Exhibit 10(l)
MEDCO CONTAINMENT SERVICES, INC.
CLASS A NON-QUALIFIED STOCK OPTION AGREEMENT
NON-QUALIFIED STOCK OPTION AGREEMENT (this "Agreement") made as of July 1,
1991, between MEDCO CONTAINMENT SERVICES, INC., a Delaware corporation with
offices at 000 Xxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000 (the "Company"), and
PER X. X. XXXXXXX ("Optionee").
RECITAL
The Company desires to provide Optionee with an opportunity to acquire
shares of Common Stock of the Company pursuant to the terms of the Company's
Class A 1983 Non-Qualified Stock Option Plan (the "Plan"), a copy of which is
attached as an Exhibit to this Agreement and incorporated herein. All terms
used herein shall have the same meanings as in the Plan, unless otherwise
defined. Optionee is a director of the Company.
AGREEMENTS
In consideration of the Recital (which is incorporated by reference) and
the mutual covenants of this Agreement, the Company and Optionee agree as
follows:
1. Confirmation of Grant of Option. Pursuant to a determination by the
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Board of Directors of the Company (the "Board") or its Stock Option Committee
(the "Committee") effective as of the date first set forth above (the "Date of
Grant"), the Company hereby confirms that Optionee has been granted, subject to
the terms of this Agreement and the Plan, as of the Date of Grant, as a matter
of separate inducement and agreement and not in lieu of salary or other
compensation for services, the right (the "Option") to purchase 60,000 shares of
Common Stock of the Company (the shares subject to purchase hereunder being
hereinafter called "Shares") at a price of $48.25 per Share. The price and
number of Shares subject to the Option may be adjusted as provided in section 8.
2. Exercisability of Option.
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2.1 Subject to section 7.6 of the Plan and to the terms and
conditions of this Agreement, the Option shall be exercisable:
2.1.1 with respect to 20% of the Shares, on or after the first
anniversary of the Date of Grant;
2.1.2 with respect to an additional 20% of the Shares, on and
after the second anniversary of the Date of Grant;
2.1.3 with respect to an additional 20% of the Shares, on and
after the third anniversary of the Date of Grant;
2.1.4 with respect to an additional 20% of the Shares, on and
after the fourth anniversary of the Date of Grant; and
2.1.5 with respect to the remainder of the Shares, on and after
the fifth anniversary of the Date of Grant.
The foregoing vesting is on a cumulative basis. For example, assuming
that the Option has not terminated and that Optionee has not exercised any part
of the Option, Optionee shall have the right to purchase by exercise 60% of the
Shares subject to the Option after the third anniversary of the Date of Grant.
If, in that example, Optionee had already exercised the Option for 10% of the
Shares, he would have the right to exercise for 50% of the Shares after the
third anniversary.
2.2 The unexercised portion of the Option (both vested and non-
vested) shall automatically and without notice terminate and become null and
void at the time of the earliest to occur of the following:
2.2.1 the tenth anniversary of the Date of Grant;
2.2.2 subject to the provisions of section 2.3 below, 30 days
following the date of termination of Optionee's status as a director of the
Company; except that, if following such termination Optionee is retained as a
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consultant by the Company, the Board or the Committee may, in their sole
discretion, continue the Option for the balance of its term with respect to
either (a) all Shares covered by it or (b) the Shares for which the Option has
become exercisable pursuant to section 2.1 (in which case the Option shall be
deemed not to have terminated) or may permit the termination to stand. Any such
continuation shall not be deemed the grant of a new Option.
2.3 If Optionee dies within the 30 day period following termination
(described in section 2.2.2), any unexercised portion of the Option which was
otherwise exercisable on the date of death shall be exercisable by Optionee's
personal representatives, heirs or legatees at any time within the one year
period from the date of death. If Optionee dies while a director of the
Company, any unexercised portion of the Option that was exercisable on the date
of death shall be exercisable by the Optionee's personal representatives, heirs
or legatees at any time within the one year period from the date of death.
