms of the Award Agreement or by action
of
the Committee in writing prior to the making of such election. If a grantee
of
an Award, in connection with the acquisition of shares of Common Stock under
the
Plan or otherwise, is expressly permitted under the terms of the Award Agreement
or by such Committee action to make any such election and the grantee makes
the
election, the grantee shall notify the Committee of such election within ten
(10) days of filing notice of the election with the Internal Revenue Service
or
other governmental authority, in addition to any filing and notification
required pursuant to regulations issued under Code Section 83(b) or other
applicable provision.
|
3.7
|
Requirement
of Notification Upon Disqualifying Disposition Under Section 421(b)
of the
Code
|
ix
If
any
grantee shall make any disposition of shares of Common Stock delivered pursuant
to the exercise of an incentive stock option under the circumstances described
in Section 421(b) of the Code (relating to certain disqualifying dispositions),
such grantee shall notify the Company of such disposition within ten (10) days
thereof.
|
3.8
|
Change
in Control
|
3.8.1.
In
the
event of a Change in Control, as hereinafter defined, (i) each option and stock
appreciation right shall be deemed fully vested and exercisable, (ii) the
restrictions applicable to all restricted shares of Common Stock and restricted
stock units shall lapse and such shares and share units shall be deemed fully
vested, (iii) all performance conditions shall be deemed satisfied in full,
and
(iv) all restricted stock units and performance stock units shall be paid in
cash if so specified by the Committee. The amount of any cash payment in respect
of a restricted stock unit or performance stock unit may be equal to: (A) in
the
event the Change in Control is the result of a tender offer or exchange offer
for Common Stock, the final offer price per share paid for the Common Stock
or
(B) in the event the Change in Control is the result of any other occurrence,
the aggregate per share value of Common Stock as determined by the Committee
at
such time. The Committee may, in its discretion, include such further provisions
and limitations in any agreement documenting such Awards as it may deem
equitable and in the best interests of the Company.
3.8.2 A
"Change
in Control" shall mean the occurrence of any one of the following events: (i)
any "person" (as such term is defined in Section 3(A)(9) of the Exchange Act
and
as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes
a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding securities eligible
to
vote for the election of the Board (the "Company Voting Securities");
provided,
however,
that the
event described in this clause (i) shall not be deemed to be a Change in Control
by virtue of any of the following acquisitions: (A) by the Company or any of
its
subsidiaries, (B) by any employee benefit plan sponsored or maintained by the
Company or any of its subsidiaries, (C) by any underwriter temporarily holding
securities pursuant to an offering of such securities, or (D) pursuant to a
Non-Control Transaction (as defined in clause (iii) below); (ii) during any
period of not more than two years, individuals who constitute the Board as
of
the beginning of the period (the "Incumbent Directors") cease for any reason
to
constitute at least a majority of the Board, provided
that any
person becoming a director subsequent to the beginning of the period, whose
election or nomination for election was approved by a vote (either by specific
vote or by approval of the proxy statement of the Company in which such person
is named as a nominee for director, without objection to such nomination) of
at
least three-quarters of the Incumbent Directors who remain on the Board,
including those directors whose election or nomination for election was
previously so approved, shall also be deemed to be an Incumbent Director; provided;
however,
that no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to directors
or
any other actual or threatened solicitation of proxies or consents by or on
behalf of any person other than the Board shall be deemed to be an Incumbent
Director; (iii) the consummation of a merger, consolidation, share exchange
or
similar form of corporate reorganization of the Company (or any such type
of
x
transaction
involving the Company or any of its subsidiaries that requires the approval
of
the Company's shareholders, whether for the transaction or the issuance of
securities in the transaction or otherwise) (a "Business Combination"), unless
immediately following such Business Combination: (a) more than 60% of the total
voting power of the corporation resulting from such Business Combination
(including, without limitation, any corporation which directly or indirectly
has
beneficial ownership of 100% of the Company Voting Securities) eligible to
elect
directors of such corporation is represented by shares that were Company Voting
Securities immediately prior to such Business Combination (either by remaining
outstanding or being converted), and such voting power is in substantially
the
same proportion as the voting powers of such Company Voting Securities
immediately prior to the Business Combination, (b) no person (other than any
holding company resulting from such Business Combination, any employee benefit
plan sponsored or maintained by the Company (or the corporation resulting from
such business Combination)) immediately following the consummation of the
Business Combination becomes the beneficial owner, directly or indirectly,
of
25% or more of the total voting power of the outstanding voting securities
eligible to elect directors of the corporation resulting from such Business
Combination, and (c) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
Incumbent Directors at the time of the approval of the execution of the initial
agreement providing for such Business Combination (any Business Combination
which satisfies the conditions in clauses (a), (b) and (c) is referred to
hereunder as a "Non-Control Transaction"); or (iv) the shareholders of the
Company approve a plan of complete liquidation or dissolution of the Company
or
the sale of all or substantially all of its assets. Notwithstanding the
foregoing, a Change in Control shall not be deemed to occur solely because
any
person acquires beneficial ownership of more than 25% of the Company Voting
Securities as a result of the acquisition of Company Voting Securities by the
Company which reduces the number of Company Voting Securities outstanding;
provided,
that
if after
such acquisition by the Company such person becomes the beneficial owner of
additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such person, a
Change in Control of the Company shall then occur.
