THE MED-DESIGN CORPORATION
NON-QUALIFIED STOCK OPTION PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement (this "Agreement") is made by and
between The Med-Design Corporation, a Delaware corporation (the "Company"), and
Xxxx Xxxxxx (the "Option Holder"), governing the grant by the Company to the
Option Holder, effective as of June 3,1996, of a Non-Qualified Stock Option to
purchase an aggregate of 16,000 shares of common stock, $.01 par value, of the
Company under The Med-Design Corporation Non-Qualified Stock Option Plan (the
"Plan"). This Agreement is to replace the original Agreement in that the option
is repriced as hereinafter provided, that original Agreement is hereby cancelled
and void.
ARTICLE I
DEFINITIONS
1.1. In this Agreement, unless the context otherwise requires,
references to the following words shall have the following meanings:
"Board of Directors" shall mean the Board of Directors of the
Company as constituted from time to time.
"Business Day" shall mean a day (other than a Saturday or
Sunday) on which the principal office of the Company in Philadelphia,
Pennsylvania, is open for the conduct of normal business.
"Change in Control" shall mean a change in control of
the Company of a nature that would be required to be reported
(assuming such event has not been previously reported) to Item 1(a) of the
Current Report on Form 8-K, as in effect on the date hereof, pursuant to Section
13 or 15(d) of the Exchange Act; provided that, without limiting the foregoing,
a "Change in Control" shall be deemed to have occurred at such time as (a) any
Person (as defined in the Exchange Act) after the date hereof becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of 10% or more of the combined voting power to the Company's
outstanding securities ordinarily having the right to vote at elections of
directors ("Voting Securities"), or (b) during any period of two consecutive
years after the date of the initial acquisition by such Person of Voting
Securities of the Company, individuals who constitute the members of the Board
of Directors of the Company on the date of such acquisition, or at the
commencement of any two year period thereafter (the "Incumbent Board") cease for
any reason to constitute at least a majority thereof, provided that any person
becoming a director subsequent to the date of such acquisition whose election,
or nomination for election by the Company's shareholders, was approved by a vote
of at least eighty percent (80%) of the directors comprising the Incumbent Board
(either by a specific vote or by approval of the proxy statement of the Company
in which such person is named as a nominee for director, without objection to
such nomination) shall be considered as though such person were a member of the
Incumbent Board, or (c) the shareholders of the Company approve a merger or
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consolidation of the Company with any other entity other than (i) a merger or
consolidation that would result in the Voting Securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or being converted into Voting Securities of the entity
surviving such merger or consolidation), in combination with Voting Securities
of the Company or such surviving entity held by a trustee or other fiduciary
pursuant to any employee benefit plan of the Company or such surviving entity or
any Subsidiary of the Company or such surviving entity, at least 75% of the
combined voting power of the Voting Securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation or (ii) a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person becomes the beneficial owner of
securities of the Company or the entity outstanding immediately after such
merger or consolidation than such Person was the beneficial owner of immediately
prior to such recapitalization, or (d) the shareholders of the Company approve
an agreement for the sale or disposition by the Company of all or substantially
all of the Company's assets.
"Committee" shall mean the Compensation Committee of the Board
of Directors of the Company as constituted by the Board of Directors of the
Company from time to time.
"Company" shall mean The Med-Design Corporation.
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"Date of Grant" shall mean the date on which an Option is
granted by the Company pursuant to Article V of the Plan.
"Disability" means permanent and total disability as defined
in Section 422(c)(6) of the Internal Revenue Code of 1986, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as it may be amended from time to time, or any successor act or statue.
"Expiration Date" shall mean the expiration date of the Option
fixed by the Committee and set forth in Section 3.1 of this Agreement.
"Independent Director" shall mean any director of the Company
who is not an employee or officer of the Company or any Subsidiary.
