Proxy
Statement Pursuant to Section 14(a)
of
the Securities Exchange Act of 1934 (Amendment
No. )
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by
the Registrant T
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by
a Party other than the Registrant £
Check
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Preliminary
Proxy Statement
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14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to Rule 14a-12
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AngioDynamics,
Inc.
(Name
of
Registrant as Specified In Its Charter)
N/A
(Name
of
Person(s) Filing Proxy Statement,
if
other
than the Registrant)
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of Filing Fee (check the appropriate box):
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determined):
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Check
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ANGIODYNAMICS,
INC.
603
Queensbury Avenue
Queensbury,
New York 12804
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
I
am
pleased to give you notice that the 2006 Annual Meeting of Stockholders of
AngioDynamics, Inc. will be held at the Logan Airport Hilton, Boston,
Massachusetts, on Tuesday,
October
24, 2006 at 9:00 a.m., local time for the following purposes:
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1.
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to
elect three Class III directors of AngioDynamics, each for a term
of three
years;
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2.
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to
approve an amendment to the AngioDynamics, Inc. 2004 Stock and Incentive
Award Plan to increase by 1,000,000 shares the number of shares of
AngioDynamics common stock available for issuance under the
plan;
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3.
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to
ratify the appointment of PricewaterhouseCoopers LLP as AngioDynamics'
independent registered public accounting firm for the fiscal year
ending
June 2, 2007; and
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4.
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to
transact such other business as may properly come before the
meeting.
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The
board
of directors has fixed the close of business on September 15, 2006 as the record
date for the annual meeting. Only stockholders of record of AngioDynamics common
stock on the close of business on that date are entitled to notice of and to
vote at the meeting.
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By
Order of the Board of Directors,
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/s/
Gregory J. Champion
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Gregory
J. Champion, Secretary
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Queensbury,
New York
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Dated:
September 22, 2006
Whether
or not you expect to be present at the meeting, you are urged to fill in, date,
sign and return the enclosed proxy card in the envelope that is provided, which
requires no postage if mailed in the United States.
If
you
wish to attend the annual meeting, please check the appropriate box on the
enclosed proxy card and return it in the enclosed envelope.
The
annual meeting for which this notice is given may be adjourned from time to
time
without further notice other than announcement at the meeting or any adjournment
thereof. Any business for which notice is hereby given may be transacted at
any
such adjourned meeting.
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| STOCKHOLDER PROPOSALS AND NOMINATIONS | 37 |
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38
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ANGIODYNAMICS,
INC.
603
Queensbury Avenue
Queensbury,
New York 12804
_______________________
FOR
ANNUAL
MEETING OF STOCKHOLDERS
OF
ANGIODYNAMICS, INC.
October
24, 2006
_______________________
This
proxy statement is being furnished to the stockholders of AngioDynamics, Inc.
by
the board of directors of AngioDynamics in connection with the solicitation
of
proxies for use at our 2006 Annual Meeting of Stockholders to be held
at
the Logan
Airport Hilton, Boston, Massachusetts, on Tuesday, October 24, 2006 at
9:00
a.m., local time, or at any adjournment or postponement thereof. Unless the
context otherwise requires, "we," "us," "our company," and similar terms refer
to AngioDynamics, Inc.
Our
principal executive offices are located at 603 Queensbury Avenue, Queensbury,
New York 12804. The approximate date on which this proxy statement and the
accompanying proxy are first being sent or given to our stockholders is
September 22, 2006.
This
proxy statement is being furnished to you in connection with the solicitation
of
proxies by the board of directors of AngioDynamics, Inc. from holders of
AngioDynamics' common stock for use at the annual meeting of stockholders to
be
held at the Logan Airport Hilton, Boston, Massachusetts, on Tuesday, October
24,
2006 at
9:00
a.m., local time, and at any adjournments or postponements of the annual
meeting.
At
the
annual meeting, we will ask holders of our common stock to consider and vote
upon the following items:
Election
of Directors
The
election of three of AngioDynamics' nine directors, namely Eamonn P. Hobbs,
Peter J. Graham and David P. Meyers. If elected, these Class III directors
will
each serve until the 2009 annual meeting of stockholders and their respective
successors are duly elected and qualified.
Approval
of an Amendment to the AngioDynamics, Inc. 2004 Stock and Incentive Award
Plan
Approval
of an amendment to the AngioDynamics, Inc. 2004 Stock and Incentive Award Plan
to increase the number of shares of our common stock available for issuance
under the plan by 1,000,000 shares to 2,000,000 shares.
Ratification
of Appointment of Independent Registered Public Accounting
Firm
Ratification
of the appointment of PricewaterhouseCoopers LLP as our independent registered
public accounting firm for the fiscal year ending June 2, 2007.
Stockholders
of record at the close of business on September 15, 2006, the record date for
the annual meeting, are entitled to receive this proxy statement and to vote
at
the meeting and at any adjournment or postponement thereof. As of the close
of
business on the record date there were 15,598,166 outstanding shares of the
Company's common stock entitled to notice of and to vote at the annual meeting.
Holders of our common stock have one vote per share on each matter to be acted
upon. A list of the stockholders of record entitled to vote at the annual
meeting will be available at the annual meeting and for 10 days prior to the
annual meeting, for any purpose germane to the meeting, between the hours of
9:00 a.m. and 4:30 p.m. at our principal executive offices at 603 Queensbury
Avenue, Queensbury, New York 12804, by contacting the Secretary of our company.
A
majority of the outstanding shares of common stock present in person or by
proxy
is required to constitute a quorum at the meeting. For purposes of determining
the presence of a quorum for transacting business at the annual meeting,
abstentions and broker "non-votes" (proxies from banks, brokers or nominees
indicating that such persons have not received instructions from the beneficial
owner or other persons entitled to vote shares on a particular matter with
respect to which the banks, brokers or nominees do not have discretionary power)
will be treated as shares that are present.
Election
of Directors
The
directors nominated for election will be elected by a plurality of the votes
cast, in person or by proxy, at the annual meeting. Abstentions from voting
and
broker "non-votes" on the election of directors will have no effect since they
will not represent votes cast at the annual meeting for the purpose of electing
directors.
Amendment
to the AngioDynamics, Inc. 2004 Stock and Incentive Award Plan
The
proposal to approve the amendment to the AngioDynamics, Inc. 2004 Stock and
Incentive Award Plan will require the affirmative vote of a majority of votes
cast at the annual meeting. For purposes of this vote, votes to abstain will
have the same effect as votes against the proposal, and broker non-votes will
have no effect on the vote on the proposal.
Ratification
of the Appointment of Independent Registered Public Accounting
Firm
The
proposal to ratify the appointment of PricewaterhouseCoopers LLP as our
independent registered public accounting firm for the fiscal year ending June
2,
2007 will require the affirmative vote of a majority of the votes cast at the
annual meeting. For the purposes of this vote, votes to abstain
will
have
the
same effect as votes against the proposal, and broker non-votes will have no
effect on the vote on such proposal.
Shares
of
our common stock will be voted in accordance with the instructions contained
in
the proxies. If you return a signed proxy card without indicating your vote,
your shares will be voted:
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·
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FOR
the election as directors of the persons who have been nominated
by the
board of directors;
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·
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FOR
the approval of the amendment to the AngioDynamics, Inc. 2004 Stock
and
Incentive Award Plan;
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·
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FOR
the ratification of the appointment of PricewaterhouseCoopers LLP
as the
Company's independent registered public accounting firm for the fiscal
year ending June 2, 2007; and
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·
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with
respect to any other matter that may properly be brought before the
annual
meeting in accordance with the judgment of the person or persons
voting.
We do not expect that any matter other than as described in this
proxy
statement will be brought before the annual
meeting.
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The
grant
of a proxy on the enclosed proxy card does not preclude a stockholder from
voting in person. You may revoke a proxy at any time prior to your proxy being
voted at the annual meeting by:
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·
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delivering
to our Secretary prior to the annual meeting, a written notice of
revocation bearing a later date or time than the proxy;
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·
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timely
delivery of a valid, later dated proxy; or
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·
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attending
the annual meeting and voting in person.
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Attendance
at the annual meeting will not by itself constitute revocation of a proxy.
If an
adjournment occurs, it will have no effect on the ability of stockholders of
record as of the record date to exercise their voting rights or to revoke any
previously delivered proxies. We do not expect to adjourn the annual meeting
for
a period of time long enough to require the setting of a new record date for
such meeting.
If
your
shares are registered directly in your name with our transfer agent, Registrar
and Transfer Company, you are considered, with respect to those shares, the
"shareholder of record." The Notice of Annual Meeting, Proxy Statement, Annual
Report on Form 10-K and proxy card have been sent directly to you by
us.
If
your
shares are held in a stock brokerage account or by a bank or other holder of
record, you are considered the "beneficial owner" of shares held in street
name.
The Notice of Annual Meeting, Proxy Statement, Annual Report on Form 10-K and
proxy card have been forwarded to you by your broker, bank or other holder
of
record who is considered, with respect to those shares, the shareholder
of
record.
As the beneficial owner, you have the right to direct your broker, bank or
other
holder of record on how to vote your shares by using the voting instruction
card
included in the mailing.
The
cost
of solicitation of proxies being solicited on behalf of the board of directors
will be borne by us. In addition to the use of the mail, proxy solicitation
may
be made by telephone, facsimile and personal interview by our officers,
directors and employees. We will, upon request, reimburse banks, brokers,
nominees and other record holders for their reasonable expenses in sending
soliciting material to persons for whom they hold shares.
Stockholders
should not send stock certificates with their proxy cards.
ELECTION
OF DIRECTORS
Our
board
of directors currently consists of nine directors. The board is classified
into
three classes, each of which has a staggered three-year term. At the annual
meeting, our stockholders will elect three Class III directors. If elected,
Eamonn P. Hobbs, Peter J. Graham and David P. Meyers will hold office until
the
annual meeting of stockholders to be held in 2009 and until their successors
are
duly elected and qualified. The Class I directors and Class II directors will
continue in office during the terms indicated below. Unless otherwise specified,
all proxies received will be voted in favor of the election of the nominees
named below as directors of the Company. Directors will be elected by a
plurality of the votes cast, in person or by proxy, at the annual meeting.
The
term
of each of the current Class III directors expires at the 2006 annual meeting
and when his respective successor is duly elected and qualified. Management
has
no reason to believe that any of the nominees will be unable or unwilling to
serve as a director, if elected. Should any of the nominees not remain a
candidate for election at the date of the annual meeting, proxies will be voted
in favor of the nominees who remain candidates and may be voted for substitute
nominees selected by the board of directors. Set forth below is biographical
information for each nominee and for each director whose term of office will
continue after the annual meeting.
Nominees
to serve as Class III Directors for a Term Expiring at the 2009 Annual
Meeting:
Eamonn
P.
Hobbs, age 48, is one of our co-founders. He has been our President and Chief
Executive Officer since June 1996 and a director since our inception. From
1991
until September 2002, Mr. Hobbs was a Vice President, and from October 2002
to
May 2004 was a Senior Vice-President, of E-Z-EM Inc., our former parent company,
with operational responsibility for our company. He was first employed by E-Z-EM
from 1985 to 1986 and was continuously employed by E-Z-EM from 1988 to May
2004.
From 1986 to 1988, Mr. Hobbs was Director of Marketing for the North American
Instrument Corporation (NAMIC), a medical device company later acquired by
Boston Scientific. Mr. Hobbs started his career at Cook Incorporated, a leading
manufacturer of interventional radiology, interventional cardiology and
gastroenterology medical devices. Mr. Hobbs has over 25 years experience in
the
interventional radiology, interventional cardiology and gastroenterology medical
device industries. He is a bio-medical engineer, having completed a Bachelor
of
Sciences in Plastics Engineering with a Biomaterials emphasis at University
of
Lowell in 1980. Mr. Hobbs is the only business executive from the medical device
industry to serve on the strategic planning committee of the Society of
Interventional Radiology, or SIR, and in April 2005, he was awarded an honorary
fellowship by the SIR.
Peter
J.
Graham, age 40, joined our board of directors in January 2006, when he was
elected to fill the vacancy created by the death of our co-founder and former
Chairman, Howard S. Stern. Mr. Graham has been Senior Vice President — Chief
Legal Officer, Global Human Resources and a director of E-Z-EM since May 2005,
and was Vice President-General Counsel and Secretary of E-Z-EM from 2001 to
May
2005. Mr. Graham also served as our Corporate Counsel and Secretary from 1997
until our spin-off by E-Z-EM in October 2004.
David
P.
Meyers, age 42, has served as a director, and as a director of E-Z-EM, since
1996. He is a founder of Alpha Cord, Inc., which provides cryopreservation
of
umbilical cord blood, and has served as its President since 2002. Previously,
he
founded MedTest Express, Inc., a provider of contracted laboratory services
for
home health agencies, and served as its President, Chief Executive Officer
and a
director from 1994 to September 2002.
Recommendation
of the Board of Directors
The
board of directors recommends a vote FOR the election of each of the nominees.
The
following Class I and Class II directors will continue on the board of directors
for the terms indicated:
Class
I Directors (Term Expiring at the 2007 Annual Meeting):
Paul
S.
Echenberg, age 62, has been a director since 1996 and Chairman of our board
of
directors since February 2004. He has been a director of E-Z-EM since 1987,
Chairman of the board of directors of E-Z-EM since January 2005, and Chairman
of
the board of directors of E-Z-EM Canada, an E-Z-EM subsidiary, since 1994.
He
has been the President, Chief Executive Officer and a director of Schroders
& Associates Canada Inc., an investment buy-out advisory services company,
and a director of Schroders Ventures Ltd., an investment firm, since 1996.
He is
also a founder and has been a general partner and director of Eckvest Equity
Inc., a personal investment and consulting services company since 1989. From
1970 to 1989, he was President and Chief Executive Officer of Twinpak Inc.
and
Executive Vice President of CB Pak Inc., both packaging companies. He also
co-founded BDE & Partners, an investment banking and strategic advisory
services firm, in 1991. He is a director of Lallemand Inc., Benvest Newlook
Income Trust, ITI Medical, Med-Eng Systems Inc., MacroChem Corp., MatraPack
Industries Inc. and A.P. Plasman Corp.
Jeffrey
Gold, age 58, has served as a director since 1997. Mr. Gold was a consultant
to
Boston Scientific Corporation from its acquisition of CryoVascular Systems
Inc.
in April 2005 until December 2005. Mr. Gold was President and CEO of
CryoVascular Systems, a peripheral vascular disease device company, from 2001
until its acquisition by Boston Scientific. From 1997 to 2001, he was Executive
Vice President and Chief Operating Officer of Cardio Thoracic Systems, Inc.,
a
company engaged in the development and introduction of devices for beating-heart
coronary bypass surgery. Before that, Mr. Gold spent 18 years with Cordis
Corporation in a variety of senior management roles including Vice President
of
Manufacturing and Vice President of Research and Development, and was a
co-founder and President of Cordis Endovascular Systems, a Cordis subsidiary
engaged in the interventional neuroradiology business. At Cordis, Mr. Gold
also
had responsibility for its peripheral vascular business. He serves on the board
of directors of several start-up medical device companies and is a Special
Network Advisor to Sapient Capital Management.
Dennis
S.
Meteny, age 53, joined our board of directors in March 2004. In August 2006,
Mr.
Meteny was appointed President and Chief Executive Officer of Cygnus
Manufacturing Company LLC, a privately held manufacturer of minimally and
non-invasive medical device products, health and safety components, and high
precision transportation, aerospace and industrial products. From February
2006
to August 2006, Mr. Meteny was President and CEO of Teemyn LLC, a private
strategic advisory firm. From 2003 to 2006, Mr. Meteny was an
Executive-in-Residence at the Pittsburgh Life Sciences Greenhouse, a strategic
economic development initiative of the University of Pittsburgh Health System,
Carnegie Mellon University, the University of Pittsburgh, the State of
Pennsylvania and local foundations. From 2001 to 2003, he served as President
and Chief Operating Officer of TissueInformatics, Inc., a privately held company
engaged in the medical imaging business. From 2000 to 2001, Mr. Meteny was
a
business consultant to various technology companies. Prior to that, Mr. Meteny
spent 15 years in several executive-level positions, including as President
and
Chief Executive Officer, from 1994 to 1999, of Respironics, Inc. a
cardio-pulmonary medical device company. Mr. Meteny began his career in 1975
with Ernst & Young LLP.
Class
II Directors (Term Expiring at the 2008 Annual Meeting):
Howard
W.
Donnelly, age 45, joined our board of directors in March 2004. Mr. Donnelly
is
currently a principal in two privately held start-up medical device companies
that are targeting the regional anesthetic and general anesthesia markets,
respectively. Mr. Donnelly is also a principal of Concert Medical, a privately
held contract manufacturer for the medical device industry. From 1999 to 2002,
he was President of Level 1, Inc., a medical device manufacturer and a
subsidiary of Smiths Group. From 1990 to 1999, Mr. Donnelly was employed at
Pfizer, Inc., with his last position being Vice President, Business Planning
and
Development, for Pfizer's Medical Technology Group from 1997 to 1999. Mr.
Donnelly is currently a director of Vital Signs, Inc., a medical device
manufacturer for the anesthesia, critical care and sleep disorder
markets.
Gregory
D. Casciaro, age 50, joined our board of directors in April 2004. Since
September 2004, Mr. Casciaro has been President, Chief Executive Officer and
a
director of XTENT, Inc, a developer of stent systems for delivering multiple
drug eluting stents of customizable length with a single catheter. From 2000
to
2004, he was President, Chief Executive Officer and a director of Orquest,
Inc.,
a developer and manufacturer of devices used for orthopedic procedures that
was
acquired by Johnson & Johnson. From 1995 to 2000, Mr. Casciaro was employed
by General Surgical Innovations, Inc., a videoscopic surgical equipments
manufacturer that was acquired by United States Surgical, a division of Tyco
Healthcare Group LP, in 1999. Mr. Casciaro's last position with General Surgical
Innovations was as a director and its President and Chief Executive Officer
from
1998 to 2000. Mr. Casciaro was employed by the Devices for Vascular Innovations
division of Guidant Corporation from 1991 to 1995, having last served as the
Vice President of Sales from 1994 to 1995. Prior to joining Guidant, he was
employed by NAMIC from 1983 to 1991, with his last position being Area Sales
Manager. Mr. Casciaro began his career with Procter and Gamble Company in 1978.
He is currently a director of Apneon, Inc. and Kerberos Proximal
Solutions.
Robert
E.
Flaherty, age 60, joined our board of directors in April 2004. Since 1992,
Mr.
Flaherty has served as Chairman, President and Chief Executive Officer of Athena
Diagnostics, Inc., a commercial laboratory specializing in developing diagnostic
testing services focused on neurological disorders. From 1992 to 1995, Mr.
Flaherty served as President and Chief Executive Officer of Genica
Pharmaceuticals, which was acquired by Athena Neurosciences, Inc., and renamed
Athena Diagnostics in 1995. Athena Neurosciences subsequently was acquired
by
Elan Corporation plc in 1996. In 2002, Athena Diagnostics, Inc., became a
privately held company following a leveraged buy-out. In April 2006, Athena
Diagnostics, Inc. was purchased by Fisher Scientific. From 1976 to 1992, Mr.
Flaherty was employed by Becton, Dickinson & Company, a medical technology
company, with his last position from 1984 to 1992 being President of that
company's largest operating unit, the Becton Dickinson Division. Before that,
he
was employed by C.R. Bard in various sales and marketing positions in its
surgical and cardiovascular units in the United States and abroad. Mr. Flaherty
began his career with Procter and Gamble Company in 1968 in manufacturing
management.
Board
Independence
A
majority of our directors must qualify as independent under the listing
standards of The Nasdaq Stock Market LLC ("Nasdaq"). Under the Nasdaq listing
standards, an "independent director" is a director who is not an officer or
employee of AngioDynamics or any subsidiary and who does not have any
relationship that the board of directors believes would interfere with the
exercise of independent judgment in carrying out the responsibilities of a
director. Our board reviews the relationships that each director has with our
company on an annual basis, and only those directors having no direct or
indirect material
relationship
with our company and who qualify as independent under the Nasdaq listing
standards will be considered independent directors of AngioDynamics.
