EXHIBIT 4(d)
ALARIS MEDICAL SYSTEMS, INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
SECTION 1. NAME
The name of this Plan, effective as of May 22, 2002, is the Non-Employee
Director Stock Option Plan. This Plan is a continuation, and amendment and
restatement, of the Third Amended and Restated 1990 Non-Qualified Stock Option
Plan for Non-Employee Directors, as amended effective April 17, 2000.
SECTION 2. DEFINITIONS
For the purposes of the Plan, the following terms shall be defined as set forth
below:
(a) "Board" means the board of directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and the Treasury regulations promulgated thereunder.
(c) "Committee" means the committee appointed by the Board to
administer the Plan as provided in Section 4(a).
(d) "Common Stock" means the $.01 par value common stock of the Company
or any security of the Company identified by the Committee as having been issued
in substitution or exchange therefor or in lieu thereof.
(e) "Company" means ALARIS Medical Systems, Inc., a Delaware
corporation.
(f) "Effective Date" means September 7, 1990.
(g) "Employee" means an individual whose wages are subject to the
withholding of federal income tax under Section 3401 of the Code.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor statute.
(i) "Fair Market Value" of a Share as of a specified date means, except
as otherwise reasonably determined by the Committee based on reported prices of
a Share, (i) the average of the highest and lowest market prices of a Share on
such date as reported in the American Stock Exchange (or the principal exchange
on which the Shares are then traded) composite transactions published in the
Eastern Edition of The Wall Street Journal or, if no trading of Common Stock is
reported for that day, the next preceding day on which trading was reported, or
(ii) if the Shares are traded in the over-the-counter market, the average of the
highest bid and lowest asked prices per Share on the specified date (or the next
preceding date on which trading was reported) as reported through the NASDAQ
system or any successor thereto. "Non-Employee Director" means an individual
who: (i) is now, or hereafter becomes, a member of the Board; (ii) is neither an
Employee nor an Officer (other than an officer who does not receive a salary as
an officer) of the Company or of any Subsidiary on the date of the grant of the
NQSO; and (iii) has not elected to decline to participate in the Plan pursuant
to the next succeeding sentence. A director otherwise eligible to participate in
the Plan may make an irrevocable, one-time election, by written notice to the
Corporate Secretary of the Company and the Chairman of the Committee within
thirty days after his initial election or appointment to the Board to decline to
participate in the Plan.
(k) "NQSO" means an option granted under this Plan, which option is not
qualified under Section 422 of the Code.
(l) "Officer" means an individual elected or appointed by the Board or
by the board of directors of a Subsidiary, or chosen in such other manner as may
be prescribed by the by-laws of the Company or a Subsidiary, as the case may be,
to serve as such.
(m) "Participant" means a Non-Employee Director who is granted a NQSO
under the Plan.
(n) "Plan" means this Non-Employee Director Stock Option Plan, as
amended from time to time.
(o) "Retainer" means the fixed fee payable to a Non-Employee Director
in effect on the first day of each calendar quarter for which such fee is
payable for services to be rendered as a Non-Employee Director during such
calendar quarter, excluding meeting fees.
(p) "Rule 16b-3" means Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Exchange Act, or any successor or replacement rule
adopted by the Securities and Exchange Commission.
(q) "Share" means one share of Common Stock, adjusted in accordance
with Section 9(b), if applicable.
(r) "Stock Option Agreement" means the written agreement between the
Company and the Participant that contains the terms and conditions pertaining to
the NQSO.
(s) "Subsidiary" means any corporation or entity of which the Company,
directly or indirectly, is the beneficial owner of fifty percent (50%) or more
of the total combined voting power of all classes of its stock having voting
power, unless the Committee shall determine that any such corporation or entity
shall be excluded hereunder from the definition of the term Subsidiary.
SECTION 3. PURPOSE
The purpose of the Plan is to enable the Company to provide incentives, which
are linked directly to increases in stockholder value, to Non-Employee Directors
in order that they will be encouraged to serve on the Board and exert their best
efforts on behalf of the Company.
SECTION 4. ADMINISTRATION
(a) Composition of the Committee
The Plan shall be administered by a Committee appointed by the Board consisting
of no less than two individuals. Members of the Committee need not be members of
the Board, Officers or Employees of the Company. Members of the Committee shall
not be entitled to participate in the Plan. The Board may from time to time
remove members from, or add members to, the Committee. Vacancies on the
Committee, however caused, shall be filled by the Board.