"Market Value," on the Date of Grant of any Option, shall mean
(i) the last sale price (regular way) of the Shares on the Date of Grant or, if
no such sale takes place on such day, the average of the closing bid and asked
prices on the New York Stock Exchange Composite Tape or, if the Shares are not
listed or admitted to trading on the New York Stock Exchange on the Date of
Grant, on the national securities exchange in or nearest the City of New York on
which the Shares are listed or admitted to trading, or (ii) if on the Date of
Grant the Shares are not listed or admitted to trading on any national
securities exchange, the last sale price (regular way) of the Shares on the Date
of Grant or, if no such sale takes place on such day, the
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average of the highest reported bid and lowest reported asked prices as
furnished by the National Association of Securities Dealers, Inc. through the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
or a similar organization if NASDAQ is no longer reporting such information, or
(iii) if on the Date of Grant the Shares are not quoted by any such
organization, the fair market value of the Shares on the Date of Grant as
determined by the Committee.
"Option" shall mean a right to subscribe for Shares granted to
a Qualified Person pursuant to the Plan.
"Option Holder" shall mean a Qualified Person or a former
Qualified Person who holds an Option.
"Option Shares" shall mean unissued Shares in respect of which
Options are granted.
"Plan" shall mean The Med-Design Corporation Non-Qualified
Stock Option Plan.
"Qualified Person" shall mean any employee or officer of, or
consultant to, the Company or any Subsidiary or any Independent Director of the
Company.
"Retirement" means retirement from active employment with the
Company or any Subsidiary at or after the age established by the Committee from
time to time for purposes of the Plan, or earlier in any particular case with
the consent of the Committee.
"Shares" shall mean the authorized shares of common
stock of the Company.
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"Subscription Price" shall mean the price payable for a Share
on the exercise of an Option, as set forth in Section 2.1 hereof and as it may
be adjusted pursuant to Section 8.1 hereof.
"Subsidiary" shall mean any corporation which at the time
qualifies as a subsidiary of the Company under the definition of "subsidiary
corporation" in Section 424(f) of the Internal Revenue Code of 1986, as amended.
"Termination Date" shall mean the first to occur of the dates
described in Article V of this Agreement.
ARTICLE II
CONFIRMATION OF GRANT AND SUBSCRIPTION PRICE
2.1. Subject to the terms and conditions of the Plan, the
provisions of which are hereby made a part of this Agreement, and the return of
this Agreement signed by the Option Holder, the Company hereby confirms its
grant to the Option Holder of an Option to purchase 16,000 Shares at the
Subscription Price of $4.50 Dollars per Share.
ARTICLE III
VESTING
3.1. The schedule for the exercise of the Options granted pursuant to
this Agreement shall be as follows:
No. of Date First Available Expiration Date of
Shares for Exercise Right of Exercise
------ -------------------- ------------------
3200 June 3, 1997 June 3, 2002
3200 June 3, 1998 June 3, 2002
3200 June 3, 1999 June 3, 2002
3200 June 3, 2000 June 3, 2002
3200 June 3, 2001 June 3, 2002
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The number of Shares as to which the Option becomes available
for exercise may be purchased after the date first available for exercise
indicated above, subject to the provisions hereof, and at any time prior to the
Expiration Date, subject to prior termination pursuant to Article V.
3.2. Each Option held by a Qualified Person who is not an
Independent Director shall automatically be vested and exercisable in full
(subject to termination pursuant to Section 5.1) if the employment of such
Qualified Person by the Company or any Subsidiary is terminated by the Company
or such Subsidiary (other than by reason of death or Disability) within six (6)
months after the occurrence of any Change in Control.
If the employment of an Option Holder by the Company or any
Subsidiary is terminated (other than by reason of Retirement, death or
Disability), each Option of such Option Holder shall be exercisable prior to its
Expiration Date (subject to Section 5.1) only if, and only to the extent that,
such Option, in accordance with its terms, is vested and exercisable on the date
on which the employment of the Option Holder by the Company or such Subsidiary
is terminated.
3.3. Each Option held by an Independent Director shall
automatically be vested and exercisable in full (subject to termination pursuant
to Section 5.2) if such Independent Director is removed as a director of the
Company (other than by reason of Disability) within six (6) months after the
occurrence of any Change in Control.
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ARTICLE IV
EXERCISE OF OPTION
4.1. An Option may be exercised only for full Shares. No
fractional Shares shall be issued.
