MEDEX INC, DEF 14A, 1996-10-18

MEDEX INC
DEF 14A, 1996-10-18
SURGICAL & MEDICAL INSTRUMENTS & APPARATUS

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934

Filed by the registrant /X/

Filed by a party other than the registrant / /

Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

MEDEX, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

ROBERT E. BOYD, JR.
(NAME OF PERSON(S) FILING PROXY STATEMENT)

Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:

(4) Proposed maximum aggregate value of transaction:

/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.

(1) Amount previously paid:

(2) Form, schedule or registration statement no.:

(3) Filing party:

(4) Date filed:

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<PAGE> 2

3637 LACON ROAD
HILLIARD, OHIO 43026

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

NOVEMBER 13, 1996

To the Shareholders of Medex, Inc.

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Medex,
Inc. will be held at the Columbus Marriott North, 6500 Doubletree Avenue,
Columbus, Ohio 43229, on the 13th day of November, 1996 at 9:00 A.M., Eastern
Standard Time, for the following purposes:

1. To elect three directors of the Company.

2. To approve the Medex, Inc. Non-Employee Director Restricted Stock Option
Plan IV under which options may be granted to non-employee directors of
the Company.

3. To approve amendments to the Medex, Inc. Key Employee Nonstatutory Stock
Option Plan.

4. To approve amendments to the Medex, Inc. 1994 Executive Stock Option
Plan including an increase in the number of shares authorized under the
Plan.

5. To approve amendment of the Medex, Inc. Employees Stock Purchase Plan to
increase the number of shares authorized under the Plan.

6. To approve the selection of Deloitte & Touche LLP as auditors for the
year ending June 30, 1997.

7. To transact such other business as may properly come before the Meeting
or any adjournment thereof.

All shareholders of record on the books of the Company at the close of
business September 23, 1996, shall be entitled to receive notice of and to vote
at the Meeting.

You are cordially invited to attend the Meeting in person.

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE DATE, SIGN AND MAIL
THE ENCLOSED PROXY SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR
WISHES. NO POSTAGE IS REQUIRED. IF YOU DECIDE LATER TO ATTEND THE MEETING, YOU
MAY REVOKE YOUR PROXY AT THAT TIME AND VOTE YOUR SHARES IN PERSON.

By Order of the Board of Directors

C. Craig Waldbillig, Chairman

Robert E. Boyd, Jr., Secretary
OCTOBER 17, 1996
<PAGE> 3

3637 LACON ROAD
HILLIARD, OHIO 43026

------------------------

PROXY STATEMENT

------------------------

GENERAL

This statement is furnished in regard to the Proxy enclosed with the Notice
of Annual Meeting of Shareholders. The Proxy Statement and the enclosed Proxy
will be first sent to shareholders of Medex, Inc. on or about October 17, 1996.

The enclosed Proxy is solicited on behalf of the Board of Directors of
Medex, Inc. (hereinafter "the Company") and the cost of preparing, printing and
mailing will be borne by the Company. Solicitation will be by mail, except that
if necessary, officers or employees of the Company, without additional
compensation, may make solicitations by telephone or in person. The Company has
retained Corporate Investor Communications, Inc., Carlstadt, New Jersey, to aid
in the solicitation of proxies for a fee of approximately $4,500, plus expenses.
The Company will also reimburse brokerage houses and other nominees for their
reasonable expenses in forwarding Proxy materials to beneficial owners of Common
Stock.

The Board of Directors has fixed the close of business on September 23,
1996, as the record date for determining shareholders entitled to receive notice
of and to vote at the Meeting.

When the Proxies in the enclosed form are properly executed and returned,
the shares they represent will be voted at the Meeting as specified therein. Any
shareholder giving a Proxy has the power to revoke it at any time before it is
voted at the Meeting by notifying the Secretary of the Company.

On September 23, 1996, there were 6,209,922 shares of the Company's Common
Stock issued and outstanding, each share being entitled to one vote. There were
also 150,590 shares of Common Stock held in the Company's treasury which are not
entitled to vote.

Under Ohio law, in the election of directors, any shareholder may give
written notice to the president, a vice-president or secretary of the Company,
not less than 48 hours before the time fixed for the meeting, of his/her desire
that the voting in the election of directors be cumulative and if an
announcement of the giving of such notice is made by or on behalf of the
shareholder giving such notice, upon the convening of the meeting, all
shareholders shall have the right to cumulate their votes. In voting
cumulatively, a shareholder may give one candidate that number of votes
determined by multiplying the number of votes to which he/she is entitled by the
number of directors to be elected, or he/she may distribute that number of votes
among two or more

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<PAGE> 4

candidates as he/she sees fit. Proxies given to the Board of Directors may in
the Board's discretion be voted cumulatively.

All voting shall be governed by the Code of Regulations and By-Laws of the
Company and the law of the State of Ohio. A majority of the outstanding shares,
represented in person or by Proxy, shall constitute a quorum at the Meeting of
Shareholders. Shares as to which authority to vote is withheld and broker
non-votes will be counted as present for quorum purposes. For purposes of the
election of directors, the three directors having the greatest number of votes
cast shall be elected. Shares as to which the authority to vote is withheld and
broker non-votes are not counted toward the election of directors and, thus,
will have no effect. Each other matter to be submitted to the shareholders at
this Meeting requires the affirmative vote of the majority of shares represented
at the Meeting. Therefore, on all matters other than the election of directors,
abstentions and broker non-votes will have the same effect as votes cast against
the proposal.

BENEFICIAL OWNERSHIP OF THE COMPANY'S COMMON STOCK

The following tables, together with the accompanying footnotes, describe
the beneficial ownership of the Company's Common Stock, $.01 par value per
share, as of September 23, 1996, of each person who at such date was known to be
the beneficial owner of more than five percent of the total shares of Common
Stock then issued and outstanding, each Director and nominee for Director
individually, each of the Executive Officers named in the Summary Compensation
Table who were employed by the Company, as of the above date, and all Officers
and Directors of the Company as a group. The share figures shown below are based
principally upon information supplied by the named individuals and group members
described in the tables.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
BENEFICIALLY PERCENT
NAME AND ADDRESS OWNED OF CLASS
- ----------------------------------------------------------------
<S> <C> <C>
Kennedy Capital Management, Inc. 521,340(1) 8.40%
10829 Olive Boulevard
St. Louis, Missouri 63141

SAFECO Corporation
SAFECO Plaza 464,600(2) 7.48%
Seattle, Washington 96185

C. Craig Waldbillig 427,348(3) 6.87%
1650 Dolphin Court
Naples, Florida 33962

Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11th Floor 312,623(4) 5.03%
Santa Monica, California 90401
</TABLE>

- --------------------------------------------------------------------------------

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<PAGE> 5

SECURITY OWNERSHIP OF MANAGEMENT
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
BENEFICIALLY PERCENT
NAME OWNED OF CLASS
- -----------------------------------------------------------
<S> <C> <C>
Michael J. Barilla 79,150(5) 1.26%
Robert E. Boyd, Jr. 84,870(6)(7) 1.36%
James L. Ginter 38,383(6) *
Bradley P. Gould 196,700(8) 3.07%
Thomas A. Helmrath, M.D. 26,857(6) *
John N. Holscher 33,000(6) *
Thomas M. Jordan, Jr. 29,000(6) *
John B. Joyce, Jr. 37,321(6) *
Georg W. Landsberg 26,350(9) *
Clint R. Lawson 21,718(10) *
J. David Martino, M.D. 34,514(6)(11) *
Terry L. Sanborn 65,427(12) 1.05%
C. Craig Waldbillig 427,348(3) 6.87%
All Directors and Officers
as a group (19 persons) 1,172,855(13) 17.11%
</TABLE>

- --------------------------------------------------------------------------------

* less than 1%

1. All information related to this shareholder is based upon a report on
Form 13F filed with the SEC as of July 10, 1996. This figure includes 124,750
shares over which the holder has no voting power.

2. All information related to this shareholder is based upon a report on
Form 13F filed with the SEC as of September 10, 1996. This figure includes
464,600 shares over which the holder has shared investment power.

3. Includes 15,000 shares which Mr. Waldbillig has the right to acquire
within sixty (60) days following September 23, 1996, upon the exercise of stock
options. Includes 8,476 shares which Mr. Waldbillig has sole voting and
investment power; 9,116 shares which Mr. Waldbillig shares such power with his
wife; 344,439 shares held by the Charles Craig Waldbillig Trust; and 50,317
shares held by Mr. Waldbillig's wife's trust.

4. All information related to this shareholder is based upon a report on
Form 13F-E dated July 25, 1996. This figure includes 89,400 shares over which
the holder has no voting power.

5. Includes 460 shares of which Mr. Barilla is custodian for his minor
children; also includes 74,875 shares which Mr. Barilla has the right to acquire
within sixty (60) days following September 23, 1996, upon the exercise of stock
options.

6. Includes shares in the following amounts which the following
Non-Employee Directors have a right to acquire within sixty (60) days following
September 23, 1996 pursuant to the Non-Employee Director Restricted Stock Option
Plans: Mr. Boyd 41,088; Mr. Ginter 30,000; Dr. Helmrath 21,000; Mr. Holscher
33,000; Mr. Jordan 29,000; Mr. Joyce 35,775; and Dr. Martino 34,400.

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<PAGE> 6

7. Includes 8,258 shares owned by Mr. Boyd's wife.

8. Includes 193,200 shares which Mr. Gould has the right to acquire within
sixty (60) days following September 23, 1996, upon the exercise of stock
options.

9. Includes 26,350 shares which Dr. Landsberg has the right to acquire
within sixty (60) days following September 23, 1996, upon the exercise of stock
options.

10. Includes 17,000 shares which Mr. Lawson has the right to acquire within
sixty (60) days following September 23, 1996, upon the exercise of stock
options.

11. Includes 114 shares of which Dr. Martino is custodian for his minor
children.

12. Includes 32,850 shares which Mr. Sanborn has the right to acquire
within sixty (60) days following September 23, 1996, upon the exercise of stock
options; also includes 3,231 shares in which Mr. Sanborn shares voting and
investment power with his wife.