Our board
of
directors has determined that six of our nine directors—Messrs. Gold, Donnelly,
Meteny, Flaherty, Echenberg and Casciaro—are independent under the Nasdaq
listing standards.
Committees
of the Board
The
board
of directors has three standing committees, the members of which have been
elected by the board: the audit committee; the nominating and corporate
governance committee; and the compensation committee. Each committee is composed
entirely of independent directors, and the chairman and members of each
committee are appointed annually by the board. Each
committee is authorized to retain its own outside counsel and other advisors
as
it desires, subject to, for the nominating and corporate governance committee
and the compensation committee, a $100,000 limitation on fees and expenses
for
such counsel and advisors without the full board's prior consent.
Each
committee has adopted a written charter, and a brief summary of each committee's
responsibilities follows.
Audit
Committee and Audit Committee Financial Expert. The
audit committee assists our board of directors in its oversight of (i) the
integrity of our financial statements, financial reporting process, system
of
internal controls over financial reporting, and audit process, (ii) our
compliance with, and process for, monitoring compliance with, legal and
regulatory requirements, (iii) our independent registered public accounting
firm's qualifications and independence, and (iv) the performance of our
independent registered public accounting firm. The audit committee also provides
an open avenue of communication between the independent registered public
accounting firm and the board. The authority and responsibilities of the audit
committee are set forth in detail in its charter, which was updated in May,
2006, and which is attached to this proxy statement as Appendix B. The audit
committee charter is also available on our website located at
www.angiodynamics.com1
under
the "Corporate Governance Highlights - Committee Charters - Audit Committee"
caption.
The
members of the audit committee are Howard W. Donnelly, Robert E. Flaherty and
Dennis S. Meteny, each of whom has been determined by our board to be
independent under the Nasdaq listing standards. The board has also determined
that each member of the audit committee is financially literate in accordance
with the Nasdaq listing standards and that Mr. Meteny is an "audit committee
financial expert," as defined under SEC rules. The audit committee met
10 times
during our 2006 fiscal year.
Compensation
Committee. The
compensation committee is responsible for (i) developing and evaluating
potential candidates for executive positions, (ii) reviewing and recommending
to
the board the corporate goals and objectives with respect to our chief executive
officer's, or CEO's, compensation on an annual basis, (iii) reviewing our CEO's
performance annually in light of the committee's established goals and
objectives, (iv) reviewing and approving the evaluation process and compensation
structure for our other executive officers
annually and overseeing management's decisions concerning the performance and
compensation of our other executive officers and (v) reviewing and administering
our incentive compensation and other stock-based plans and recommending changes
in such plans to the board, as needed. The authority and responsibilities of
the
compensation committee are set forth in detail in its charter, which is
available on our website located at www.angiodynamics.com under the "Corporate
Governance Highlights—Committee Charters—Compensation Committee" caption.
___________________________
(1) This
website address is not intended to function as a hyperlink, and information
on
our website is not a part of our proxy soliciting
material.
The
members of the compensation committee are Gregory D. Casciaro, Robert E.
Flaherty and Jeffrey G. Gold, each of whom has been determined by our
board of directors to be independent under the Nasdaq listing standards. The
compensation committee met six times during fiscal 2006.
Nominating
and Corporate Governance Committee. The
nominating and corporate governance committee is responsible for (i) assisting
the board in identifying individuals qualified to serve as directors of our
company and on committees of the board, (ii) advising the board with respect
to
the board composition, procedures and committees, (iii) developing and
recommending to the board a set of corporate governance principles applicable
to
our company, including principles for determining the form and amount of
director compensation, and (iv) overseeing the evaluation of the board and
our management. The nominating and corporate governance committee maintains
the
following guidelines for selecting nominees to serve on the board.
The
nominating and corporate governance committee may apply several criteria in
selecting nominees. At a minimum, the committee shall consider (a) whether
each
such nominee has demonstrated, by significant accomplishment in his field,
an
ability to make a meaningful contribution to the board's oversight of the
business and affairs of our company, and (b) the nominee's reputation for
honesty and ethical conduct in his personal and professional activities.
Additional factors that the committee may consider include a candidate's
specific experiences and skills, relevant industry background and knowledge,
time availability in light of other commitments, potential conflicts of interest
and any other factors or qualities that the committee believes will enhance
the
board's ability to effectively manage and direct our company's affairs and
business, including, where applicable, the ability of board committees to
perform their duties or satisfy any independence requirements under the Nasdaq
listing standards or otherwise.
The
nominating and corporate governance committee will identify nominees by first
evaluating the current members of our board of directors whose terms are
expiring and who are willing to continue in service. In doing so, the committee
will balance the skills and experience of such current directors, as well as
the
value of continuity of their service, with that of obtaining new perspectives
for the board. For new nominees, the committee will identify potential
candidates based on input from members of the board and management and, if
the
committee deems it appropriate, from one or more third-party search firms.
Once
a
person has been identified by the committee as a potential candidate, the
committee will assess, based on publicly available information regarding the
person, whether the candidate should be considered further. If the committee
determines that the candidate warrants further consideration and the person
expresses a willingness to be considered and to serve on the board, the
committee will request information from the candidate, review his or her
accomplishments and qualifications and conduct one or more interviews with
the
candidate. If the candidate appears qualified, committee members may also
contact references provided by the candidate or other persons with first-hand
knowledge of the candidate's experience and accomplishments. Additionally,
candidates may be requested to meet with some or all of the other members of
the
board of directors. Using the input from these interviews and the other
information it has obtained, the committee will determine whether it should
recommend that the board nominate, or elect to fill a vacancy with, a final
prospective candidate. The committee's evaluation process is the same for
candidates recommended by stockholders.
The
authority and responsibilities of the nominating and corporate governance
committee are set forth in detail in its charter, which, is available on our
website located at www.angiodynamics.com under the "Corporate Governance
Highlights—Committee Charters—Nominating and Corporate Governance Committee"
caption.
The
members of the nominating and corporate governance committee are Jeffrey G.
Gold, Dennis S. Meteny and Howard W. Donnelly, each of whom has been
determined by our board of directors to be independent under the Nasdaq listing
standards. The nominating and corporate governance committee met six times
during fiscal 2006.
Recommendations
by Stockholders of Director Nominees
Stockholders
may recommend individuals to the nominating and corporate governance committee
for consideration as potential director candidates by submitting their names
and
appropriate background and biographical information to the Nominating and
Corporate Governance Committee, c/o AngioDynamics, Inc., 603 Queensbury Avenue,
Queensbury, New York 12804 at least 120 days prior to the anniversary of the
date on which our proxy statement was first released to stockholders for the
previous year's annual meeting. Assuming that the appropriate information has
been timely provided, the committee will consider these candidates in the same
manner as it considers other board candidates it identifies. Our stockholders
also have the right to nominate director candidates without any action on the
part of the nominating and corporate governance committee or our board of
directors by following the advance notice provisions of our by-laws as described
under "Stockholder Proposals and Nominations" on page of
this
proxy statement.
Meetings
of the Board and Committees
Our
board
of directors held eight meetings during fiscal 2006. Each incumbent director
attended at least 75% of all meetings of the board and of each committee of
which he was a member that were held during the period in which he was a
director or committee member.
Communications
with the Directors
Stockholders
may communicate in writing with any particular director, the independent
directors as a group, or the entire board by sending such written communication
to the Secretary of the Company at the Company's principal executive offices,
603, Queensbury Avenue, Queensbury, New York 12804. Copies of written
communications received at such address will be provided to the board or the
relevant director or directors unless such communications are determined by
our
outside counsel to be inappropriate for submission to the intended recipient(s).
However, any communication not so delivered will be made available upon request
to any director. Examples of stockholder communications that would be considered
inappropriate for submission include, without limitation, customer complaints,
business solicitations, product promotions, résumés and other forms of job
inquiries, junk mail and mass mailings, as well as material that is unduly
hostile, threatening, illegal or similarly unsuitable.
Policy
on Director Attendance at Annual Meetings
All
board
members are expected to attend our annual meetings of stockholders absent an
emergency or other unforeseen circumstances. Attendance at the annual meeting
will be considered by the nominating and corporate governance committee in
assessing director performance. All of our directors named in this proxy
statement who were then members of the board attended our annual meeting of
stockholders in 2005.
Code
of Business Conduct and Ethics. Our
board of directors has adopted a written Code of Business Conduct and Ethics
for
our company. Our Code of Business Conduct and Ethics is available on our website
located at www.angiodynamics.com under the "Corporate Governance
Highlights—Governance Documents—Code of Ethics" caption.
Directors
who are not our employees receive an annual retainer of $24,000, in addition
to
$1,500 for each board meeting attended in person and for each telephonic meeting
of the board in which they participate. The chairman of the board of directors
receives an additional annual retainer of $24,000. The chairman of the audit
committee receives an additional annual retainer of $12,000, and the chairmen
of
the compensation committee and the nominating and corporate governance committee
receive additional annual retainers of $5,000. Committee chairmen receive
$1,500, and committee members $750, for each committee meeting in which they
participate. Directors who are not our employees also receive an annual grant
of
an option to purchase 6,000 shares of our common stock. New directors receive
options for 25,000 shares of our common stock upon joining our board, which
vests one-fourth per year over four years from the grant date. Directors who
are
our employees receive no additional compensation for their services as
directors.
We
entered into an agreement, effective as of January 1, 2004, with Donald A.
Meyer, who resigned as a director as of March 1, 2004, under which Mr. Meyer
agreed to serve as the trustee of our 401(k) savings plan and to provide other
consulting services at our request. The agreement is for a term of 36 months,
but will terminate sooner upon a change of control of AngioDynamics, Mr. Meyer's
death, or a material breach of the agreement that is not cured within 30 days.
Mr. Meyer is receiving 36 equal monthly payments of $3,500 and reimbursement
for
reasonable business expenses incurred in providing services under the agreement.
The fees paid in fiscal 2006 were $42,000. Further, under the agreement, the
expiration dates of Mr. Meyer's options, which are exercisable for 42,263 shares
of our common stock, were extended to the earlier of (i) December 31, 2006
or
(ii) the tenth anniversary of the original grant date of each option. In
connection with the extension of the expiration dates of Mr. Meyer's options,
the fair value of the options has been recorded as a non-cash dividend to E-Z-EM
in the amount of $468,000, with the corresponding credit to "Additional Paid-in
Capital" on the effective date.
The
following table sets forth the AngioDynamics common stock beneficially owned
by
each of our directors, each of our Named Executive Officers, all of our
directors and executive officers as a group and all other persons known to
us
who beneficially own 5% or more of the outstanding AngioDynamics common stock
as
of July 20, 2006. Except as otherwise noted, each individual director or named
executive officer had sole voting and investment power with respect to the
AngioDynamics common stock.
|
Number
of Shares
of
Common Stock
Owned
(a)(b)(c)
|
Percent
of
Class
|
|
|
Eamonn
P. Hobbs
|
153,622
|
1.0
|
|
Robert
M. Rossell (h)
|
7,200
|
*
|
|
Paul
J. Shea
|
9,276
|
*
|
|
William
M. Appling
|
9,451
|
*
|
|
Brian
S. Kunst
|
7,550
|
*
|
|
Gilder,
Gagnon, Howe & Co. LLC (e)
|
968,465
|
6.3
|
|
Mellon
Financial Corporation (f)
|
897,282
|
5.8
|
|
Linda
B. Stern (g)
|
1,723,960
|
11.0
|
|
Jeffery
Gold
|
25,965
|
*
|
|
Paul
S. Echenberg
|
162,759
|
1.0
|
|
David
P. Meyers (d)
|
373,481
|
2.4
|
|
Number
of Shares
of
Common Stock
Owned
(a)(b)(c)
|
Percent
of
Class
|
|
|
Howard
W. Donnelly
|
14,500
|
*
|
|
Dennis
S. Meteny
|
16,500
|
*
|
|
Gregory
D. Casciaro
|
15,000
|
*
|
|
Robert
E. Flaherty
|
15,700
|
*
|
|
Peter
J. Graham (i)
|
98,109
|
*
|
|
All
directors and executive officers as a group (16 persons)
|
934,146
|
5.9
|
|
(a)
|
Beneficial
ownership is determined in accordance with the rules of the Securities
and
Exchange Commission and generally includes voting or investment power
with
respect to securities. Under those rules, shares of common stock
subject
to options that are exercisable or will become exercisable within
60 days
of July 20, 2006, and performance share awards that will vest within
60
days of July 20, 2006, are deemed to be outstanding and to be beneficially
owned by the person holding the securities for the purpose of computing
the percentage ownership of the person, but are not treated as outstanding
for the purpose of computing the percentage ownership of any other
person.
|
|
(b)
|
Includes
shares of our common stock issuable upon exercise of options currently
exercisable or exercisable within 60 days from July 20, 2006 as follows:
Eamonn P. Hobbs (101,446), Robert M. Rossell (5,100), Paul J. Shea
(7,650), William M. Appling (7,650 ), Brian S. Kunst (6,550), Estate
of
Howard S. Stern (98,773), Jeffrey Gold (9,600), Paul S. Echenberg
(100,350), David P. Meyers (16,501), Howard W. Donnelly (11,500),
Dennis
S. Meteny (14,500), Gregory D. Casciaro (14,500), Robert E. Flaherty
(14,500), Peter J. Graham (5,643) and all directors and officers
as a
group (337,520).
|
|
(c)
|
Includes
performance share awards which vest within 60 days of July 20, 2006,
as
follows: Eamonn P. Hobbs (2,062), Robert M. Rossell (1,000), Paul
J. Shea
(1,000), William M. Appling (1,000), Brian S. Kunst (1,000) and all
officers as a group (8,437).
|
|
(d)
|
Excludes
7,427 shares held by a trust established for the benefit of Mr. Meyers'
children, as to which Mr. Meyers disclaims beneficial
ownership.
|
|
(e)
|
Share
ownership information obtained from a Schedule 13G filed by Gilder,
Gagnon, Howe & Co., LLC on June 12,
2006
|
|
(f)
|
Share
ownership information obtained from a Schedule 13G filed by Mellon
Financial Corporation filed on February 15,
2006
|
|
(g)
|
Share
ownership information obtained from a Schedule 13D/A filed by Linda
B.
Stern and the Estate of Howard S. Stern (the "Estate") on May 31,
2006,
and other information available to AngioDynamics. Linda B. Stern,
the wife
of the late Howard S. Stern, is the executor of the Estate and is
deemed
to share beneficial ownership of the 1,671,569 shares held by the
Estate.
In addition, Mrs. Stern has sole beneficial ownership of 52,391 shares
of
common stock, bringing her total beneficial ownership percentage
to
11.0%.
|
|
(h)
|
Includes
100 shares owned jointly with Mr. Rossell's
spouse.
|
| (i) | Includes 8,191 shares owned jointly with Mr. Graham's spouse, 45,832 shares owned solely by Mr. Graham's spouse, and 20,395 shares owned by Mr. Graham's children. |
__________________
*
Less
than 1%.
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our executive
officers and directors, and persons who own more than 10% of a registered class
of our equity securities, to file reports of initial ownership and changes
in
ownership with the Securities and Exchange Commission. Based solely on our
review of copies of such forms received by us, or on written representations
from certain reporting persons that no reports were required for such persons,
we believe that, during the fiscal year ended June 3, 2006, all of our executive
officers, directors and 10% stockholders complied with all section 16 filing
requirements, except as follows:
|
(1)
|
Eamonn
P. Hobbs filed a Form 4 on May 15, 2006, that was required to be
filed on
or before July 12, 2005, reporting the acquisition of common
stock.
|
|
(2)
|
Eamonn
P. Hobbs filed a Form 4 on May 3, 2006, that was five business days
late,
reporting the exercise of stock
options.
|
AMENDMENT
TO THE ANGIODYNAMICS, INC.
2004
STOCK AND INCENTIVE AWARD PLAN
We
are
asking our stockholders to approve an amendment of our 2004 Stock and Incentive
Award Plan, (the "2004 Plan") to increase the number of shares of our common
stock authorized under the 2004 Plan by 1,000,000 shares to 2,000,000
shares. Our board of directors approved the amendment to the 2004 Plan on
August 15, 2006, subject to stockholder approval at the annual meeting.
The
use
of equity compensation has historically been a significant part of our overall
compensation philosophy at AngioDynamics, and is a practice
that we
plan to continue. The 2004 Plan serves as an important part of this practice,
and is a critical part of the compensation package that we offer our personnel.
We believe that the use of stock options, restricted stock units, performance
share awards and other equity-based incentives are critical for us to attract
and retain the most qualified personnel and to respond to relevant changes
in
equity compensation practices. In addition, awards under the 2004 Plan provide
our employees an opportunity to acquire or increase their ownership stake in
us,
and we believe this alignment with our stockholders' interests creates a strong
incentive to work hard for our growth and success.
As
of
September 8, 2006, options and stock awards covering 933,921 shares of our
common stock were outstanding and 54,481 shares were
available for future grant under the 2004 Plan. Based on the closing
market
price of our common stock on September 8, 2006, the additional
1,000,000 shares proposed to be added to the 2004 Plan would have a market
value of approximately $16,150,000.
The
following is a summary of the principal provisions of the 2004 Plan, as amended
by this proposal. This summary is qualified in its
entirety
by reference to the full text of the 2004 Plan, which is included as
Appendix A to this proxy statement.
Purposes
of the 2004 Plan. The
primary purposes of the 2004 Plan are (i) to provide competitive equity
incentives to enable us to attract, retain, motivate and reward persons who
render services to us and (ii) to align the interests of our employees and
such
other persons with the interests of our stockholders by providing participants
with the opportunity to share in any appreciation in the value of our stock
that
their efforts help bring about.
Shares
Authorized for Issuance. As
amended, up to 2,000,000 shares of our common stock may be issued under our
2004 Plan. Shares that are subject to issuance upon exercise of an option but
cease to be subject
to such
option for any reason (other than exercise of such option), and shares that
are
subject to an award that is granted but is subsequently forfeited or reacquired
by us, or that are subject to an award that terminates without shares being
issued, will again be available for grant and issuance under the 2004 Plan,
as
will be any shares that we may withhold in satisfaction of withholding taxes
or
permit to be used to pay the exercise price of an option. No more than
1,600,000 shares can be issued (including shares issued, reacquired by us
pursuant to the terms of awards, and then reissued) as "incentive stock
options," or "ISOs" (by which we mean stock options that meet certain
requirements of the Internal Revenue Code).
Administration. The
compensation committee of our board of directors administers the 2004 Plan,
except when the board decides to directly administer the 2004 Plan (either
being
the "committee").
The
committee determines the persons who are to receive awards, the
number
of shares subject to each such award and the other terms
and
conditions of such awards. The committee also has the authority to interpret
the
provisions of the 2004 Plan and of any awards granted thereunder and to modify
awards granted under the 2004 Plan. The committee may not, however, reprice
options issued under the 2004 Plan without prior approval of our stockholders.
Eligibility.
Our 2004
Plan provides for the grant of ISOs, within the meaning of section 422 of the
Internal Revenue Code of 1986, as amended, (the "Code") to our employees, and
for the grant of nonstatutory stock options, restricted stock, restricted stock
units, stock appreciation rights, performance units and other incentive awards
to our employees, directors and other service providers
No
participant in our 2004 Plan may receive options to purchase, or stock
appreciation rights with respect to, more than 200,000 shares in any year.
The
maximum number of shares for which restricted stock, performance shares and
any
other stock-value-based award not based solely on the appreciation of our common
stock after the award may be granted to a plan participant in any year is
100,000 shares. Dollar-denominated awards under the 2004 Plan may not exceed
$400,000 for a participant in any year.
Options.
The
committee will determine the exercise price of options granted under our 2004
Plan, but for all ISOs the exercise price must at least be equal to the fair
market value of our common stock on the date of grant. The term of an ISO may
not exceed ten years. For any participant who owns 10% of the voting power
of
all classes of our outstanding stock, the exercise price must equal at least
110% of the fair market value on the grant date and the term must not exceed
five years. The committee will determine the term of all options, including
the
vesting period and exercise period in the event of termination of service of
an
employee, director or other service provider. All options will be subject to
any
other terms and conditions included in the option agreement.