2.4 Notwithstanding any other provision of this Agreement, the right
to exercise any unvested portion of the Option may be accelerated by the Board
or the Committee and shall be acceleration pursuant to section 7.6 of the Plan.
The terms of any such acceleration shall be deemed to be a provision of the
Option and not the grant of a new option.
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3. Method of Exercise of Option. Subject to section 7.7 of the Plan,
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the Option may be exercised by Optionee (or by Optionee's personal
representatives, heirs or legatees, as provided in section 2 but no other
person) as to all or (at Optionee's election) part of the Shares as to which
the Option is then exercisable (that is, "vested") under section 2 by giving
written notice of exercise to the Company at its principal business office,
specifying the number of shares for which the Option is exercised, accompanied
by payment in full for such Shares. The failure to exercise the Option, in
whole or in part, as to any vested exercise rights shall not constitute a waiver
of those rights. The Company shall cause certificates for the Shares so
purchased to be delivered to Optionee or Optionee's personal representatives,
heirs or legatees at its principal business office, against payment in full of
the Option Price, on the date specified in the notice of exercise. The Option
Price shall be paid in cash, certified check or bank draft or (if the shares of
Common Stock of the Company are then publicly traded) in fully paid shares of
Common Stock of the Company (valued for this purpose at their then fair market
value determined as provided below) or a combination of the two. Payment in the
form of shares of Common Stock of the Company shall be by delivery of one or
more certificates therefor, accompanied by a blank signed assignment, and the
shares so delivered shall be valued at the average of the closing price of the
Company's Common Stock on the principal exchange on which traded on the 20
trading days during which the Common Stock actually traded preceding the Closing
Date or, if the Company's Common Stock is not traded on an exchange, at the
average last quoted bid price in the over-the-counter market on the 20 trading
days during which the Common Stock actually traded preceding the Closing Date.
4. Non-Transferability of Option. Except as set forth in section 7.7,
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the Option shall not be transferable otherwise than by will or by the laws of
descent and distribution. Without limiting the generality of the foregoing, the
Option may not be assigned, transferred (except as permitted in the preceding
sentence), pledged or hypothecated in any way (whether by operation of law or
otherwise), and shall not be subject to levy, attachment or similar process.
Any attempt to assign, transfer, pledge or hypothecate the Option contrary to
the provisions of this Agreement, and any levy, attachment or similar process
upon the Option, shall be null and void and without effect, and the Board may,
in its discretion, upon the happening of any such event, terminate the Option as
of the date of such event.
5. No Rights Prior to Issuance of Shares. The holder of the Option
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shall not have any rights to dividends nor any other rights of a shareholder
with respect to the Shares covered by the Option until the Shares have been
issued (as evidenced by the appropriate entry on the books of the transfer agent
of the Company) following exercise of the Option prior to its termination.
6. Restrictions on Exercise and on Common Stock.
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6.1 The Shares issued upon exercise of the Option shall be issued
only to Optionee or a person permitted to exercise the Option pursuant to
section 2.3 or pursuant to section 7.7 of the Plan as in effect on the date
hereof. Each share
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certificate representing Shares purchased upon exercise of the Option shall bear
a legend stating that the Shares evidenced thereby may not be sold or
transferred except in compliance with the Securities Act of 1933 (the "1933
Act") and the provisions of the Plan. The certificate(s) may be made subject
to a stop transfer order placed with the Company's transfer agent.