13. Includes 646,751 shares which the directors and officers have the right
to acquire within sixty (60) days following September 23, 1996, upon the
exercise of stock options.

Unless otherwise indicated each person named above has sole voting and
investment power over the listed shares.

SHAREHOLDER PROPOSALS

Proposals of shareholders intended for inclusion in the Proxy Statement to
be mailed to all shareholders entitled to vote at the next Annual Meeting of the
Company must be received at the Company's principal executive offices not later
than June 19, 1997. In order to curtail controversy as to the date on which a
proposal was received by the Company, proponents should submit their proposals
by Certified Mail - Return Receipt Requested.

ELECTION OF DIRECTORS

Directors of the Company are elected at the Annual Meeting of Shareholders.
The Company's Code of Regulations provides for nine directors of the Company.
There are currently nine directors of the Company and following the election of
directors at the Meeting there will be nine directors. The Board of Directors is
divided into three classes of three directors each. In accordance with the
Company's Code of Regulations, directors in each class will be nominated for
election as directors to serve a three year term from the date of their election
or in each case until their respective successors are duly elected and
qualified. The directors standing for election herein are nominated for a full
three year term. All of the nominees will be nominated for election as director
to hold office until his or her successor is elected and qualified at the 1999
Annual Meeting or until his or her earlier resignation or removal. Dr. Helmrath,
Mr. Jordan and Mr. Joyce are all currently directors of the Company. At the
present time it is intended that proxies received by management of the Company
which contain no instructions to the contrary will be voted for the three
nominated directors who are standing for election. In the event that any nominee
becomes unavailable for election for any reason, an event which management does
not anticipate, shares of Common Stock represented by proxies will be voted for
any substitute nominees designated by the Board of Directors.

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<PAGE> 7

Information concerning the directors and nominees for director is set forth
below:
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR
DURING THE LAST FIVE YEARS OF MEDEX, INC.
NAME AGE AND OTHER DIRECTORSHIPS SINCE:
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NOMINEES FOR DIRECTOR FOR TERMS EXPIRING IN 1999
Thomas A. Helmrath, M.D. 59 Physician; President and Chief 1985
Executive Officer, Physicians of The
Ohio State University, Inc.; from May
1993 to April 1994, Healthcare Systems
Management Consultant; from February
1991 until May 1993, Senior Vice
President, Medical Affairs,
MetroHealth System, Cleveland, Ohio
and Associate Dean, School of
Medicine, Case Western Reserve
University.
Thomas M. Jordan, Jr. 60 Certified Public Accountant; 1990
President,
Thomas M. Jordan, Jr., C.P.A., Inc.
John B. Joyce, Jr.(1) 70 First Vice-President, Robert W. Baird 1987
& Co., Incorporated, Columbus, Ohio,
Members of New York Stock Exchange.
</TABLE>

A proxy may not be voted for a greater number of nominees than are named.

<TABLE>
<CAPTION>
DIRECTORS WHOSE TERMS EXPIRE IN 1998
<S> <C> <C> <C>
Robert E. Boyd, Jr. 70 Attorney at Law, Boyd & Boyd Co., 1964
L.P.A.; Secretary and General Counsel
for the Company.
James L. Ginter 51 Professor, Marketing Department, Max 1986
M. Fisher College of Business, The
Ohio State University.
John N. Holscher 71 Business Consultant; Adjunct Lecturer, 1989
Max M. Fisher College of Business, The
Ohio State University.
</TABLE>

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<PAGE> 8

- --------------------------------------------------------------------------------

J. David Martino, M.D. 52 Physician; Chairman, Department of 1988
Anesthesiology, Children's Hospital,
Columbus, Ohio.

C. Craig Waldbillig(2) 70 Chairman of the Board of Directors; 1959
prior to March 1993, Chief Executive
Officer of the Company.
</TABLE>

- --------------------------------------------------------------------------------
(1) In accordance with the Company's By-Laws, the Board of Directors has by
resolution waived the age restriction contained in said By-Laws as to Mr.
Joyce's nomination and election as a director. Mr. Joyce has agreed, in writing,
to resign at anytime upon the Board's identifying a suitable replacement, and
being so requested in writing by a majority of the members currently
constituting the Board of Directors.

(2) Mr. Waldbillig is a director of Danninger Medical Technology, Inc.

There are no family relationships between any director or executive officer
and any other director or executive officer of the Company.

There are no arrangements or understandings between any of the executive
officers of the Company and other persons relating to their selection as
officers.

SECTION 16(a) COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's officers, directors and persons who are beneficial owners of more
than ten percent of the Corporation's Common Stock ("reporting persons") to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Reporting persons are required by Securities and Exchange Commission
regulations to furnish the Corporation with copies of all Section 16(a) forms
filed by them.

Based on its review of the copies of Section 16(a) forms received by it,
the Company believes that, during fiscal 1996, all reporting persons fully
complied with the filing requirements applicable to such persons.

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<PAGE> 9

COMMITTEES AND MEETINGS

During fiscal 1996, the Board of Directors had an Audit Committee,
Executive Compensation Committee, Finance Committee, Pension Plan Administrative
Committee, Stock Option Committee, Nominating Committee, Executive Committee and
an Employee Benefits Committee. The Board of Directors approved amendments to
the Company's By-Laws which, during fiscal 1996, combined the Stock Option,
Pension Plan Administrative and Executive Compensation Committees and their
functions into a single Employee Benefits Committee. The members of the Employee
Benefits Committee are Mr. Joyce, Mr. Boyd, Dr. Helmrath, Mr. Holscher and Dr.
Martino. A total of fourteen meetings of the Board of Directors of the Company
were held during the fiscal year ended June 30, 1996. During fiscal 1996, all of
the directors attended 75% or more of the total meetings of the Board and of
Committees of the Board on which they served.

The Audit Committee recommends to the Board of Directors the selection of
the independent accountants to be employed by the Company and reviews generally
the scope of the audit and the results thereof. The Audit Committee reviews
generally the Company's internal accounting controls with the auditors and
reviews compliance with the Company's policy on non-audit services provided by
the independent auditors. The members of the Audit Committee are Dr. Helmrath,
Mr. Holscher and Mr. Jordan. The Committee met six times during the year ended
June 30, 1996.

The Executive Compensation Committee reviewed and recommended to the Board
of Directors the compensation of directors and executive officers of the Company
and reviewed and recommended to the Board of Directors the adoption of any
compensation plans in which directors and officers were eligible to participate.
The members were Mr. Joyce, Dr. Helmrath and Mr. Holscher. The Committee met six
times during the year ended June 30, 1996.

The Finance Committee is responsible for formulating and presenting
recommendations to the Board of Directors on investment policy, financial
matters, capital structure and allocation, dividends, financing arrangements,
financial planning, budgeting and undertaking such other duties and
responsibilities relating to corporate finance as the Board of Directors may
delegate to the Committee. The members of the Committee are Mr. Jordan, Mr.
Waldbillig and Mr. Holscher. The Committee met four times during the year ended
June 30, 1996.

The Stock Option Committee administered and interpreted the Company's stock
option plans except the Non-Employee Director Plans and, subject to the
provisions of the plans, selected the employees who were to participate in such
plans and determined the terms of their participation. The members were Mr.
Boyd, Mr. Joyce, and Dr. Martino. The Committee met once during the year ended
June 30, 1996.

The Pension Plan Administrative Committee administered and interpreted the
Company's Employees' Profit Sharing Plan and Trust Agreement, and acted as the
"Administrative Committee" under that Plan, and reported its operations and
recommendations to the Board of Directors. The members were Mr. Ginter, Dr.
Martino and Mr. Jordan. The Committee met once during the year ended June 30,
1996.

The Nominating Committee is responsible for searching out and recommending
to the Board of Directors, for nomination, new candidates for election to the
Board. The Committee will consider nominees recommended by shareholders. Such
recommendations should be made in

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<PAGE> 10

writing, addressed to the Company's Secretary. The members are Mr. Joyce, Mr.
Gould and Mr. Holscher. The Committee did not meet during the year ended June
30, 1996.

The Executive Committee is authorized, when it is impractical or not in the
best interest of the Company to wait until a Board of Director's meeting for
approval, to approve contracts, obligations and transactions of the Company up
to $350,000. In addition, the Executive Committee is responsible for choosing
recipients for the Company's annual contributions to charities. The members are
Mr. Ginter, Mr. Waldbillig, Mr. Gould and Mr. Boyd. The Committee met five times
during the year ended June 30, 1996.

The Employee Benefits Committee is responsible for the following: reviewing
and recommending to the Board of Directors the compensation of directors and
executive officers of the Company and the approval of compensation plans in
which directors and executive officers are eligible to participate; the
administration and interpretation of the Company's stock option plans; and the
administration and interpretation of the Company's Employees' Profit Sharing
Plan and Trust Agreement. The Committee met five times during the year ended
June 30, 1996.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

DIRECTOR COMPENSATION

Each Director of the Company receives $5,000 annually, plus $1,000 for each
regular or special meeting of the Board they attend, plus $400 for each
committee meeting attended by committee members and $500 for each committee
meeting attended by the Committee Chairman.

The Company's By-Laws provide for a non-employee directors' non-qualified
defined benefit retirement plan. Retirement benefits are based on the current
annual director's fee and years of service as a director with a maximum annual
benefit of 50% of the current annual fee. The annual benefit is payable until
death, expiration of a period equal to one-half of the director's years of
service, or a maximum of 10 years, whichever occurs first.

The Company currently has three Non-Employee Director Restricted Stock
Option Plans which were approved by the shareholders in November 1987, November
1989, and November 1993. The initial Plan provides for the one time grants of
options to non-employee directors and directors emeritus. Plans II and III
provide for the one time grant to non-employee directors of options to purchase
shares of the common stock of the Company. The Company has reserved 384,315
shares of its common stock for issuance under the Plans. Options are granted at
prices equal to the fair market value at the date of grant and expire ten years
from the date of grant. The options are exercisable at the date of grant subject
to certain passage of time vesting restrictions contained in the Plans. The
Plans are to remain in effect for ten years from the date of their approval by
the Board of Directors. During fiscal 1996, no options were granted to
non-employee directors.