Stock
Appreciation Rights. Stock
appreciation rights ("SARs") may be granted under our 2004 Plan. SARs allow
the
recipient to receive the appreciation in the fair market value of our common
stock between the date of grant and the exercise date of the SARs or, if the
SARs are linked and alternative to an option, the date of grant of the option.
The committee will determine the terms of SARs, including when such rights
become exercisable and whether to pay the increased appreciation in cash or
with
shares of our common stock, or a combination thereof.
Restricted
Stock and Restricted Stock Units. Restricted
stock may be granted under our 2004 Plan. Restricted stock awards are grants
of
shares of our common stock that vest in accordance with terms and conditions
established by the committee. The committee will determine the number of shares
of restricted stock granted to any employee, director or other service provider.
The committee may impose whatever conditions to vesting it determines to be
appropriate. For example, the committee may set restrictions based on the
achievement of specific performance goals. Shares of restricted stock that
do
not vest are subject to our right of repurchase or forfeiture. The committee
may
also make restricted stock unit awards, which are shares of our common stock
that are issued only after the recipient satisfies any service or performance
objectives or contingencies determined by the committee.
Performance
Units and Performance Shares. Performance
units and performance shares may be granted under our 2004 Plan. Performance
share awards are rights to receive a specified number of shares of our common
stock and/or an amount of money equal to the fair market value of a specified
number of shares of our common stock, at a future time or times if a specified
performance goal is attained and any other terms and conditions specified by
the
committee are satisfied. Performance unit awards are rights to receive a
specified amount of money (other than an amount of money equal to the fair
market value of a
specified
number of shares of common stock) at a future time or times if a specified
performance goal is attained and any other terms and conditions specified by
the
committee are satisfied. The committee will establish organizational or
individual performance goals in its discretion, which, depending on the extent
to which they are met, will determine the number and/or the value of performance
units and performance shares to be paid out to participants.
Incentive
Awards. Our
2004
Plan authorizes the committee to grant incentive awards, which are rights to
receive money or shares on such terms and subject to such conditions as the
committee may prescribe. Restricted stock, performance shares and performance
units are particular forms of incentive awards but are not the only forms in
which they may be made. Incentive awards may also take, for example, the form
of
cash or stock bonuses.
Change
in Control. Our
2004
Plan authorizes the committee to grant options and SARs that become exercisable,
and any award under the Plan that becomes non-forfeitable, fully earned and
payable, if we have a "change in control," and to provide for money to be paid
in settlement of any award under the 2004 Plan in such event. Additionally,
if
we have a change of control, the committee may authorize the exercise of
outstanding nonvested appreciation rights, make any award outstanding under
the
2004 Plan non-forfeitable, fully earned and payable, or require the automatic
exercise for cash of all outstanding stock appreciation rights.
In
general, under the 2004 Plan, a "change in control" will be deemed to occur
if
any person or group of persons acting in concert becomes the beneficial owner
of
more than 40% of our common stock; a majority of our board changes over any
period of two years or less without the approval of a majority of the directors
serving at the beginning of such period; or our stockholders approve a merger,
reorganization, sale of assets or plan of complete liquidation following which
our stockholders before the transaction will not own at least 60% of our voting
power or assets.
Transfers
of Awards.
Our
2004 Plan does not allow for the transfer of awards, except for transfers by
will or the laws of descent and distribution or to such other persons designated
by a participant to receive the award upon the participant's death, or except
as
may otherwise be authorized by the committee for any award other than an ISO.
Amendment
of Plan.
Subject
to any applicable stockholder approval requirements of Delaware or federal
law,
any rules or listing standards that apply to our company, or the Code, the
2004
Plan may be amended by the board of directors at any time and in any respect,
including without limitation to permit or facilitate qualification of options
previously granted or to be granted in the future (1) as incentive stock options
under the Code, or (2) for such other special tax treatment as may be enacted
on
or after the date on which the 2004 Plan is approved by the board. Without
stockholder approval however, no such amendment may increase the aggregate
number of shares which may be issued under the 2004 Plan, or may permit the
exercise price of outstanding options or SARs to be reduced, subject to limited
exceptions. No amendment of the 2004 Plan may adversely affect any award granted
prior to the date of such amendment or termination without the written consent
of the holder of such award.
The
following is a general summary as of the date of this proxy statement of the
material U.S. federal income tax consequences to AngioDynamics and
participants in the 2004 Plan with respect to awards granted under the 2004
Plan. This summary is based upon the Code, Treasury Regulations, administrative
pronouncements and judicial decisions, in each case as in effect on the date
hereof, all of which are subject to change (possibly with retroactive effect).
The specific tax consequences for any
participant
will depend upon his or her individual circumstances. This
summary does not address state, local or foreign tax consequences to
AngioDynamics or participants in the 2004 Plan.
Tax
Treatment of the Participants
Options.
ISOs.
Subject
to the discussion of the alternative minimum tax ("AMT")
below, a
participant will recognize no income upon grant of an ISO and will incur no
tax
upon exercise of an ISO, provided that the participant is an employee when
the
ISO is granted and did not cease being an employee for more than three months
prior to exercise of the ISO. If a participant holds the shares purchased upon
exercise of the ISO (the "ISO
Shares")
for more
than one year after the date the ISO was exercised and for more than two years
after the ISO's grant date (the "required
holding period"),
then
the participant generally will realize long-term capital gain or loss (rather
than ordinary income or loss) upon disposition of the ISO Shares in an amount
equal to the difference between the amount realized upon such disposition and
the exercise price of the ISOs.
If
a
participant disposes of ISO Shares prior to the expiration of the required
holding period (a "disqualifying
disposition"),
then
gain realized upon such disposition, to the extent of the difference between
the
ISO exercise price and
the fair
market value of the ISO Shares on
the date
of exercise, will be treated as ordinary income. Any additional gain will be
capital gain, and treated as long-term capital gain if the ISO Shares were
held
by the participant for at least one year.
The
difference between the exercise price and fair market value of the ISO Shares
on
the date of exercise is an adjustment to income for purposes of the alternative
minimum tax ("AMT"). The AMT (imposed to the extent it exceeds the taxpayer's
regular tax) is currently 26% of an individual taxpayer's alternative minimum
taxable income (28% percent in the case of alternative minimum taxable income
in
excess of $175,000). Alternative minimum taxable income is determined by
adjusting regular taxable income for certain items, increasing that income
by
certain tax preference items and reducing this amount by the applicable
exemption amount. If a disqualifying disposition of the ISO Shares occurs in
the
same calendar year as exercise of the ISO, there is no AMT adjustment with
respect to those ISO Shares. Also, upon a sale of ISO Shares that is not a
disqualifying disposition, alternative minimum taxable income is reduced in
the
year of sale by the excess of the fair market value of the ISO Shares at
exercise over the amount paid for the ISO Shares.
Nonqualified
Stock Options. A
participant will not recognize any taxable income at the time a
nonqualified stock option, or NQSO, is granted. However, upon exercise of
a NQSO, a participant must include in income as compensation an amount equal
to
the difference between the fair market value of the shares on the date of
exercise and the NQSO's exercise price. The included amount must be treated
as
ordinary income by the participant and will be subject to income tax withholding
by us if the participant is an employee. Upon disposition of the shares by
a
participant, the participant will recognize capital gain or loss in an amount
equal to the difference between the amount received on disposition and the
fair
market value of the shares on the date of exercise. This gain will be long-term
capital gain if the participant has held the shares for at least one
year.
Stock
Appreciation Rights. A
grant of a stock appreciation right has no federal income tax consequences
at
the time of grant. Upon the exercise of stock appreciation rights, the value
of
the shares or other consideration received is generally taxable to the recipient
as ordinary income, which will be subject to income tax withholding by us if
the
participant is an employee.
Restricted
Stock and Restricted Stock Units. A
participant receiving restricted shares for services recognizes taxable income
when the shares become vested, generally when they are transferable or no longer
subject to a substantial risk of forfeiture. Upon vesting, the participant
will
include in ordinary income an amount, which will be subject to income tax
withholding by us if the participant is an employee,
equal to the difference between the fair market value of the shares at the
time
they become substantially vested and
any
amount paid for the shares. Upon
disposition of the shares by a participant, the participant will recognize
capital gain or loss in an amount equal to the difference between the amount
received on disposition and the fair market value of the shares on the date
of
exercise. This gain will be long-term capital gain if the participant has held
the shares for at least one year.
A
participant can file an election with the IRS (an "83(b) Election"), not later
than 30 days after the date of the transfer of the restricted shares, to
include in income as compensation (treated as ordinary income), in the year
of
the transfer of such restricted shares, an amount equal to the difference
between the fair market value of such shares on the date of transfer and any
amount paid for such shares. The included amount must be treated as ordinary
income by the participant and may be subject to income tax withholding by us.
Income is not again required to be included upon the lapse of the restrictions.
Upon disposition of the shares by a participant, the participant will recognize
capital gain or loss in an amount equal to the difference between the amount
received on disposition and the fair market value of the shares on the date
of
grant. This gain will be long-term capital gain if the 83(b) Election was made
at least one year prior to the disposition.
A
participant receiving a restricted stock unit will recognize ordinary income
in
an amount equal to the money or the fair market value of the shares received
at
the time of their receipt. If
the
participant does not receive all of the shares covered by the restricted stock
unit on the date of grant, the participant
may be eligible to make an 83(b) Election as described above.
Performance
Units and Performance Shares. Performance
Units and Performance Shares will be treated in the same manner as Restricted
Stock and Restricted Stock Units described above.
Code
Section 409A.
Section
409A of the Code, added to the Code on October 24, 2004, imposes significant
new
restrictions on a range of nonqualified deferred compensation plans, along
with
a penalty on a participant receiving compensation under a plan that does not
meet the requirements of 409A. Pursuant to a transition rule issued by the
Internal Revenue Service, deferred compensation plans must currently be operated
in compliance with the rules of section 409A but are not required to be amended
to comply with section 409A until December 31, 2006.
The
definition of a nonqualified deferred compensation plan is broad and would
include the 2004 Plan. Certain compensation under the 2004 Plan, however, would
not be subject to section 409A, such as:
|
·
|
options
where the exercise price is at least equal to fair market value on
the
date of grant; and
|
|
·
|
transfers
of property subject to Code section 83 (other than option grants)
(e.g.,
where income is taxed at time of vesting or where the participant
makes an
83(b) Election).
|
Amounts
deferred under a nonqualified deferred compensation plan that do not comply
with
section 409A are includable in a participant's gross income and taxable
immediately to the extent that such amounts are not subject to a substantial
risk of forfeiture (e.g.,
the
participant is vested in the deferred amounts.) Amounts deferred under a
nonqualified deferred compensation plan before January 1, 2005, are generally
not subject to the requirements of section 409A. However, amounts deferred
under
a nonqualified deferred compensation plan that is materially modified after
October 3, 2004, and amounts
deferred
but not vested prior to January 1, 2005, are subject to section 409A. An
increase in the number of shares authorized under the 2004 Plan should not
constitute a material modification.
AngioDynamics
is currently operating the 2004 Plan in good faith compliance with section
409A
and will amend the 2004 Plan within the time permitted by the IRS to conform
to
the provisions of section 409A with respect to amounts subject to section 409A.
Thus, AngioDynamics does not expect that any participant will be subject to
the
income inclusions and penalties of section 409A.
Maximum
Tax Rates for Non-corporate Taxpayers. The
maximum federal tax rate for noncorporate taxpayers applicable to ordinary
income is 35%. Long-term capital gain for noncorporate taxpayers on capital
assets (which include stock) held for more than one year will be taxed at a
maximum rate of 15%. Capital gains may be offset by capital losses, and up
to
$3,000 of capital losses may be offset annually against ordinary income.
Tax
Treatment of AngioDynamics
Subject
to any withholding requirement, the standard of reasonableness, and (if
applicable)
Code
section 162(m), we generally
will be
entitled to a deduction to the extent any participant recognizes ordinary income
from an
award
granted under the 2004 Plan.
ERISA
Information
The
2004
Plan is not subject to any of the provisions
of the
Employee Retirement Income Security Act of 1974, as amended.
If
the
proposed amendment to the 2004 Plan is approved at the annual meeting, each
of
our non-employee directors (eight persons in total) will receive an annual
grant
of options to purchase 6,000 shares of our common stock in accordance with
their
compensation arrangements with us. These grants are generally made at our
regularly scheduled board of directors meeting in the first quarter of each
fiscal year. Accordingly, the first such grant will be made in the first quarter
of fiscal 2008. Other than the future annual option grants to our non-employee
directors, all future awards to our executive officers, employees and other
participants under the 2004 Plan will be made at the discretion of the
committee. Consequently, the future benefits and amounts that will be received
or allocated under the 2004 Plan to these persons are not determinable at this
time, and, accordingly, we have not included a table reflecting such benefits
or
amounts. By way of background, please see "Executive Compensation" in this
proxy
statement for information regarding equity awards to our named executive
officers in fiscal 2006.
Recommendation
of the Board of Directors
The
board of directors recommends a vote FOR the proposal to amend the
AngioDynamics, Inc. 2004 Stock and Incentive Award
Plan.
The
following table sets forth information, as of June 3, 2006, with respect to
compensation plans under which our equity securities are authorized for
issuance.
|
(a)
|
(b)
|
(c)
|
||||
|
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
column (a))
|
|||
|
Equity
compensation plans approved by security holders
|
1,318,645(1)
|
$6.67(2)
|
523,850(3)
|
|||
|
Equity
compensation plans not approved by security holders
|
None
|
None
|
None
|
|||
|
Total
|
1,318,645
|
$6.67
|
523,850
|
|
(1)
|
Includes
33,750 shares underlying restricted stock units and 33,750 shares
underlying performance share awards issued under our 2004 Stock and
Incentive Award Plan.
|
|
(2)
|
The
weighted-average exercise price does not take into account the awards
described in footnote (1) to this table.
|
|
(3)
|
Includes
32,714 shares reserved for issuance under our 1997 Stock Option Plan
and
323,939 shares reserved for issuance under our 2004 Stock and Incentive
Award Plan, which provides for grants of stock options, restricted
stock,
stock appreciation rights, performance units, performance shares
and other
incentive awards. Also includes 167,197 shares reserved for purchase
under
our Employee Stock Purchase
Plan.
|
RATIFICATION
OF APPOINTMENT OF
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The
audit
committee of our board of directors has selected PricewaterhouseCoopers LLP,
independent certified public accountants, as our company's independent
registered public accounting firm for the fiscal year ending June 2, 2007.
Although the selection of the independent registered public accounting firm
is
not required under our by-laws or otherwise to be ratified by our stockholders,
the audit committee has directed that the appointment of PricewaterhouseCoopers
LLP be submitted to our stockholders for ratification due to the significance
of
their appointment to us. If our stockholders fail to ratify the selection,
it
will be considered as a direction to our board of directors and the audit
committee to consider the selection of a different firm. Even if the selection
is ratified, the audit committee in its discretion may select a different
independent registered public accounting firm at any time during the year if
it
determines that such a change would be in the best interests of our company
and
our stockholders.
The
proposal to ratify the appointment of PricewaterhouseCoopers LLP as our
independent registered public accounting firm for the fiscal year ending June
2,
2007, must be approved by the affirmative vote of a majority of the votes cast
at the annual meeting.
A
representative of PricewaterhouseCoopers LLP is expected to be present at the
annual meeting to respond to appropriate questions. The representative will
have
the opportunity to make a statement if he or she desires.
On
May 9,
2005, the audit committee of our board of directors appointed
PricewaterhouseCoopers LLP as our independent registered public accounting
firm
for the fiscal year ending May 28, 2005, and the fiscal year ending June 3,
2006, and dismissed Grant Thornton LLP as our independent auditor for fiscal
2005, effective May 9, 2005.
Grant
Thornton LLP's reports on our consolidated financial statements as of and for
the fiscal years ended May 29, 2004, and May 31, 2003 did not contain an adverse
opinion or a disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope, or accounting principles.
In
connection with the audits of our financial statements for the fiscal years
ended May 29, 2004 and May 31, 2003 and through the interim period ended May
9,
2005, there were no disagreements between us and Grant Thornton LLP on any
matters of accounting principles or practices, financial statement disclosure,
or auditing scope or procedure, which, if not resolved to the satisfaction
of
Grant Thornton LLP would have caused Grant Thornton LLP to make reference to
the
matter in their report. During the fiscal years ended May 29, 2004 and May
31,
2003 and the interim period ended May 9, 2005, there were no "reportable
events" (as defined in Regulation S-K, Item 304(a)(1)(v)).
During
our fiscal years ended May 31, 2003 and May 29, 2004, and the interim period
ended May 9, 2005, we did not consult with PricewaterhouseCoopers LLP
regarding any of the matters or events set forth in Item 304(a)(2)(i) or (ii)
of
Regulation S-K.
Recommendation
of the Board of Directors
The
board of directors recommends a vote FOR the ratification of the appointment
of
PricewaterhouseCoopers LLP as our company's independent registered public
accounting firm for the fiscal year ending June 2, 2007.
The
Audit
Committee of the Board of Directors (the "Committee") is composed of three
directors, each of whom has been determined by the Board Of Directors (the
"Board") to be independent under the listing standards of The Nasdaq Stock
Market ("Nasdaq"). The Committee operates under a written Audit Committee
Charter (the "Charter"), which was adopted by the Board of Directors on
April 19, 2004, and revised and approved by the Board of Directors on May
10, 2006, and a copy of which is attached as Appendix B to this proxy statement.
Management
of the Company is responsible for internal controls, the financial reporting
process and compliance with laws and regulations and ethical business standards.
The Company's independent registered public accounting firm is responsible
for
performing an independent audit of the Company's financial statements in
accordance with auditing standards generally accepted in the United States
of
America and for issuing a report thereon. The Committee is charged with the
duty
to monitor and oversee these processes.
Pursuant
to the Charter, the primary responsibilities of the Committee are to assist
the
Board in its oversight of (i) the integrity of the Company's financial
statements, financial reporting process, system of internal controls over
financial reporting, and audit process, (ii) the Company's compliance with,
and
process for monitoring compliance with, legal and regulatory requirements,
(iii)
the independent registered public accounting firm's qualifications and
independence and (iv) the performance of the Company's independent registered
public accounting firm, including, without limitation, ensuring that interim
quarterly financial statements are reviewed by the Company's independent
registered public accounting firm. The quarterly reviews include discussions
by
management and the independent registered public accounting firm with the
Committee. The Committee must also pre-approve all audit and permitted non-audit
services to be performed by the independent registered public accounting firm.
The
Committee has the authority to select, determine the compensation paid to,
and
replace the Company's independent registered public accounting firm. The Audit
Committee has selected PricewaterhouseCoopers LLP as the Company's independent
registered public accounting firm for fiscal 2007.
The
Charter provides that the Committee shall always consist of not less than three
members, all of whom must be independent directors. No member of the Committee
may serve on the audit committees of more than two other public companies unless
the Board determines that such simultaneous service would not impair the ability
of such director to serve effectively on the Committee, and discloses this
determination in the proxy statement. To carry out its responsibilities, the
Committee met ten times during fiscal year 2006.
The
Committee met with both management and the Company's independent registered
public accounting firm to review and discuss the Company's financial statements
for the fiscal year ended June 3, 2006, prior to their issuance and to
discuss significant accounting issues and policies. Management advised the
Committee that the Company's consolidated financial statements were prepared
in
accordance with accounting principles generally accepted in the United States
of
America, and the Committee has reviewed and discussed the consolidated financial
statements with management and the independent registered public accounting
firm. The Committee's review included discussion with PricewaterhouseCoopers
of
matters that are required to be discussed pursuant to Statement on Auditing
Standards No. 61 (Communication with Audit Committees).
The
Committee discussed with PricewaterhouseCoopers matters relating to
PricewaterhouseCoopers' independence, including the written disclosures and
the
letter provided by PricewaterhouseCoopers to the Committee as required by the
Independence Standards Board Standard No. 1 (Independence Discussions with
Audit
Committees). PricewaterhouseCoopers informed the Committee that it was
independent with respect to the Company within the regulations promulgated
by
the Securities and Exchange Commission and the requirements of the Independence
Standards Board. The Committee has concluded that PricewaterhouseCoopers is
independent of the Company and its management.
