1
Exhibit 10.1
MEDEX, INC
KEY EMPLOYEE NONSTATUTORY STOCK OPTION PLAN
1. PURPOSE
The Medex, Inc. Key Employee Nonstatutory Stock Option Plan (the "Plan") is
intended to strengthen the ability of Medex, Inc. (the "Company"), to attract
and retain the services of knowledgeable and experienced persons who, through
their efforts and expertise, can make a significant contribution to the success
of the Company's business, and to provide additional incentive for such key
employees to continue to work for the best interests of the Company and its
stockholders through continuing ownership of its common stock, $.01 par value
("Common Stock"). Accordingly, the Company will grant to key employees (the
"Optionee") options (the "Option") to purchase shares of Common Stock of the
Company on the terms and conditions hereinafter established.
2. ADMINISTRATION OF THE PLAN
The Plan shall be administered by a committee composed of three (3) members of
the Board of Directors of the Company who are not employees of the Company (the
"Committee"). The interpretation and construction by the Committee of any
provisions of the Plan or of any agreement or other matters related to the Plan
shall be final. The Committee may from time to time adopt such rules and
regulations for carrying out the Plan as it may deem advisable. No member of
the Committee shall be liable for any action or determination made in good
faith with respect to the Plan. The Company shall grant all Options under the
Plan by resolution of the Committee, which Options shall be evidenced by the
delivery of certificates in a form approved by the Committee. With respect to
persons subject to Section 16 of the Securities Exchange Act of 1934 ("1934
Act"), transactions under this plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent
any provisions of the Plan or actions by the Committee or participants fail to
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee.
3. STOCK SUBJECT TO THE PLAN
The shares to be issued under the Plan shall be made available either from
authorized but unissued shares of Common Stock of the Company or from shares of
Common Stock reacquired by the Company, including shares purchased in the open
market.
Shares issued under the Plan shall be subject to the terms, conditions and
restrictions specified in the Plan.
2
Subject to the provisions of the succeeding paragraphs of this Section 3 and
Section 10, the aggregate number of shares which may be issued under the Plan
shall not exceed 1,000,000 shares.
If prior to August 28, 2001, Options issued under the Plan shall be reacquired
by the Company pursuant to the provisions hereof; such Options shall again
become available for granting under the Plan.
4. ELIGIBILITY AND GRANT OF OPTIONS
Options may be granted only to employees of the Company or its subsidiaries.
No employee shall be eligible to receive Options within one (1) year prior to
his normal retirement date. The Options issued herewith shall be
nontransferrable. No Options shall be sold, assigned, pledged, encumbered or
otherwise transferred by the Optionee. Subject to the terms and conditions of
the Plan, options may be granted to such key employees in such amounts and at
such times as the Committee shall, in its sole discretion, decide.
5. PURCHASE PRICE
The purchase price of the shares under each Option shall be the fair market
value of the stock at the time such Option is granted, determined by the "Last
Transaction" price at which shares of the Company's stock are listed in the
"NASDAQ National Market System" quotation of the over-the-counter market at
the close of business on the date of granting the Option, or if the stock was
not so traded on such date, then on the next date when the stock is regularly
traded and quoted on the "NASDAQ National Market System". The purchase price
shall be paid in full prior to the delivery of the stock.
6. LIMITATIONS ON THE RIGHT TO EXERCISE OPTIONS
Subject to the provisions of Section 7 hereof, no Options shall be exercised
unless at the time of such exercise the holder of the Options is in the
employment of the Company or one of its subsidiaries. In no event shall any
Options be exercised after the expiration of ten years from the date of
granting such Options. Options will be exercisable during such Option period
as follows:
(a) No Options shall be exercised until one year after the date of grant.
(b) At the end of one year from the date of grant, twenty percent (20%) of
the Options granted, and each year
2
3
thereafter an additional twenty percent (20%), if they do not expire
under the terms of Section 7, shall be eligible to be exercised until
all the granted Options are free of this limitation.
(c) No Options shall be exercised which do not survive the expiration
provisions of Section 7 hereof.