(b) Actions by the Committee
The Committee shall hold meetings at such times and places as it may determine.
Acts approved by a majority of the members of the Committee present at a meeting
at which a quorum is present, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall be the valid acts of the
Committee.
(c) Powers of the Committee
The Committee shall have the authority to administer the Plan in its sole and
absolute discretion; PROVIDED, HOWEVER, that the Committee shall have no
authority to grant NQSOs, to determine the number of Shares subject to NQSOs or
the price at which each Share covered by a NQSO may be purchased pursuant to the
Plan, all of which shall be automatic as described in Section 8. To this end,
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the Committee is authorized to construe and interpret the Plan and to make all
other determinations necessary or advisable for the administration of the Plan.
Subject to the foregoing, any determination, decision or action of the Committee
in connection with the construction, interpretation, administration or
application of the Plan shall be final, conclusive and binding upon all
Participants and any person validly claiming under or through a Participant.
(d) Liability of Committee Members
No member of the Board or the Committee will be liable for any action or
determination made in good faith by the Board or the Committee with respect to
the Plan or any grant or exercise of a NQSO thereunder.
(e) NQSO Accounts
The Company will maintain a separate account record for each Participant.
Whenever NQSOs are granted to or exercised by a Participant, the Participant's
account shall be appropriately credited or debited. Appropriate adjustment shall
also be made with respect to each account in the event of an adjustment pursuant
to Section 9(b).
SECTION 5. EFFECTIVE DATE AND TERM OF THE PLAN
(a) Effective Date of the Plan
The Plan in its original form was adopted by the Board on July 12, 1990, and
became effective on September 7, 1990. The Plan was subsequently amended several
times, with each such amendment approved by the stockholders of the Company, and
the last such amendment becoming effective April 17, 2000. The Plan, as set
forth in this amendment and restatement, was adopted by the Board on February
26, 2002, to become effective as of May 22, 2002, subject to approval by the
stockholders of the Company at a meeting duly called and held within twelve
months following the date of Board approval.
(b) Term of the Plan
No NQSO shall be granted pursuant to the Plan on or after May 22, 2007, but
NQSOs granted before then may extend beyond that date.
SECTION 6. SHARES SUBJECT TO THE PLAN
The maximum aggregate number of Shares which may be subject to NQSOs granted to
Non-Employee Directors under the Plan during its term shall be 1,000,000. The
limitation on the number of Shares which may be subject to NQSOs under the Plan
shall be subject to adjustment as provided in Section 9(b). If any NQSO granted
under the Plan expires or is terminated for any reason without having been
exercised in full, the Shares allocable to the unexercised portion of such NQSO
shall again become available for grant pursuant to the Plan. At all times during
the term of the Plan, the Company shall reserve and keep available for issuance
such number of Shares as the Company is obligated to issue upon the exercise of
all then outstanding NQSOs.
SECTION 7. SOURCE OF SHARES ISSUED UNDER THE PLAN
Common Stock issued under the Plan may consist, in whole or in part, of
authorized and unissued Shares or treasury Shares, as determined in the sole and
absolute discretion of the Committee. No fractional Shares shall be issued under
the Plan.
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SECTION 8. NON-QUALIFIED STOCK OPTION
(a) Grant of NQSOs
An individual who first becomes a Non-Employee Director on or after May 22,
2002, shall be granted automatically NQSOs to purchase 20,000 Shares on the next
succeeding business day after becoming a Non-Employee Director. In addition, (i)
NQSOs to purchase 20,000 Shares shall be granted automatically to each
Non-Employee Director on each anniversary date of his preceding automatic NQSO
grant (the "Anniversary Date") under the Plan and every year thereafter during
the term of the Plan, provided that said Non-Employee Director continues to be a
member of the Board on the date of each such additional grant; and (ii) any
Non-Employee Director who had an Anniversary Date that occurred on or after
January 1, 2002 and before May 22, 2002, with respect to which the Non-Employee
Director received an automatic grant of NQSOs to purchase 10,000 Shares, shall
be granted automatically NQSOs to purchase 10,000 Shares on the next succeeding
business day after May 22, 2002. NQSOs shall be granted in the aforesaid manner
until the date on which the Shares available for grant shall no longer be
sufficient to permit grants of NQSOs covering 20,000 Shares to be made to each
Non-Employee Director entitled to a grant as of such date, in which event the
Shares then available for grant shall be allocated on a PRO RATA basis among the
Non-Employee Directors entitled to a grant of NQSOs as of such date.