The
Committee discussed with the Company's independent registered public accounting
firm the overall scope and plan for their audit. The Committee met with the
independent registered public accounting firm, with and without management
present, to discuss the results of their examination, the evaluation of the
Company's internal controls, and the overall quality of the Company's financial
reporting.
On
the
basis of these reviews and discussions, the Committee recommended to the Board
of Directors that the Board approve the inclusion of the Company's audited
consolidated financial statements in the Company's Annual Report on Form 10-K
for the fiscal year ended June 3, 2006, for filing with the Securities and
Exchange Commission.
Members
of the Audit Committee:
Dennis
S.
Meteny, Chairman
Howard
W.
Donnelly
Robert
E.
Flaherty
The
Audit
Committee Report does not constitute soliciting material, and shall not be
deemed to be filed or incorporated by reference into any other filing we make
under the Securities Act of 1933, as amended, or the Securities Exchange Act
of
1934, as amended, except to the extent that we specifically incorporate the
Audit Committee Report by reference therein.
The
following table presents fees for professional audit services rendered by
PricewaterhouseCoopers LLP for the audit of our financial statements for the
fiscal years ended June 3, 2006 and May 28, 2005, and by Grant Thornton LLP
for
the re-issuance of their audit opinion and consent for the fiscal year ended
May
29, 2004, for inclusion in our Annual Reports on Form 10-K for the fiscal years
ended June 3, 2006 and May 28, 2005, reviews of quarterly financial statements
and procedures performed relating to our registration statements on Form S-8
during the fiscal year ended May 28, 2005, and fees billed for other services
rendered by PricewaterhouseCoopers LLP and Grant Thornton LLP during those
periods:
|
2006
|
2005
|
||||||
|
Audit
Fees(1)
|
$
|
730
|
$
|
215
|
|||
|
Audit-Related
Fees(2)
|
192
|
70
|
|||||
|
Tax
Fees
|
33
|
-
|
|||||
|
All
Other Fees
|
-
|
-
|
|||||
|
$
|
955
|
$
|
285
|
||||
| ____________________________________ |
|
(1)
|
Fees
paid for professional services in connection with the audit of our
annual
financial statements (including, in fiscal 2006, the audit of (i)
management's assessment of the effectiveness of our internal control
over
financial reporting and (ii) the effectiveness of our internal control
over financial reporting, pursuant to Section 404 of the Sarbanes-Oxley
Act of 2002), procedures in fiscal 2006 relating to our registration
statement on Form S-3, review of our quarterly financial statements
and
procedures in fiscal 2005 relating to our registration statements
on Form
S-8.
|
|
(2)
|
Audit-related
fees consist primarily of profit sharing and 401(k) plan audits and
interpretation of accounting standards and, in fiscal 2006, due diligence
services provided in conjunction with an attempted acquisition of
another
company.
|
Consistent
with SEC policies regarding auditor independence, the audit committee has
responsibility for appointing, setting compensation and overseeing the work
of
the independent registered public accounting firm. In recognition of this
responsibility, the audit committee has established a policy to pre-approve
all
audit and permissible non-audit services provided by the independent registered
public accounting firm.
Prior
to
engagement of the independent registered public accounting firm for the next
year's audit, management submits a list of services and related fees expected
to
be rendered during that year within each of four categories of services to
the
audit committee for approval.
1.
Audit
services
include audit work performed on the financial statements and internal control
over financial reporting, as well as work that generally only the independent
registered public accounting firm can reasonably be expected to provide,
including comfort letters, statutory audits, and discussions surrounding the
proper application of financial accounting and/or reporting standards.
2.
Audit-Related
services
are for assurance and related services that are traditionally performed by
the
independent registered public accounting firm, including due diligence related
to mergers and acquisitions, employee benefit plan audits, and special
procedures required to meet certain regulatory requirements.
3.
Tax
services
include all services, except those services specifically related to the audit
of
the financial statements, performed by the independent registered public
accounting firm's tax personnel, including tax analysis, assisting with
coordination of execution of tax related activities, primarily in the area
of
corporate development, supporting other tax-related regulatory requirements
and
tax compliance and reporting.
4.
Other
Fees
are
those associated with services not captured in the other categories. We
generally don't request such services from the independent registered public
accounting firm.
Prior
to
engagement, the audit committee pre-approves the independent registered public
accounting firm services within each category. The fees are budgeted and the
audit committee requires the independent registered public accounting firm
and
management to report actual fees versus the budget quarterly throughout the
year
by category of service. During the year, circumstances may arise when it may
become necessary to engage the independent registered public accounting firm
for
additional services not contemplated in the original pre-approval categories.
In
those instances, the audit committee requires specific pre-approval before
engaging the independent registered public accounting firm.
The
audit
committee may delegate pre-approval authority to one or more of its members.
The
member to whom such authority is delegated must report, for informational
purposes only, any pre-approval decisions to the audit committee at its next
scheduled meeting.
The
following table sets forth information concerning the compensation for services,
in all capacities for fiscal years 2006, 2005, and 2004, of (i) those persons
who were, during fiscal 2006, our Chief Executive Officer ("CEO") (Eamonn P.
Hobbs), and (ii) those persons who were, at the end of fiscal 2006, our four
most highly compensated executive officers other than our CEO (collectively,
with the CEO, the "Named Executive Officers"):
|
Annual
Compensation
|
Long-Term
Compensation
|
||||||||||||||||
| Awards | Payouts | ||||||||||||||||
|
Name
and Principal
Position
|
Fiscal
Year
|
Salary
($)
|
Bonus
($)
|
Other
Annual
Compen-
sation(1)
($)
|
Restricted
Stock
Awards(2)(3)
($)
|
Securities
Underlying
Options/
SARs
(#)
|
LTIP
Payouts
($)
|
All
Other
Compen-
sation(4)
($)
|
|||||||||
|
Eamonn
P. Hobbs
President,
Chief Executive Officer
|
2006
2005
2004
|
$289,000
267,000
254,400
|
$104,618
140,175
126,882
|
None
None
None
|
None
$310,530
None
|
45,000
35,500
None
|
None
None
None
|
$12,533
10,834
10,572
|
|||||||||
|
Robert
M. Rossell
Vice
President
|
2006
2005
2004
|
$176,567
163,488
156,000
|
$47,938
73,570
65,286
|
None
None
None
|
None
$150,560
None
|
10,200
10,200
None
|
None
None
None
|
$11,710
10,285
11,128
|
|||||||||
|
Paul
J. Shea
Vice
President
|
2006
2005
2004
|
$181,427
167,988
156,000
|
$49,257
74,083
65,286
|
None
None
None
|
None
$150,560
None
|
10,200
10,200
None
|
None
None
None
|
$11,100
9,989
11,119
|
|||||||||
|
William
M. Appling
Vice
President
|
2006
2005
2004
|
$168,078
155,628
148,500
|
$45,633
69,612
63,484
|
None
None
None
|
None
$150,560
None
|
10,200
10,200
None
|
None
None
None
|
$11,445
10,174
10,518
|
|||||||||
|
Brian
S. Kunst
Vice
President
|
2006
2005
2004
|
$170,100
157,500
143,000
|
$46,182
70,875
59,845
|
None
None
None
|
None
$150,560
None
|
10,200
8,000
None
|
None
None
None
|
$11,532
9,864
10,029
|
|||||||||
|
(1)
|
We
have concluded that the aggregate amount of perquisites and other
personal
benefits paid to each of the Named Executive Officers for 2006, 2005,
and
2004 did not exceed the lesser of 10% of such officer's total annual
salary and bonus for fiscal 2006, 2005, or 2004 or $50,000; such
amounts
are, therefore, not reflected in the table.
|
|
(2)
|
Awards
settle in our common stock. As of June 3, 2006, the number and value
of
the aggregate awards for each Named Executive Officer were as follows:
16,500 shares valued at $484,770 for Mr. Hobbs; 8,000 shares valued
at
$235,040 for each of Mr. Rossell, Mr. Shea, Mr. Appling, and Mr.
Kunst.
All awards were unvested at June 3, 2006.
|
|
(3)
|
Of
the total awards, 50% are restricted stock units, which vest in full
upon
the recipient's continued employment through the end of fiscal year
2009,
or on or about May 30, 2009. The remaining 50% of the awards are
performance share awards. Under the performance share award agreements,
25% of the total performance shares awarded may be earned for each
of four
consecutive fiscal years of AngioDynamics, commencing with its 2006
fiscal
year. Each year, one-half of the shares available to be earned that
year
will be earned upon achievement by AngioDynamics of specified earnings
per
share ("EPS") goals and the other half of the shares will be earned
upon
the achievement of specified revenue goals. Shares not earned in
a fiscal
year may be earned in the following fiscal year if the EPS or revenue
goals in such following year are exceeded by an amount at least equal
to
the shortfall for the applicable goal for the preceding year. The
EPS and
revenue goals are the same for all of the performance share awards
granted
in fiscal 2005. The performance share awards
are
|
subject
to additional conditions, including the recipient's continued employment with
AngioDynamics and the recipient's not competing with its business or otherwise
engaging in other activities detrimental to its business.
|
(4)
|
For
each of the Named Executive Officers, the amounts reported include
amounts
we contributed under our Profit Sharing Plan and, as matching
contributions, under the companion 401(k) Plan. For fiscal 2006,
2005, and
2004, such amounts contributed were: $12,308, $10,542, and $9,764,
respectively, for Mr. Hobbs; $11,382, $10,043, and $10,698, respectively,
for Mr. Rossell; $10,819, $9,658, and $10,689, respectively, for
Mr. Shea;
$11,302, $10,043, and $10,109, respectively, for Mr. Appling; and
$11,329,
$9,672, and $9,635, respectively, for Mr. Kunst. For each of the
Named
Executive Officers, the amounts reported include term life insurance
premiums we paid. For 2006, 2005, and 2004, such amounts contributed
were:
$225, $292, and $808, respectively, for Mr. Hobbs; $328, $242, and
$430,
respectively, for Mr. Rossell; $281, $331, and $430, respectively,
for Mr.
Shea; $144, $131, and $409, respectively, for Mr. Appling; and $203,
$192,
and $394, respectively, for Mr.
Kunst.
|
The
following table sets forth certain information concerning all grants of stock
options during fiscal 2006 to our Named Executive Officers. We did not grant
any
SARs in fiscal 2006.
|
Name
|
Number
of
Securities
Underlying
Options
Granted
(1)
(#)
|
%
of Total
Options
Granted
to
Employees
in
Fiscal
Year
|
Exercise
or
Base
Price
($/Share)
|
Expiration
Date
|
Grant
Date
Present
Value $
(2)
|
|||||
|
Eamonn
P. Hobbs
|
45,000
|
17.2%
|
$24.21
|
7/29/2015
|
$554,148
|
|||||
|
Robert
M. Rossell
|
10,200
|
3.9%
|
$24.21
|
7/29/2015
|
$125,607
|
|||||
|
Paul
J. Shea.
|
10,200
|
3.9%
|
$24.21
|
7/29/2015
|
$125,607
|
|||||
|
William
M. Appling
|
10,200
|
3.9%
|
$24.21
|
7/29/2015
|
$125,607
|
|||||
|
Brian
S. Kunst
|
10,200
|
3.9%
|
$24.21
|
7/29/2015
|
$125,607
|
|||||
|
(1)
|
Options
for 25% of the shares vest and become exercisable on July 29, 2006,
July
29, 2007, July 29, 2008, and July 29, 2009, respectively. All of
these
options will vest in full upon a change in control of AngioDynamics,
as
defined in our 2004 Stock and Incentive Award Plan.
|
|
(2)
|
Calculated
using the Black-Scholes valuation model with the following assumptions:
expected volatility (57.77%), risk-free rate of return (4.1%), dividend
yield (0%), and expected time of exercise (4.5
years).
|
The
following table sets forth certain information concerning all exercises of
stock
options during fiscal 2006 by our Named Executive Officers and the fiscal
year-end value of unexercised stock options held by such officers on an
aggregated basis. No SARs were exercised during, or were outstanding as of
the
end of, fiscal 2006.
|
Number
of Securities
Underlying
Unexercised
Options at
June
3, 2006
(#)
|
Value
of Unexercised
In-the-Money
Options
at
June
3, 2006(1)
($)
|
|||||||
|
Name
|
Shares
Acquired on Exercise
(#)
|
Value
Realized
($)
|
Exercisable/Unexercisable
(2)
|
Exercisable/Unexercisable
(2)
|
||||
|
Eamonn
P. Hobbs
|
234,100
|
$5,024,152
|
101,321/71,625
|
$2,457,902/$633,975
|
||||
|
Robert
M. Rossell
|
2,550
|
$30,203
|
None/17,850
|
None/$176,664
|
||||
|
Paul
J. Shea
|
27,000
|
$465,341
|
2,550/17,850
|
$41,310/$176,664
|
||||
|
William
M. Appling
|
39,000
|
$796,976
|
2,550/17,850
|
$41,310/$176,664
|
||||
|
Brian
S. Kunst
|
None
|
None
|
2,000/16,200
|
$32,400/$149,934
|
||||
|
(1)
|
Options
are "in-the-money" if, on June 3, 2006, the market price of our common
stock exceeded the exercise price of such options. On June 3, 2006,
the
closing price of our common stock was $29.38. The value of such options
is
calculated by determining the difference between the aggregate market
price of the stock covered by the options on June 3, 2006 and the
aggregate exercise price of such options.
|
|
(2)
|
Options
are exercisable into common stock of
AngioDynamics.
|
We
do not
have any employment, termination of employment, or change-of-control agreements
with any of our executive officers.
In
fiscal
2006, we did not adjust or amend the exercise price of any stock options
previously awarded to any of the Named Executive Officers.
The
following directors serve on the compensation committee of our board of
directors: Messrs. Flaherty, Casciaro and Gold. None of these persons was an
officer or employee of AngioDynamics or of its subsidiary during fiscal 2006,
nor was formerly an officer or employee of AngioDynamics or its subsidiary.
None
of such directors had any relationship requiring disclosure by us under Item
404
of Regulation S-K.
General
The
compensation committee of the board of directors (the "Compensation Committee")
is composed solely of directors who are not current or former employees of
AngioDynamics, Inc. (the "Company") and each has been determined by the board
of
directors (the "Board") to be independent under the revised listing standards
of
The Nasdaq Stock Market LLC. The Board has delegated to the Compensation
Committee the responsibility to evaluate and make recommendations to the Board
regarding the compensation of the Chief Executive Officer ("CEO") and to approve
the compensation of the other executive officers of the Company. The
Compensation Committee also administers all executive compensation programs,
incentive compensation plans and equity-based plans and all other compensation
and benefit programs currently in place at the Company.
Compensation
Philosophy and Objectives
The
Company operates in an extremely competitive industry. The Compensation
Committee believes that the compensation programs for the executive officers
should be designed to attract, motivate and retain talented executives
responsible for the Company's success and should be determined within a
framework based on the achievement of the Company's operating plans,
particularly sales from existing and new products, profits and operating
margins; individual contributions; and financial performance relative to the
Company's competitors. Within this overall philosophy, the Compensation
Committee's objectives are to:
|
·
|
offer
a total compensation program that takes into consideration the
compensation practices of similarly situated companies with which
the
Company competes for executive talent;
|
|
·
|
provide
annual bonus incentive awards that are based on the Company's meeting
or
exceeding its EBIT budget and individual executive performance;
and
|
|
·
|
align
the financial interests of executive officers with those of stockholders
by providing significant equity-based, long-term
incentives.
|
The
three
components of the compensation program for executive officers are base salary,
annual cash incentives and long-term equity-based incentive awards in the form
of stock options, performance share awards and restricted stock unit awards.
These components are administered with the goal of providing total compensation
that is competitive in the marketplace, while recognizing meaningful differences
in individual performance and offering the opportunity to earn superior rewards
when merited by individual and corporate performance
The
Compensation Committee's policy is to establish ranges for base salary, annual
cash incentives and long term, equity-based incentive awards for executive
officer positions, including that of the CEO, around the averages paid by
similarly situated companies, which are defined as publicly traded companies
of
similar size in the health care industry. In determining these ranges, the
Compensation Committee reviewed information from a compensation survey conducted
on the Company's behalf by Top Five Data Services, Inc., an independent
consulting company, covering compensation levels at a variety of such companies.
Base
Salaries
The
base
salary for each executive officer is determined at levels considered appropriate
for comparable positions at similarly situated companies. Adjustments to each
individual's base salary were made based on annual performance reviews with
consideration given to the incumbent's salary compared with the range of those
listed in the aforementioned survey. Among the criteria used in the annual
performance reviews were the work and supervisory performance of the executive,
demonstrated management and leadership skills, performance to specific
established personal goals, and the strengths and weaknesses that the executive
demonstrates on the job. Base salary adjustments for the executive officers
of
the Company averaged 8% during fiscal 2006, reflecting the performance of the
executive officers and the Compensation Committee's assessment of industry
salaries for the executive officers.
Annual
Cash Incentives
The
Compensation Committee believes that a substantial portion of the annual
compensation of each executive officer should be in the form of annual incentive
cash bonuses. In fiscal 2006, the target
incentive
payment amounts established for the CEO and other executive officers were,
respectively, 40% and 30% of base salary with 70% of the possible incentive
based on the Company's performance to its planned earnings before interest
and
taxes ("EBIT") and the remaining 30% of the possible incentive based on the
individual executive's performance to personal goals, both having been
established at the beginning of the fiscal year. The incentive plan sets a
threshold level of the Company's performance based on ÉBIT that must be attained
before any incentives are awarded. Once the fiscal year's threshold is reached,
specific formulas are in place to calculate the actual incentive payment for
each executive officer. Additional compensation up to a maximum of 50% of the
target incentive payment amounts may be awarded if the threshold is exceeded.
In
fiscal 2006, the Company exceeded its EBIT goals such that the CEO and the
other
executive officers were awarded 16% of the maximum EBIT-based incentive payment
allowed.
Long-Term,
Equity-Based Incentive Awards
Stock
Incentives.
In
2004, the Company adopted its 2004 Stock and Incentive Award Plan (the "2004
Plan") to supplement the Company's 1997 Stock Option Plan (the "1997 Plan"),
under which very few shares remained available for option grants. The 2004
Plan
provides for the grant of incentive awards, which may be, but need not be,
in
the form of performance share awards, performance unit awards, restricted stock
awards and restricted stock unit awards, as well as incentive and non-qualified
stock options and stock appreciation rights. The Compensation Committee has
made
grants of stock options, restricted stock unit awards and performance share
awards and, in the future, expects to offer other types of awards allowed under
the 2004 Plan in order to provide executive officers with an opportunity to
share, along with stockholders, in the long-term performance of the Company
and
to reward officers for their contribution to the Company's performance.
Stock
option grants generally are made initially to each executive officer upon his
or
her joining the Company and satisfying the requirements for eligibility under
the Company's plans, with additional grants being made annually in smaller
amounts as options under the initial grants vest. Stock options granted under
the 2004 Plan generally have a four-year vesting schedule and generally expire
ten years from the date of grant. The exercise price of options granted under
both of the Company's plans is at least 100% of the fair market value of the
underlying stock on the date of grant. The number of stock options granted
to
each executive officer is generally based upon several factors, including the
executive officer's position with the Company and salary and performance, and
are targeted to approximate the grants made, on average, by similarly situated
companies to executives with similar responsibilities. In fiscal 2006, the
Compensation Committee granted stock options for a total of 67,000 shares under
the 2004 Plan to the Company's executive officers other than the CEO. Each
officer received a grant equal to the mid-point of the established range for
his
job in recognition of the performance of the executive officers in achieving
net
sales and EBIT in excess of the Company's plan for fiscal 2005.
In
addition, in fiscal 2005, based on the Compensation Committee's assessment
of
labor market conditions and in order to further motivate the executive officers
to achieve superior levels of long-term financial performance, the Compensation
Committee granted 33,750 performance share awards and 33,750 restricted stock
unit awards to the Company's executive officers, including the CEO. Twenty-five
percent of each performance share award vests annually if, and to what extent,
the Company achieves predetermined revenue and earnings per share goals
established when the awards were made. Each restricted stock awards vests in
full four years after the date of grant provided the officer remains employed
by
the Company. The objective of these awards is to ensure that if the Company
meets its long term financial performance goals, the total earned by each
executive officer in salary, bonus, restricted stock and performance share
award
compensation over the four year period will equal what the Compensation
Committee projected would be the 75th
percentile of salary plus bonus compensation for similarly situated executives
over such four-year period. In making this determination, the
Compensation
Committee
assumed a 4% annual increase in salary and bonus compensation in peer group
companies and an increase in the Company's stock price reflective of the
Company's achieving its long term financial goals.
