EXHIBIT 10.7
ROTECH MEDICAL CORPORATION
1996 KEY EMPLOYEE STOCK OPTION PLAN
1. PURPOSE. The purposes of this Stock Option Plan ("Plan") are to encourage
stock ownership by key executive officers of RoTech Medical Corporation (herein
called the "Corporation") and its Subsidiaries, to provide an incentive for such
employees to expand and improve the profits and prosperity of the Corporation
and its Subsidiaries, and to assist the Corporation and its Subsidiaries in
attracting and retaining key personnel through the grant of options to purchase
shares of the Corporation's common stock.
2. DEFINITIONS. When used in this Plan, unless the context otherwise
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requires:
(a) "ACT" shall mean the Securities Exchange Act of 1934, as amended.
(b) "BOARD" shall mean the Board of Directors of the Corporation.
(c) "COMMITTEE" shall mean the Stock Option Plan Committee, which is
appointed by the Board, and which shall be composed of at least two (2) members
of the Board.
(d) "CORPORATION" shall mean RoTech Medical Corporation, a Florida
corporation.
(e) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(f) "ISO" shall mean a stock option which, at the time such Option is
granted, qualifies as an Incentive Stock Option as defined in Section 422 of the
Code.
(g) "NQSO" shall mean an Option granted under this Plan, or any other
stock option which, at the time such Option is granted, does not qualify as an
ISO as defined in the Code.
(h) "OPTION" shall mean a right to purchase Shares granted pursuant to
the Plan.
(i) "OPTION PRICE" shall mean the purchase price for Shares under an
Option, as determined in Paragraph 7 below.
(j) "PARTICIPANT" shall mean an employee of the Corporation, or of any
Subsidiary to whom an Option is granted under the Plan.
(k) "PLAN" shall mean this RoTech Medical Corporation Stock Option Plan.
(l) "SHARE" shall mean a share of the common stock, par value $.0002, of
the Corporation.
(m) "SUBSIDIARY" shall mean a subsidiary corporation of the Corporation,
as defined in Section 424(f) of the Code.
3. ADMINISTRATION. The Plan shall be administered by the Committee, which
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shall consist of not less than two (2) directors of the Corporation, who shall
be appointed by, and shall serve at the pleasure of, the Board. Each member of
such Committee, while serving as such, shall be deemed to be acting in his
capacity as a director of the Corporation. Until the Committee has been
appointed, all of the members of the Board shall constitute the Committee.
Subject to the terms of the Plan, the Committee shall have full authority
to select the persons to whom Options may be granted under the Plan, to grant
options on behalf of the Corporation, to condition the grant of any such Options
upon the exchange of existing Options held by an Optionee, and to set the number
of Shares to be covered by such Options, the times and dates at which such
Options shall be granted and exercisable and the other terms of such Options.
The Committee also shall have the authority to establish such rules and
regulations, not inconsistent with the provisions of the Plan, for the proper
administration of the Plan, and to amend, modify or rescind any such rules and
regulations, and to make such determinations and interpretations under, or in
connection with, the Plan, as it deems necessary or advisable. All such rules,
regulations, determinations and interpretations shall be binding and conclusive
upon the Corporation, its shareholders and all employees, and upon their
respective legal representatives, beneficiaries, successors and assigns and upon
all other persons claiming under or through any of them.
No member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Option granted
under it. Nothing herein shall be deemed to expand the personal liability of a
member of the Board or Committee beyond that which may arise under any
applicable standards set forth in the Corporation's by-laws and Florida law, nor
shall anything herein limit any rights to indemnification or advancement of
expenses to which any member of the Board or the Committee may be entitled under
any by-law, agreement, vote of the shareholders or directors, or otherwise.
4. ELIGIBILITY. The Committee may grant Options to any key executive
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officer (including an employee who is a director) of the Corporation, or its
Subsidiaries. For purposes of this Plan, "key executive officer" shall be
defined as follows:
The Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer, President, all Vice Presidents, Secretary and Treasurer who are
employed by the Corporation.
Options may be awarded by the Committee at any time and from time to time to new
Participants, or to then Participants, or to a greater or lesser number of
Participants, and may include or exclude previous Participants, as the Committee
shall determine. Options granted to different Participants, or to the same
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Participants at different times, need not contain similar provisions.
5. AMOUNT OF STOCK. The stock to be offered for purchase pursuant to
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Options granted under this Plan shall be treasury or authorized but unissued
Shares, and the total number of such Shares which may be issued pursuant to
Options under this Plan shall not exceed 500,000 Shares (as of April 1, 1996),
subject to adjustment as provided in Paragraph 14 hereof. If any unexercised
Options are exchanged for new Options, lapse or terminate for any reason, the
Shares covered thereby may again be optioned.