|
3.9
|
Right
of Discharge Reserved
|
Neither
the grant of an Award nor any provision in the Plan or in any Award Agreement
shall confer upon any grantee the right to continued Employment by the Company
or any of its affiliates or subsidiaries or affect any right that the Company
or
its subsidiaries or affiliates may have to terminate or alter the terms and
conditions of the grantee’s Employment.
|
3.10
|
Nature
of Payments
|
3.10.1
Any
and
all grants of Awards and deliveries of shares of Common Stock, cash, securities
or other property under the Plan shall be in consideration of services performed
or to be performed for the Company or its subsidiaries or affiliates by the
grantee. Awards under the Plan may, in the sole discretion of the Committee,
be
made in substitution in whole or in part for cash or other compensation
otherwise payable to an Employee. Deliveries of shares of Common Stock may
be
rounded to avoid fractional shares. In addition, the Company may pay cash in
lieu of fractional shares.
xi
3.10.2 All
grants of Awards and deliveries of shares of Common Stock, cash or other
property under the Plan shall constitute a special discretionary incentive
payment to the grantee and shall not be required to be taken into account in
computing the amount of salary or compensation of the grantee for the purpose
of
determining any contributions to or any benefits under any pension, retirement,
profit-sharing, bonus, life insurance, severance or other benefit plan of the
Company or its subsidiaries or affiliates or under any agreement with the
grantee, unless the Company or its subsidiaries or affiliates specifically
provides otherwise.
|
3.11
|
Non-Uniform
Determinations
|
None
of
the Committee’s determinations under the Plan and Award Agreements need to be
uniform, and any such determination may be made by it selectively among persons
who receive, or are eligible to receive, Awards under the Plan (whether or
not
such persons are similarly situated). Without limiting the generality of the
foregoing, the Committee shall be entitled, among other things, to make
non-uniform and selective determinations under Award Agreements, and to enter
into non-uniform and selective Award Agreements, as to (a) the persons to
receive Awards, (b) the terms and provisions of Awards, (c) whether a grantee’s
Employment has been terminated for purposes of the Plan and (d) any adjustments
to be made to Award pursuant to Section 1.6.2 or otherwise.
|
3.12
|
Other
Payments or Awards
|
Nothing
contained in the Plan shall be deemed in any way to limit or restrict the
Company or its subsidiaries or affiliates from making any award or payment
to
any person under any other plan, arrangement or understanding, whether now
existing or hereafter in effect.
|
3.13
|
Plan
Headings
|
The
headings in this Plan are for the purpose of convenience only and are not
intended to define or limit the construction of the provisions
hereof.
|
3.14
|
References
to Laws, Rules or Regulations
|
Any
reference in this Plan to any law, rule or regulation shall be deemed to include
any amendments, revisions or successor provisions to such law, rule or
regulation.
3.15
Adoption
Date, Effective Date, and Term of Plan
The
Plan was adopted on February 17, 2006. The Plan
shall become effective upon shareholder approval of the Plan. Unless sooner
terminated by the Board, the provisions of the Plan which address the grant
of
incentive stock options shall terminate on the day before the tenth anniversary
of the date the Plan was adopted, and no incentive stock options shall
thereafter be granted under the Plan. Unless sooner terminated by the Board,
the
provisions of Section 1.6.1 which provide that shares of Common Stock that
are
withheld from Awards of restricted stock upon vesting to satisfy a grantee’s
income tax or other withholding obligations shall be
xii
added
back to the total shares that may be delivered pursuant to Awards granted under
the Plan shall terminate on the day before the tenth anniversary of the date
the
Plan was approved by shareholders. The Board reserves the right to terminate
the
Plan at any time; provided
,
however,
that
all Awards made under the Plan prior to its termination shall remain in effect
until such Awards have been satisfied or terminated in accordance with the
terms
and provisions of the Plan and the applicable Award Agreements.