(b) Exercise Price
The price at which each Share covered by a NQSO may be purchased pursuant to
this Plan shall be equal to the Fair Market Value of a Share on the date of the
NQSO grant.
(c) Terms and Conditions
All NQSOs granted pursuant to the Plan shall be evidenced by a Stock Option
Agreement (which need not be the same for each Participant or NQSO), approved by
the Committee which shall be subject to the following express terms and
conditions and to the other terms and conditions specified in this Section 8,
and to such other terms and conditions as shall be determined by the Committee
in its sole and absolute discretion which are not inconsistent with the terms of
the Plan:
(i) except as set forth in Sections 8(a) and 10, all NQSOs
granted to a Participant shall vest and become first exercisable at the rate of
one-third of the Shares subject to the NQSOs for each twelve month period of
continuous service on the Board (from the date of grant of the NQSO) by such
Participant, rounded down to the nearest whole number for each of the first two
twelve month periods and rounded up to the nearest whole number for the third
twelve month period of service;
(ii) the failure of a NQSO to vest for any reason whatsoever
shall cause the NQSO to expire and be of no further force or effect;
(iii) unless terminated earlier pursuant to Sections 8(f) or
10, the term of each NQSO granted on or after May 22, 2002 shall be ten years
from the date of grant;
(iv) no NQSO or interest therein may be pledged, hypothecated,
encumbered or otherwise made subject to execution, attachment or similar
process, and no NQSO or interest therein shall be assignable or transferable by
the holder otherwise than by will or by the laws of descent and distribution or
to a beneficiary upon the death of a Participant, and an NQSO shall be
exercisable during the lifetime of the holder only by him or by his guardian or
legal representative, except that a NQSO may be transferred to one or more
transferees during the lifetime of the Participant, and may be exercised by such
transferee in accordance with the terms of such NQSO, subject to any terms and
conditions which the Committee may impose thereon. A transferee or other person
claiming any rights under the Plan from or through any Participant shall be
subject to all terms and conditions of the Plan and any Stock Option Agreement
applicable to such Participant, except as otherwise determined by the Committee,
and to any additional terms and conditions deemed necessary or appropriate by
the Committee; and
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(v) payment for the Shares to be received upon exercise of a NQSO may
be made in cash or in Shares (determined with reference to their Fair Market
Value on the date of exercise), or any combination thereof.
(d) Additional Means of Payment
Any Stock Option Agreement may, in the sole and absolute discretion of the
Committee, permit payment by any other form of legal consideration consistent
with applicable law and any rules and regulations relating thereto, including,
but not limited to, the execution and delivery of a full recourse promissory
note by the Participant to the Company.
(e) Exercise
The holder of a NQSO may exercise the same by filing with the Corporate
Secretary of the Company a written election, in such form as the Committee may
determine, specifying the number of Shares with respect to which such NQSO is
being exercised. Such notice shall be accompanied by payment in full of the
exercise price for such Shares. Notwithstanding the foregoing, the Committee may
specify a reasonable minimum number of Shares that may be purchased on any
exercise of an Option, provided that such minimum number will not prevent the
Participant from exercising the Option with respect to the full number of Shares
as to which the Option is then exercisable.
(f) Termination of NQSOs.
NQSOs granted under the Plan shall be subject to the following events of
termination:
(i) in the event a Participant is removed from the Board for
cause, all unexercised NQSOs held by such Participant on the date of such
removal (whether or not vested) will expire immediately;
(ii) in the event a Participant is no longer a member of the
Board, other than by reason of removal for cause, all NQSOs which remain
unvested at the time the Participant is no longer a member of the Board shall
expire immediately, and all NQSOs which have vested prior to such time shall
expire twelve months thereafter unless by their terms they expire sooner; and
(iii) in the event a Participant becomes an Officer or
Employee of the Company or a Subsidiary (whether or not such Participant remains
a member of the Board) all NQSOs which remain unvested on the date such
Participant becomes an Officer or Employee of the Company shall expire
immediately, and all NQSOs which have vested prior to such date shall expire
twelve months thereafter unless by their terms they expire sooner.