During fiscal 1993, the Company entered into a Non-Competition and
Consulting Contract with Mr. Waldbillig, a Director, Chairman of the Board and
former Chief Executive Officer of the Company. Under the terms of the Contract,
Mr. Waldbillig agreed not to engage in any activity or business that is in
competition with the Company for a three year period that began on July 1, 1993
and to provide consulting services to the Company. In exchange for Mr.
Waldbillig's agreement not to compete and to provide consulting services, the
Company paid Mr. Waldbillig the sum of $220,000 per year over the three year
period. In addition, the Contract provided that

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<PAGE> 11

the Company, during the term of the agreement, would keep in force and continue
to pay the premiums on all split dollar life insurance policies owned by the
parties on the life of Mr. Waldbillig. During fiscal 1996, the Company paid Mr.
Waldbillig $220,000 pursuant to the terms of the Contract and paid $10,508
representing the P.S.58 yearly renewable term portion of the split dollar life
insurance premiums.

INDEMNIFICATION AGREEMENTS

The Company is party to an indemnity agreement (the "Indemnity Agreement")
with each of the Directors and Bradley P. Gould, CEO which provides that the
indemnitee will be entitled to receive indemnification, including advancement of
expenses, to the full extent permitted by law for all expenses, judgments,
fines, penalties and settlement payments incurred by the indemnitee in actions
brought against the indemnitee in connection with any act taken in the
indemnitee's capacity as a director or executive officer of the Company. In the
event of a change of control, the Indemnity Agreement provides for the
appointment of independent legal counsel to determine whether a director or
executive officer is entitled to indemnity. It also requires the Company to
maintain its current level of directors' and officers' liability insurance for
so long as the indemnitee may be subject to any possible, threatened or pending
action, unless the cost of such insurance is more than 150% of the annualized
rate of premiums paid by the Company in fiscal 1996. Additionally, pursuant to
the Indemnity Agreement, the Company retains subrogation rights to recover any
payments paid by a third party to the indemnitee. The Indemnity Agreement is
binding on the Company and any successors thereto.

EXECUTIVE COMPENSATION

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION

The following table sets forth information for fiscal years ended June 30,
1996, 1995 and 1994 as to compensation paid by the Company and its subsidiaries
to the Company's Chief Executive Officer, its four other most highly compensated
Executive Officers as of June 30, 1996, and one additional former Executive
Officer of the Company (the "Named Executive Officers").

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<PAGE> 12

SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------- AWARDS
OTHER ------------ ALL
ANNUAL SECURITIES OTHER
COMPEN- UNDERLYING COMPEN-
NAME AND PRINCIPAL SALARY BONUS SATION OPTIONS SATION
POSITION YEAR ($) ($)(3) ($)(4) (#) ($)(5)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bradley P. Gould 1996 $303,229 $89,600 $81,606 214,300 $ 3,131
President and Chief 1995 $242,004 $67,000 -- 9,900 $ 120
Executive Officer(1) 1994 $195,137 $30,874 -- 9,000 $ 55

Phillip D. Messinger 1996 $111,219 $ -0- -- -0- $794,994
Former President and 1995 $204,000 $ -0- -- 17,300 $20,572
Chief Executive 1994 $198,421 $52,323 -- 20,000 $15,592
Officer(1)

Georg W. Landsberg 1996 $165,169 $40,000 -- 19,800 $ 140
Senior Vice President 1995 $141,302 $56,464 -- 3,300 $ 117
European Operations(2) 1994 -- -- -- -- --

Terry L. Sanborn 1996 $141,500 $25,470 -- 22,700 $ 1,651
Senior Vice President, 1995 $178,167 $ 2,123 -- 9,900 $ 4,912
Manufacturing and 1994 $160,750 $42,389 -- 10,000 $ 4,518
Chief Operating
Officer

Michael J. Barilla 1996 $129,300 $27,000 -- 22,825 $ 827
Senior Vice President 1995 $110,000 $ 8,250 -- 3,300 $ 3,322
and Chief Financial 1994 $110,000 $29,007 -- 9,000 $ 2,764
Officer

Clint R. Lawson 1996 $114,400 $28,600 -- 15,200 $ 1,386
Vice President, 1995 $110,000 $ 6,188 -- 6,500 $ 3,942
Corporate Quality 1994 $110,000 $29,007 -- 2,500 $ 3,275
Assurance & Regulatory
Affairs
</TABLE>

- --------------------------------------------------------------------------------

(1) Mr. Gould was elected Chief Executive Officer in October 1995 and
elected President in May 1996.

(2) Information is only provided for fiscal years 1996 and 1995. Dr.
Landsberg became an Executive Officer of the Company in fiscal 1995.

(3) Amounts shown include cash compensation earned by the Named Executive
Officer during the year covered.

(4) The aggregate amount of such compensation to be reported herein is less
than either $50,000 or 10% of the total of annual salary and bonuses reported
for the Named Executive Officer, except for Mr. Gould. The amount shown for Mr.
Gould includes: $76,169 for payments and reimbursements associated with moving
and relocation expenses, including gross-up payments to offset the effect of
income taxes; and $5,437 for personal use of a Company automobile.

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<PAGE> 13

(5) The following items were included under the heading "All Other
Compensation":

(a) During fiscal 1996, the following matching contributions were made
to the Company's deferred 401(k) savings plan accounts of: Mr. Gould
$1,333; Mr. Sanborn $1,303; Mr. Barilla $665; and Mr. Lawson 1,206.

(b) The following Split Dollar Life Insurance benefits, representing
the P.S.58 portion of the insurance premiums, were paid on behalf of the
following persons: Mr. Gould $148; Mr. Messinger $603; Dr. Landsberg $140;
Mr. Sanborn $348, Mr. Barilla $162; and Mr. Lawson $180.

(d) The Company and Mr. Messinger entered into a Severance Agreement
and Release pursuant to which Mr. Messinger resigned as a director and
received payments in the amount of $670,613 and the Company transferred its
entire interest in a certain split dollar life insurance policy to Mr.
Messinger which had a cash value of $110,628.

Each of the currently employed Named Executive Officers, with the exception
of Dr. Landsberg, have entered into an employment agreement with the Company.
Each agreement becomes operative only upon a change of control, as defined in
the agreement, that occurs when the officer is in the employ of the Company. If
a change in control occurs and the officer's employment with the Company is
involuntarily terminated within one year thereafter, the officer becomes
entitled to the severance benefits described below. Likewise, the officer shall
be entitled to the severance benefits if he/she in good faith determines that
his/her status or responsibilities with the Company have been diminished
subsequent to a change in control and shall for that reason resign within one
year after such change in control. Upon such termination the officer shall be
entitled to receive (i) cash equal to two times his/her annual salary paid in
equal installments over a 24 month period, (ii) cash in the amount equal to two
times his/her previous year's incentive compensation benefit, (iii) 24 months of
continued coverage under the Company's hospital, medical, accident, disability
and life insurance plans, or the cash equivalent thereof, and (iv) a paid-up
annuity equal to what the officer would have received under the Company's
defined contribution profit sharing plan. The officer is not required to
mitigate the amount of any payments by seeking other employment. The Company
must pay all legal fees, up to $500,000, incurred by the officer as a result of
such officer's seeking to enforce the agreement. There have been no payments
pursuant to said agreements.

The Company has entered into an additional employment agreement with Mr.
Gould which provides for reimbursement of moving and relocation expenses
associated with Mr. Gould's move to Ohio and also provides for severance
payments, should a change in control of the Company occur, equivalent to one
year of salary and bonus. The employment agreement also provides for the
following: (i) a base salary of $320,000 per annum; (ii) 90 days prior written
notice of termination of Mr. Gould's employment to be given by either the
Company or Mr. Gould to the other party; (iii) tax preparation and consultation
services; and (iv) Mr. Gould's eligibility for and participation in the
Company's benefit plans.

11
<PAGE> 14

The following tables reflect: (i) the number and value of options granted
in fiscal 1996 to the Named Executive Officers; and (ii) the aggregate exercises
and number and value of exercisable and unexercisable options at June 30, 1996.

OPTION GRANTS IN LAST FISCAL YEAR
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- ---------------------------------------------------------------------- VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF
OPTIONS STOCK PRICE
GRANTED TO EXERCISE APPRECIATION FOR
OPTIONS EMPLOYEES OR BASE OPTION TERM(3)
GRANTED IN FISCAL PRICE EXPIRATION ------------------------
NAME (#) YEAR ($/SH) DATE 5% 10%
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bradley P. Gould 14,300 (1) 3.21% $10.75 08/23/00 $ 42,471 $ 93,851
*200,000(2) 44.89% $10.50 11/15/05 $1,320,679 $3,346,859
Phillip D. Messinger -0- -- -- -- -- --
Georg W. Landsberg 4,800 (1) 1.08% $10.75 08/23/00 $ 14,256 $ 31,502
15,000 (2) 3.37% $10.50 11/15/05 $ 99,051 $ 251,014
Terry L. Sanborn 200 (1) 0.04% $10.50 11/15/00 $ 580 $ 1,282
22,500 (2) 5.05% $10.50 11/15/05 $ 148,576 $ 376,522
Michael J. Barilla 325 (1) 0.07% $10.50 11/15/00 $ 943 $ 2,083
22,500 (2) 5.05% $10.50 11/15/05 $ 148,576 $ 376,522
Clint R. Lawson 200 (1) 0.04% $10.50 11/15/00 $ 580 $ 1,282
15,000 (2) 3.37% $10.50 11/15/05 $ 99,051 $ 251,014
- -------------------------------------------------------------------------------------------------
</TABLE>

(1) Granted under the 1994 Executive Stock Option Plan, in which the
participants, the timing of grants, and the amount of options granted were at
the discretion of the Stock Option Committee which subsequently became the
Employee Benefits Committee subject to terms and conditions of the Plan. Under
the Plan, options are granted at prices equal to the fair market value at the
date of grant and are exercisable six months after date of grant. Options expire
five years from date of grant.