|
3.16
|
Governing
Law
|
All
rights and obligations under the Plan and each Award Agreement shall be governed
by and construed in accordance with the laws of the State of New York, without
regard to principles of conflict of laws.
|
3.17
|
Arbitration
|
Any
dispute, controversy or claim between the Company and any participant arising
out of or relating to or concerning the provisions of the Plan shall be finally
settled by arbitration in New York, New York before, and in accordance with,
the
rules then obtaining of the American Arbitration Association (the “AAA”) in
accordance with the commercial arbitration rules of the AAA, provided that
the
sole persons who may be selected to serve as arbitrators shall be partners
of
nationally recognized law firms with experience in securities laws issues
generally and equity compensation plans in particular. Prior to arbitration,
all
disputes, controversies or claims maintained by any participant must first
be
submitted to the Committee in accordance with claim procedures determined by
the
Committee in its sole discretion.
|
3.18
|
Severability;
Entire Agreement
|
If
any of
the provisions of this Plan or any Award Agreement is finally held to be
invalid, illegal or unenforceable (whether in whole or in part), such provision
shall be deemed modified to the extent, but only to the extent, of such
invalidity, illegality or unenforceability and the remaining provisions shall
not be affected thereby; provided
that, if
any of such provisions is finally held to be invalid, illegal, or unenforceable
because it exceeds the maximum scope determined to be acceptable to permit
such
provision to be enforceable, such provision shall be deemed to be modified
to
the minimum extent necessary to modify such scope in order to make such
provision enforceable hereunder. The Plan and any Award Agreements contain
the
entire agreement of the parties with respect to the subject matter thereof
and
supersede all prior agreements, promises, covenants, arrangements,
communications, representations and warranties between them, whether written
or
oral with respect to the subject matter thereof.
|
3.19
|
No
Third Party Beneficiaries
|
Except
as
expressly provided in an Award Agreement, neither the Plan nor any Award
Agreement shall confer on any person other than the Company and the grantee
of
the Award any rights or remedies thereunder; provided
that the
exculpation and indemnification
xiii
provisions
of Section 1.3.5 shall inure to the
benefit of a Covered Person’s estate, beneficiaries and legatees.
|
3.20
|
Successors
and Assigns of the Company
|
The
terms
of this Plan shall be binding upon and inure to the benefit of the Company
and
its successors and assigns.
xiv
|
ý PLEASE
MARK VOTES
AS
IN
THIS EXAMPLE
|
REVOCABLE
PROXY
CONMED
CORPORATION
|
|
For
|
With-
hold
|
For
All
Except
|
|||
|
ANNUAL
MEETING OF SHAREHOLDERS—MAY 16, 2006
|
(1) -
Election of directors
|
o
|
o
|
o
|
|
|
THIS
PROXY IS SOLICITED ON BEHALF OF
|
NOMINEES:
|
||||
|
THE
BOARD OF DIRECTORS
|
Eugene
R. Corasanti, Bruce F. Daniels,
|
||||
|
The
undersigned hereby appoints Eugene R. Corasanti and Daniel
S. Jonas, and
either of them, proxies of the undersigned, with full power
of
substitution, to vote all the shares of Common Stock of CONMED
Corporation
(the “Company”) held of record by the undersigned on March 31, 2006, at
the Annual Meeting of Shareholders to be held May 16, 2006,
and at any
adjournment thereof.
|
William
D. Matthews, Stuart J. Schwartz, Joseph J. Corasanti, Stephen
M. Mandia,
and Jo Ann Golden
INSTRUCTION:
To withhold authority to vote for any individual nominee, mark
“For All
Except” and write that nominee’s name in the space provided
below.
|
||||
|
For
|
Against
|
Abstain
|
|||
|
|
(2) -
Ratification
of the
appointment of
PricewaterhouseCoopers LLP as independent accountants for the
Company for
2006.
|
o
|
o
|
o
|
|
|
|
|
||||
|
(3) -
Approval of the 2006 Stock Incentive Plan.
|
o
|
o
|
o
|
||
|
(4) -
In their discretion the proxies are authorized to vote upon such
other
matters as may come before the meeting or any adjournment
thereof.
|
|||||
|
THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED BY THE
UNDER-SIGNED SHAREHOLDER. IF NO CHOICE IS SPECIFIED BY THE SHAREHOLDER,
THIS PROXY WILL BE VOTED “FOR” ALL PORTIONS OF ITEMS (1), (2) AND (3) AND
IN THE PROXIES’ DISCRETION ON ANY OTHER MATTERS COMING BEFORE THE
MEETING.
|
|||||
|
|
|||||
|
The above signed hereby revokes any proxy or proxies heretofore given
to
vote upon or act with respect to such stock and hereby ratifies and
confirms all that said proxies, their substitutes or any of them
may
lawfully do by virtue hereof.
|
||||
|
Please
be sure to sign and date
this Proxy in the box below |
Date |
Please
date this Proxy Card and sign your name exactly as it appears hereon.