Any option granted on or after November 15, 1995 may, by action of the
Committee, be granted with any limitation, restriction, and/or condition upon
the exercise of such option as the Committee may deem appropriate, including
the complete waiver of any limitation, restriction and/or condition on the
right to exercise (including those set forth in Sections 6 or 7 herein),
provided those limitations, restrictions and/or conditions are not in conflict
with any section other than 6 or 7 of this Plan.
7. EXPIRATION OF OPTIONS
Each year all Options granted under this Plan which become exercisable under
the provisions of Section 6 of this Plan shall be subject to expiration and
forfeiture in accordance with the provisions of this section.
(a) GOALS: Each year (except 1991 when the date shall be November 1, 1991)
prior to May 1, the Committee shall set achievement goals consisting of:
the net consolidated sales goal for the Company for the next fiscal
year; the consolidated net income goal for the Company for the next
fiscal year; and the net income goal for each of the operating
divisions of the Company, as these divisions may be determined from year
to year by the Committee. Further, the Committee achievement goals,
each year, shall identify each Optionee and the division that Optionee
shall be identified with for that year.
(b) FAILURE TO MEET THESE GOALS: Should the Company or any operating
division as defined by the Committee fail in the following fiscal
year to attain the goals established as to consolidated net income,
consolidated net sales or divisional net income as reflected on the
financial reports of the Company, then certain Options granted under
this Plan shall expire.
(c) EXPIRING OPTIONS: Of the Options becoming exercisable in any year,
forty percent (40%) shall expire if the Company fails to attain the
established goal for net income. Of the Options becoming exercisable in
any year, forty percent (40%) shall expire if the division identified
with the Options fails to attain the established goal for net income for
that division. Of
3
4
the Options becoming exercisable in any year, twenty percent (20%) shall
expire if the Company fails to attain the established goal for net
sales. Further, any Option granted to a person assigned to an operating
division which fails to have a net income (make a profit) for that
fiscal year and which Option would otherwise be exercisable as provided
in Sections 6 and 7 above, shall also expire.
(d) If an Option expires under the provisions of this Section it shall,
except as provided for in Section 14, forever be forfeited as to that
Optionee.
(e) If an Option does not expire as provided in this Section, it shall
remain exercisable as otherwise provided in the other Sections of this
Plan.
Any Option granted on or after November 15, 1995 may, by action of the
Committee, be granted with such limitations, restrictions, waivers and/or
conditions as to the expiration or forfeiture of such Option as the Committee
may deem appropriate, including the complete waiver of any limitation,
restrictions and/or conditions relating to the expiration or forfeiture of such
Options, provided those limitations, restrictions, waivers and/or conditions
are not in conflict with any Section other than 6 or 7 of this Plan.
8. TERMINATION OF EMPLOYMENT
If a holder of an Option shall retire or shall cease to be employed by the
Company or by a subsidiary of the Company for any reason other than death after
Optionee shall have been continuously so employed for one year from and after
the date of granting his Option, Optionee may, but only within 90 days next
succeeding such retirement or cessation of employment, exercise his Options to
the extent that Optionee was entitled to exercise it at the date of such
retirement or cessation. Provided, however, the Committee may, at its sole
discretion, extend the period within which an Optionee who ceased to be an
employee from 90 days to a maximum of three (3) years from the date of
retirement or cessation of employment. Leaves of absence duly authorized by
the Company shall not be deemed cessation of employment. This Plan will not
confer upon a holder of Options any right with respect to continuance of
employment by the Company or by a subsidiary of the Company; nor will it
interfere in any way with his right, or his employer's right to terminate his
employment at any time.
9. DEATH OF HOLDER
In the event of the death of a holder of Options, while in the employment of
the Company or of a subsidiary of the Company or within three months after
termination of such employment, the
4
5
Options shall be exercisable only within one year following such death and then
only (a) by his estate representative or by the person or persons who acquired
the right to exercise such Options by bequest or inheritance by reason of the
death of the decedent, and (b) only to the extent that Optionee was entitled to
exercise the Options at the date of his death.
