1996 MEDICAL ACTION INDUSTRIES INC. STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
1. Purpose
The purpose of the 1996 Medical Action Industries Inc. Non-Employee
Directors Stock Option Plan (the "Plan") is to increase the proprietary and
vested interest of the non-employee directors of Medical Action Industries Inc.
(the "Company") in the growth and performance of the Company by granting such
directors options to purchase shares of Common Stock, $.001 par value per share
(the "Stock") of the Company.
2. Administration
The Plan shall be administered by the Company's Board of Directors (the
"Board"). Subject to the provisions of the Plan, the Board shall be authorized
to interpret the Plan, to establish, amend, and rescind any rules and
regulations relating to the Plan and to make all other determinations necessary
or advisable for the administration of the Plan; provided, however, that the
Board shall have no discretion with respect to the selection of directors to
receive options under the Plan, the number of shares of Stock subject to any
such options, the purchase price thereunder or the timing of grants of options
under the Plan. The determinations of the Board in the administration of the
Plan, as described herein, shall be final and conclusive. The Secretary of
the Company shall be authorized to implement the Plan in accordance with its
terms and to take such actions of a ministerial nature as shall be necessary to
effectuate the intent and purposes thereof. The validity, construction and
effect of the Plan and any rules and regulations relating to the Plan shall be
determined in accordance with the laws of the State of New York.
3. Eligibility
The class of individuals eligible for grants of options under the Plan
shall be Eligible Directors, as defined below. Eligible Director shall mean a
director of the Company who is not an employee of the Company or its
subsidiaries and has not, within one year immediately preceding the
determination of such director's eligibility, received any award under any plan
of the Company or its subsidiaries that entitles the participants therein to
acquire stock, stock options or stock appreciation rights of the Company or its
subsidiaries (other than any other plan which participants' entitlements are
governed by provisions meeting the requirements of Rule 16b-3(c)(2)(ii)
promulgated under the Securities Exchange Act of 1934). Any holder of an option
granted hereunder shall hereinafter be referred to as a "Participant".
10.1
4. Shares Subject to the Plan
Subject to adjustment as provided in Section 7, an aggregate of 100,000
shares of Stock shall be available for issuance upon the exercise of options
granted under the Plan. The shares of Stock deliverable upon the exercise of
options may be made available from authorized but unissued share or shares
reacquired by the Company, including shares purchased in the open market or in
private transactions. If any option granted under the Plan shall terminate for
any reason without having been exercised, the shares subject to, but not
delivered under, such option shall be available for other options.
5. Grant, Terms and Conditions of Options
Each individual who is an Eligible Director will be granted an option to
purchase 2,500 shares of Stock as of the date of each Annual Stockholders
Meeting following the effectiveness of the Plan at which such individual is
elected or re-elected to the office of director. The options granted will be
nonstatutory stock options not intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") and shall have the
following terms and conditions:
(a) Price. The purchase price per share of Stock deliverable upon the
exercise of each option shall be 100% of the Fair Market Value per share of
the Stock on the date the option is granted. For purposes of determining
Fair Market Value of a share of Common Stock on the date of grant, if the
Common Stock (i) is then listed on any national securities exchange, the
fair market value shall be the closing price per share of the Common Stock
on such exchange at the close of the trading session on the date of grant,
(ii) is then listed on NASDAQ (but not on any national securities
exchange), the Fair Market Value shall be the closing price per share of
the Common Stock on NASDAQ on the date of grant, or (iii) is then traded on
the over-the-counter market (but not on a national securities exchange or
NASDAQ), the Fair Market Value shall be the average of the closing bid and
asked prices of the Common Stock as reported by the National Quotation
Bureau, Inc. or other entity then publishing bid and asked prices for the
Common Stock for the date of grant, or, if unavailable, then the last
trading date on which bid and asked quotations were published immediately
preceding the date of grant.
(b) Payment. Options may be exercised only upon payment of the
purchase price thereof in full. Such payment shall be made in cash or in
Stock, which shall have a Fair Market Value (determined in accordance with
the rules of paragraph (a) above), at least equal to the aggregate exercise
price of the shares being purchased, or a combination of cash and Stock.
(c) Exercisability and Term of Option. Options shall be exercisable
in whole or in part at all times during the period beginning on the date
of grant until terminated, as provided in paragraph (d) below.
(d) Termination of Service as Eligible Director.
(i) Except as provided in subparagraph (ii) of this paragraph
(d), all outstanding options held by a Participant shall be
automatically cancelled upon such Participant's termination of service
as an Eligible Director.
(ii) Upon termination of a Participant's service as an Eligible
Director by reason of such Participant's voluntary mid-term
resignation, declining to stand for reelection (whether as a result of
the Company's mandatory retirement program or otherwise), becoming an
employee of the Company or a subsidiary thereof or becoming disabled
(as defined in the Company's pension plan), all outstanding options
held by such Participant on the date of such termination shall expire
five years from the date upon which the Participant ceases to be an
Eligible Director. In the event of the death of a Participant (whether
before or after termination of service as an Eligible Director), all
outstanding options held by such Participant (and not previously
cancelled or expired) on the date of such death shall be fully
exercisable by the Participant's legal representative within one year
after the date of death (without regard to the expiration date of the
option specified in accordance with the preceding sentence).