(2) Granted under the Key Employee Nonstatutory Stock Option Plan. Under
the Plan, options were granted by the Executive Compensation Committee which
subsequently became the Employee Benefits Committee at prices equal to the fair
market value at the date of grant. Subject to shareholder approval of the
proposed amendments to the Plan, these options become exercisable one-half on
July 1, 1996 and one-half on July 1, 1997 (*Mr. Gould's are exercisable one-half
on date of grant, one-fourth on November 15, 1996 and one-fourth on November 15,
1997). Options expire ten years from date of grant.

(3) The amounts represent certain assumed rates of appreciation only, and
assume the options are held until their expiration date. Actual gains, if any,
on stock option exercises will be dependent upon overall market conditions and
on the future performance of the Company and its Common Stock. There can be no
assurance that the Potential Realizable Values reflected in this table will be
achieved.

12
<PAGE> 15

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
NUMBER OF IN-THE-MONEY
UNEXERCISED OPTIONS AT
OPTIONS AT FY-END ($)
ACQUIRED ON VALUE FY-END (#)EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE(1)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
Bradley P. Gould 0 0 143,200/100,000 $ 280,263/$237,500
Phillip D. Messinger 0 0 27,300/ 10,000 0/0
Georg W. Landsberg 0 0 18,850/ 15,000 $ 15,700/ $35,625
Terry L. Sanborn 0 0 22,600/ 22,500 $ 14,225/ $53,438
Michael J. Barilla 0 0 13,625/ 22,500 $ 13,147/ $53,438
Clint R. Lawson 0 0 9,500/ 15,000 $ 8,725/ $35,625
</TABLE>

- --------------------------------------------------------------------------------
(1) Based on the 1996 fiscal year-end closing price of $12.875 per share
and rounded to the nearest whole dollar.

REPORT OF THE COMPANY'S EMPLOYEE BENEFITS COMMITTEE

EXECUTIVE COMPENSATION PHILOSOPHY

LONG-TERM INCENTIVES

During August of 1995 the Board of Directors approved amendments to the
Company's By-Laws which combined the Stock Option Committee, Pension Plan
Administrative Committee and the Executive Compensation Committee into a single
Executive Compensation Committee with Mr. Joyce as Chairman, Mr. Boyd, Dr.
Helmrath and Mr. Holscher as its members. In February of 1996, the Committee was
renamed the Employee Benefits Committee and in May of 1996 Dr. Martino was added
as an additional member.

Salary and bonus compensation of the Company's executive officers for
fiscal 1996 were determined by the Executive Compensation (Employee Benefits)
Committee of the Board of Directors and submitted for approval to the Board of
Directors. Long-term incentive compensation in the form of stock options under
the Company's Employee Stock Option Plans were awarded and administered by the
Stock Option Committee until August 1995, and subsequent to August of 1995 the
Executive Compensation (Employee Benefits) Committee was responsible for option
awards and administration of the Company's Employee Stock Option plans. All the
Committees were composed entirely of directors who are not employees of the
Company.

EXECUTIVE COMPENSATION PHILOSOPHY

The purpose of the Company's compensation program is to attract and retain
qualified executive officers by providing a total compensation package which is
competitive with comparable companies in the health care manufacturing industry
and to also provide the incentives to create short-term and long-term
improvements in the Company's earnings and net return on shareholders' equity.

13
<PAGE> 16

The Board of Directors, with the assistance of an independent compensation
consultant, previously established a compensation program designed to: establish
competitive salary, bonus and long-term incentive compensation programs;
attribute a greater percentage of compensation to specific company performance
goals; and establish appropriate linkage between executive compensation and
creation of shareholder value.

Base salaries for the Chief Executive Officer (CEO) and executive officers
were determined by the Executive Compensation (Employee Benefits) Committee
based upon individual performance evaluations, the individual executives'
responsibilities, the general overall performance of the Company and a
comparison with compensation of other employers within and outside the Company's
industry with a similar number of employees and revenues.

The Company maintains a cash incentive bonus compensation program designed
to provide additional compensation opportunities which are aligned with the
Company's and the executives' performance. The amount of incentive compensation
is based upon performance in three separate areas:

1. Corporate business results primarily tied to total Company operating
income return on assets employed, with an adjustment based upon revenue versus
budget (target.)

2. Business unit performance primarily tied to business unit profitability,
modified by business unit revenue versus budget (target.)

3. Executive performance based primarily upon review of each individual
executives' performance in terms of specific objectives as well as identified
competencies.

These measures are weighed differently for the different executive
positions. Target award levels are established for each position with actual
award amounts based upon actual performance levels attained on the three
measures. The program is designed so that, upon achieving maximum performance,
up to 40% of an executive officers' annual cash compensation would be incentive
(performance) based.

During fiscal 1996 the Company underwent an extensive reorganization of its
executive officer management, including the election of Mr. Gould as CEO and Mr.
Barilla as Chief Financial Officer (CFO). Thereafter, management undertook a
"turnaround" program which included substantial restructuring charges which had
a negative effect on the Company's financial performance and results for the
1996 fiscal year. Because of the executive management reorganization and the
Company's "turnaround" program, the Committee placed a greater emphasis, than it
would have otherwise, on each Executive Officer's individual performance in
determining incentive bonuses for fiscal 1996.

In addition, the domestic executive officers, along with substantially all
the other full-time domestic employees, participate in the Company's Deferred
Defined Contribution Profit Sharing Plan. Contributions to each participating
executive officer and all other participating employees are determined based
upon salary and years of service to the Company and are paid, at the discretion
of the Board of Directors, from profits of the Company calculated upon a formula
directly related to the adjusted operating profit of the Company. Based upon
fiscal 1995 financial results no contribution was made to the Profit Sharing
Plan and therefore no executive officer received an individual contribution
during fiscal 1996.

14
<PAGE> 17

LONG-TERM INCENTIVES

Although the incentive compensation plan and Profit Sharing Plan in which
the executive officers participate are tied to current performance and
profitability, the Company has found that they also provide longer term
incentives since future compensation for officers will continue to be based in
part on the incentive compensation program and Profit Sharing Plan, thus
providing incentives to maintain the long-term profitability of the Company.

Long-term incentives are also provided under the Company's Stock Option
Plans. The Company views stock options as particularly appropriate long-term
incentives because stock options align the interests of the employee/option
holder with those of the shareholder by providing value to the employee that is
tied directly to stock price increases. The Company's executive officers
participate in the Company's Administrative Incentive Plan II, 1994 Executive
Stock Option Plan and the Key Employee Nonstatutory Stock Option Plan. All
options granted under these plans are granted at 100% of the market value on the
date of grant.

In fiscal 1996, the Stock Option (Employee Benefits) Committee awarded
options from the 1994 Executive Stock Option Plan and the Executive Compensation
Committee granted options from the Key Employee Nonstatutory Stock Option Plan
to the CEO and other executive officers of the Company. (See "Option Grants in
Last Fiscal Year" for grants to the "Named Executive Officers.")

BASIS FOR CHIEF EXECUTIVE OFFICERS COMPENSATION

In October of 1995, Mr. Gould replaced Mr. Messinger as CEO of the Company.
Mr. Messinger's base salary for fiscal 1996 was based upon the individual
performance evaluation of the Executive Compensation Committee, overall
performance of the Company and a comparison of CEO salaries for comparable
companies. Mr. Messinger did not receive any incentive bonus compensation for
fiscal 1996. Subsequent to Mr. Messinger's departure as CEO, the Company and Mr.
Messinger entered into a Severance Agreement and Release.(See Summary
Compensation Table, Footnote 5(d).) Prior to his election as CEO, Mr. Gould had
served as Senior Vice President, European Operations. After his election as CEO,
Mr. Gould's base salary was increased based in part upon his performance as
Senior Vice President and the success of the Company's European Operations under
his leadership and in part upon his increased responsibilities as CEO. Likewise,
Mr. Gould's incentive bonus for fiscal 1996 was in part attributable to the
Company's performance and financial results in Europe and in part to his
leadership and overall performance as CEO including the implementation of the
Company's "turnaround" program and management reorganization.

TAX DEDUCTIBILITY OF COMPENSATION

Under Section 162(m) of the Internal Revenue Code of 1986, compensation
paid to certain executive officers in excess of $1 million may be
non-deductible, unless it is performance-based compensation or is otherwise
exempt under law or applicable regulations. The Company will continue to review
its existing compensatory plans in light of this section and the regulations
issued thereunder but has not established a policy with respect to the changes
in the law effected by Section 162(m). No salary or bonus compensation paid to
any executive officer by the

15
<PAGE> 18

Company to date has exceeded $1 million and it is not anticipated that such
compensation paid for the current fiscal year will exceed said limit.

THE EMPLOYEE BENEFITS COMMITTEE

John B. Joyce, Jr., Chairman
Robert E. Boyd, Jr.
Thomas A. Helmrath, M.D.
John N. Holscher
J. David Martino, M.D.

EXECUTIVE COMPENSATION COMMITTEE REPORT ON REPRICING OF OPTIONS

In October 1995, the Company began an executive management reorganization
with the election of Mr. Gould as CEO and Mr. Barilla as CFO. In November 1995,
the Executive Compensation Committee, as part of the executive management
reorganization, issued Key Employee Nonstatutory Stock Options to certain of the
executive officers as an incentive tied to the future success of the Company and
an increase in the share price of the Company's stock, thereby aligning the
executive officers' interests with those of the Company's shareholders. In order
to create such an incentive and to lessen the total increase in the number of
options outstanding after the grants, the Executive Compensation Committee
conditioned a portion of the Key Employee grants upon the cancellation and
forfeiture of the Key Employee options previously granted to said executive
officers. (See Ten Year Repricing Table below.) Most of the outstanding Key
Employee options were at exercise prices far above the then current market price
of the Company's stock, thereby creating no real expectation or incentive for
the executive officers to realize any future value in the previously outstanding
options. The Committee felt that granting new options at 100% of the market
price at the time of grant would restore the incentive nature of the options and
allow the executive officers to share in any increased share value resulting
from their efforts on behalf of the Company.

