EXHIBIT 10.3
1997 STOCK OPTION PLAN
ARTICLE 1
PURPOSE
The purpose of this Plan is to permit the Company to grant stock options
to selected officers, directors and employees of the Company and its
Subsidiaries, and to selected consultants to the Company, in order to reward
them for their efforts on the Company's behalf and to provide an additional
incentive to contribute to the Company's attainment of its performance
objectives.
ARTICLE 2
DEFINITIONS
BOARD means the Company's Board of Directors.
COMMON STOCK means the Company's Common Stock, par value $.01 per share.
CLOSING PRICE means the last reported sales price of a share of Common
Stock on the Nasdaq National Market.
COMPANY means Stericycle, Inc., a Delaware corporation.
DIRECTOR means a director of the Company.
ELIGIBLE PERSON means a person or entity eligible under Article 6 to be
granted an Option.
EMPLOYEE means a full-time employee of the Company or any Subsidiary.
EXPIRATION DATE means (i) in the case of an Option which is or may
become exercisable in full at one time, the last day on which the Option may
be exercised, and (ii) in the case of an Installment, the last day on which
the Installment may be exercised.
GRANT DATE means the date on which an Option is granted.
ISO is defined in Article 4.
INSTALLMENT means an installment of an Option which is or may become
exercisable in installments.
NON-EMPLOYEE DIRECTOR means a Director who (i) is not currently an
Officer or Employee, (ii) does not receive direct or indirect compensation
from the Company or any Subsidiary for services rendered as a consultant, or
in any capacity other than as a Director, in an amount for which disclosure
would be required under Item 404(a) of Regulation S-K of the Securities and
Exchange Commission ("Item 404(a)"), (iii) does not possess an interest in
any other transaction for which disclosure would be required under Item
404(a) and (iv) is not engaged in a business relationship for which
disclosure would be required under Item 404(a).
NSO is defined in Article 5.
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OFFICER means (i) the Company's President and Chief Executive Officer,
(ii) any Vice President of the Company and (iii) any other person who is
considered an "officer" of the Company for purposes of Rule 16a-1(f) under
the Securities Exchange Act of 1934.
OFFICER OPTIONS COMMITTEE is defined in Paragraph 7.2.
OPTION means an option granted under this Plan to purchase shares of
Common Stock.
OPTION AGREEMENT is defined in Paragraph 8.6.
PLAN means this plan, as it may be amended. The name of this Plan is the
"Stericycle, Inc. 1997 Stock Option Plan."
PLAN ADMINISTRATOR means, in the context of the administration of this
Plan in respect of Eligible Persons other than Officers, the Board or the
committee of the Board to which the Board has delegated its authority in
accordance with Paragraph 7.1, and in the context of the administration of
this Plan in respect of Officers, the Officer Options Committee.
OFFICER-EMPLOYEE means an Officer who is also an Employee.
10% STOCKHOLDER means an Officer or Employee who, at the time that he or
she is granted an ISO, owns more than 10% of the Company's outstanding Common
Stock.
SUBSIDIARY means a corporation in which the Company owns stock
possessing at least 50% of the total combined voting power of all classes of
stock.
TERMINATION DATE means the date of termination of employment by the
Company or a Subsidiary of an Employee or Officer-Employee. A transfer of
employment from the Company to a Subsidiary, or from a Subsidiary to the
Company or to another Subsidiary, will not be considered a termination of
employment.
UNDERLYING SHARES means the shares of Common Stock for which an Option
or Installment is or may become exercisable.
ARTICLE 3
EFFECTIVE DATE AND TERM OF PLAN
3.1 EFFECTIVE DATE. When adopted by the Board, this Plan shall become
effective retroactive to February 1, 1997, but shall be subject to approval
by the Company's stockholders. Options may be granted under this Plan (but
may not be exercised) prior to stockholder approval, but if for any reason
stockholder approval is not obtained on or before December 31, 1997, all such
options shall be cancelled.
3.2 TERM. This Plan shall have a term of 10 years expiring on January
31, 2007. No Option may be granted under this Plan after its expiration.
ARTICLE 4
SHARES AVAILABLE UNDER PLAN
4.1 MAXIMUM NUMBER OF SHARES. The maximum total number of shares of
Common Stock for which Options may be granted under this Plan is 1,500,000
shares (subject to adjustment as provided in Paragraph 10.1).
4.2 SHARES ADDED BACK. If an Option or Installment expires
unexercised or is surrendered prior to
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January 31, 2007, the number of Underlying Shares in respect of the Option or
Installment shall be added back to the number of shares of Common Stock for
which Options may be granted under this Plan.