In
addition, in fiscal 2007, the Compensation Committee has made, and expects
to
make additional, stock option grants in accordance with the above guidelines
to
each of the Company's executive officers under the 2004 Plan.
CEO
Compensation
The
Compensation Committee evaluates, at least annually, the performance of the
Company's CEO and recommends to the Board for approval the CEO's annual
compensation including salary, bonus and equity-based compensation. For fiscal
2006, Mr. Hobbs' base salary and incentive bonus compensation were determined
in
accordance with the criteria described above. In June 2005, Mr. Hobbs received
a
salary increase of $22,000, reflecting the Compensation Committee's positive
assessment of his performance, particularly the achievement of the Company's
financial goals for fiscal 2005, and his leadership in that effort.
Mr. Hobbs earned $289,000 in base salary compensation during fiscal
2006.
Mr.
Hobbs
received an incentive bonus of $104,618 for fiscal 2006. Of this amount, $69,938
was based on the Company's exceeding its EBIT goal. The balance reflected his
personal contribution to the Company's exceeding the revenue and EBIT goals
projected in its fiscal 2006 budget; leadership in improving the Company's
gross
profit margin; developing strategic guidelines for evaluating company, product,
and new technology platform acquisitions; identifying and launching new
products; successfully overseeing the Company's Sarbannes-Oxley compliance
effort and the SAP software installation effort; advancing the succession
planning system for the Company; managing key relationships with investors;
and
speaking at industry meetings.
In
July
2005, Mr. Hobbs was granted an option under the 2004 Plan to purchase 45,000
shares of the Company's stock at the market price in recognition of the strong
performance of the Company against its financial plans for fiscal 2005 and
for
overseeing the successful public offering of the Company's stock. In addition,
the Compensation Committee awarded Mr. Hobbs approximately 25% of the total
performance share awards and restricted stock unit awards granted in fiscal
2006
on the same basis as the awards made to the Company's other executive officers,
as described above.
Internal
Revenue Code Section 162(m) Considerations
Section
162(m) of the Internal Revenue Code prohibits a publicly-held corporation,
such
as the Company, from claiming a deduction on its federal income tax return
for
compensation in excess of $1 million paid for a given fiscal year to the chief
executive officer (or person acting in that capacity) and to the four most
highly compensated officers of the Company other than the chief executive
officer as of the end of the Company's fiscal year. This limitation does not
apply to compensation that meets the requirements under section 162(m) for
"qualifying performance-based" compensation (i.e.,
compensation paid only if the individual's performance meets pre-established
objective goals based on performance criteria approved by shareholders). The
committee believes that awards under the Company's 2004 Plan will be deductible
pursuant to the section 162(m). However, awards under the 1997 Plan do not
qualify for the deduction.
In
2006,
the CEO and two other officers received compensation in excess of $1.0 million
as a result of exercising options granted under the 1997 Plan. The committee
does not intend to authorize any further option grants under the 1997 Plan;
however, exercises of additional options outstanding under the
1997
Plan
may result in the receipt by the CEO and other officers of compensation in
excess of $1.0 million in future years, which excess amounts will not be
deductible by the Company.
The
Compensation Committee
Robert
E.
Flaherty (Chairman)
Gregory
D. Casciaro
Jeffrey
G. Gold
The
following graph shows a two-year comparison of the cumulative total return
for
the Company's common stock and The Nasdaq Stock Market (U.S.) and The Nasdaq
Medical Equipment Index. The Company's common stock began trading on the Nasdaq
National Market on May 27, 2004.
|
5/04
|
5/04
|
8/04
|
11/04
|
2/05
|
5/05
|
8/05
|
11/05
|
2/06
|
6/06
|
|
|
ANGIODYNAMICS,
INC.
|
100.00
|
113.44
|
100.32
|
128.00
|
172.80
|
163.12
|
172.80
|
164.88
|
200.88
|
235.04
|
|
NASDAQ
STOCK MARKET (U.S.)
|
100.00
|
103.49
|
96.19
|
109.58
|
106.88
|
107.96
|
112.80
|
117.67
|
119.90
|
114.44
|
|
NASDAQ
MEDICAL EQUIPMENT
|
100.00
|
101.22
|
97.84
|
107.32
|
109.35
|
109.96
|
116.03
|
117.91
|
120.98
|
117.18
|
In
June
2004, we completed the initial public offering ("IPO") of our shares of common
stock. The offering consisted of 2,242,500 shares (including 292,500 shares
issued pursuant to the underwriters' over-allotment option) at an initial public
offering price of $11.00 per share. Prior to the offering, we were a wholly
owned subsidiary of E-Z-EM, Inc. After the offering, E-Z-EM held 80.4% of our
shares. On October 30, 2004, E-Z-EM distributed to its stockholders in the
form
of a dividend all of our shares of common stock that it owned, as a result
of
which E-Z-EM no longer owned any shares of our common stock.
Before
the IPO, we entered into a master separation and distribution agreement and
other agreements with E-Z-EM that relate to our relationship with E-Z-EM both
before and after the distribution by E-Z-EM to its stockholders of all of the
shares of our common stock held by E-Z-EM. In this section of our proxy
statement, references to E-Z-EM include all of its subsidiaries except us.
The
master separation and distribution agreement contains the key provisions related
to our separation from E-Z-EM and the distribution of our shares to E-Z-EM's
common stockholders. The other agreements referenced in the master separation
and distribution agreement govern various ongoing relationships between E-Z-EM
and us. These agreements consist of a corporate agreement and a tax allocation
and indemnification agreement.
Under
the
master separation and distribution agreement, we agreed to indemnify E-Z-EM
and
its officers, directors, stockholders, employees or other representatives from
all losses they suffer arising out of or due to any of the following:
|
·
|
our
failure to pay, perform or discharge in due course the liabilities,
if
any, assumed by us in connection with the distribution or our separation
from E-Z-EM;
|
|
·
|
our
failure to comply with the terms of the master separation and distribution
agreement or any of the other agreements we enter into with E-Z-EM
in
connection with the distribution;
|
|
·
|
any
untrue statement of a material fact or material omission contained
in the
prospectus for our IPO or any similar documents relating to the offering,
other than information provided by and related to E-Z-EM, or, in
connection with the distribution, if we provide E-Z-EM with such
information about our business;
|
|
·
|
any
action or inaction by us that causes the distribution by E-Z-EM of
our
stock to its stockholders to be taxable to E-Z-EM or its stockholders,
to
the extent E-Z-EM or its stockholders are adversely affected;
|
|
·
|
any
out-of-pocket payments by E-Z-EM under its $500,000 self-insurance
retention, which are limited to $500,000 per claim, and any increases
in
E-Z-EM's insurance premiums caused by claims based upon our business;
|
|
·
|
any
defense of any claims, investigations or proceedings arising out
of or in
connection with the funding and other payment obligations of AngioDynamics
related to E-Z-EM's benefit plans;
|
|
·
|
any
credit support agreement (e.g.,
guaranties) previously entered into by E-Z-EM for our benefit;
|
|
·
|
any
proceedings relating to the operation of our business prior to the
date of
distribution in which E-Z-EM is a defendant solely because it was
our
stockholder;
|
|
·
|
any
claims arising with respect to one of our pre-distribution employment
arrangements;
|
|
·
|
any
claims based on our gross negligence or willful misconduct in performing
intercompany services; or
|
|
·
|
any
claims based on our manufacturing and production for E-Z-EM.
|
These
indemnification obligations may be very substantial, particularly for any losses
resulting from any action or inaction by us that causes the distribution by
E-Z-EM to be taxable to E-Z-EM or its stockholders.
E-Z-EM
has agreed to similar, less expansive, indemnification obligations in favor
of
us and our officers, directors, stockholders, employees and other
representatives.
The
corporate agreement contained various provisions relating to E-Z-EM's ownership
of our common stock, including approval rights for future issuances of our
stock
by us, registration rights for the shares held by E-Z-EM, and E-Z-EM's right
to
privately sell the shares and related matters. Included in these provisions
is
an agreement not to take any action or enter into any agreement during the
two
years following the distribution that would reasonably be expected to result
in
the distribution not being tax-free to E-Z-EM and its stockholders, except
with
the written consent of E-Z-EM.
Allocation
of Taxes
We
also
have a tax allocation and indemnification agreement ("tax allocation agreement")
with E-Z-EM. The tax allocation agreement governs the respective rights,
responsibilities and obligations of E-Z-EM and us with respect to tax
liabilities and benefits, tax attributes, tax contests and other matters
regarding income taxes, non-income taxes and related tax returns.
In
general, under the tax allocation agreement:
|
·
|
E-Z-EM
is responsible for any U.S. Federal income taxes of the affiliated
group
of which E-Z-EM is the common parent. However, during the period
(or
portion of a period) that we are included in the affiliated group,
we are
responsible for our share of such income tax liability computed as
if we
had filed a separate Federal income tax return that included only
us for
that period (or portion of a period). For any periods beginning
after
|
the
distribution of E-Z-EM of its shares of our common stock to its stockholders,
we
will be responsible for our own U.S. Federal income taxes.
|
·
|
E-Z-EM
is responsible for any U.S. Federal income taxes reportable on a
consolidated return that includes E-Z-EM or one of its subsidiaries
and
us. However, if we are included in such a group for U.S. Federal
income
tax purposes for periods (or portions thereof), we are responsible
for our
portion of such income tax liability as if we had filed a separate
tax
return that included only us for that period (or portion of a period).
Fiscal 2005 is the final year we will be included in an affiliated
group
with E-Z-EM for U.S. Federal income tax
purposes.
|
|
·
|
E-Z-EM
is responsible for any U.S. Federal income taxes reportable on returns
that include only E-Z-EM and its subsidiaries (excluding us), and
we are
responsible for any state or local income taxes filed on returns
that
include only us.
|
|
·
|
E-Z-EM
and we are each responsible for any non-income taxes attributable
to our
business for all periods.
|
E-Z-EM
is
primarily responsible for preparing and filing any tax return for the E-Z-EM
affiliated group for U.S. Federal income tax purposes. We are responsible for
preparing and filing any tax returns that include only us.
We
generally have exclusive authority to control tax contests related to tax
returns that include only us and our subsidiaries. E-Z-EM generally has
exclusive authority to control tax contests related to any tax returns of the
E-Z-EM affiliated group for U.S. Federal income tax purposes and related to
any
consolidated, combined or unitary group for U.S. state or local income tax
purposes that includes E-Z-EM or any of its subsidiaries. However, E-Z-EM must
consult with us with respect to any tax issue relating to us or any of our
subsidiaries.
The
tax
allocation agreement also assigns responsibilities for administrative matters,
such as the filing of returns, payment of taxes due, retention of records and
conduct of audits, examinations or similar proceedings. In addition, the tax
allocation agreement provides for cooperation and information allocation with
respect to taxes.
E-Z-EM
has received a private letter ruling from the IRS that the distribution of
its
shares of AngioDynamics common stock to the E-Z-EM stockholders will qualify
as
a tax-free distribution for which no gain or loss is recognized by E-Z-EM or
its
stockholders for Federal income tax purposes under section 355 and related
provisions of the Internal Revenue Code. In order to obtain the ruling, we
were
required to make certain representations regarding our company and our business
and E-Z-EM was required to make certain representations regarding it and its
business. We have also agreed to certain restrictions that are intended to
preserve the tax-free status of the distribution. We may take certain actions
otherwise prohibited by these covenants if E-Z-EM seeks and obtains another
private letter ruling from the IRS to the effect that such action would not
jeopardize the tax-free status of the distribution. These covenants include
restrictions on our:
|
·
|
issuance,
sale or acquisition of our stock or other securities (including securities
convertible into our stock but excluding certain compensatory
arrangements);
|
|
·
|
sales
of assets outside the ordinary course of business; and
|
|
·
|
entering
into any other corporate transaction that, together with the stock
that
was sold in our initial public offering, and certain other stock
transactions, would cause us to undergo a 50% or greater change in
our
stock ownership.
|
We
have
generally agreed to indemnify E-Z-EM and its stockholders against any and all
tax-related liabilities incurred by them relating to the distribution to the
extent caused by an acquisition of our stock or assets, or other actions of
ours.
For
information regarding our consulting agreement with Donald A. Meyer, a former
director, please see "Compensation of Directors" on page 11
of this
proxy statement.
ANNUAL
REPORT
All
stockholders of record as of the record date, have been sent, or are
concurrently herewith being sent, a copy of the Company's Annual Report on
Form
10-K for the fiscal year ended June 3, 2006.
Any
stockholder of the Company may obtain without charge additional copies of the
Company's Annual Report on Form 10-K for the 2006 fiscal year (without
exhibits), as filed with the Securities and Exchange Commission, by writing
to:
Chief
Financial Officer
AngioDynamics,
Inc.
603
Queensbury Avenue
Queensbury,
New York 12804
STOCKHOLDER
PROPOSALS AND NOMINATIONS
Under
Rule 14a-8 under the Exchange Act, stockholders may present proper proposals
for
inclusion in our proxy statement and for consideration at our next annual
meeting of stockholders. To be eligible for inclusion in our 2007 proxy
statement, your proposal must be received by us no later than May 25,
2007, and must otherwise comply with Rule 14a-8. While the board of directors
will consider stockholder proposals, we reserve the right to omit from our
proxy
statement stockholder proposals that we are not required to include under the
Exchange Act, including under Rule 14a-8.
In
addition, our Bylaws contain an advance notice provision with respect to matters
to be brought before at an annual meeting of stockholders, including nominations
for directors, and not included in our proxy statement. If you would like to
nominate a director or bring any other business before the stockholders at
the
2007 Annual Meeting, you must comply with the procedures contained in the Bylaws
and you must notify us in writing, and such notice must be delivered to or
received by our Secretary no less than 90 days nor more than 120 days prior
to
October 24, 2007.
You
may
write to our Secretary at our principal executive office, 603 Queensbury
Avenue, Queensbury, New York 12804, to deliver the notices discussed above
and
to request a copy of the relevant Bylaw provisions regarding the requirements
for making stockholder proposals and nominations of directors.
As
of
the
date of this proxy statement, we know of no matters other than those set forth
herein that will be presented for consideration at the meeting. If any other
matter or matters are properly brought before the meeting or any adjournment
thereof, the persons named in the accompanying proxy will have discretionary
authority to vote, or otherwise act, with respect to such matters in accordance
with their judgment.
APPENDIX
A
ANGIODYNAMICS,
INC.
2004
STOCK AND INCENTIVE AWARD PLAN
(As
amended by the Board of Directors on August 15, 2006)
1. Purposes. The
primary purposes of this Plan are (a) to provide competitive equity incentives
that will enable the Company to attract, retain, motivate and reward persons
who
render services that benefit the Company or other enterprises in which the
Company has a significant interest and (b) to align the interests of such
persons with the interests of the Company's shareholders generally
2. Definitions.
Unless
otherwise required by the context, the following terms, when used in this Plan,
shall have the meanings set forth in this Section 2.
(a) "Affiliate"
means an affiliate as defined in Rule 12b-2 promulgated under Section 12 of
the
Exchange Act.
(b) "Allied
Enterprise" means a business enterprise, other than the Company or a Subsidiary,
in which the Committee determines the Company has a significant interest,
contingent or otherwise. E-Z-EM, Inc. shall be deemed to be an Allied Enterprise
while it is an Affiliate of the Company.
(c) "Appreciation-Only
Award" means (i) Options and Stock Appreciation Rights the exercise price of
which is equal to at least 100% of Fair Market Value on the date on which the
Options or Stock Appreciation Rights are granted, and (ii) Linked Stock
Appreciation Rights that are granted as an alternative to the related Option
after the date of grant of such Option, the exercise price of which Stock
Appreciation Rights is equal to at least 100% of Fair Market Value on the date
on which such Option was granted.
(d) "Award"
means an award granted under this Plan in one of the forms provided for in
Section 3(a).
(e) "Beneficiary"
means a person or entity (including but not limited to a trust or estate),
designated in writing by a Service Provider or other rightful holder of an
Award, on such forms and in accordance with such terms and conditions as the
Committee may prescribe, to whom such Service Provider's or other rightful
holder's rights under the Plan shall pass in the event of the death of such
Service Provider or other rightful holder. In the event that the person or
entity so designated is not living or in existence at the time of the death
of
the Service Provider or other rightful holder of the Award, or in the event
that
no such person or entity has been so designated, the "Beneficiary" shall mean
the legal representative of the estate of the Service Provider or other rightful
holder, or the person or entity to whom the Service Provider's or other rightful
holder's rights with respect to the Award pass by will or the laws of descent
and distribution.
(f) "Board"
or "Board of Directors" means the Board of Directors of the Company, as
constituted from time to time.
(g) "Change
in Control" means that any of the following events has occurred:
(i) any
Person is or becomes the Beneficial Owner, directly or indirectly, of securities
of the Company (not including in the securities beneficially owned by such
Person any securities acquired directly from the Company or its Affiliates)
representing more than 40% of
the
combined voting power of the Company's then outstanding securities, excluding
any Person who becomes such a Beneficial Owner in connection with a transaction
described in clause (A) of paragraph (iii) below; or
(ii) the
following individuals cease for any reason to constitute a majority of the
number of directors serving on the Board: individuals who, at the beginning
of
any period of two consecutive years or less (not including any period prior
to
the Effective Date), constitute the Board and any new director (other than
a
director whose initial assumption of office is in connection with an actual
or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by the Company's
shareholders was approved or recommended by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors at the beginning
of such period or whose appointment, election or nomination for election was
previously so approved or recommended; or
(iii) there
is
consummated a merger or consolidation of the Company or any Subsidiary with
any
other corporation, other than (A) a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior to such
merger or consolidation continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving entity or any
parent thereof), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the Company
or
any Subsidiary, at least 60% of the combined voting power of the securities
of
the Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (B) a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction)
in which no Person is or becomes the Beneficial Owner, directly or indirectly,
of securities of the Company (not including in the securities beneficially
owned
by such Person any securities acquired directly from the Company or its
Affiliates) representing more than 40% or more of the combined voting power
of
the Company's then outstanding securities; or
(iv) the
shareholders of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for the sale
or
disposition by the Company of all or substantially all of the Company's assets,
other than a sale or disposition by the Company of all or substantially all
of
the Company's assets to an entity, at least 60% of the combined voting power
of
the voting securities of which are owned by shareholders of the Company in
substantially the same proportions as their ownership of the Company immediately
prior to such sale.
For
purposes of the foregoing provisions of this Section 2(g),
(A) the
term
"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the
Exchange Act;
(B) the
term
"Effective Date" shall mean the date on which the Plan is effective as provided
in Section 11 hereof; and
(C) the
term
"Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act,
as
modified and used in Sections 13(d) and 14(d) thereof, except that such term
shall not include (i) the Company or any of its subsidiaries, (ii) a trustee
or
other fiduciary holding securities under an employee benefit plan of the Company
or any of its Affiliates, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a
corporation
owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the
Company.
(h) "Code"
means the Internal Revenue Code of 1986, as amended and in effect from time
to
time. References to a particular section of the Code shall include references
to
any related Treasury Regulations and to successor provisions of the
Code.
(i) "Committee"
means the committee appointed by the Board of Directors to administer the Plan
pursuant to the provisions of Section 12(a) below.
(j) "Common
Stock" means common stock of the Company, par value $.01 per share.
(k) "Company"
means AngioDynamics, Inc., a Delaware corporation, and, except for purposes
of
determining under Section 2(g) hereof whether or not a Change in Control has
occurred, shall include its successors.
(l) "Dollar-Denominated
Awards" means Performance Unit Awards and any other Incentive Award the amount
of which is based on a specified amount of money (other than an amount of money
determined by reference to the Fair Market Value of a specified number of shares
of Common Stock). Options and Stock Appreciation Rights are not
Dollar-Denominated Awards.
(m) "Employee"
means any person who is employed by the Company or a Subsidiary on a full-time
or part-time basis, including an officer or director if he is so
employed.