4.2. No Option may be exercised in whole or in part and the
Company shall not be required to issue or deliver any certificate evidencing
Shares purchasable upon the exercise of any Option prior to fulfillment of all
of the following conditions:
(a) receipt by the Secretary of the Company from the
Option Holder or his executor or administrator of a written notice of exercise
of the Option specifying the number of Shares for which the Option is to be
exercised, substantially in the form set out as Exhibit 1 to such Option
Holder's Stock Option Agreement, together with full payment of the Subscription
Price per Share in United States dollars for each Share for which the Option is
to be exercised;
(b) if the Option is to be exercised by an executor or
administrator of the Option Holder, receipt by the Secretary of the Company from
such executor or administrator of evidence satisfactory to the Company of such
person's right to exercise the Option;
(c) (i) receipt by the Secretary of the Company from the
Option Holder or his executor or administrator of such documents as the Company
shall deem necessary to determine whether registration of the Shares is required
under the
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Securities Act of 1933 or to comply with such act or any other law and (ii) the
completion of any such registration or other qualification of such Shares under
any federal or state law or under the rulings or regulations of the Securities
and Exchange Commission or any other governmental regulatory body that the
Committee shall in its sole discretion deem necessary or advisable;
(d) receipt by the Company of any approval or other
consent from any federal, state of foreign governmental agency that the
Committee shall in its sole discretion deem necessary or advisable;
(e) if requested by the Company, receipt by the Secretary
of the Company from the Option Holder or his executor or administrator of a
letter representing that the Shares to be acquired upon exercise of the Option
are to be acquired for the account of the Option Holder or for the account of
his executor or administrator for investment and not with a view to distribution
of such Shares; and
(f) for issuance of certificates evidencing Shares for
which the Option has been exercised, the lapse of such reasonable period of time
following the exercise of the Option as the Committee from time to time may
establish for reasons of administrative convenience.
4.3. If notice is duly given of a Resolution for the voluntary
winding up of the Company an Option Holder may forthwith and before the
commencement of the winding-up exercise
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his Option up to the full extent to which it remains vested and unexercised (but
so that such exercise shall be conditional upon such Resolution being passed)
provided that an Option shall not be exercisable later than the Termination
Date.
ARTICLE V
TERMINATION OF OPTION
5.1. Except as otherwise stated herein, each Option held by a
Qualified Person other than an Independent Director shall terminate on the first
to occur of the following dates:
(a) The expiration of thirty (30) calendar days after the
date on which the employment of such Qualified Person by the Company or any
Subsidiary is terminated by the Company or such Subsidiary for cause (which
shall not include Disability), except if such termination occurs within six (6)
months after a Change in Control.
(b) The expiration of ninety (90) calendar days after the
date on which the employment of such Qualified Person by the Company or any
Subsidiary is terminated by such Qualified Person (except if such termination
occurs by reason of Retirement, death or Disability).
(c) The Expiration Date.
The granting of an Option to a Qualified Person does not alter
in any way the existing rights of the Company or any Subsidiary to terminate the
employment of such Qualified Person with or without cause and does not create an
actual or implied contract of employment.
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If an Option terminates on either of the dates described in
subsections (a) and (b) of this Section 5.1, the Option may be exercised prior
to the Termination Date only if, and only to the extent that, the Option, in
accordance with its terms, is vested and exercisable on the date on which the
employment of the Qualified Person by the Company or any Subsidiary is
terminated.
5.2. Except as otherwise stated herein, each Option held by an
Independent Director shall terminate on the first to occur of the following
dates:
(a) The expiration of thirty (30) calendar days after the
date on which such Independent Director resigns as a director of the Company or
the term of such Independent Director as a director of the Company expires and
such Independent Director is not reelected (in either case, other than by reason
of death or Disability) or after the date on which such Independent Director is
removed as a director by the Company for cause (which shall not include
Disability), except if such termination occurs within six (6) months after the
occurrence of any Change in Control.
(b) The Expiration Date.
If an Option is to terminate pursuant to subsection (a) of
this Section 5.2, the Option may be exercised prior to the Termination Date only
if, and only to the extent that, the Option, in accordance with its terms, is
vested and exercisable on the date on which the Independent Director resigns
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or is removed as a director of the Company or the term of such Independent
Director expires.
ARTICLE VI
NON-ASSIGNABILITY
6.1. An Option may not be transferred by the Option Holder
(other than by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Internal Revenue Code of
1986, as amended, or Title I of the Employee Retirement Income Security Act, or
the rules thereunder).