EXECUTIVE COMPENSATION COMMITTEE

John B. Joyce, Jr., Chairman
Robert E. Boyd, Jr.
Thomas A. Helmrath, M.D.
John N. Holscher

16
<PAGE> 19

The following table sets forth information concerning the repricings of
options held by the Company's Executive Officers during the last ten completed
fiscal years:

TEN-YEAR OPTION REPRICINGS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
NUMBER OF LENGTH OF
SECURITIES MARKET PRICE ORIGINAL OPTION
UNDERLYING OF STOCK AT EXERCISE PRICE NEW TERM REMAINING
OPTIONS TIME OF AT TIME OF EXERCISE AT DATE
NAME DATE REPRICED(#) REPRICING($) REPRICING($) PRICE($) OF REPRICING
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bradley P. Gould 01/29/88 700 $ 7.00 $ 9.25 $ 7.00 55 months
President and Chief 11/15/95 14,400 $10.50 $16.50 $10.50 84 months
Executive Officer 11/15/95 9,600 $10.50 $30.00 $10.50 72 months

Phillip D. Messinger 11/19/87 2,000 $ 6.50 $ 8.00 $ 6.50 54 months
Former President and 11/19/87 11,000 $ 6.50 $ 8.00 $ 6.50 54 months
Chief Executive Officer

Georg W. Landsberg 11/15/95 2,040 $ 10.50 $11.50 $ 10.50 93 months
Senior Vice President,
European Operations

Terry L. Sanborn 11/19/87 2,000 $ 6.50 $ 8.00 $ 6.50 54 months
Senior Vice President, 11/19/87 7,500 $ 6.50 $ 8.00 $ 6.50 54 months
Manufacturing and Chief 11/15/95 10,000 $10.50 $30.00 $10.50 72 months
Operating Officer

Michael J. Barilla 01/29/88 300 $ 7.00 $ 9.25 $ 7.00 55 months
Senior Vice President 05/25/89 2,200 $ 9.13 $12.05 $ 9.13 57 months
and Chief Financial 11/15/95 8,000 $10.50 $30.00 $10.50 72 months
Officer

Clint R. Lawson 01/29/88 300 $ 7.00 $ 9.25 $ 7.00 55 months
Vice President Corporate 11/15/95 8,000 $10.50 $30.00 $10.50 72 months
Quality Assurance &
Regulatory Affair

C. Craig Waldbillig 11/19/87 2,000 $ 7.15 $ 8.80 $ 7.15 54 months
Chairman of the Board 11/19/87 13,000 $ 7.15 $ 8.80 $ 7.15 54 months
and Director

Kevin L. Barnett 11/15/95 3,200 $ 10.50 $16.50 $ 10.50 84 months
Vice President,
Treasurer and Corporate
Controller

David G. Musgrove 11/19/87 2,000 $ 6.50 $ 8.00 $ 6.50 54 months
Vice President, 11/19/87 7,500 $ 6.50 $ 8.00 $ 6.50 54 months
International & O.E.M. 11/15/95 8,000 $10.50 $30.00 $10.50 72 months
Development

Nigel S. Perry 01/29/88 600 $ 7.00 $ 9.25 $ 7.00 55 months
Vice President of 11/15/95 4,800 $10.50 $30.00 $10.50 72 months
Operations, Europe

Alan Upton 05/25/89 1,100 $ 9.13 $12.05 $ 9.13 57 months
Vice President, Finance
& Administration, Europe
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

17
<PAGE> 20

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN

The following graph compares the five year cumulative return from investing
$100 at June 30, 1991 in the Company's Common Shares, the NASDAQ Market Index of
companies and the S & P Medical Products and Supplies Index, with dividends
assumed to be reinvested.

<TABLE>
<CAPTION>
S & P MEDI-
Measurement Period MEDEX IN- CAL PROD & NASDAQ STOCK
(Fiscal Year Covered) CORPORATED SUPL MRKT - US
<S> <C> <C> <C>
6/91 100 100 100
6/92 99 114 120
6/93 59 94 151
6/94 51 90 153
6/95 56 139 204
6/96 58 182 261
</TABLE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the last fiscal year, the Executive Compensation Committee consisted
of Mr. Joyce, Dr. Helmrath and Mr. Holscher. The Stock Option Committee
consisted of Mr. Boyd, Mr. Joyce and Dr. Martino. The Employee Benefits
Committee consisted of Mr. Joyce, Mr. Boyd, Dr. Helmrath, Mr. Holscher and Dr.
Martino.

Mr. Robert E. Boyd, Jr., who served on the Stock Option Committee and the
Executive Compensation Committee (now known as the Employee Benefits Committee),
is a Director and Secretary (non-employee) of the Company, and a member of the
law firm of Boyd & Boyd Co., L.P.A. Boyd & Boyd Co., L.P.A. serves as legal
counsel to the Company and rendered legal services in the amount of $332,034
during the last fiscal year.

PROPOSAL FOR APPROVAL OF STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS

At the Annual Meeting, there will be presented to the shareholders a
proposal to approve the adoption of the Medex, Inc. Non-Employee Director
Restricted Stock Option Plan IV (the "Non-Employee Directors Plan IV" or the
"Plan"). The Plan was adopted by the Board of Directors

18
<PAGE> 21

(the "Board") on August 21, 1996 and in order to comply with NASDAQ National
Market requirements the Board authorized the Plan's submission to the
shareholders for approval. The following is a brief summary of the Plan which is
qualified in its entirety by the Plan which is attached hereto as Exhibit A.

DESCRIPTION OF NON-EMPLOYEE DIRECTORS PLAN IV

The Plan provides for the grant to directors not otherwise employed by the
Company of a one time option grant to purchase shares of the Common Stock of the
Company. The Plan is designed to promote the interests of the Company and its
shareholders by attracting and retaining highly qualified, independent directors
with an investment interest in the Company's future success and thereby aligning
the directors' interests with those of the Company's shareholders. Directors
eligible to receive an option grant under the Plan are eligible to receive
options under the Company's other Non-Employee Director Stock Option Plans There
are currently eight non-employee directors eligible to participate in the Plan.

The aggregate number of shares which may be issued under the Plan is
135,000. Such shares may be authorized but unissued shares or reacquired shares
of the Company's Common Stock. Shares subject to options granted under the Plan
which have lapsed or terminated may again be subject to options granted under
the Plan.

Options will be awarded under the Plan only to directors who, as of the
effective date of the Plan (or, if first elected as a director by the Board or
the shareholders thereafter, as of the effective date of such election), are not
employees of the Company. Each director, serving as of the effective date of the
Plan, who is eligible to receive an option under the Plan, shall receive on the
effective date of the Plan, by the terms of the Plan and without the exercise of
any discretion by any person, an option to purchase 15,000 shares of the
Company's Common Stock. Options for 15,000 shares each were granted to Mr. Boyd,
Mr. Ginter, Dr. Helmrath, Mr. Holscher, Mr. Jordan, Mr. Joyce, Dr. Martino and
Mr. Waldbillig. Further, any new non-employee director who is first elected
(elected for the first time), during the term of the Plan, a director of the
Company following the adoption of this Plan by the Board of Directors shall
automatically upon election be granted options to purchase 15,000 shares of the
Company's Common Stock. A director is not thereafter eligible to receive any
further grants under the Plan.

The exercise price per share will be equal to the fair market value of a
share of Common Stock of the Company as of the date the option is granted. The
exercise price of the options granted to the existing directors under the Plan
was $11.25. The exercise price for the shares as to which an option is being
exercised must be paid in full, in cash, by check or with shares of the
Company's Common Stock at the time of exercise.

All options granted under the Plan will have a term of ten (10) years,
provided however, the options shall be exercisable by the optionee only while
serving as a director or director emeritus of the Company. Provided, however, if
the optionee shall die while serving as a director or director emeritus of the
Company, his/her executor, personal representative or beneficiary shall have the
right to exercise the option at any time within twelve (12) months from the date
of death with respect to the total number of shares as to which he/she would be
entitled to exercise as of the date of his/her death, that is, those shares free
of all the restrictions on exercise imposed by the Plan. If the optionee shall
cease to serve as a director or director emeritus of the Company before the
options shall have terminated, the optionee may exercise the option within
ninety (90)

19
<PAGE> 22

days after the date on which he/she ceases to serve as a director or director
emeritus of the Company, as to those shares which at the close of business on
the date of cessation of service as a director or director emeritus, are free of
all restrictions on exercise imposed by the Plan.

Pursuant to the terms of the Plan, options granted become exercisable at
the rate of 5,000 per year beginning one year from the date of grant and
thereafter on each anniversary of the date of grant; however, no installment
vests after an optionee ceases to be a director or director emeritus of the
Company. The Plan provides that in the event of a change in control of the
Company as defined in the Plan, all options theretofore granted shall become
fully exercisable.

Options are not assignable or otherwise transferable except by will or the
laws of descent and distribution, pursuant to a qualified domestic relations
order as defined by the Internal Revenue Code of 1986 or Title I of ERISA or as
specifically approved in advance by the Board.

The Plan became effective as of the date of its adoption by the Board. The
Plan has a four-year term from the date of approval by the Board; provided,
however, options granted on or before such termination date shall remain
exercisable for the duration of their term. The Board may terminate the Plan
before its stated expiration date and make modifications or amendments to the
Plan, but the Board may not, without further approval by the shareholders: (a)
increase the maximum number of shares which may be issued under the Plan in
aggregate; or (b) modify the requirements as to eligibility for participation in
the Plan.

It is the Board of Directors' intention that options granted under the Plan
would qualify for the exemption afforded by Rule 16b-3 under the Securities
Exchange Act. 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 provision of the Plan or action by the Plan
administrators fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Plan administrators.

No shares shall be issued upon exercise of options granted under this Plan
prior to the effective date of a Registration Statement covering said shares
filed with the Securities and Exchange Commission, which the Company shall
undertake to do, or in violation of the requirements of Section 16 of the
Securities and Exchange Act of 1934 and the Rules thereunder.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

Options granted under the Plan constitute "nonqualified" stock options
under the Internal Revenue Code of 1986, as amended (the "Code"). An optionee
will not be subject to federal income tax upon the grant of a nonqualified
option under the Plan, and the Company will not be entitled to a tax deduction
by reason of such grant. Upon exercise of an option under the Plan, the director
will recognize ordinary income in the amount of the "option spread" (the
difference between the fair market value of the option shares on the date of
exercise and the exercise price), and the Company will be entitled to a
corresponding deduction.