10. ADJUSTMENT OF SHARES
In the event of any change as a result of recapitalization, merger,
consolidation, stock dividend, stock splits, combination or exchanges of
shares, or otherwise, in the character or amount of the Company's authorized
and outstanding capital stock prior to the exercise of an Option previously
granted, the Option, to the extent that it has not been exercised, shall
entitle the holder to purchase the number and kind of securities which Optionee
would have been entitled to receive had Optionee actually owned the stock
subject to the Option at the time of the occurrence of such change. If any
other event shall occur, prior to the exercise of an Option granted hereunder,
which shall increase or decrease the amount of capital stock outstanding and
which the Committee, in its sole discretion, shall determine equitably requires
an adjustment in the number of shares which the holders of Options should be
permitted to acquire, such adjustment as the Committee shall determine may be
made, and when so made shall be effective and binding for all purposes of the
Plan.
11. AMENDMENTS
The Committee of the Board may from time to time make such changes and
amendments to the Plan as it may deem necessary.
12. COMPANY RESPONSIBILITY
As long as any Options remain outstanding, the Company will reserve and keep
available and will seek to obtain, from any regulatory body having jurisdiction,
the requisite authority to issue and sell such number of shares of its capital
stock as shall be sufficient to satisfy the requirements of such Options. The
Company shall not be liable in the event of its inability to issue or sell
stock to any holder of Options if such issuance or sale would be unlawful, nor
shall the Company be liable if an issuance or sale to a holder is subsequently
invalidated.
13. EFFECTIVE DATES AND EXTINGUISHMENT OF RIGHTS
The Plan shall become fully effective upon its approval by the shareholders.
The date of granting an Option shall be the date of
5
6
its award by resolution of the Committee and the certificate evidencing such
Option shall bear that date. Unless sooner terminated as herein provided, the
Plan shall terminate upon expiration of ten years from the date of its approval
by the shareholders.
14. ACCELERATION OF EXERCISABILITY ON CHANGE IN CONTROL
Upon a change in control of the Company, all Options theretofore granted and
not previously exercisable or previously expired by virtue of Section 7, shall
become fully exercisable to the same extent and in the same manner as if they
had become exercisable by passage of the time in accordance with the provisions
of the Plan relating to periods of exercisability.
For purposes of this Plan, a "change in control of the Company" shall mean:
(a) A change in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended ("Exchange Act");
provided that, without limitation, such a change in control shall be
deemed to have occurred if (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then outstanding
securities, or
(b) During any period of two consecutive years, individuals who at the
beginning of such period constitute the Board cease for any reason to
constitute at least a majority thereof unless the election, or the
nomination for election by the Company's stockholders, of each new
director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period,
or
(c) The Company shall have merged into or consolidated with another
corporation, or merged another corporation into the Company, on a basis
whereby less than 50% of the total voting power of the surviving
corporation is represented by shares held by former shareholders of the
Company prior to such merger or consolidation, or
(d) The Company shall have sold substantially all of its assets to another
corporation or other entity or person.
6
7
(e) Provided further, however, that any of the events described in
subparagraphs (a), (b), (c) or (d) above shall not cause the
acceleration of exercisability, described in this Section, to become
operative and there shall be no change of control if the event described
in subparagraphs (a), (b), (c) or (d) is approved by a two-thirds (2/3)
vote of the total non-employee membership of the Board of Directors of
the Company and a majority of the continuing non-employee directors (as
hereinafter defined) of the Company at the time of said vote. The term
continuing non-employee directors shall mean those members of the Board
of Directors of the Company not otherwise employed by the Company and
elected by the shareholders or otherwise appointed prior to the
occurrence of any of the events described in subparagraphs (a), (b), (c)
or (d) above.
15. PAYMENT
All payment for shares obtained by exercise of Options granted under the Plan
shall be made by payment of the amount due to the Treasurer of the Company in
cash or by delivery to the Secretary of the Company of sufficient shares of the
Company's Common Stock, properly endorsed for transfer to the Company, which
when valued at "Last Transaction" price at the close of business for the
previous day on which the stock was traded on the "NASDAQ National Market
System," will equal the payment due for those shares. Any fractional amount of
overpayment received by the Company because of receiving whole shares may be
refunded in cash by the Treasurer.
Notwithstanding any of the foregoing restrictions, any free or restricted
Options acquired under the Plan may at any time be pledged or otherwise
hypothecated to secure borrowings by the Optionee to obtain the acquisition
price to be paid by the Optionee for such shares; provided, however, that the
amount of such borrowings may not exceed the acquisition price of such shares.
7