(n) "Exchange
Act" means the Securities Exchange Act of 1934, as amended from time to
time.
(o) "Fair
Market Value" on a particular date means as follows:
(i) The
mean
between the high and low sale prices of a share of Common Stock on such date,
as
reported by the National Association of Securities Dealers, Inc. Automated
Quotation System or such other system then in use with regard to the Common
Stock or, if on such date the Common Stock is publicly traded but not quoted
by
any such system, the mean of the closing bid and asked prices of a share of
Common Stock on such date as furnished by a professional market maker making
a
market in the Common Stock; or
(ii) If
in (i)
above, there were no sales on such date reported as provided above, the
respective prices on the most recent prior day on which a sale was so
reported.
In
the
case of an Incentive Stock Option, if the foregoing method of determining fair
market value should be inconsistent with Section 422 of the Code, "Fair Market
Value" shall be determined by the Committee in a manner consistent with Section
422 of the Code and shall mean the value as so determined.
(p) "General
Counsel" means the General Counsel of the Company serving from time to
time.
(q) "Incentive
Award" means an amount of money that is paid or a number of shares of Common
Stock that are issued, or a right to be paid an amount of money or to be issued
a number of shares of Common Stock that is granted, subject to and in accordance
with Section 5 and the other applicable provisions of the Plan. The term
"Incentive Award" does not include Options or Stock Appreciation
Rights.
(r) "Incentive
Stock Option" means an option, including an Option as the context may require,
intended to meet the requirements of Section 422 of the Code.
(s) "Linked
Stock Appreciation Rights" means Stock Appreciation Rights that are linked
to
all or any part of an Option, subject to and in accordance with Section 8(a),
8(b) and the other applicable provisions of the Plan.
(t) "Non-Statutory
Stock Option" means an option, including an Option as the context may require,
which is not intended to be an Incentive Stock Option.
(u) "Option"
means an option granted under this Plan to purchase shares of Common Stock.
Options may be Incentive Stock Options or Non-Statutory Stock
Options.
(v) "Performance-Based
Compensation" means compensation that satisfies the requirements applicable
to
"performance-based compensation" under Code Section 162(m)(4)(C).
(w) "Performance
Share Award" means a right granted subject to and in accordance with Section
5
and the other applicable provisions of the Plan (including, without limitation,
Section 5.II., 5.II.(d), and 6(e)) to receive a specified number of shares
of
Common Stock, and/or an amount of money determined by reference to the Fair
Market Value of a specified number of shares of Common Stock, at a future time
or times if a specified performance goal is attained and any other terms or
conditions specified by the Committee are satisfied.
(x) "Performance
Unit Award" means a right granted subject to and in accordance with Section
5
and the other applicable provisions of the Plan (including, without limitation,
Section 5.II., 5.II.(d), and 6(e)) to receive a specified amount of money (other
than an amount of money determined by reference to the Fair Market Value of
a
specified number of shares of Common Stock), or shares of Common Stock having
a
Fair Market Value equal to such specified amount of money, at a future time
or
times if a specified performance goal is attained and any other terms or
conditions specified by the Committee are attained.
(y) "Plan"
means the AngioDynamics, Inc. Stock and Incentive Award Plan set forth in these
pages, as amended from time to time.
(z) "Restricted
Stock Award" means shares of Common Stock which are issued to a Service Provider
in accordance with Section 5.I. and the other applicable provisions of the
Plan
subject to restrictions and/or forfeiture provisions specified by the Committee
that will cease to apply at a future time or times if continued employment
conditions and/or other terms and conditions specified by the Committee are
satisfied.
(aa) "Restricted
Stock Unit Award" means shares of Common Stock that will be issued to a Service
Provider at a future time or times subject to and in accordance with Section
5.I. below and the other applicable provisions of the Plan if continued
employment conditions and/or other terms and conditions specified by the
Committee are satisfied.
(bb) "SEC
Rule
16b-3" means Rule 16b-3 of the Securities and Exchange Commission promulgated
under the Exchange Act, as such rule or any successor rule may be in effect
from
time to time.
(cc) "Section
16 Person" means a person subject to potential liability under Section 16(b)
of
the Exchange Act with respect to transactions involving equity securities of
the
Company.
(dd) "Service
Provider" means a person who renders, has rendered or who the Committee expects
to render services that benefit or will benefit the Company or a Subsidiary
or
an Allied Enterprise, in the capacity of employee, director, independent
contractor, agent, advisor, consultant, representative or otherwise, and
includes but is not limited to (i) Employees, (ii) personal service
corporations, limited liability companies and similar entities through which
any
such person renders, has rendered or is expected to render such services, and
(iii) members of the Board who are not Employees.
(ee) "Stock
Appreciation Right" means a right granted subject to and in accordance with
Section 8 and the other applicable provisions of the Plan.
(ff) "Subsidiary"
means a corporation or other form of business association of which shares (or
other ownership interests) having more than 50% of the voting power are owned
or
controlled, directly or indirectly, by the Company; provided, however, that
in
the case of an Incentive Stock Option, the term "Subsidiary" shall mean a
Subsidiary (as defined by the preceding clause) which is also a "subsidiary
corporation" as defined in Section 424(f) of the Code.
3. Grants
of Awards
(a) Subject
to the provisions of the Plan, the Committee may at any time, and from time
to
time, grant the following types of awards to any Service Provider:
(i) Incentive
Awards, which may but need not be in the form of Performance Share Awards,
Performance Unit Awards, Restricted Stock Awards, or Restricted Stock Unit
Awards;
(ii) Options;
and
(iii) Stock
Appreciation Rights.
Any
provision above of this Section 3(a) to the contrary notwithstanding, the
Committee may grant Incentive Stock Options only to Service Providers who are
Employees.
(b) After
an
Award has been granted,
(i) the
Committee may waive any term or condition thereof that could have been excluded
from such Award when it was granted, and
(ii) with
the
written consent of the affected participant, may amend any Award after it has
been granted to include (or exclude) any provision which could have been
included in (or excluded from) such Award when it was granted,
and
no
additional consideration need be received by the Company in exchange for such
waiver or amendment.
(c) The
Committee may (but need not) grant any Award linked to another Award, including,
without limitation, Options linked to Stock Appreciation Rights. Linked Awards
may be granted as either alternatives or supplements to one another. The terms
and conditions of any such linked Awards shall be determined by the Committee,
subject to the provisions of the Plan.
(d) No
Service Provider shall acquire any rights in or to or with respect to any Award
unless and until a written instrument signed by an officer of the Company and
setting forth the terms and conditions of such Award is delivered to him and
returned to the designated Company representative subscribed by the Service
Provider within the time, if any, prescribed therefore by the Committee or
its
delegate. Any such instrument shall be consistent with this Plan and incorporate
it by reference. Subscribing such instrument and returning it to the designated
Company representative as aforesaid shall constitute the Service Provider's
irrevocable agreement to and acceptance of the terms and conditions of the
Award
set forth in such instrument and of the Plan applicable to such
Award.
(e) The
Committee may grant Awards that qualify as Performance-Based Compensation,
as
well as Awards that do not qualify as Performance-Based Compensation. Any
provision of the Plan to the contrary notwithstanding, the Plan shall be
interpreted, administered and construed to permit the Committee to grant Awards
that qualify as Performance-Based Compensation as well as Awards that do not
so
qualify, and any provision of the Plan that cannot be so interpreted,
administered or construed shall to that extent be disregarded.
(f) The
Plan
is intended to enable the Committee to grant Options that qualify for the tax
treatment applicable to incentive stock options under Section 422 of the Code,
as well as Options and other Awards that do not qualify for such tax treatment.
Any provision of the Plan to the contrary notwithstanding, the Plan shall be
interpreted, administered and construed to enable the Committee to grant Options
that qualify for the tax treatment applicable to incentive stock options under
Section 422 of the Code as well as Options and other Awards that do not qualify
for such tax treatment, and any provision of the Plan that cannot be so
interpreted, administered or construed shall to that extent be
disregarded.
4. Stock
Subject to this Plan; Award Limits
(a) Subject
to the provisions below of Sections 4(c) and 4(d) and Section 10,
(i) the
maximum aggregate number of shares of Common Stock which may be issued pursuant
to Awards is 2,000,000 shares of Common Stock. Not more than 80% of such maximum
aggregate number of shares may be issued pursuant to Options that are Incentive
Stock Options; and
(ii) the
maximum number of shares of Common Stock with respect to which Options or Stock
Appreciation Rights may be granted during any calendar year to any Employee
or
other Service Provider is 200,000 shares of Common Stock; and
(iii) the
maximum number of shares of Common Stock with respect to which any and all
Awards other than Appreciation-Only Awards and Dollar-Denominated Awards may
be
granted in any one calendar year to any Employee or other Service Provider
is
100,000 shares of Common Stock; and
(iv) no
Employee or other Service Provider may receive more than $400,000 dollars (or
the equivalent thereof in shares of Common Stock, based on Fair Market Value
on
the date as of which the number of shares is determined) in payment of
Dollar-Denominated Awards that are granted to such Employee or other Service
Provider in any one calendar year.
If,
after
any Award is earned or exercised, the issuance or transfer of shares of Common
Stock or money is deferred, any amounts equivalent to dividends or other
earnings during the deferral period (including shares which may be distributed
in payment of any such amounts) shall be disregarded in applying the
per
Employee
or other Service Provider limitations set forth above in clauses (ii), (iii)
and
(iv) of this Section 4(a). If, in connection with an acquisition of another
company or all or part of the assets of another company by the Company or a
Subsidiary, or in connection with a merger or other combination of another
company with the Company or a Subsidiary, the Company either (A) assumes stock
options or other stock incentive obligations of such other company, or (B)
grants stock options or other stock incentives in substitution for stock options
or other stock incentive obligations of such other company, then none of the
shares of Common Stock that are issuable or transferable pursuant to such stock
options or other stock incentives that are assumed or granted in substitution
by
the Company shall be charged against the limitations set forth in this Section
4(a) above.
(b) Shares
which may be issued pursuant to Awards may be authorized but unissued shares
of
Common Stock, or shares of Common Stock held in the treasury, whether acquired
by the Company specifically for use under this Plan or otherwise, as the
Committee may from time to time determine, provided, however, that any shares
acquired or held by the Company for the purposes of this Plan shall, unless
and
until issued to a Service Provider or other rightful holder of an Award in
accordance with the terms and conditions of such Award, be and at all times
remain treasury shares of the Company, irrespective of whether such shares
are
entered in a special account for purposes of this Plan, and shall be available
for any corporate purpose.
(c) Subject
to Section 4(e) below, the maximum aggregate number of shares set forth in
Section 4(a)(i) above shall be charged only for the number of shares which
are
actually issued under the Plan; if any shares of Common Stock subject to an
Award shall not be issued to a Service Provider and shall cease to be issuable
to a Service Provider because of the termination, expiration, forfeiture or
cancellation, in whole or in part, of such Award or the settlement of such
Award
in cash or for any other reason, or if any such shares shall, after issuance,
be
reacquired by the Company because of a Service Provider's failure to comply
with
the terms and conditions of an Award, the shares not so issued, or the shares
so
reacquired by the Company, as the case may be, shall no longer be charged
against the limitations provided for in Section 4(a)(i) above and may again
be
made subject to Awards.
(d) Subject
to Section 4(e) below, if the purchase price of shares subject to an Option
is
paid in shares of Common Stock in accordance with the provisions of clause
(iv)
of Section 7(b) below, or if shares of Common Stock that are issued or issuable
pursuant to an Award are withheld by the Company in accordance with Section
13(e) below in full or partial satisfaction of withholding taxes due in respect
of the Award or the grant, exercise, vesting, distribution or payment of the
Award, the number of shares surrendered to the Company in payment of the
purchase price of the shares subject to the Option, or the number of shares
that
are withheld by the Company in payment of such withholding taxes, shall be
added
back to the maximum aggregate number of shares which may be issued pursuant
to
Awards under Section 4(a)(i) above, so that the maximum aggregate number of
shares which may be issued pursuant to Awards under Section 4(a)(i) above shall
have been charged only for the net number of shares that were issued by the
Company pursuant to the Option exercise or the Award.
(e) If
and to
the extent that the General Counsel determines that Section 4(c) or Section
4(d)
above or Section 8(f) below shall cause the Company or the Plan to fail to
satisfy any NASDAQ rules or listing standards that apply to the Company from
time to time, or shall prevent Incentive Stock Options granted under the Plan
from qualifying as Incentive Stock Options under Code Section 422, then to
that
extent (and only to that extent) Section 4(c), Section 4(d) or Section 8(f)
shall be disregarded.
5. Incentive
Awards
I. Generally.
Incentive Awards shall be subject to the following provisions:
(a) Incentive
Awards may be granted in lieu of, or as a supplement to, any other compensation
that may have been earned by the Service Provider prior to the date on which
the
Incentive Award is granted. The amount of an Incentive Award may be based upon
(i) a specified number of shares of Common Stock or the Fair Market Value of
a
specified number of shares of Common Stock, or (ii) an amount not determined
by
reference to the Fair Market Value of a specified number of shares of Common
Stock. Any Incentive Award may be paid in the form of money or shares of Common
Stock valued at their Fair Market Value on the payment date, or a combination
of
money and such shares, as the Committee may provide. Performance Share Awards,
Performance Unit Awards, Restricted Stock Awards and Restricted Stock Unit
Awards are specific forms of Incentive Awards, but are not the only forms in
which Incentive Awards may be made.
(b) Any
shares of Common Stock that are to be issued pursuant to an Incentive Award,
and
any money to be paid in respect of an Incentive Award, may be issued or paid
to
the Service Provider at the time such Award is granted, or at any time
subsequent thereto, or in installments from time to time, as the Committee
shall
determine. In the event that any such issuance or payment shall not be made
to
the Service Provider at the time an Incentive Award is granted, the Committee
may but need not provide that, until such shares are issued or money is paid
in
respect of the Award or until the Award is forfeited, and subject to such terms
and conditions as the Committee may impose, the Award shall earn amounts
equivalent to interest, dividends or another investment return specified by
the
Committee, which amounts may be paid as earned or deferred and reinvested,
and
which amounts may be paid either in money or shares of Common Stock, all as
the
Committee may provide.
(c) Incentive
Awards shall be subject to such terms and conditions, including, without
limitation, restrictions on the sale or other disposition of the shares issued
or transferred pursuant to such Award, and conditions calling for forfeiture
of
the Award or the shares issued pursuant thereto in designated circumstances,
as
the Committee may determine; provided, however, that upon the issuance of shares
pursuant to any such Award, the recipient shall, with respect to such shares,
be
and become a shareholder of the Company fully entitled to receive dividends,
to
vote and to exercise all other rights of a shareholder except to the extent
otherwise provided in the Award. In the case of a Restricted Stock Award, the
recipient shall pay the par value of the shares to be issued pursuant to the
Award unless such payment is not required by applicable law.
II. Performance
Share Awards and Performance Unit Awards
(a) Subject
to the terms and conditions of the Plan, the Committee may grant any Service
Provider a Performance Share Award and/or a Performance Unit Award. The
Committee may but need not provide that a specified portion of the Performance
Share Award or Performance Unit Award will be earned if the specified
performance goal applicable to the Award is partially attained.
(b) Subject
to Section 6(b) below, the specified performance goal applicable to a
Performance Share Award or Performance Unit Award may but need not consist,
without limitation, of any one or more of the following: completion of a
specified period of employment with or other service that benefits the Company
or a Subsidiary or an Allied Enterprise, achievement of financial or operational
goals, and/or the occurrence of a specified circumstance or event. The
performance goal applicable to Performance Share Awards and Performance Unit
Awards, and the other terms and conditions of such awards need not be the same
for each award or each Service Provider to whom an award is granted. A Service
Provider may (but need not) be granted Performance Share Awards and Performance
Unit Awards each year, and the performance period applicable to any such Award
may overlap with one or more years included in the performance period applicable
to any earlier- or later-granted Award. Subject to Section 6(d) below, the
Committee may retain discretion to adjust the determinations of the degree
of
attainment
of the performance objectives applicable to Performance Share Awards and
Performance Unit Awards.
(c) Subject
to Section 6(e) below, the Committee may but need not provide that, if the
Service Provider's death or disability or another circumstance or event
specified by the Committee occurs before the performance goal applicable to
a
Performance Share Award or Performance Unit Award is attained, and irrespective
of whether the performance goal is thereafter attained, the Performance Share
Award or Performance Unit Award will be earned in whole or in part (as the
Committee may specify).
(d) The
Committee may but need not provide for a Service Provider's Performance Share
Award or Performance Unit Award to be forfeited in whole or in part if such
Participant's employment by or other service that benefits the Company, a
Subsidiary or an Allied Enterprise terminates for any reason before shares
are
issued or money is paid (as applicable) in full settlement of such Performance
Share Award or Performance Unit Award.
(e) Except
as
otherwise provided in the instrument evidencing a Performance Share Award or
Performance Unit Award, Performance Share Awards and Performance Unit Awards
may
not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution
or
to a Beneficiary.
6. Performance
Measures and Other Provisions Applicable to Performance-Based Compensation
Awards
(a) Awards
that the Committee intends to qualify as Performance-Based Compensation shall
be
granted and administered in a manner that will enable such Awards to qualify
as
Performance-Based Compensation.
(b) The
performance goal applicable to any Award (other than an Appreciation-Only Award)
that the Committee intends to qualify as Performance-Based Compensation shall
be
based on earnings per share, total shareholder return, or any one or more of
the
following performance measures on a consolidated Company, business unit or
divisional level, or by product or product line, as the Committee may specify:
net sales, net income, operating income, return on equity, return on capital,
or
cash flow. The Committee shall select the performance measure or measures on
which the performance goal applicable to any such Award shall be based and
shall
establish the levels of performance at which such Award is to be earned in
whole
or in part. Any such performance measure or combination of such performance
measures may apply to the Service Provider's Award in its entirety or to any
designated portion or portions of the Award, as the Committee may specify.
The
foregoing performance measures shall be determined in accordance with generally
accepted accounting principles ("GAAPs") to the extent that GAAPs define such
performance measures, and otherwise shall be determined in accordance with
any
customary and reasonable definition the Committee approves. However,
notwithstanding the preceding sentence, unless the Committee determines
otherwise prior to payment of an Award to which this Section 6(b) applies,
and
subject to any exercise of "negative discretion" by the Committee,
extraordinary, unusual or non-recurring items; discontinued operations; effects
of accounting changes; effects of currency fluctuations; effects of financing
activities (by way of example, without limitation, effect on earnings per share
of issuing convertible debt securities); expenses for restructuring or
productivity initiatives; non-operating items; effects of acquisitions and
acquisition expenses; and effects of divestitures and divestiture expenses,
any
of which affect any performance goal applicable to such Award (including,
without limitation, earnings per share but excluding total shareholder return)
shall be automatically excluded or included in determining the extent to which
the performance goal has been achieved, whichever will produce the higher Award.
(c) Any
provision of the Plan to the contrary notwithstanding, but subject to Section
6(e), Section 9 and Section 10 below, Awards to which Section 6(b) above applies
shall (i) "be paid solely on account of the attainment of one or more
preestablished, objective performance goals" (within the meaning of Treasury
Regulation 1.162-27(e)(2) or its successor) over a period of one year or longer,
which performance goals shall be based upon one or more of the performance
measures set forth in Section 6(b) above, and (ii) be subject to such other
terms and conditions as the Committee may impose.
(d) The
terms
of the performance goal applicable to any Award to which Section 6(b) above
applies shall preclude discretion to increase the amount of compensation that
would otherwise be due upon attainment of the goal.
(e) An
Award
to which Section 6(b) above applies may be earned in whole or in part if the
Service Provider's death or disability or a Change in Control or another
circumstance or event specified by the Committee occurs before the performance
goal applicable to the Award is attained, and irrespective of whether the
performance goal applicable to the Award is thereafter attained, but only if
and
to the extent that (i) the Committee so provides with respect to such Award,
and
(ii) the Award will nevertheless qualify as Performance-Based Compensation
if
the performance goal applicable to such Award is attained and the Service
Provider's death or disability, a Change in Control or any such other
circumstance or event specified by the Committee does not occur.