ARTICLE 5
TYPES OF OPTIONS
Two types of Options may be granted under this Plan: (i) incentive stock
options intended to satisfy the requirements of Section 422 of the Internal
Revenue Code of 1986 ("ISOs") and (ii) nonstatutory stock options ("NSOs").
ARTICLE 6
ELIGIBILITY
NSOs may be granted to Employees, Officers and Directors and to
consultants to the Company (who also may be Directors). ISOs may be granted
only to Employees and to Officer-Employees.
ARTICLE 7
ADMINISTRATION
7.1 BOARD. This Plan shall be administered by the Board in respect of
all Eligible Persons other than Officers. Except for the Board's authority to
administer the Plan in respect of Directors, the Board may delegate its
authority to administer the Plan to a standing committee of the Board or to a
committee appointed by the Board for the purpose consisting of at least two
Directors.
7.2 OFFICER OPTIONS COMMITTEE. This Plan shall be administered by a
committee (the "Officer Options Committee") in respect of Officers. The
Officer Options Committee shall be or consist of (i) the Compensation
Committee of the Board, or (ii) if any member of the Compensation Committee
is not a Non-Employee Director, the members of the Compensation Committee who
are Non-Employee Directors, or (iii) if there are not at least two members of
the Compensation Committee who are Non-Employee Directors, the full Board.
7.3 POWERS. The Board shall have sole authority to grant Options to
Eligible Persons other than Officers, and the Officers Option Committee shall
have sole authority to grant Options to Officers. Within the scope of their
respective authority and subject to the express provisions of this Plan, the
Board and the Officer Options Committee may (i) select the Eligible Persons
to whom Options are granted, (ii) designate an Option as an ISO or NSO, (iii)
determine the number of shares of Common Stock for which an Option is granted
and (iv) determine the other terms, conditions, restrictions and limitations
applicable to an Option.
7.4 INTERPRETATION. Within the scope of their respective authority
and subject to the express provisions of this Plan, the Board and the Officer
Options Committee may interpret the Plan, adopt and revise policies and
procedures to administer the Plan, and make all determinations required for
the Plan's administration. The actions of the Board and the Officer Options
Committee on matters within the scope of their respective authority shall be
final and binding.
ARTICLE 8
STOCK OPTIONS
8.1 EXERCISE PRICE. The Plan Administrator shall determine the
exercise price of each Option. The exercise price per share may not be less
than the Closing Price on the Grant Date of the Option (or on the
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last trading day preceding the Grant Date if it is not a trading day).
8.2 TERM. The Plan Administrator shall determine (i) whether each
Option shall be exercisable in full at one time or in installments at
different times and (ii) the time or times at which the Option or
Installments shall become and remain exercisable. No Option or Installment
may have an Expiration Date more than 10 years from the Grant Date. The Plan
Administrator may accelerate the exercisability of an Option or Installment
at any time.
8.3 TERMINATION OF EMPLOYMENT. Any Option or Installment held by an
Employee or Officer-Employee which is unexercisable as of his or her
Termination Date shall expire on the Termination Date. Any Option or
Installment held by an Employee or Officer-Employee which is exercisable as
of his or her Termination Date shall also expire on the Termination Date
unless the expiration date is extended by the Plan Administrator. The Plan
Administrator may extend the expiration of an exercisable NSO (or an
exercisable Installment of a NSO) to any date ending on or before the
applicable Expiration Date. The Plan Administrator may extend the expiration
of an exercisable ISO (or exercisable Installment of an ISO) to the earlier
of (i) a date no later than 90 days after the Termination Date or (ii) the
applicable Expiration Date, unless the termination of the Employee or
Officer-Employee occurred as a result of his or her death. In this case, the
Plan Administrator may extend the expiration to the earlier of (i) a date no
later than the first anniversary of the death of the Employee or
Officer-Employee or (ii) the applicable Expiration Date.
8.4 TRANSFERABILITY. No Option or Installment may be transferred,
assigned or pledged (whether by operation of law or otherwise), except as
provided by will or the applicable laws of intestacy, and no Option shall be
subject to execution, attachment or similar process. An Option or Installment
may be exercised only by the person to whom it was granted except in the case
of his or her death, when it may be exercised by the person or persons to
whom it passes by will or inheritance.
8.5 ISO LIMITATIONS. Notwithstanding anything to the contrary in
Paragraphs 8.1 and 8.2: (i) the exercise price per share of an ISO granted
to a 10% Stockholder shall not be less than 110% of the Closing Price on the
Grant Date (or on the last trading day preceding the Grant Date if it is not
a trading day); (ii) no ISO granted to a 10% Stockholder may have an
Expiration Date more than five years from the Grant Date; and (iii) the
aggregate fair market value (determined in respect of each ISO on the basis
of the Closing Price on the Grant Date, or on the last trading day preceding
the Grant Date if it was not a trading day) of the Underlying Shares of all
ISOs which become exercisable by an individual for the first time in any
calendar year shall not exceed $100,000.