RECOMMENDATION AND REQUIRED VOTE

The Non-Employee Director Restricted Stock Option Plan IV will be deemed
approved by the shareholders if approved by the affirmative vote of the holders
of a majority of the shares of Common Stock represented at the Annual Meeting.

20
<PAGE> 23

The Board believes the approval of the Non-Employee Director Restricted
Stock Option Plan IV to be in the best interest of the Company and recommends
its approval by the shareholders.

AMENDMENTS TO THE MEDEX, INC.
KEY EMPLOYEE NONSTATUTORY STOCK OPTION PLAN PROPOSAL

DESCRIPTION OF THE PLAN AND PROPOSED AMENDMENTS

The Medex, Inc. Key Employee Nonstatutory Stock Option Plan (the "Key
Employee Plan" or the "Plan") was adopted by the Board of Directors (the
"Board") in August 1991, approved by the shareholders in December 1991 and
subsequently amended by the Executive Compensation Committee in November 1995
and by the Board in October 1996. In order to comply with NASDAQ National Market
requirements, the Board authorized submission of the Key Employee Plan, as
amended, to the shareholders for approval.

The Plan provides for the grant to key employees of Medex, Inc., and its
subsidiaries (the "Company") of options to purchase shares of the Common Stock
of the Company. The Plan is designed to promote the interests of the Company and
its shareholders by attracting and retaining highly qualified management
employees by providing an investment interest in the Company's future success
and thereby aligning the Plan participants' interests with those of the
shareholders. Key employees eligible to receive an option grant under the Plan
are also eligible to receive options under the Company's 1994 Executive Stock
Option Plan and Administrative Incentive Stock Option Plan II.

The Executive Compensation Committee of the Board approved amendments to
Sections 6 and 7 of the Plan to allow the Executive Compensation Committee
greater flexibility in awarding stock options under the Plan by allowing the
Executive Compensation Committee or its successor to, at the time of grant,
waive the vesting requirements of Section 6 and the performance requirements of
Section 7 and to establish vesting and performance standards at the time of
grant as the Committee deems appropriate. At the same time, the Committee
granted additional options under the Plan, as amended, to certain of the
Company's executive officers. A portion of those grants were contingent upon the
officers' forfeiture of all previously granted Key Employee Plan options still
held at the time of the new grant. (See Option Grants in Last Fiscal Year Table,
Ten-Year Option Repricings Table and Executive Compensation Committee Report on
Repricing, contained herein.)

The Board also has approved amendments to the Plan's existing acceleration
of exercisability upon a change in control provisions to provide for immediate
full vesting for all outstanding options in the event of any change in control
regardless of the approval of said change in control by the non-employee members
of the Board. Section 14 of the Plan currently provides for an acceleration of
exercisability of options on a "Change in Control", as defined in the Plan.
However, Section 14(e) of the Plan provides that no such Change in Control shall
be deemed to have occurred if the events constituting a Change in Control shall
have been approved by a two-thirds vote of the total non-employee membership of
the continuing non-employee directors of the Company. The proposed amendment
would delete Section 14(e) and thereby cause the immediate acceleration of
exercisability as to all outstanding options under the Plan

21
<PAGE> 24

upon any Change in Control, whether or not said Change in Control is approved by
the Company's non-employee directors. Section 14, as amended, shall read as
follows:

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.

A change in control shall also be deemed to occur if the Company
enters into an agreement, the consummation of which would result in the
occurrence of a change in control of the Company.

This provision of the Plan, as amended, may discourage or render more difficult
certain merger, tender offer, proxy contest or other takeover proposals.

While the new option grants are not contingent upon shareholder approval of
the Plan amendments proposed herein, the new option terms as amended regarding
vesting, performance and acceleration of exercisability on change in control
will be subject to shareholder approval. If shareholder approval is not
obtained, the terms of said option grants will be in accordance with the
preamendment terms of the Plan.

The aggregate number of shares which may be issued under the Plan is
1,000,000. The proposed amendments to the Plan will not increase the number of
shares authorized under the

22
<PAGE> 25

Plan. Options granted under the Plan which have expired or are forfeited may
again be subject to options granted under the Plan.

Options may be awarded under the Plan only to key employees, including
executive officers, of the Company. The Company estimates that at the present
time there are approximately 55 key employees that are eligible to participate
in the Plan. Subject to the terms of the Plan, the timing, amounts and
individuals who receive options is at the sole discretion of the Board
(previously the Executive Compensation Committee). In August of 1996, the Plan
was amended to provide administration by the full Board of Directors.

The option exercise price per share will be the fair market value (last
transaction price as listed in the NASDAQ National System quotation of
over-the-counter market) of a share of Common Stock of the Company as of the
close of business on the date the option is granted. The exercise price for the
shares as to which an option is being exercised must be paid in full, in cash or
with shares of the Company's Common Stock at the time of exercise.

All options granted under the Plan will have a term of ten (10) years. If
the optionee shall die while employed by the Company, his/her executor, personal
representative or beneficiary shall have the right to exercise the option at any
time within twelve (12) months from the date of death with respect to the total
number of shares as to which he/she would be entitled to exercise as of the date
of his/her death. If the optionee shall cease to be employed by the Company
before the options shall have terminated, the optionee may exercise the option
within ninety (90) days after the date on which he/she ceases to be employed by
the Company, as to those shares which as of the cessation of employment are
exercisable. Provided, however, the Board may at its sole discretion extend that
period from ninety (90) days to a maximum of three (3) years from the date of
cessation of employment.

Pursuant to Section 6 of the Plan, options granted become exercisable at
the rate of 20% per year beginning one (1) year from the date of grant and 20%
thereafter on each anniversary of the date of grant; however, no installment
accrues after an optionee ceases to be an employee of the Company. In addition,
Section 7 of the Plan provides that options which become exercisable under the
provisions of Section 6 shall be subject to expiration and forfeiture unless
certain sales and income goals as set forth by the Committee (Board) on a yearly
basis are achieved on a company-wide basis and company-divisional basis. The
proposed amendments to the Plan would allow the Board, on a grant-by-grant
basis, to waive, at the time of grant, the restrictions, limitations and
conditions of Sections 6 and/or 7 and establish such restrictions, limitations
and conditions as the Board deems appropriate upon the exercise and/or
expiration and forfeiture of such option.

Options are not assignable or otherwise transferrable except by will or the
laws of descent and distribution. During the lifetime of the optionee, an option
shall be exercisable solely by the optionee or his/her legal guardian.

The Plan amendments become effective as of the date of their approval by
the Company's Executive Compensation Committee and the Board, respectively. The
Plan has a ten-year term from the date of its original approval by the
shareholders. The Board may make changes and amendments to the Plan as it may
deem necessary.

Since the end of fiscal year 1996 Key Employee Nonstatutory Stock Option
Plan Options have been granted to the following: all current executive officers
as a group 20,000; and all employees, who are not executive officers, as a group
2,100.

23
<PAGE> 26

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

Options granted under the Plan constitute nonstatutory (nonqualified) stock
options under the Internal Revenue Code of 1986, as amended.

Because the options granted under the Plan do not have a readily
ascertainable market value, an optionee will not be subject to federal income
tax upon the grant of an option under the Plan, and the Company will not be
entitled to a tax deduction by reason of such grant. Upon exercise of an option
under the Plan, the optionee will recognize ordinary income in the amount of the
"option spread" (the difference between the fair market value of the option
shares on the date of exercise and the exercise price), and the Company will be
entitled to a corresponding deduction.

CERTAIN SECURITIES LAW ISSUES

Certain of the employees participating in the Plan are subject to Sections
16(a) and 16(b) of the Securities Exchange Act of 1934, therefore it is the
Company's intent to comply with, and the Company believes the Plan does comply
with, Rule 16b-3 of the Act and the exemptions afforded thereunder. To the
extent any provisions of the Plan or actions of the Plan administrators or
participants fail to comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Board.

RECOMMENDATION AND REQUIRED VOTE

The Key Employee Nonstatutory Stock Option Plan, as amended, will be deemed
approved by the shareholders if approved by the affirmative vote of the holders
of a majority of the shares of Common Stock represented at the Annual Meeting.

The Board believes the approval of the Key Employee Nonstatutory Stock
Option Plan amendments, as detailed above, to be in the best interest of the
Company and recommends approval of the Plan as amended.

AMENDMENTS TO THE 1994 EXECUTIVE STOCK OPTION PLAN PROPOSAL

DESCRIPTION OF THE PLAN AND PROPOSED AMENDMENTS

The Company's Board of Directors (the "Board") adopted the 1994 Medex, Inc.
Executive Stock Option Plan (the "Plan"), on August 24, 1994, and the Plan was
approved by the Company's shareholders on November 16, 1994. The Board has
adopted amendments to the Plan to increase the number of shares of common stock
available under the Plan from 300,000 to 500,000, an increase of 200,000 shares
and to add a provision to the Plan accelerating the exercisability of options on
a change in control of the Company. The Board authorized submission of these
amendments to the shareholders in order to comply with NASDAQ National Market
requirements and to comply with Internal Revenue Code sections concerning
qualification of certain options as Incentive Stock Options. The following is a
brief summary of the Plan and the amendments thereto which are qualified in
their entirety by the express terms of the Plan.

The purpose of the Plan is to advance the interests of the Company and its
shareholders by encouraging and enabling selected officers and key employees,
upon whose judgement, initiative and effort the Company is largely dependent for
the successful conduct of its business, to acquire and retain a proprietary
interest in the Company by ownership of its stock through the exercise of

24
<PAGE> 27

stock options, thus aligning Plan participants' interests with those of the
Company's shareholders and to assist the Company in attracting and retaining
highly qualified employees.

The Plan previously authorized and reserved 300,000 shares for issuance to
officers and key employees as of September 23, 1996, a total of 218,250 options
had been granted and were currently outstanding or previously exercised (leaving
81,750 shares available for future option grants.) The term of the Plan is for a
period of ten (10) years from its approval by the Board in August of 1994. The
Company believes that the availability of additional shares is necessary in
order for the Plan to continue to function as intended in the remaining years of
its term. Therefore, the Board has approved an amendment to the Plan to reserve
and make available for purchasing an additional 200,000 shares pursuant to
future option grants.