6. STOCK OPTION AGREEMENT. Each Option granted under this Plan shall be
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evidenced by an appropriate stock option agreement ("Agreement"), which
Agreement shall be executed by the Corporation and by the Participant. The
Agreement shall contain such terms and provisions, not inconsistent with the
Plan, as shall be determined by the Committee. Such terms and provisions may
vary between Participants or as to the same Participant to whom more than one
Option may be granted.
7. OPTION PRICE. The purchase price for Shares under each Option shall be
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one hundred percent (100%) of the fair market value of the Shares, as determined
by last sales price quoted on NASDAQ on the date the Option is granted.
8. TERM AND EXERCISE OF OPTION. Each Option shall expire on such date as
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may be determined by the Committee with respect to such Option, but in no event
shall any Option expire more than ten years from the date it is granted. The
date on which an Option shall be granted shall be the date of the Committee's
authorization of the Option or such later date as may be determined by the
Committee at the time the Option is authorized.
Options shall be exercisable in such installments and on such dates, and/or
upon the occurrence of such events, as the Committee may specify. The Committee
may accelerate the exercise date of any outstanding Options, in its discretion,
if it deems such acceleration to be desirable. Except as provided in Paragraph
9, no Option shall be exercised unless at the time of such exercise the
Participant is then an employee of the Corporation or any Subsidiary.
Exercisable Options may be exercised, in whole or in part, from time to time, by
giving written notice of exercise to the Corporation at its principal office,
specifying the number of Shares to be purchased and accompanied by payment in
full of the aggregate Option Price for such Shares. Only full Shares shall be
issued under the Plan, and any fractional Share which might otherwise be
issuable upon exercise of an Option granted hereunder shall be forfeited.
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The Option price shall be payable (a) in cash or its equivalent; (b) in the
discretion of the Committee, in Shares previously acquired by the Participant,
provided that if such Shares were acquired through exercise of an ISO, such
Shares have been held by the Participant for a period not less than the holding
period described in Section 422(a)(1) of the Code on the date of exercise, or if
such Shares were acquired through exercise of an NQSO or of an option under a
similar plan, such Shares have been held by the Participant for a period of more
than one (1) year on the date of exercise, and further provided that the
Participant shall not have tendered Shares in payment of the exercise price of
any other Option under the Plan or any other stock option plan of the
Corporation within six calendar months of the date of exercise; or (c) in the
discretion of the Committee, in any combination of (a) and (b) above. In the
event the Option price is paid, in whole or in part, with Shares, the portion of
the Option price so paid shall be equal to the fair market value on the date of
tender of the Shares so tendered in payment of such Option price.
9. TERMINATION OF EMPLOYMENT.
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(a) Except as set forth below with regard to the death of a Participant,
in the event of termination (voluntary or involuntary) for any reason, with or
without cause, of a Participant's employment by the Corporation, any unexercised
Option must be exercised within one (1) year after termination of employment (or
two (2) years after termination of employment for Participants subject to
Section 16(b) of the Act at the time of termination), but in no event shall any
Option be exercisable after the expiration of its term. Any Options not so
exercised shall expire and be null and void for all purposes.
(b) If, however, the termination of employment is due to death of the
Participant while in the employ of the Corporation or a Subsidiary, the estate
of the holder or the person or persons who acquired the right to exercise such
Option by bequest or inheritance, shall have the privilege of exercising the
unexpired Option, to the extent such option was exercisable on the date of such
termination due to death, within one year of such date, but in no event shall
any Option be exercisable after the expiration of its term.
10. WITHHOLDING AND USE OF SHARES TO SATISFY TAX OBLIGATIONS. The
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obligation of the Corporation to deliver Shares upon the exercise of any Option
shall be subject to applicable federal, state and local tax withholding
requirements.
If the exercise of any Option is subject to the withholding requirements of
applicable federal tax laws, the Committee, in its discretion (and subject to
such withholding rules ("Withholding Rules") as shall be adopted by the
Committee), may permit the Participant to satisfy the federal withholding tax,
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in whole or in part, by electing to have the Corporation withhold (or by
returning to the Corporation) Shares, which Shares shall be valued, for this
purpose, at their fair market value on the date the amount of tax required to be
withheld is determined (the "Determination Date"). Such election must be made
in compliance with and subject to the Withholding Rules, and the Committee may
not withhold Shares in excess of the number necessary to satisfy the minimum
federal income tax withholding requirements. In the event Shares acquired under
the exercise of an ISO are used to satisfy such withholding requirement, such
Shares must have been held by the Participant for a period not less than the
holding period described in Section 422(a)(1) of the Code on the Determination
Date. In the event Shares acquired under the exercise of an NQSO or of an
option under a similar plan are used to satisfy such withholding requirement,
such Shares must have been held by the Participant for a period of more than one
(1) year on the Determination Date.