SECTION 9. RECAPITALIZATION
(a) Corporate Flexibility
The existence of the Plan and the NQSOs granted hereunder shall not affect or
restrict in any way the right or power of the Board or the stockholders of the
Company, in their sole and absolute discretion, to make, authorize or consummate
any adjustment, recapitalization, reorganization or other change in the
Company's capital structure or its business, any merger or consolidation of the
Company, any issue of bonds, debentures, common stock, preferred or prior
preference stocks ahead of or affecting the Company's capital stock or the
rights thereof, the dissolution or liquidation of the Company or any sale or
transfer of all or any part of its assets or business, or any other grant of
rights, issuance of securities, transaction, corporate act or proceeding and
notwithstanding the fact that any such activity, proceeding, action, transaction
or other event may have, or be expected to have, an impact (whether positive or
negative) on the value of any NQSO or underlying Shares.
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(b) Adjustments Upon Changes in Capitalization
Except as otherwise provided in Section 10 below, in the event of any change in
capitalization affecting the Common Stock of the Company, such as a stock
dividend, stock split or recapitalization, the Committee shall make
proportionate adjustments with respect to: (i) the aggregate number of Shares
available for issuance under the Plan; (ii) the number of shares subject to each
grant under the Plan; (iii) the number and exercise price of Shares subject to
outstanding NQSOs; and (iv) such other matters as shall be appropriate in light
of the circumstances; PROVIDED, HOWEVER, that the number of Shares subject to
any NQSO shall always be a whole number.
SECTION 10. CHANGES OF CONTROL
In the event of a Change of Control (as defined below), all NQSOs not vested on
or prior to the effective time of any such Change of Control shall vest
immediately prior to such effective time. Unless otherwise determined by the
Committee at the time of a Change of Control, in the event of a Change of
Control all outstanding NQSOs shall terminate and cease to be outstanding
immediately following the Change of Control; PROVIDED, HOWEVER, that no such
NQSO termination shall occur unless a Participant shall have been given five
business days, following prior written notice, to exercise such Participant's
outstanding vested NQSOs at the effective time of the Change of Control, or to
receive cash in an amount per Share subject to such NQSOs equal to the amount by
which the price paid for a Share (determined on a fully diluted basis and taking
into account the exercise price, as determined by the Committee) in the Change
of Control exceeds the per share exercise price of such NQSOs. The Committee in
its discretion may make provisions for the assumption of outstanding NQSOs, or
the substitution for outstanding NQSOs of new incentive awards covering the
stock of a successor corporation or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices so as to
prevent dilution or enlargement of rights.
A "Change of Control" will be deemed to occur on the date any of the following
events occur:
(a) any person or persons acting together which would constitute a
"group" for purposes of Section 13(d) of the Exchange Act (other than the
Company, any Subsidiary and Jeffry M. Picower (including, any of his Affiliates
and any lineal descendant of Mr. Picower, any widow or then current spouse of
Mr. Picower or of any such lineal descendant, a trust established principally
for the benefit of any of the foregoing, any entity which is at least 90%
beneficially owned by any of the foregoing, and the executor, administrator or
personal representative of the estate of any of the foregoing (the "Picower
Group"))) beneficially own (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, securities of the Company or any Significant Subsidiary
(as defined below) representing greater than 10% of the total combined voting
power of the Company or the Significant Subsidiary entitled to vote in the
election of the board of directors of the Company or the Significant Subsidiary;
PROVIDED, HOWEVER, that such event shall not constitute a Change of Control
unless and until the combined voting power of such securities owned
beneficially, directly or indirectly, by such person or persons is greater than
the combined voting power of all such securities owned beneficially, directly or
indirectly, by Mr. Picower and the Picower Group;
(b) persons other than the Current Directors (as herein defined)
constitute a majority of the members of the Board (for these purposes, a
"Current Director" means any member of the Board as of May 1, 1997, and any
successor of any such member whose election, or nomination for election by the
Company's stockholders, was approved by at least a majority of the Current
Directors then on the Board or by Mr. Picower or the Picower Group);
(c) the consummation of (i) a plan of liquidation of all or
substantially all of the assets of the Company or any Subsidiary owning directly
or indirectly all or substantially all of the consolidated assets of the Company
(a "Significant Subsidiary"), or (ii) an agreement providing for the merger or
consolidation of the Company or a Significant Subsidiary (A) in which the
Company or a Significant Subsidiary is not the continuing or surviving
corporation (other than a consolidation or merger with a wholly-owned subsidiary
of the Company in which all Shares of the Company or common stock in the
Significant