7. Options.
Options
shall be subject to the following provisions and such other terms and
conditions, consistent with the following provisions, as the Committee may
provide in the instrument evidencing the Options:
(a) Subject
to the provisions of Section 10, the purchase price per share shall be, in
the
case of an Incentive Stock Option, not less than 100% of the Fair Market Value
of a share of Common Stock on the date the Incentive Stock Option is granted
(or
in the case of any optionee who, at the time such Incentive Stock Option is
granted, owns stock possessing more than 10 percent of the total combined voting
power of all classes of stock of his employer corporation or of its parent
or
subsidiary corporation, not less than 110% of the Fair Market Value of a share
of Common Stock on the date the Incentive Stock Option is granted) and, in
the
case of a Non-Statutory Stock Option, not less than the par value of a share
of
Common Stock on the date the Non-Statutory Stock Option is granted. Subject
to
the foregoing limitations, the purchase price per share may, if the Committee
so
provides at the time of grant of an Option, be indexed to the increase or
decrease in an index specified by the Committee.
(b) The
purchase price of shares subject to an Option may be paid in whole or in part
(i) in money, (ii) by bank-certified, cashier's or personal check subject to
collection, (iii) if so provided in the Option and subject to Section 402 of
the
Sarbanes-Oxley Act of 2002 as amended from time to time and subject to such
terms and conditions as the Committee may impose, by delivering to the Company
a
properly executed exercise notice together with a copy of irrevocable
instructions to a stockbroker to sell immediately some or all of the shares
acquired by exercise of the option and to deliver promptly to the Company an
amount of sale proceeds (or, in lieu of or pending a sale, loan proceeds)
sufficient to pay the purchase price, or (iv) if so provided in the Option
and
subject to such terms and conditions as may be specified in the Option, in
shares of Common Stock which have been owned by the optionee for at least six
months or which were acquired on the open market and which are surrendered
to
the Company actually or by attestation. Shares of Common Stock thus surrendered
shall be valued at their Fair Market Value on the date of exercise.
(c) Options
may be granted for such lawful consideration, including but not limited to
money
or other property, tangible or intangible, or labor or services received or
to
be received by the Company, a
Subsidiary
or an Allied Enterprise, as the Committee may determine when the Option is
granted. The consideration for the grant of options may consist of the discharge
of an obligation of the Company or an Affiliate. Subject to the foregoing and
the other provisions of this Section 7, each Option may be exercisable in full
at the time of grant or may become exercisable in one or more installments
and
at such time or times and subject to such terms and conditions, as the Committee
may determine. Without limiting the foregoing, an Option may (but need not)
provide by its terms that it will become exercisable in whole or in part upon
the completion of specified periods of service or earlier achievement of one
or
more performance objectives specified therein, or that it will become
exercisable only if one or more performance goals specified therein are
achieved. The Committee may at any time accelerate the date on which an Option
becomes exercisable, and no additional consideration need be received by the
Company in exchange for such acceleration. Unless otherwise provided in the
instrument evidencing the Option, an Option, to the extent it becomes
exercisable, may be exercised at any time in whole or in part until the
expiration or termination of the Option.
(d) Subject
to Section 13(a) below, each Option shall be exercisable during the life of
the
optionee only by him or his guardian or legal representative, and after death
only by his Beneficiary. Notwithstanding any other provision of this Plan,
(i)
no Option shall be exercisable after the tenth anniversary of the date on which
the Option was granted, and (ii) no Incentive Stock Option which is granted
to
any optionee who, at the time such Option is granted, owns stock possessing
more
than 10 percent of the total combined voting power of all classes of stock
of
his employer corporation or of its parent or subsidiary corporation, shall
be
exercisable after the expiration of five (5) years from the date such Option
is
granted. If an Option is granted for a term of less than ten years, the
Committee may, at any time prior to the expiration of the Option, extend its
term for a period ending not later than on the tenth anniversary of the date
on
which the Option was granted, and no additional consideration need be received
by the Company in exchange for such extension. Subject to the foregoing
provisions of this Section 7(d), the Committee may but need not provide for
an
Option to be exercisable after termination of the Service Provider's employment
or other service for any period and subject to any terms and conditions that
the
Committee may determine.
(e) An
Option
may, but need not, be an Incentive Stock Option; provided that the aggregate
Fair Market Value (determined as of the time the option is granted) of the
stock
with respect to which Incentive Stock Options may be exercisable for the first
time by any Employee during any calendar year (under all plans, including this
Plan, of his employer corporation and its parent and subsidiary corporations)
shall not exceed $100,000 unless the Code is amended to allow a higher dollar
amount.
(f) Shares
purchased pursuant to the exercise of an Option shall be issued to the person
exercising the Option as soon as practicable after the Option is properly
exercised. However, the Committee may (but need not) permit the person
exercising an Option to elect to defer the issuance of shares purchased pursuant
to the exercise of the Option on such terms and subject to such conditions
and
for such periods of time as the Committee may in its discretion provide. In
the
event of such deferral, the Committee may (but need not) pay the person who
exercised the Option amounts equivalent to any dividends paid on or reinvested
in such shares during the deferral period. Such amounts may be paid in cash
or
shares, as the Committee may provide.
(g) The
Committee shall not have the authority to reduce the exercise price of
outstanding Options, except as permitted by Section 10 below (relating to
adjustments for changes in capitalization and similar adjustments).
(h) No
Employee shall make any elective contribution or employee contribution to the
Plan (within the meaning of Treasury Regulation Section
1.401(k)-1(d)(2)(iv)(B)(4) or a successor thereto) during the six months after
the Employee's receipt of a hardship distribution from a plan of the
Company
or
a
related party within the provisions of Code Sections 414(b), (c), (m) or (o)
containing a cash or deferred arrangement under Section 401(k) of the Code.
The
preceding sentence shall not apply if and to the extent that the General Counsel
determines it is not necessary to qualify any such plan as a cash or deferred
arrangement under Section 401(k) of the Code.
(i) No
option
shall be exercisable unless and until the Company (i) obtains the approval
of
all regulatory bodies whose approval the General Counsel may deem necessary
or
desirable, and (ii) complies with all legal requirements deemed applicable
by
the General Counsel.
(j) An
Option
shall be considered exercised if and when written notice, signed by the person
exercising the Option and stating the number of shares with respect to which
the
Option is being exercised, is received by the designated representative of
the
Company on a properly completed form approved for this purpose by the Committee,
accompanied by full payment of the Option exercise price in one or more of
the
forms authorized in the instrument evidencing such Option and described in
Section 7(b) above for the number of shares to be purchased. No Option may
at
any time be exercised with respect to a fractional share unless the instrument
evidencing such Option expressly provides otherwise.
8. Stock
Appreciation Rights.
Stock
Appreciation Rights shall be subject to such terms and conditions, not
inconsistent with the Plan, as shall from time to time be determined by the
Committee and to the following terms and conditions:
(a) Stock
Appreciation Rights that are granted under the Plan may be linked to all or
any
part of an Option ("Linked Stock Appreciation Rights"), or may be granted
without any linkage to an Option ("Free-Standing Stock Appreciation Rights").
Linked Stock Appreciation Rights may be granted on the date of grant of the
related Option or on any date thereafter, as the Committee may
determine.
(b) Linked
Stock Appreciation Rights may be granted either as an alternative or a
supplement to the Option to which they are linked (the "related" Option). Linked
Stock Appreciation Rights that are granted as an alternative to the related
Option may only be exercised when the related Option is exercisable, and at
no
time may a number of such Linked Stock Appreciation Rights be exercised that
exceeds the number of shares with respect to which the related Option is then
exercisable. Upon exercise of Linked Stock Appreciation Rights that are granted
as an alternative to an Option, the holder shall be entitled to receive the
amount determined pursuant to Section 8(e) below. Exercise of each such Linked
Stock Appreciation Right shall cancel the related Option with respect to one
share of Common Stock purchasable under the Option. Linked Stock Appreciation
Rights that are granted as a supplement to the related Option shall entitle
the
holder to receive the amount determined pursuant to Section 8(e) below if and
when the holder purchases shares under the related Option or at any subsequent
time specified in the instrument evidencing such Stock Appreciation
Rights.
(c) Stock
Appreciation Rights may be granted for such lawful consideration, including
but
not limited to money or other property, tangible or intangible, or labor or
services received or to be received by the Company, a Subsidiary or an Allied
Enterprise, as the Committee may determine when the Stock Appreciation Rights
are granted. The consideration for the grant of Stock Appreciation Rights may
consist of the discharge of an obligation of the Company or an Affiliate. .
Subject to the foregoing and the other provisions of this Section 8, Stock
Appreciation Rights may be exercisable in full at the time of grant or may
become exercisable in one or more installments and at such time or times and
subject to such terms and conditions, as the Committee may determine. Without
limiting the foregoing, Stock Appreciation Rights may (but need not) provide
by
their terms that they will become exercisable in whole or in part upon the
completion of specified periods of service or earlier achievement of one or
more
specified performance objectives, or that they will become exercisable only
if
one or more specified performance goals are achieved. The Committee may at
any
time accelerate the date on which Stock
Appreciation
Rights become exercisable, and no additional consideration need be received
by
the Company in exchange for such acceleration. Unless otherwise provided in
the
Plan or the instrument evidencing the Stock Appreciation Rights, Stock
Appreciation Rights, to the extent they become exercisable, may be exercised
at
any time in whole or in part until they expire or terminate.
(d) No
Free-Standing Stock Appreciation Rights or Linked Stock Appreciation Rights
that
are granted as a supplement to the related Option shall be exercisable after
the
tenth anniversary of the date on which the Stock Appreciation Rights were
granted, and no Linked Stock Appreciation Rights that are granted as an
alternative to the related Option shall be exercisable after the related Option
ceases to be exercisable. If the Committee grants Stock Appreciation Rights
for
a lesser term than that permitted by the preceding sentence, the Committee
may,
at any time prior to expiration of the Stock Appreciation Rights, extend their
term to the maximum term permitted by the preceding sentence, and no additional
consideration need be received by the Company in exchange for such extension.
Subject to the foregoing provisions of this Section 8(d), the Committee may
but
need not provide for Stock Appreciation Rights to be exercisable after
termination of the Service Provider's employment or other service for any period
and subject to any terms and conditions that the Committee may
determine.
(e) Upon
exercise of Stock Appreciation Rights, the holder thereof shall be entitled
to
receive an amount of money, or a number shares of Common Stock that have a
Fair
Market Value on the date of exercise of such Stock Appreciation Rights, or
a
combination of money and shares valued at Fair Market Value on such date, as
the
Committee may determine, equal to the amount by which the Fair Market Value
of a
share of Common Stock on the date of such exercise exceeds the Exercise Price
(as hereafter defined) of the Stock Appreciation Rights, multiplied by the
number of Stock Appreciation Rights exercised; provided that in no event shall
a
fractional share be issued unless the instrument evidencing such Stock
Appreciation Rights expressly provides otherwise. In the case of Linked Stock
Appreciation Rights that are granted as an alternative to the related Option,
the Exercise Price shall be the price at which shares may be purchased under
the
related Option. In the case of Linked Stock Appreciation Rights that are granted
as a supplement to the related Option, and in the case of Free-Standing Stock
Appreciation Rights, the Exercise Price shall be the Fair Market Value of a
share of Common Stock on the date the Stock Appreciation Rights were granted,
unless the Committee specified a different price when the Stock Appreciation
Rights were granted (which shall not be less than the par value of the Common
Stock).
(f) Subject
to Section 4(e) above, (i) the limitations set forth in Section 4(a)(i) above
shall be charged only for the number of shares which are actually issued in
settlement of Stock Appreciation Rights; and (ii) in the case of an exercise
of
Linked Stock Appreciation Rights that were granted as an alternative to the
related Option, if the number of shares of Common Stock previously charged
against such limitations on account of the portion of the Option that is
cancelled in connection with such exercise in accordance with Section 8(b)
exceeds the number of shares (if any) actually issued pursuant to such exercise,
the excess may be added back to the maximum aggregate number of shares available
for issuance under the Plan.
(g) Subject
to Section 13(a) below, Stock Appreciation Rights shall be exercisable during
the life of the Service Provider only by him or his guardian or legal
representative, and after death only by his Beneficiary.
(h) The
Committee shall not have the authority to reduce the exercise price of
outstanding Stock Appreciation Rights, except as permitted by Section 10 below
(relating to adjustments for changes in capitalization and similar
adjustments).
9. Certain
Change in Control, Termination of Service, Death and Disability
Provisions.
The
Committee may at any time, and subject to such terms and conditions as it may
impose:
(a) authorize
the holder of an Option or Stock Appreciation Rights to exercise the Option
or
Stock Appreciation Rights (i) on and after a Change in Control, or (ii) after
the termination of the participant's employment or other applicable service
that
benefits the Company or a Subsidiary or an Allied Enterprise, or (iii) after
the
participant's death or disability, whether or not the Option or Stock
Appreciation Rights would otherwise be or become exercisable on or after any
such event, provided that in no event may an Option or Stock Appreciation Rights
be exercised after the expiration of their term;
(b) grant
Options and Stock Appreciation Rights, which become exercisable only in the
event of a Change in Control;
(c) provide
for Stock Appreciation Rights to be exercised automatically and only for money
in the event of a Change in Control;
(d) authorize
any Award to become non-forfeitable, fully earned and payable (i) upon a Change
in Control, or (ii) after the termination of the Service Provider's employment
with or other applicable service that benefits the Company or a Subsidiary
or an
Allied Enterprise, or (iii) after the Service Provider's death or disability,
whether or not the Award would otherwise be or become non-forfeitable, fully
earned and payable upon or after any such event;
(e) grant
Awards which become non-forfeitable, fully earned and payable only in the event
of a Change in Control; and
(f) provide
in advance or at the time of a Change in Control for money to be paid in
settlement of any Award in the event of a Change in Control, either at the
election of the participant or at the election of the Committee.
10. Adjustment
Provisions.
In the
event that any recapitalization, or reclassification, split-up, reverse split,
or consolidation of shares of Common Stock shall be effected, or the outstanding
shares of Common Stock shall be, in connection with a merger or consolidation
of
the Company or a sale by the Company of all or a part of its assets, exchanged
for a different number or class of shares of stock or other securities or
property of the Company or any other entity or person, or a spin-off or a record
date for determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in Common Stock or other property (other than
normal cash dividends) shall occur, (a) the maximum aggregate number and the
class of shares or other securities or property that may be issued in accordance
with Section 4(a)(i) above pursuant to Awards thereafter granted, (b) the
maximum number and the class of shares or other securities or property with
respect to which Options or Stock Appreciation Rights, or Awards other than
Appreciation-Only Awards and Dollar-Denominated Awards, may be granted during
any calendar year to any Employee or other Service Provider pursuant to Section
4(a)(ii) or 4(a)(iii) above, (c) the number and the class of shares or other
securities or property that may be issued or transferred under outstanding
Awards, (d) the purchase price to be paid per share under outstanding and future
Awards, and (e) the price to be paid per share by the Company or a Subsidiary
for shares or other securities or property issued pursuant to Awards which
are
subject to a right of the Company or a Subsidiary to reacquire such shares
or
other securities or property, shall in each case be equitably adjusted; provided
that with respect to Incentive Stock Options any such adjustments shall comply
with Sections 422 and 424 of the Code.
11. Effective
Date and Duration of Plan.
The Plan
shall be effective on the date on which the shareholders of the Company approve
it either (a) at a duly held stockholders' meeting, or (b) by the written
consent of the holders of a majority of the securities of the Company entitled
to vote, in accordance with any applicable provisions of the Delaware General
Corporation Law. If the Plan is not so approved by shareholders, the Plan shall
be null, void and of no force or effect. If so approved, Awards may be granted
within ten years after the date of such approval by shareholders, but not
thereafter. In no event shall an Incentive Stock Option be granted under the
Plan more than ten (10) years from the date the Plan is adopted by the Board,
or
the date the Plan is approved by the shareholders of the Company, whichever
is
earlier.
12. Administration.
(a) The
Plan
shall be administered by a committee of the Board consisting of two or more
directors appointed from time to time by the Board. No person shall be appointed
to or shall serve as a member of such committee unless at the time of such
appointment and service he shall satisfy any director independence requirements
then applicable to service on such committee under any NASDAQ rules or listing
standards that apply to the Company at such time. Unless the Board determines
otherwise, such committee shall also be comprised solely of "outside directors"
within the meaning of Section 162(m)(4)(C)(i) of the Code and Treasury
Regulation Section 1.162-27(e)(3), and "non-employee directors" as defined
in
SEC Rule 16b-3.
(b) The
Committee may establish such rules and regulations, not inconsistent with the
provisions of the Plan, as it may deem necessary for the proper administration
of the Plan, and may amend or revoke any rule or regulation so established.
The
Committee shall, subject to the provisions of the Plan, have full power and
discretion to interpret, administer and construe the Plan and full authority
to
make all determinations and decisions thereunder including without limitation
the authority and discretion to (i) determine the persons who are Service
Providers and select the Service Providers who are to participate in the Plan,
(ii) determine when Awards shall be granted, (iii) determine the number of
shares and/or amount of money to be made subject to each Award, (iv) determine
the type of Award to grant, (v) determine the terms and conditions of each
Award, including the exercise price, in the case of an Option or Stock
Appreciation Rights, and whether specific Awards shall be linked to one another
and if so whether they shall be alternative to or supplement one another, (vi)
make any adjustments pursuant to Section 10 of the Plan, and (vii) determine
whether or not a specific Award is intended to qualify as Performance-Based
Compensation. Without limiting the generality of the foregoing, the Committee
shall have the authority to establish and administer performance goals
applicable to Awards, and the authority to certify that such performance goals
are attained, within the meaning of Treasury Regulation Section 1.162-27(c)(4).
The interpretation by the Committee of the terms and provisions of the Plan
and
any instrument issued thereunder, and its administration thereof, and all action
taken by the Committee, shall be final, binding and conclusive on the Company,
its stockholders, Subsidiaries, Allied Enterprises, all participants and Service
Providers, and upon their respective Beneficiaries, successors and assigns,
and
upon all other persons claiming under or through any of them.
(c) Members
of the Board of Directors and members of the Committee acting under this Plan
shall be fully protected in relying in good faith upon the advice of counsel
and
shall incur no liability except for gross or willful misconduct in the
performance of their duties.
13. General
Provisions.
(a) No
Award,
including without limitation any Option or Stock Appreciation Rights, shall
be
transferable by the Service Provider or other rightful holder of such Award
other than by will or the laws of descent and distribution or to a Beneficiary.
The preceding sentence and any other provision of
the
Plan
to the contrary notwithstanding, the Committee may (but need not) permit a
Service Provider to transfer any Award, other than an Incentive Stock Option
or
any other Award that is linked to an Incentive Stock Option, during his lifetime
to such other persons and such entities and on such terms and subject to such
conditions as the Committee may provide in the instrument evidencing such
Award.
(b) Nothing
in this Plan or in any instrument executed pursuant hereto shall confer upon
any
person any right to continue in the employment or other service of the Company
or a Subsidiary or an Allied Enterprise, or shall affect the right of the
Company or a Subsidiary or any Allied Enterprise to terminate the employment
or
other service of any person at any time with or without cause.
(c) No
shares
of Common Stock shall be issued or transferred pursuant to an Award unless
and
until all legal requirements applicable to the issuance or transfer of such
shares have, in the opinion of the General Counsel, been satisfied. Any such
issuance or transfer shall be contingent upon the person acquiring the shares
giving the Company any assurances the General Counsel may deem necessary or
desirable to assure compliance with all applicable legal
requirements.
(d) No
person
(individually or as a member of a group) and no Beneficiary or other person
claiming under or through him, shall have any right, title or interest in or
to
any shares of Common Stock (i) allocated, or (ii) reserved for the purposes
of
this Plan, or (iii) subject to any Award, except as to such shares of Common
Stock, if any, as shall have been issued to him.
(e) The
Company and its Subsidiaries and any Allied Enterprises may make such provisions
as they may deem appropriate for the withholding of any taxes which they
determine they are required to withhold in connection with any Award. Without
limiting the foregoing, the Committee may, subject to such terms and conditions
as it may impose, permit or require any withholding tax obligation arising
in
connection with any Award or the grant, exercise, vesting, distribution or
payment of any Award, up to the minimum required federal, state and local
withholding taxes, including payroll taxes, to be satisfied in whole or in
part,
with or without the consent of the Service Provider or other rightful holder
of
the Award, by having the Company withhold all or any part of the shares of
Common Stock that vest or would otherwise be issued or distributed at such
time.