Where there is more than one owner, each should sign. When signing
as an
attorney, administrator, executor, guardian, or trustee, please add
your
title as such. If executed by a corporation, this
Proxy Card should be signed by a duly authorized officer. If executed
by a
partnership, please sign in partnership name by authorized
persons.
|
||
|
Shareholder
sign above
|
Co-holder
(if any) sign above)
|
|||
Ç Detach
above card, sign, date and mail in postage paid envelope
provided.
Ç
CONMED
CORPORATION
525
French Road - Utica, New York
13502
|
PLEASE
PROMPTLY MARK, DATE, SIGN AND MAIL THIS PROXY
CARD
IN
THE ENCLOSED ENVELOPE. NO POSTAGE IS
REQUIRED.
|
IF
YOUR
ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW
AND
RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
|
ý PLEASE
MARK VOTES
AS
IN
THIS EXAMPLE
|
REVOCABLE
PROXY
CONMED
CORPORATION
|
|
For
|
With-
hold
|
For
All
Except
|
|||
|
ANNUAL
MEETING OF SHAREHOLDERS—MAY 16, 2006
|
(1) -
Election of directors
|
o
|
o
|
o
|
|
|
THIS
PROXY IS SOLICITED ON BEHALF OF
|
NOMINEES:
|
||||
|
THE
BOARD OF DIRECTORS
|
Eugene
R. Corasanti, Bruce F. Daniels,
|
||||
|
The
undersigned hereby appoints Eugene R. Corasanti and Daniel
S. Jonas, and
either of them, proxies of the undersigned, with full power
of
substitution, to vote all the shares of Common Stock of CONMED
Corporation
(the “Company”) held of record by the undersigned on March 31, 2006, at
the Annual Meeting of Shareholders to be held May 16, 2006,
and at any
adjournment thereof.
|
4
0
1
(k)
|
William
D. Matthews, Stuart J. Schwartz, Joseph J. Corasanti, Stephen
M. Mandia,
and Jo Ann Golden
INSTRUCTION:
To withhold authority to vote for any individual nominee, mark
“For All
Except” and write that nominee’s name in the space provided
below.
|
|||
|
For
|
Against
|
Abstain
|
|||
|
|
(2) -
Ratification
of the
appointment of
PricewaterhouseCoopers LLP as independent accountants for the
Company for
2006.
|
o
|
o
|
o
|
|
|
|
|
||||
|
(3) -
Approval of the 2006 Stock Incentive Plan.
|
o
|
o
|
o
|
||
|
(4) -
In their discretion the proxies are authorized to vote upon such
other
matters as may come before the meeting or any adjournment
thereof.
|
|||||
|
THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED BY THE
UNDER-SIGNED SHAREHOLDER. IF NO CHOICE IS SPECIFIED BY THE SHAREHOLDER,
THIS PROXY WILL BE VOTED “FOR” ALL PORTIONS OF ITEMS (1), (2) AND (3) AND
IN THE PROXIES’ DISCRETION ON ANY OTHER MATTERS COMING BEFORE THE
MEETING.
|
|||||
|
|
|||||
|
The above signed hereby revokes any proxy or proxies heretofore given
to
vote upon or act with respect to such stock and hereby ratifies and
confirms all that said proxies, their substitutes or any of them
may
lawfully do by virtue hereof.
|
||||
|
Please
be sure to sign and date
this Proxy in the box below |
Date |
Please
date this Proxy Card and sign your name exactly as it appears hereon.
Where there is more than one owner, each should sign. When signing
as an
attorney, administrator, executor, guardian, or trustee, please add
your
title as such. If executed by a corporation, this
Proxy Card should be signed by a duly authorized officer. If executed
by a
partnership, please sign in partnership name by authorized
persons.
|
||
|
Shareholder
sign above
|
Co-holder
(if any) sign above)
|
|||
Ç Detach
above card, sign, date and mail in postage paid envelope
provided.
Ç
CONMED
CORPORATION
525
French Road - Utica, New York
13502
|
PLEASE
PROMPTLY MARK, DATE, SIGN AND MAIL THIS PROXY
CARD
IN
THE ENCLOSED ENVELOPE. NO POSTAGE IS
REQUIRED.
|
IF
YOUR
ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW
AND
RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.