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Subsidiary outstanding immediately prior to the effectiveness thereof are
changed into or exchanged for all or substantially all of the common stock of
the surviving corporation and (if the Company ceases to exist) the surviving
corporation assumes all the NQSO, or (B) pursuant to which, even though the
Company is the continuing or surviving corporation, the Shares of the Company or
common stock in the Significant Subsidiary are converted into cash, securities
or other property; PROVIDED, HOWEVER, that no "Change of Control" shall be
deemed to occur as the result of a consolidation or merger of the Company or a
Significant Subsidiary in which the holders of the Shares of the Company
immediately prior to the consolidation or merger have, as a result thereof,
directly or indirectly, at least a majority of the combined voting power of all
classes of voting stock of the continuing or surviving corporation or its parent
immediately after such consolidation or merger or in which the Board immediately
prior to the merger or consolidation would, immediately after the merger or
consolidation, constitute a majority of the board of directors of the continuing
or surviving corporation or its parent; or
(d) the consummation of an agreement (or agreements) providing for the
sale or other disposition (in one transaction or a series of transactions) of
all or substantially all of the assets of the Company or a Significant
Subsidiary other than such a sale or disposition immediately after which such
assets will be owned directly or indirectly by the stockholders of the Company
in substantially the same proportions as their ownership of the Shares
immediately prior to such sale or disposition.
SECTION 11. SECURITIES LAW REQUIREMENTS
No Shares shall be issued under the Plan unless and until: (i) the Company and
the Participant have taken all actions required to register the Shares under the
Securities Act of 1933, as amended, or perfect an exemption from the
registration requirements thereof; (ii) any applicable listing requirement of
any stock exchange or national market system on which the Common Stock is listed
has been satisfied; and (iii) any other applicable provision of state or federal
law has been satisfied. The Company shall be under no obligation to register the
Shares with the Securities and Exchange Commission or to effect compliance with
the registration or qualification requirements of any state securities laws or
stock exchange.
SECTION 12. AMENDMENT AND TERMINATION
(a) Modifications to the Plan
The Board may, insofar as permitted by law, from time to time, with respect to
any Shares at the time not subject to NQSOs, suspend or terminate the Plan or,
subject to Sections 8(a) and 8(b), revise or amend the Plan in any respect
whatsoever. However, any revision or amendment that would cause the Plan to fail
to comply with any requirement of applicable law or regulation if such amendment
were not approved by the stockholders of the Company shall not be effective
unless and until such approval is obtained.
(b) Rights of Participant
No amendment, suspension or termination of the Plan or of any NQSO that would
adversely affect the right of any Participant with respect to a NQSO previously
granted under the Plan will be effective without the written consent of the
affected Participant.
SECTION 13. MISCELLANEOUS
(a) Stockholders' Rights
No Participant and no beneficiary or other person claiming under or through such
Participant shall acquire any rights as a stockholder of the Company by virtue
of such Participant having been granted a NQSO under the Plan. No Participant
and no beneficiary or other person claiming under or through such Participant
will have any right, title or interest in or to any Shares allocated or reserved
under the Plan or subject to any NQSO, except as to Shares, if any, that have
been issued or transferred to such Participant. No adjustment shall be made for
dividends or distributions or other rights for which the record date is prior to
the date of exercise.
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(b) Other Compensation Arrangements
Nothing contained in the Plan shall prevent the Board from adopting other
compensation arrangements, subject to stockholder approval if such approval is
required. Such other arrangements may be either generally applicable or
applicable only in specific cases.
(c) Treatment of Proceeds
Proceeds realized from the exercise of NQSOs under the Plan shall constitute
general funds of the Company.
(d) Costs of the Plan
The costs and expenses of administering the Plan shall be borne by the Company.
(e) No Right to Continue as Director
Nothing contained in the Plan or in any instrument executed pursuant to the Plan
will confer upon any Participant any right to continue as a member of the Board
or affect the right of the Company, the Board or the stockholders of the Company
to terminate the directorship of any Participant at any time with or without
cause.
(f) Severability
The provisions of the Plan shall be deemed severable and the validity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
(g) Governing Law
The Plan and all actions taken thereunder shall be enforced, governed and
construed by and interpreted under the laws of the State of Delaware applicable
to contracts made and to be performed wholly within such State without giving
effect to the principles of conflict of laws thereof.
(h) Headings
The headings contained in this Plan are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Plan.
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