Additionally, the Board has approved an amendment to the Plan to add the
following Section 4.10 to the Plan relative to the acceleration of
exercisability of options on a change in control:

4.10. ACCELERATION OF EXERCISABILITY ON CHANGE IN CONTROL.

Upon a change in control of the Company, all Options theretofore
granted and not previously exercisable 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:

(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

(d) The Company shall have sold substantially all of its assets to
another corporation or other entity or person.

A change in control shall also be deemed to occur if the Company
enters into an agreement, the consummation of which would result in the
occurrence of a change in control of the Company.

25
<PAGE> 28

The amendment provides that upon a change in control, as defined above, all
options previously granted and outstanding at the time of the change in control
will immediately vest and become exercisable. This provision of the Plan may
discourage or render more difficult certain merger, tender officer, proxy
contest or other takeover proposals.

The Plan, as amended, provides for the grant of Incentive Stock Options and
Nonqualified Stock Options covering an aggregate of 500,000 shares of Common
Stock. No individual participant in the Plan may receive options under the Plan
exceeding the 500,000 share aggregate limit. The number of shares of Common
Stock subject to options is subject to equitable adjustments for any stock
dividends, stock splits, recapitalization, reclassification, or any other
similar changes which may be required in order to prevent dilution. Any option
which is not exercised prior to expiration or which otherwise terminates will
thereafter be available for further grant under the Plan.

The Plan, as recently amended, is administered by the Board. Subject to the
conditions set forth in the Plan, the Board has full and final authority to
determine the number of options, the individuals to whom and the time or times
at which such options shall be granted and be exercisable, and the terms and
provisions of the respective agreements to be entered into at the time of grant,
which may vary. The Plan is intended to be flexible, and a significant amount of
discretion is vested in the Board with respect to all aspects of the options to
be granted under the Plan.

Nonqualified Options and Incentive Options may be granted under the Plan
only to persons who are employees of the Company or any of its subsidiaries. The
Company estimates that at the present time approximately twenty-five of its
1,100 employees are eligible to participate in the Plan.

The exercise price of each option granted under the Plan shall be 100% of
the fair market value of the shares on the date of grant. "Fair Market Value" as
defined in the Plan means the "Last Transaction" Price of a share of the
Company's Common Stock reflected in the NASDAQ National Market quotation,
provided that if deemed appropriate by the Board for any reason, the Fair Market
Value of shares of Common Stock shall be determined by the Board in such other
manner as it may deem appropriate.

Each stock option shall be fully exercisable six months from the date of
its grant unless a shorter period is provided by the Board, and may be exercised
during a period of five (5) years from the date of grant thereof which may
extend beyond the term of the Plan. No stock option shall be exercisable after
the expiration of its option term.

Payment of the exercise price upon exercise of an option may be made in any
combination of cash and shares of Common Stock. Where payment is made in Common
Stock, such Common Stock shall be valued for such purpose at the fair market
value of such shares on the date of exercise.

Options granted under the Plan are not transferable or assignable,
otherwise than by will or the laws of descent and distribution and, during the
lifetime of the holder, options are exercisable only by the holder or by such
person's guardian or legal representative.

Except as the Board may expressly determine otherwise, if the holder of an
option ceases to be employed by the Company or any of its subsidiaries other
than by reason of the holder's death, retirement or permanent disability (as
determined by the Board) all options granted to

26
<PAGE> 29

such holder under the Plan shall terminate immediately. In the event of the
death of the holder of an option, the option may be exercised to the extent that
the holder might have exercised the option on the date of death for a period of
one (1) year following the date of death, unless by their terms the options
expire before the end of such one (1) year period. Upon termination of the
optionee's employment by reason of retirement or permanent disability (as each
is determined by the Board), the option holder may, within thirty-six (36)
months from the date of termination, exercise any stock options to the extent
such options were exercisable at the date of such termination.

Since the end of fiscal year 1996, 1994 Executive Stock Option Plan Options
have been granted to the following: Mr. Gould 20,000; Dr. Landsberg 12,000; Mr.
Sanborn 7,500; Mr. Barilla 58,000; Mr. Lawson 4,800; and all current executive
officers as a group 122,900.

The Board may at any time and from time to time amend, modify or terminate
the Plan, but may not, without the approval of the shareholders of the Company,
increase the maximum number of shares of Common Stock subject to options which
may be granted under the Plan, increase the term during which options may be
exercised, materially modify the requirements as to eligibility for participants
in the Plan, materially increase the benefits to participants under the Plan or
extend the term of the Plan. No amendment, modification, or termination of the
Plan by the Board may affect any of the rights under any option previously
granted under the Plan without the holder's consent except the Board may amend
the Plan or condition or modify option awards under the Plan in response to
changes in securities, tax or other laws, rules, regulations or regulatory
interpretations thereof applicable to the Plan. The Plan and transactions under
the Plan are intended to comply with Rule 16b-3 of the Securities Exchange Act
of 1934 and Section 162(m) of the Internal Revenue Code of 1986.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The Company believes that with respect to Incentive Options granted under
the Plan, no income will be recognized by an optionee for federal income tax
purposes at the time such an option is granted or at the time it is exercised.
If the optionee makes no disposition of the shares so received within two (2)
years from the date the Incentive Option was granted and one (1) year from the
receipt of the shares pursuant to the exercise of the Incentive Option, they
will generally recognize long-term capital gain or loss upon disposition of the
shares.

If the optionee disposes of shares acquired by exercise of an Incentive
Option before the expiration of the applicable holding period, any amount
realized from such a disqualifying disposition will be taxable as ordinary
income in the year of disposition generally to the extent that the lesser of the
fair market value of the shares on the date the option was exercised or the fair
market value at the time of such disposition exceeds the exercise price. Any
amount realized upon such a disposition in excess of the fair market value of
the shares on the date of exercise generally will be treated as capital gain. A
disqualifying disposition will include the use of shares acquired upon exercise
of an Incentive Option in payment of the exercise price of another option prior
to the satisfaction of the applicable holding period.

The Company will not be allowed a deduction for federal income tax purposes
at the time of the grant or exercise of an Incentive Option. At the time of a
disqualifying disposition by an optionee, the Company will be entitled to a
deduction for federal income tax purposes equal to

27
<PAGE> 30

the amount taxable to the optionee as ordinary income in connection with such
disqualifying disposition (assuming that such amount constitutes reasonable
compensation).

The Company believes that the grant of a Nonqualified Option under the Plan
will not be subject to federal income tax. Upon exercise, the optionee generally
will recognize ordinary income, and the Company will be entitled to a
corresponding deduction for federal income tax purposes (assuming that such
compensation is reasonable), in an amount equal to the excess of the fair market
value of the shares on the date of exercise over the exercise price. Gain or
loss on the subsequent sale of shares received on exercise of a Nonqualified
Option generally will be long-term or short-term capital gain or loss, depending
on the holding period of the shares.

RECOMMENDATION AND REQUIRED VOTE

The 1994 Executive Stock Option Plan, as amended, will be deemed approved
by the shareholders if approved by the affirmative vote of the holders of a
majority of the shares of Common Stock represented at the Annual Meeting.

The Board believes the approval of the 1994 Executive Stock Option Plan
amendments, as detailed above, to be in the best interest of the Company and
recommends approval of the Plan as amended.

AMENDMENT TO THE MEDEX, INC.
EMPLOYEES STOCK PURCHASE PLAN PROPOSAL

DESCRIPTION OF THE PLAN AND PROPOSED AMENDMENT

The Medex, Inc. Employees Stock Purchase Plan was adopted by the Company's
Board of Directors (the "Board") in July of 1980 and approved by the Company's
shareholders on November 14, 1980, and has subsequently been amended on several
occasions by the Board and approved by the shareholders. The Board has recently
approved an amendment to the Plan to increase the number of shares available for
issuance under the Plan. In order to comply with NASDAQ National Market
requirements and to comply with Internal Revenue Code requirements regarding
qualification of the options for favorable tax treatment under Section 423 of
the Code, the Board authorized submission of the amendment to the shareholders
for approval.

The Company's Board believes that an employee stock purchase plan provides
the additional incentives inherent in stock ownership to the employees of the
Company, bringing them into close identity with the Company, aligning their
interests with those of the Company's shareholders, strengthening the desire of
such employees to remain with the Company and aiding in securing the services of
dedicated employees.

The Plan currently provides that the stock which may be purchased pursuant
to options granted under the Employees Stock Purchase Plan shall be limited to
160,000 shares (after adjustments) of the authorized and unissued or reacquired
Common Stock of the Company. When an outstanding option terminates, expires, or
is cancelled, any shares of Common Stock which were covered by such an option
and were not purchased, are available for the grant of additional options.

If approved by the shareholders the amendment to the Plan would make
available an additional 100,000 shares and increase the number of authorized
shares under the Plan to 260,000 shares. As of September 23, 1996, there were
approximately 72,225 shares available for

28
<PAGE> 31

future option grants. The Company believes that the availability of additional
shares is necessary in order for the Plan to continue to function as intended in
the future.

Under the Plan, qualified employees may request options to purchase shares
of Common Stock, subject to certain limitations contained in the Plan, at prices
equal to 87.5% of the fair market value at the date of grant. As of June 30,
1996, there were approximately 135 participants in the Plan. There are
approximately 1,090 persons eligible.

The Plan is administered by the Board who are not eligible to participate
in the Plan. The Plan may be amended by the Board but may not be amended without
shareholder approval, to increase the number of shares covered by the Plan,
change the persons eligible to receive options under the Plan, materially
increase benefits to optionees or change the corporations whose employees will
be offered options.

The Employees Stock Purchase Plan provides that options may be granted only
to employees of the Company and its subsidiaries who are eligible under the
applicable provisions of Section 423 of the Internal Revenue Code, as amended.