6.2 Notwithstanding any other provision of this Agreement, unless
the issuance of Shares upon exercise of the Option shall then be covered by an
effective registration statement under the 1933 Act (which the Company shall
have no obligation to file), the Company shall have no obligation to issue any
Shares pursuant to an exercise of the Option in the absence of an opinion of
counsel to the Company that said sale may be effected pursuant to an exemption
from the registration requirements of the 1933 Act. If the Company's Common
Stock is not then publicly traded, the Company shall have no obligation to file
a registration statement or take other steps to permit the Shares to be issued
in compliance with the 1933 Act. It shall be a further condition to the
Company's obligation to issue and deliver to Optionee certificates for those
Shares that Optionee deliver to the Company in writing, a representation that
such Optionee is exercising such Option for his or her own account for
investment only and not with a view to distribution and that the Optionee will
not make any sale, transfer or other disposition of any Shares purchased except
(i) pursuant to the registration thereof under the 1933 Act, as amended, (ii)
pursuant to an opinion of counsel satisfactory in form and substance to the
Company that the sale, transfer or other disposition may be made without
registration, or (iii) pursuant to a "no action" letter from the Securities and
Exchange Commission. Optionee has been advised and understands the Shares must
be held indefinitely unless they are registered for resale under the 1933 Act or
an exemption from registration is available and that the Company is under no
obligation to register those shares under the 1933 Act for resale or to take any
action which would make available to the holder any exemption from registration.
7. Right to Terminate Employment. This Agreement does not constitute a
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contract of, or an implied promise to continue, Optionee's employment or status
with the Company or a subsidiary; and nothing contained in this Agreement shall
confer upon Optionee the right to continue such employment or status; nor does
this Agreement affect the right of the Company or any subsidiary to terminate
Optionee's employment at any time. Optionee shall have no rights in the
benefits conferred by the Option or in any Shares except to the extent the
Option is exercised while vested and prior to termination. Termination of the
Option by reason of cessation of employment shall give no rise for any claim for
damages by Optionee under this or any other agreements and shall be without
prejudice to any rights or remedies which the Company or any subsidiary may have
against Optionee.
8. Adjustment. Subject to the provisions of the Plan, the number,
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class and Option Price of Shares covered by the Option, and any other rights
under the Option, shall be adjusted by the Board or the Committee, whose good
faith
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determination with respect thereto shall be conclusive, to reflect any stock
dividend, common stock split, share combination, exchange of shares, merger,
consolidation, recapitalization, separation, reorganization, liquidation or
extraordinary dividend or distribution payable in assets for stock of a company
other than the Company.
9. Notice. Each notice relating to this Agreement shall be in writing
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and delivered in person or by certified mail to the proper address. Each notice
to the Company shall be addressed to it at its principal office, attention of
the President. Each notice to Optionee (or other person or persons then
entitled to exercise the Option) shall be addressed to Optionee (or such other
person or persons) at Optionee's most recent address on the books of the
Company. Anyone to whom a notice may be given under this Agreement may
designate a new address by notice to that effect. Each notice shall be deemed
to have been given on the day it is received.
10. Benefits of Agreement. This Agreement shall inure to the benefit of
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and be binding upon each successor of the Company. Subject to section 2.3,
rights granted to the Company under this Agreement shall be binding upon
Optionee's heirs, legal representatives and successors.
11. Source of Rights. This Agreement and the Plan as in effect on the
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date hereof (which is incorporated in full herein) shall be the sole and
exclusive source of any and all rights which Optionee, and Optionee's personal
representatives, heirs or legatees may have in respect to the Option as granted
hereunder. In the event of any conflict between the provisions of the Plan and
of this Agreement, the provisions of the Plan shall prevail.
12. Captions. The captions contained in this Agreement are for
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reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
13. Governing Law. This Agreement shall be governed by the laws of the
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State of New Jersey applicable to agreements and made to be fully performed
therein.
EXECUTION
The parties signed this Agreement as of the day and year first written,
whereupon it became binding in accordance with its terms.
MEDCO CONTAINMENT SERVICES, INC.
By: /s/ Xxxxx X. Xxxxxxx
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XXXXX X. XXXXXXX
Senior Executive Vice President-Finance
/s/ Per X. X. Xxxxxxx
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OPTIONEE
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ANNEX A
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Options Held
Vesting Exercise Expiration
Options Date Exercisable Price Date
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36,421 7/01/95 36,421 $15.89 7/01/01
36,421 7/01/96 - $15.89 7/01/01
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