Any shares so withheld shall be valued at their Fair Market Value on the date
of
such withholding.
(f) Nothing
in this Plan is intended to be a substitute for, or shall preclude or limit
the
establishment or continuation of, any other plan, practice or arrangement for
the payment of compensation or fringe benefits to directors, officers,
employees, consultants or Service Providers generally, or to any class or group
of such persons, which the Company or any Subsidiary now has or may hereafter
lawfully put into effect, including, without limitation, any incentive
compensation, retirement, pension, group insurance, stock purchase, stock bonus
or stock option plan. A Service Provider may be granted an Award whether or
not
he is eligible to receive similar or dissimilar incentive compensation under
any
other plan or arrangement of the Company.
(g) The
Company's obligation to issue shares of Common Stock or to pay money in respect
of any Award shall be subject to the condition that such issuance or payment
would not impair the Company's capital or constitute a breach of or cause the
Company to be in violation of any covenant, warranty or representation made
by
the Company in any credit agreement to which the Company is a party before
the
date of grant of such Award.
(h) By
accepting any benefits under the Plan, each Service Provider, and each person
claiming under or through him, shall be conclusively deemed to have indicated
his acceptance and ratification of, and consent to, all provisions of the Plan
and any action or decision under the Plan by the Company, its agents and
employees, and the Board of Directors and the Committee.
(i) The
validity, construction, interpretation and administration of the Plan and of
any
determinations or decisions made thereunder, and the rights of all persons
having or claiming to have any interest therein or thereunder, shall be governed
by, and determined exclusively in accordance with, the laws of the State of
Delaware, but without giving effect to the principles of conflicts of laws
thereof. Without limiting the generality of the foregoing, the period within
which any action arising under or in connection with the Plan must be commenced,
shall be governed by the laws of the State of Delaware, without giving effect
to
the principles of conflicts of laws thereof, irrespective of the place where
the
act or omission complained of took place and of the residence of any party
to
such action and irrespective of the place where the action may be brought.
A
Service Provider's acceptance of any Award shall constitute his irrevocable
and
unconditional waiver of the right to a jury trial in any action or proceeding
concerning the Award, the Plan or any rights or obligations of the Service
Provider or the Company under or with respect to the Award or the
Plan.
(j) The
use
of the masculine gender shall also include within its meaning the feminine.
The
use of the singular shall include within its meaning the plural and vice
versa.
14.
Amendment
and Termination.
Subject
to any applicable shareholder approval requirements of Delaware or federal
law,
NASDAQ rules or listing standards, or the Code, the Plan may be amended by
the
Board of Directors at any time and in any respect, including without limitation
to permit or facilitate qualification of Options theretofore or thereafter
granted (a) as Incentive Stock Options under the Code, or (b) for such other
special tax treatment as may be enacted on or after the date on which the Plan
is approved by the Board, provided that, without stockholder approval, no
amendment shall increase the aggregate number of shares which may be issued
under the Plan, or shall permit the exercise price of outstanding Options or
Stock Appreciation Rights to be reduced, except as permitted by Section 10
hereof. The Plan may also be terminated at any time by the Board of Directors.
No amendment or termination of this Plan shall adversely affect any Award
granted prior to the date of such amendment or termination without the written
consent of the holder of such Award.
APPENDIX
B
ANGIODYNAMICS,
INC.
CHARTER
OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
I. PURPOSE
The
function of the Audit Committee (the "Committee") of the Board of Directors
(the
"Board") of AngioDynamics, Inc. (the "Corporation") is to:
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A.
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assist
the Board in its oversight of (i) the integrity of the Corporation's
financial statements, financial reporting process, system of internal
controls (including the control environment, control activities and
internal controls over financial reporting), and audit process, (ii)
the
Corporation's compliance with, and process for monitoring compliance
with,
legal and regulatory requirements, (iii) the independent auditors'
qualifications and independence, and (iv) the performance of the
Corporation's independent auditors, including, without limitation,
ensuring that interim quarterly financial statements are reviewed
by the
Corporation's independent auditors;
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B.
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prepare
the report required to be prepared by the Committee under the rules
of the
Securities and Exchange Commission (the "SEC") for inclusion in the
Corporation's annual proxy statement; and
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C.
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provide
an open avenue of communication between the independent auditors
and the
Board.
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II.
COMPOSITION
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A.
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The
Committee shall consist of no fewer than three members of the Board,
all
of whom shall be appointed by the Board. The members of the Committee
shall each have been determined by the Board to be "independent"
under the
Nasdaq Marketplace Rules (the "Nasdaq Rules") and under the Sarbanes-Oxley
Act of 2002 (the "2002 Act").
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B.
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In
selecting the members of the Committee, the Board shall also determine
(i)
that each member is able to read and understand fundamental financial
statements, (ii) that at least one member has "accounting or related
financial management expertise," and "accounting or related financial
experience," in each case in accordance with the Nasdaq Rules, and
(iii)
to the extent required by the applicable SEC rules, that at least
one
member of the Committee is an "audit committee financial expert"
as
defined by the SEC and is financially sophisticated in accordance
with the
Nasdaq Rules (or if there is no such member, the reason for not having
an
audit committee financial expert on the Committee).
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C.
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Each
member of the Committee shall be free of any relationship that, in
the
opinion of the Board, would interfere with his or her individual
exercise
of independent judgment.
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D.
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No
director may serve as a member of the Committee if such director
serves on
the audit committees of more than two other public companies unless
the
Board determines that such simultaneous service would not impair
the
ability of such director to serve effectively on the Committee, and
discloses this determination in the Corporation's annual proxy
statement.
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III.
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MEETINGS
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A.
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The
Committee shall meet at least four (4) times annually and will be
available to meet more frequently as circumstances
require.
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B.
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Incidental
to any regularly scheduled meetings, the Committee shall meet, at
least
once annually, with management (including, but not limited to the
CEO,
CFO, Controller, and Director of Human Resources), outside legal
counsel,
and the independent auditors in separate executive sessions to discuss
any
matters that the Committee and each of these groups believe should
be
discussed privately.
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C.
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The
Committee shall appoint its chairperson, after consultation with
the
Board.
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D.
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The
Committee may invite such members of management, auditors and other
persons to its meetings as it may deem desirable or appropriate.
The
Committee's chairperson shall report regularly to the Board summarizing
the Committee's actions and any significant issues considered by
the
Committee.
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IV.
RESPONSIBILITIES
AND DUTIES
The
following are the duties, responsibilities and authority of the
Committee:
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A.
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To
meet with the Corporation's independent auditors (the "Independent
Auditors"), the Corporation's management, and
such other personnel as it deems appropriate and discuss such matters
as
it considers appropriate, including the matters referred to below.
The
Committee must meet separately with the Independent Auditors and
the
Corporation's management at least once each fiscal quarter.
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B.
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To
decide whether to appoint, retain or terminate (and recommend to
the
Corporation's shareholders the selection or ratification of selection
of
Independent Auditors) the Corporation's Independent Auditors, including
having the sole authority to approve all audit engagement fees and
terms
and to pre-approve all audit and permissible non-audit services and
fees
to be provided by the Independent Auditors. The Committee shall monitor
and evaluate the Independent Auditors' qualifications, performance
and
independence on an ongoing basis, and shall be directly responsible
for
overseeing the work of the Independent Auditors (including resolving
disagreements between management and the Independent Auditors regarding
financial reporting). In conducting such evaluations, the Committee
shall:
|
|
1.
|
At
least annually, obtain and review a report by the Independent Auditors
describing:
|
|
a.
|
the
Independent Auditors' internal quality-control
procedures;
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b.
|
any
material issues raised by the most recent peer review of the Independent
Auditors, or by any public inquiry or investigation by governmental
or
professional authorities, within the preceding five years, concerning
one
or more independent audits carried out by the auditors, and any steps
taken to deal with any such issues;
and
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|
c.
|
(to
assess the auditors' independence) all relationships between the
Independent Auditors and the
Corporation
as
required by Independence Standards Board Standard No.1, as it may
be
modified or supplemented.
|
|
2.
|
Discuss
with the Independent Auditors any relationships or services that
may
affect the objectivity or independence of the Independent Auditors
and
consider whether the provision of non-audit services is compatible
with
maintaining the Independent Auditor's
independence.
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3.
|
Review
and evaluate the qualifications and performance of the primary partners
of
the Independent Auditors.
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|
4.
|
Take
into account the opinions of management.
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5.
|
Discuss
with management the timing and process for implementing the rotation
of
the lead audit partner, the concurring partner and any other active
audit
engagement team partner and consider whether there should be a regular
rotation of the audit firm itself.
|
The
Committee shall present its conclusions concerning the Independent Auditors
to
the Board for its information at least annually.
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C.
|
Review
with management and Independent Auditors for any audit, a timely
report on
the Corporation's annual audited financial statements and related
footnotes describing all critical accounting policies and practices
used
by the Corporation and all alternative treatments of financial information
within generally accepted accounting principles that have been discussed
with management, the ramifications of each alternative and the treatment
preferred by the Corporation and recommended by
auditors.
|
|
D.
|
Obtain
from the Independent Auditors any material written communications
between
the Independent Auditors and management, such as any "management"
letter,
response thereto by the Corporation's management, or schedule of
unadjusted differences.
|
|
E.
|
Prior
to their being filed, to discuss with management and the Independent
Auditors the Corporation's annual audited financial statements and
related
footnotes and quarterly financial statements and related footnotes,
including the Corporation's disclosures under "Management's Discussion
and
Analysis of Financial Condition and Results of Operations", and to
discuss
with the Corporation's Chief Executive Officer and Chief Financial
Officer
their certifications to be provided under Sections 302 and 906 of
the 2002
Act, including whether the financial statements fairly present, in
all
material respects, the financial condition, results of operations
and cash
flows of the Corporation as of and for the periods presented and
whether
any significant deficiencies exist in the design or operation of
internal
controls that could adversely affect the Corporation's ability to
record,
process, summarize and report financial data, assess any material
weaknesses that may exist in internal controls, or consider whether
any
fraud has occurred, whether or not material, that involves management
or
other employees who have a significant role in the Corporation's
internal
controls. The Committee shall discuss, as applicable: (a) major issues
encountered and judgments about the quality and acceptability of
the
Corporation's accounting principles, financial statement presentation
and
the Corporation's financial statements generally, including any
significant changes in the Corporation's selection or application
of
accounting principles; (b) analyses
prepared
|
by
management and/or the Independent Auditors setting forth significant financial
reporting issues and judgments made in connection with the preparation of the
financial statements; (c) the effect of regulatory and accounting initiatives,
as well as off-balance sheet structures, transactions, obligations (including
contingent obligations), other relationships of the Corporation with
unconsolidated entities or other persons on the financial statements of the
Corporation and any unusual methods of acquiring or holding interests in other
entities; and (d) the results of the review of the Corporation's quarterly
financial statements by the Corporation's Independent Auditors.
|
F.
|
To
review filings (including interim reports) with the SEC and other
published documents containing the Corporation's financial statements
and
consider whether the information therein is consistent with the
information in the financial statements before it is filed with the
SEC,
Nasdaq or other regulators, exchanges or
associations.
|
|
G.
|
To
discuss with the Independent Auditors on at least an annual basis,
if
applicable, the matters required to be discussed by Statement on
Auditing
Standards No. 61, as it may be modified or supplemented, as well
as, any
problems or difficulties the auditors encountered in the course of
the
audit work, including any restrictions on the scope of the Independent
Auditors' activities or access to requested information, significant
changes required in the Independent Auditor's accounting plan, any
significant disagreements with management, and any other matters
relating
to the audit that are to be communicated to the Committee under GAAP.
Among the items the Committee will consider discussing with the
Independent Auditors are:
|
|
1.
|
any
accounting adjustments that were noted or proposed by the Independent
Auditors but were "passed" (as immaterial or
otherwise);
|
|
2.
|
any
communications between the audit team and the Independent Auditor's
national office concerning auditing or accounting issues presented
by the
engagement; and
|
|
3.
|
any
"management" or "internal control" letter issued, or proposed to
be
issued, by the Independent Auditors to the
Corporation.
|
|
H.
|
To
discuss with management the Corporation's earnings press releases,
as well
as financial information and any earnings guidance provided to analysts
and rating agencies. Discussion of earnings releases, as well as
financial
information and any earnings guidance may be done generally (i.e.,
discussion of the types of information to be disclosed and the type
of
presentation to be made).
|
|
I.
|
To
discuss with management on at least an annual
basis:
|
|
1.
|
the
Independent Auditors' annual audit scope, risk assessment and the
use of
independent public accountants other than the appointed Independent
Auditors;
|
|
2.
|
the
form of Independent Auditors' report on the annual financial statements
and matters related to the conduct of the audit under generally accepted
auditing standards; and
|
|
3.
|
comments
by the Independent Auditors on internal controls and significant
findings
and recommendations resulting from the
audit.
|
|
J.
|
To
discuss with management on at least an annual basis the adequacy
of the
Corporation's internal controls, any codes of conduct and any monitoring
of the Corporation's compliance therewith.
|
|
K.
|
To
establish procedures for the receipt, retention and treatment of
complaints received by the Corporation regarding accounting, internal
accounting controls or auditing matters, and for the confidential,
anonymous submission by the Corporation's employees of concerns regarding
questionable accounting or auditing matters.
|
|
L.
|
To
establish policies governing the Corporation's hiring of or engaging
as a
contractor any current or former employee of the Independent Auditors
and
review and concur with the hiring or engagement of such an individual.
These policies shall provide that no former employee of the Independent
Auditors who was a member of the Corporation's audit engagement team
within one year of the date of the commencement of procedures for
a review
or audit may undertake a financial reporting oversight role at the
Corporation.
|
|
M.
|
To
discuss with management on at least an annual basis management's
assessment of the Corporation's market, credit, liquidity and other
financial and operational risks, and the guidelines, policies and
processes for managing such risks.
|
|
N.
|
To
discuss with the Corporation's general counsel any significant legal,
compliance or regulatory matters that may have a material impact
on the
Corporation's business, financial statements or compliance policies,
including related party transactions and reports or inquiries from
governmental or other agencies.
|
|
O.
|
To
review and approve all related party transactions (as defined by
the
applicable Nasdaq Rule).
|
|
P.
|
To
conduct or authorize investigations into any matters within the
Committee's charter. The Committee is empowered to: (i) retain outside
counsel or other advisors to advise or assist the Committee in the
conduct
of an investigation; (ii) seek any information it requires from external
parties or employees, all of whom are directed to cooperate with
the
Committee's requests; (iii) meet with management, the Independent
Auditors
or outside counsel, as necessary; (iv) meet with the Corporation's
financial advisors; and (v) authorize the payment of any fees in
respect
of the foregoing.
|
|
Q.
|
To
produce the reports described under "Committee Reports"
below.
|
|
R.
|
To
discharge any other duties or responsibilities delegated to the Committee
by the Board, by the Corporation's bylaws or by law from time to
time.
|
|
S.
|
To
review the Committee's duties and responsibilities, as set forth
in this
Charter, at least annually.
|
V.
COMMITTEE
REPORTS
The
Committee shall produce the following reports and provide them to the
Board:
A.
Any
report or filing, including any recommendation, or other disclosures required
to
be prepared by the Committee pursuant to the rules of the SEC or any other
regulatory authority for inclusion in the Corporation's annual proxy statement,
including:
|
1.
|
a
report for the annual proxy statement as to the Committee's review
and
discussion of matters with the Corporation's management and the
Independent Auditors;
|
|
2.
|
filing
a copy of the Committee's charter as an appendix to the annual proxy
statement at least once every three (3) years;
and
|
|
B.
|
An
annual performance evaluation of the Committee, which shall compare
the
performance of the Committee with the requirements of this charter.
The
performance evaluation shall also include a review of the adequacy
of this
charter and shall recommend to the Board any revisions the Committee
deems
necessary or desirable, although the Board shall have the sole authority
to amend this charter. The performance evaluation shall be conducted
in
such manner as the Committee deems
appropriate.
|
VI.
COMPENSATION
OF COMMITTEE MEMBERS
No
member
of the Committee may receive any compensation from the Corporation other than
(i) director's fees, which may be received in cash, common stock, equity-based
awards or other in-kind consideration ordinarily available to directors; (ii)
a
pension or other deferred compensation for prior service that is not contingent
on future service; and (iii) any other regular benefits that other directors
receive.
VII.
DELEGATION
TO SUBCOMMITTEE
The
Committee may, in its discretion, delegate all or a portion of its duties and
responsibilities to a subcommittee of the Committee. The Committee may, in
its
discretion, delegate to one or more of its members the authority to pre-approve
any audit or non-audit services to be performed by the Independent Auditors,
provided that any such approvals are presented to the Committee at its next
scheduled meeting.
VIII.
RESOURCES
AND AUTHORITY OF THE COMMITTEE
The
Committee shall have the resources and authority appropriate to discharge its
duties and responsibilities, including the authority to select, retain,
terminate, and approve the fees and other retention terms of special or
independent counsel, accountants or other experts, as it deems appropriate,
without seeking approval of the Board or management.
IX.
GENERAL
The
Committee may perform any other activities consistent with this Charter, the
Corporation's By-laws and applicable law, as the Committee deems necessary
or
appropriate, or as directed by the Board.
X.
AMENDMENTS:
This
Charter may be amended by the Board.
x PLEASE
MARK VOTES
AS
IN THIS EXAMPLE
Revocable
Proxy
AngioDynamics,
Inc.
Proxy
for the Annual Meeting of Stockholders
to
be held on October 24, 2006
This
Proxy is solicited on behalf of the Board of Directors of AngioDynamics, Inc.
for the 2006 Annual Meeting of Stockholders. The 2006 Annual Meeting of
Stockholders will be held at the Logan Airport Hilton, Boston, Massachusetts,
on
Tuesday, October 24, 2006, at 9:00 a.m., local time.
The
undersigned, a holder of common stock of AngioDynamics, Inc., hereby appoints
Eamonn P. Hobbs and Joseph G. Gerardi, and each of them, the true and lawful
attorneys and proxies with full power of substitution, for and in the name,
place and stead of the undersigned, to vote all of the shares of common stock
of
AngioDynamics, Inc. which the undersigned would be entitled to vote if
personally present at the 2006 Annual Meeting of Stockholders, and at any
adjournment or postponement thereof, in all matters indicated on the reverse
side hereof, and with discretionary authority to vote as to any other matters
that may properly come before such meeting.
|
For
All
|
Withhold
All
|
For
All Except
|
|
|
1. The
election of Class III directors of AngioDynamics, Inc., each for
a term of
three years.
|
[_____]
|
[_____]
|
[_____]
|
Eamonn
P.
Hobbs, Peter J. Graham and David P. Meyers
INSTRUCTION:
To withhold authority to vote for any individual nominee(s), mark "For
All Except"
and
write the name(s) of such nominee(s) in the space provided below.
|
For
|
Against
|
Abstain
|
|
|
2. To
approve the amendment to the AngioDynamics, Inc. 2004 Stock and Incentive
Award Plan
|
[_____]
|
[_____]
|
[_____]
|
|
3. To
ratify the appointment of PricewaterhouseCoopers LLP as the independent
registered public accounting firm of AngioDynamics, Inc. for the
fiscal
year ending June 2, 2007.
|
[_____]
|
[_____]
|
[_____]
|
| Check here if you plan to attend the 2006 Annual Meeting |
[_____]
|
||
This
Proxy, when properly signed, will be voted in the manner directed. If no
direction is given, this Proxy will be voted FOR Proposal 1, Proposal 2 and
Proposal 3.
NOTE:
Please sign exactly as your name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
|
Please
be sure to sign and date this Proxy in the box below.
|
Date
|
|
Stockholder
sign above
Co-Holder
(if any) sign above
|
|
|
Detach
above card, sign, date and mail in postage paid envelope
provided.
|
|
|
ANGIODYNAMICS,
INC.
|
|
|
PLEASE
ACT PROMPTLY
SIGN,
DATE & MAIL YOUR PROXY CARD
TODAY
|
|
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.
______________________________________
______________________________________
______________________________________
______________________________________