11. NON-ASSIGNABILITY. Each Option granted under the Plan shall be non-
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transferable by the Participant except by will or the laws of descent and
distribution, and each Option shall be exercisable during the Participant's
lifetime only by the Participant.
12. ISSUANCE OF SHARES AND COMPLIANCE WITH SECURITIES ACTS. Within a
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reasonable time after exercise of an Option, the Corporation shall cause to be
delivered to the Participant a certificate for the Shares purchased pursuant to
the exercise of the Option. At the time of any exercise of any Option, the
Corporation may, if it shall deem it necessary and desirable for any reason
connected with any law or regulation of any governmental authority relative to
the regulation of securities, require the Participant to represent in writing to
the Corporation that it is the Participant's then intention to acquire the
Common Stock for investment and not with a view to distribution thereof and that
such Participant will not dispose of such Shares in any manner that would
involve a violation of applicable securities laws. In such event, no Shares
shall be issued to such holder unless and until the Corporation is satisfied
with such representation. Certificates for Shares issued pursuant to the
exercise of Options may bear an appropriate securities law legend.
13. RIGHTS AS A SHAREHOLDER. A Participant shall have no rights as a
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shareholder with respect to Shares covered by Participant's Option until the
date of the issuance or transfer of the Shares to Participant and only after
such Shares are fully paid. No adjustment shall be made for dividends or other
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rights for which the record date is prior to the date of such issuance or
transfer.
14. STOCK ADJUSTMENTS. In the event of a reorganization, recapitalization,
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change of shares, stock split, or spinoff, stock dividend, reclassification,
subdivision or combination of shares, merger, consolidation, rights offering, or
any other change in the corporate structure or shares of the Corporation, the
Committee shall make such adjustment as it, in its sole discretion, deems
appropriate in the number and kind of shares authorized by the Plan, in the
number and kind of shares covered by grants made under the Plan or in the
purchase prices of outstanding Options, and such adjustments shall be effective
and binding on the Participant and the Corporation for all purposes of the Plan.
In the event of a corporate transaction (as that term is described in
Section 424(a) of the Code and the Treasury Regulations issued thereunder as,
for example, a merger, consolidation, acquisition of property or stock,
separation, reorganization, or liquidation), each outstanding Option shall be
assumed by the surviving or successor corporation, provided, however, that in
the event of a proposed corporate transaction, the Committee may terminate all
or a portion of the outstanding Options if it determines that such termination
is in the best interests of the Corporation. If the Committee decides to
terminate outstanding Options, the Committee shall give each Participant holding
an Option to be terminated not less than seven days' notice prior to any such
termination by reason of such a corporate transaction, and any such outstanding
Option which is to be so terminated may be exercised (if and only to the extent
that it is then exercisable) up to and including the date immediately preceding
such termination. Notwithstanding the preceding sentence, as provided in
Paragraph 8 hereof, the Committee, in its discretion, may accelerate, in whole
or in part, the date on which any or all Options become exercisable.
15. ADOPTION BY BOARD. This Plan becomes effective on the date of its
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adoption by the Board.
16. TERMINATION AND AMENDMENT OF THE PLAN. Subject to the right of the
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Board to terminate the Plan prior thereto, the Plan shall automatically
terminate ten years after its adoption by the Board of Directors. The Board
shall have the power at any time, in its discretion, to amend, abandon or
terminate the Plan, in whole or in part, provided that no such action shall
affect any Options theretofore granted and then outstanding under the Plan.
Nothing contained in this Paragraph 16, however, shall terminate or affect the
continued existence of rights created under Options issued hereunder and
outstanding under the Plan, which by their terms extend beyond such date.
17. INTERPRETATION. A determination of the Committee as to any question
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which may arise with respect to the interpretation of the provisions of this
Plan or any Options shall be final and conclusive, and nothing in this Plan, or
in any regulation hereunder, shall be deemed to give any Participant, his legal
representatives, assigns or any other person any right to participate herein
except to such extent, if any, as the Committee may have determined or approved
pursuant to this Plan. The Committee may consult with legal counsel who may be
counsel to the Corporation and shall not incur any liability for any action
taken in good faith in reliance upon the advice of such counsel.
Date of Board Approval: April 1, 1996
Effective Date: May 1, 1996
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