(e) Nontransferability of Options. No option shall be transferable
by a Participant otherwise than by will or the laws of descent and
distribution, and during the lifetime of the Participant to whom an option
is granted it may be exercised only by the Participant or by the
Participant's guardian or legal representative. Notwithstanding the above,
options may be transferred pursuant to a qualified domestic relations
order.
(f) Listing and Registration. Each option shall be subject to the
requirement that if at any time the Board shall determine, in its
discretion, that the listing, registration or qualification of the Stock
subject to such option upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection with,
the granting of such option or the issue or purchase of shares thereunder,
no such option may be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected
or obtained free of any condition not acceptable to the Board.
(g) Option Agreement. Each option granted hereunder shall be evidenced by
an agreement with the Company which shall contain the terms and provisions set
forth herein and shall otherwise be consistent with the provisions of the Plan.
6. Adjustment of and Change in Stock
In the event of a stock split, stock dividend, subdivision or combination
of the Stock or other change in corporate structure affecting the Stock, the
number of shares of Stock authorized by the Plan shall be increased or decreased
proportionately, as the case may be, and the number of shares of Stock subject
to any outstanding option shall be increased or decreased proportionately, as
the case may be, with appropriate corresponding adjustment in the purchase price
per share of Stock thereunder.
7. Mergers, Sales and Change of Control
In the case of (i) any merger, consolidation or combination of the Company
with or into another corporation (other than a merger, consolidation or
combination in which the Company is the continuing corporation and which does
not result in its outstanding Stock being converted into or exchanged for
different securities, cash or other properly, or any combination thereof) or a
sale of all or substantially all of the assets of the Company or (ii) a Change
in Control (as defined below) of the Company, the holder of each option then
outstanding immediately prior to such Change in Control shall (unless the Board
determines otherwise) have the right to receive on the date or effective date of
such event an amount equal to the excess of the Fair Market Value on such date
of (a) the securities, cash or other property, or combination thereof,
receivable upon such merger, consolidation or combination in respect of a share
of Stock, in the cases covered by clause (i) above, or in the case of a sale of
assets referred to in such clause (i), a share of Stock, or (b) the final tender
offer price in the case of a tender offer resulting in a Change in Control or
(c) the value of the Stock covered by the option as determined by the Board, in
the case of Change in Control by reason of any other event, over the exercise
price of such option multiplied by the number of shares of Stock subject to such
option. Such amount will be payable fully in cash.
Any determination by the Board made pursuant to this Section 7 will be made
as to all outstanding options and shall be made (a) in cases covered by clause
(i) above, prior to the occurrence of such event, (b) in the event of a tender
or exchange offer, prior to the purchase of any Stock pursuant thereto by the
offeror and (c) in the case of a Change in Control by reason of any other event,
just prior to or as soon as practicable after such Change in Control.
A "Change in Control shall be deemed to have occured if (a) any person, or
any two or more persons acting as a group, and all affiliates of such person or
persons, shall own beneficially 20% or more of the Stock outstanding, or (b) if
following (i) a tender or exchange offer for voting securities of the Company
(other than any such offer made by the Company), or (ii) a proxy contest for the
election of directors of the Company, the persons who were directors of the
Company immediately before the initiation of such event (or directors who were
appointed by such directors) cease to constitute a majority of the Board of
Directors of the Company upon the completion of such tender or exchange offer or
proxy contest or within one year after such completion.
8. No Rights of Stockholders
Neither a Participant nor a Participant's legal representative shall be, or
have any of the rights and privileges of a shareholder of the Company in respect
of any shares purchasable upon the exercise of any option, in whole or in part,
unless and until certificates for such shares shall have been issued.
9. Plan Amendments
The Plan may be amended by the Board, as it shall deem advisable or to
conform to any change in any law or regulation applicable thereto; provided,
that the Board may not, without the authorization and approval of shareholders:
(i) increase the number of shares which may be purchased pursuant to options
hereunder, either individually or in the aggregate, except as permitted by
Section 8, (ii) change the requirements of Section 5(a) that option grants be
priced at Fair Market Value, except as permitted by Section 6, (iii) modify in
any respect the class of individuals who constitute Eligible Directors; or (iv)
materially increase the benefits accruing to Participants hereunder. The
provisions of Sections 3 and 5 may not be amended more than once every six
months, other than to comport with changes in the Code, the Employee Retirement
Income Security Act, or the rules under either such statute.
10. Effective Date and Duration of Plan
The Plan shall become effective on the day after the Company's Annual
Stockholders Meeting at which the Plan is approved by Stockholders. The Plan
shall terminate on the day following the tenth Annual Stockholders Meeting at
which Directors are elected succeeding the Annual Stockholders Meeting at which
the Plan was approved by Stockholders, unless the Plan is extended or terminated
at an earlier date by Stockholders.