ARTICLE VII
RIGHTS AS SHAREHOLDER
7.1. No Option Holder shall have any rights as a shareholder
with respect to Shares subject to an Option until the date of exercise of such
Option in accordance with the Plan and the issuance of the Shares for which the
Option has been exercised. All Shares acquired by an Option Holder pursuant to
the Plan shall be subject to the restrictions contained in the Certificate of
Incorporation and Bylaws of the Company, as in effect on the date hereof and as
they may be amended or restated from time to time, and (subject thereto) shall
be effective on the date of issue thereof and rank pari passu with the Shares of
the Company then issued and outstanding (including the right to receive all
dividends or other distributions thereafter declared, paid or made by reference
to a record date falling on or after the date of issue thereof). Except for
adjustments to be made to
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Options pursuant to the terms of the Plan, no adjustment shall be made for
dividends or other rights that have accrued to shareholders of the Company prior
to the date of issue of such Shares.
ARTICLE VIII
CAPITAL ADJUSTMENTS
8.1. If and to the extent that the number of Shares shall be
increased or reduced by reason of a recapitalization, a reclassification, a
distribution or a dividend payable in stock, a rights issue, a sub-division or
consolidation of Shares or an increase or reduction of capital, then the number
of Shares subject to the Option and Subscription Price per Share shall be
proportionately adjusted. If the Company is reorganized or consolidated or
merged with another entity, the Option Holder shall be entitled to receive an
Option in exchange for this Option, but only if this Option has not terminated
pursuant to 5.1 or 5.2 hereof and only to the extent this Option has not
theretofore been exercised, covering Shares or such other ownership interest of
such reorganized, consolidated, or merged entity in the same proportion, at an
equivalent price, and subject to the same terms and conditions; provided,
however, that the issuance of securities by the Company as consideration for the
acquisition by the Company of securities of another corporation or any other
asset shall not be regarded as a circumstance requiring adjustment.
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ARTICLE IX
DISPOSITION OF SHARES
9.1. If the Option Holder disposes of any Shares received upon
exercise of an Option within a one-year period beginning on the day the Shares
were transferred to the Option Holder, the Option Holder shall notify the
Secretary of the Company of the number of, and the date on which, the Shares
were disposed of, the manner of disposition (whether by sale, exchange, gift or
otherwise) and the amount, if any, realized upon such disposition.
ARTICLE X
NOTICE
10.1. All notices to the Secretary of the Company hereunder
shall be in writing and shall be made by personal delivery or by certified mail,
return receipt requested, to the Secretary at the then principal office of the
Company.
ARTICLE XI
INTERPRETATION OF AGREEMENT: GOVERNING LAW
11.1. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Delaware.
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IN WITNESS WHEREOF, the Company and the Option Holder have
duly executed this Agreement as of _________________,
__________.
ATTEST: THE MED-DESIGN CORPORATION
By:_________________________ By:__________________________
Xxxxxx X. Xxxxxxxxxxx, III Xxxxx X. Xxxxxxx
Secretary President/CEO
WITNESS: OPTION HOLDER
____________________________ _____________________________
Xxxx X. Xxxxxx
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EXHIBIT 1
Secretary
The Med-Design Corporation
Philadelphia, Pennsylvania
Dear ____________:
FORM OF EXERCISE OF NON-QUALIFIED STOCK OPTIONS
AND INDEPENDENT DIRECTOR'S NON-QUALIFIED STOCK OPTIONS
I wish to exercise Options for _________________ shares of
common stock of The Med-Design Corporation now available to me under the grant
of Options for ______________ shares made to me effective as of _______________,
_____, at $______________ per share pursuant to The Med-Design Corporation
Non-Qualified Stock Option Plan and the Stock Option Agreement, made as of
_____________, _______, between The Med-Design Corporation and me. My check
drawn to the order of The Med-Design Corporation in the amount of
$________________ is attached.
Name:_____________________________________
SS No:____________________________________
Address of Record:_____________________________________________________________
(Street) (City) (State) (Zip)
Please forward my certificate to the following address
_______________________________________________________________________________
(Street) (City) (State) (Zip)
______________________________ ___________________
Signature of Option Holder Date
To be completed by Personnel Manager:
The above individual is a current employee: Yes____ No____
Termination Date_____________________ (if applicable)
______________________________ ___________________
Authorized Corporate Officer Date
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