8.6 OPTION AGREEMENTS. Each Option shall be evidenced by a written
agreement (an "Option Agreement"), in a form approved by the Plan
Administrator, entered into by the Company and the person to whom the Option
is granted. Each Option Agreement shall contain the terms, conditions,
restrictions and limitations applicable to the Option and any other
provisions that the Plan Administrator considers advisable to include.
ARTICLE 9
EXERCISE OF OPTIONS
9.1 MANNER OF EXERCISE. An exercisable Option or Installment may be
exercised in full or in part (but only in respect of a whole number of
Underlying Shares) by (i) written notice to the Plan Administrator (or its
designee) stating the number of Underlying Shares in respect of which the
Option or Installment is being exercised and (ii) full payment of the
exercise price of those shares.
9.2 PAYMENT OF EXERCISE PRICE. Payment of the exercise price of an
Option or Installment shall be made by certified or bank cashier's check or,
if permitted by the Plan Administrator (either in the applicable Option
Agreement or at the time of exercise): (i) a personal check; (ii) delivery of
shares of Common Stock having a fair market value on the date of exercise
equal to the exercise price; (iii) directing the
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Company to withhold, from the Underlying Shares otherwise issuable upon
exercise of the Option or Installment, Underlying Shares having a fair market
value on the date of exercise equal to the exercise price; (iv) surrendering
exercisable Options or Installments having a fair market value on the date of
exercise equal to the exercise price (measuring the fair market value of the
Options or Installments surrendered by the excess of the aggregate fair
market value on the date of exercise of the Underlying Shares over the
aggregate exercise price); (v) any combination of the preceding methods of
payment; or (vi) any other method of payment authorized by the Plan
Administrator. For purposes of this Paragraph and Paragraph 9.3, "fair market
value" shall be determined by the Closing Price on the Nasdaq National Market
on the date in question (or on the last trading day preceding the date in
question if it is not a trading day).
9.3 WITHHOLDING. Each person exercising a NSO or an Installment of a
NSO shall remit to the Company an amount sufficient to satisfy its federal,
state and local withholding tax obligation in connection with the exercise.
Payment shall be made by certified or bank cashier's check or, if permitted
by the Plan Administrator (either in the applicable Option Agreement or at
the time of exercise): (i) a personal check; (ii) delivery of shares of
Common Stock having a fair market value on the date of exercise equal to the
withholding obligation; (iii) directing the Company to withhold, from the
Underlying Shares otherwise issuable upon exercise of the Option or
Installment, Underlying Shares having a fair market value on the date of
exercise equal to the withholding obligation; (iv) any combination of the
preceding methods of payment; or (v) by any other method of payment
authorized by the Plan Administrator.
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 CAPITALIZATION ADJUSTMENTS. The aggregate number of shares of
Common Stock for which Options may be granted under the Plan, the aggregate
number of Underlying Shares in respect of each outstanding Option, and the
exercise price of each outstanding Option may be adjusted by the Board as it
considers appropriate in the event of changes in the number of outstanding
shares of Common Stock by reason of stock dividends, stock splits,
recapitalizations, reorganizations and the like. Adjustments under this
Paragraph 10.1 shall be made in the Board's discretion, and its decisions
shall be final and binding.
10.2 AMENDMENT AND TERMINATION. The Board may amend, suspend or
terminate this Plan at any time. The Company's stockholders shall be required
to approve any amendment which would materially increase the number of shares
of Common Stock for which NSOs may be granted or which would increase the
number of shares of Common Stock for which ISOs may be granted (other than an
amendment authorized under Paragraph 10.1). If this Plan is terminated, the
provisions of this Plan shall continue to apply to Options granted prior to
termination, and no amendment, suspension or termination of the Plan shall
adversely affect the rights of the holder of any outstanding Option without
his or her consent.
10.3 NO RIGHT TO EMPLOYMENT. Nothing in this Plan or in any Option
Agreement shall confer on any person the right to continue in the employ of
the Company or any Subsidiary or limit the right of the Company or Subsidiary
to terminate his or her employment.
10.4 NOTICES. Notices required or permitted under this Plan shall be
considered to have been duly given if sent by certified or registered mail
addressed to the Plan Administrator at the Company's principal office or to
any other person at his or her address as it appears on the Company's payroll
or other records.
10.5 SEVERABILITY. If any provision of this Plan is held illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining provisions, and the Plan shall be construed and administered as if
the illegal or invalid provision had not been included.
10.6 GOVERNING LAW. This Plan and all Option Agreements shall be
governed in accordance with the laws of the State of Illinois.
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