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Exhibit 10.7
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 the Board of Directors of the Company (the
"Board"). The interpretation and construction by the Board of any provisions of
the Plan or of any agreement or other matters related to the Plan shall be
final. The Board may from time to time adopt such rules and regulations for
carrying out the Plan as it may deem advisable. No member of the Board 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
Board, which Options shall be evidenced by the delivery of certificates in a
form approved by the Board. 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 Board or participants fail to comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Board.
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.
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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 nontransferable. 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 Board
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 thereafter an
additional twenty percent (20%), if they do not expire under
the terms of Section 7, shall be
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eligible to be exercised until all the granted Options are
free of this limitation.
(c) No Options shall be exercised which do no survive the
expiration provisions of Section 7 hereof.
Any option granted on or after November 15, 1995 may, by action of the Board, be
granted with any limitation, restriction, and/or condition upon the exercise of
such option as the Board 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 Board 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; 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 Board.
Further, the Board 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 Board fail in the
following fiscal year to attain the goal 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 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
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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 Board, be
granted with such limitations, restrictions, waivers and/or conditions as to the
expiration or forfeiture of such option as the Board 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 Board may, at its sole
discretion, extend the period within which an Optionee who ceased to be 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 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
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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
Board, 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 Board shall determine may be made, and when so
made shall be effective and binding for all purposes of the Plan.
11. AMENDMENTS
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 its award by resolution of the
Board and the certificate evidencing such Option shall bear that date. Unless
sooner terminated as
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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.
(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
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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.
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