In order to be eligible, an employee must not be both a highly compensated
employee within the meaning of Internal Revenue Code Section 414(q) and an
executive officer of the Company. All other employees shall be eligible to
receive options except: (1) Employees who have been employed less than one (1)
year; (2) Employees whose customary employment is twenty (20) hours or less per
week; and (3) Employees whose customary employment is for not more than (five) 5
months in any calendar year. No options shall be granted or exercised which do
not comply with the provisions of Section 423 of the Internal Revenue Code or
any comparable provisions subsequently enacted. All employees granted options
shall have the same rights and privileges. Each employee shall be granted, upon
the employee's written request, an option to purchase one (1) share for each one
hundred dollars of total compensation received by the employee in the last full
calendar year of employment, and further, options shall be for a minimum of ten
(10) shares. No employee may be granted an option allowing the purchase of more
than $25,000 of the Company's Common Stock in any one (1) year.

The options must be exercised prior to the expiration of twenty-seven (27)
months from the date of granting such option. A holder may not exercise an
option after three (3) months from the termination of his/her employment; nor
may an option be exercised by the estate of a deceased employee, or by his/her
heirs or legatees, after one (1) year from the date of his/her death. The
options granted under the Plan are not assignable or transferable by the
employee.

The Plan is not a qualified pension, profit sharing or stock bonus plan
within the meaning of Section 401(a) of the Internal Revenue Code. The Employees
Stock Purchase Plan is not subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA").

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

Pursuant to Section 423 of the Internal Revenue Code, if an individual
makes no transfer of a share of stock issued pursuant to the exercise of an
option under the Plan within two (2) years after the date of the granting of the
option nor within one (1) year after the transfer of such share to him/her, no
income shall result at the time of the granting of the option or the transfer of
such share to the individual and no deduction shall be allowed to the Company.
Upon disposition of stock issued pursuant to the exercise of an option under the
Plan, if the holding period is satisfied, any gains realized resulting from the
sale of the stock is ordinary income to the extent of the difference between the
option price and the fair market value of the stock at the time the

29
<PAGE> 32

option was granted. Any remaining gain is treated as long-term capital gain. If
the stock acquired upon exercise and transfer and of such share to him/her is
sold within two (2) years after the date of granting the option or within one
(1) year of exercise, the Company will receive a tax deduction and the optionee
will have ordinary income, equal to the lesser of the gain on sale or the
difference between the option price and the fair market value at time of
exercise.

RECOMMENDATION AND REQUIRED VOTE

The Employees Stock Purchase Plan, as amended, will be deemed approved by
the shareholders if approved by the affirmative vote of the holders of a
majority of the shares of Common Stock represented at the Annual Meeting.

The Board believes the approval of the Employees Stock Purchase Plan
amendment, as detailed above, to be in the best interest of the Company and
recommends approval of the Plan as amended.

NEW PLAN BENEFITS

The closing price of the Company's Common Stock on NASDAQ National Market
on September 23, 1996 was $14.50. The following table sets forth the amounts of
stock options that have been granted pursuant to the Medex, Inc. Non-Employee
Director Restricted Stock Option Plan IV to: the Named Executive Officers listed
in the Summary Compensation Table; all current executive officers as a group;
all current directors who are not executive officers as a group; and all
non-executive officer employees as a group. No stock options are being granted
from the Key Employee Nonstatutory Stock Option Plan, the 1994 Executive Stock
Option Plan, or the Employees Stock Purchase Plan that are subject to
shareholder approval of the amendments to said Plans.

<TABLE>
<CAPTION>
DIRECTOR STOCK
OPTION PLAN
NUMBER OF
NAME AND POSITION UNITS(1)
<S> <C>
- -------------------------------------------------------------------------------------------
Bradley P. Gould -0-
President, Chief Executive Officer
Phillip D. Messinger -0-
Former President and Chief Executive Officer
Georg W. Landsberg -0-
Senior Vice President, European Operations
Terry L. Sanborn -0-
Senior Vice President, Manufacturing and Chief Operating Officer
Michael J. Barilla -0-
Senior Vice President and Chief Financial Officer
Clint R. Lawson -0-
Vice President, Corporate Quality Assurance & Regulatory Affairs
Executive Group -0-
Non-Executive Director Group (8 persons) 120,000
Non-Executive Officer Employee Group -0-
- -------------------------------------------------------------------------------------------
</TABLE>

(1) The date of grant market value of the Company's Common Stock, $.01 par
value, was $11.25.

30
<PAGE> 33

RATIFICATION OF AUDITORS

The Board of Directors has selected the firm of Deloitte & Touche LLP,
independent public accountants, to audit the financial statements of the Company
and its subsidiaries for the year ending June 30, 1997. Deloitte & Touche LLP
has been serving as auditors of the Company since the Company's incorporation in
1959. The Board of Directors recommends that the shareholders ratify its
selection of Deloitte & Touche LLP and, accordingly, management will offer the
following resolution at the Annual Meeting.

RESOLVED, that the selection by the Board of Directors of Deloitte & Touche
LLP, Certified Public Accountants, to audit the financial statements of the
Company and its subsidiaries for the year ending June 30, 1997, be and hereby is
ratified and approved.

It is anticipated that representatives of Deloitte & Touche LLP will be
present at the meeting to respond to appropriate questions and will have an
opportunity, if they desire, to make a statement.

OTHER MATTERS

At the Meeting, the minutes of the preceding Annual Meeting of Shareholders
will be read and approved as to form. There will also be received at the Meeting
the annual financial statements, as required by law, and the reports of the
President and other officers. It is not contemplated that any action will be
taken constituting approval or disapproval of any matters referred to in these
financial statements or reports.

The management knows of no other business constituting a proper subject for
action by the shareholders which will be represented for consideration at the
Meeting. However, if any other business shall come before the Meeting, the Proxy
Committee will vote said proxy in respect to any such business in accordance
with their best judgment.

The 1996 Annual Report to Shareholders which includes Financial Statements
and information concerning the Company operations during Fiscal 1996,
accompanies this Proxy Statement. The Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1996, including the financial statements and
schedules thereto which is filed with the Securities and Exchange Commission as
well as any other filings with the Commission, interim reports and additional
information about the Company and its products can be obtained without charge.
Requests should be sent to:

Investor Relations
MEDEX, INC.
3637 Lacon Road
Hilliard, Ohio 43026
614-529-3899 (Telephone)
614-876-8356 (Fax)

C. Craig Waldbillig, Chairman
Robert E. Boyd, Jr., Secretary
October 17, 1996

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<PAGE> 34

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 35

EXHIBIT A

NON-EMPLOYEE DIRECTOR RESTRICTED STOCK OPTION PLAN IV

1. PURPOSE

The Medex, Inc. Non-Employee Director Restricted Stock Option Plan IV (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 by serving as members of the Company's Board
of Directors and to provide additional incentive for such non-employee directors
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 each non-employee director (the
"Optionee") an option (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. However, no member of the
Board shall have authority or discretion in determining the selection of
participants, the amount, price, or timing of awards to eligible participants
under the plan, all such determinations shall be in accordance with the formula
provisions set forth in Section 4 hereof. No member of the Board shall be liable
for any action or determination made in good faith with respect to the Plan.
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 provision of the plan or action by the plan administrators fails to
so comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the plan administrators.

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.

Subject to the provisions of the succeeding paragraphs of this Section 3,
the aggregate number of shares which may be issued under the Plan shall not
exceed 135,000 shares.

If prior to termination of the Plan, Options issued under the Plan shall be
reacquired by the Company pursuant to the provisions hereof, such Options shall
again become available for issuance under the Plan.

In the event that the number of outstanding shares of Common Stock of the
Company shall be changed by reason of split-ups, combinations of shares,
recapitalization or stock dividends,

A-1
<PAGE> 36

the number of shares which may thereafter be available under the Plan and the
number of options held by Optionees and the option exercise price shall be
appropriately adjusted so as to reflect any such change.

4. ELIGIBILITY AND GRANT OF OPTIONS

A. An Option to purchase 15,000 shares of the Company's Common Stock shall
automatically be granted under the Plan to each serving non-employee director of
the Company as of the date of the approval of this Plan by the Employee Benefits
Committee of the Board of Directors subject to the restrictions on exercise set
out in Section seven (7) hereof and subject to approval of this Plan and the
transactions set forth herein by the Board of Directors.

B. Further, any new non-employee director being first elected (elected for
the first time) a director of the Company, following the approval of this Plan
by the Board of Directors and during the term of this Plan, shall automatically
upon election be granted an option to purchase that number of shares which is
determined by multiplying five thousand (5,000) by a number determined by
subtracting the year in which the Director is elected from the year 1999, and
subject to availability of authorized shares remaining in the Plan. These
Options shall also be subject to the restrictions on exercise contained in
Section seven (7) hereof.

C. No non-employee director to whom an Option has been granted or will be
granted shall be eligible to receive additional Options under this Plan.

D. The exercise price for Options granted under this Plan shall be the fair
market value of the stock on the date such Option is granted. Subject to
approval of this Plan and the terms of the options by the Board of Directors,
the date of grant shall be the date this Plan is approved by the Employee
Benefits Committee of the Board of Directors or as to a new non-employee
director elected subsequent to the approval of the Plan by the Board of
Directors, the date of grant shall be the date of election to the Board of
Directors. The fair market value shall be determined by the "last transaction"
price (price of the stock on the last trade) 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 no quotation is made on that date, on the next date such quotation is
made.

5. NON-TRANSFERABILITY OF OPTIONS

The term of the Option shall be for a period of ten years from the date of
grant. The right of the Optionee to purchase Common Stock through the exercise
of the Option, wholly or in part, shall be available to the Optionee at any time
during the term of the Option subject to restrictions on exercise contained in
Sections five (5) and seven (7) hereof.

Options under the Plan may not be sold, assigned, pledged, encumbered or
otherwise transferred by the Optionee except 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 or Title I of the Employee Retirement Income
Security Act, or upon approval by the Board of Directors.

The Option shall be exercisable by the Optionee only while serving as a
director or director emeritus of the Company or upon his death or cessation of
service as a director or director emeritus of the Company. If the Optionee shall
die while serving as a director or director emeritus of the Company, his
executor, personal representative or beneficiary shall have the right to

A-2
<PAGE> 37

exercise the Option at any time within twelve (12) months from the date of
death, with respect to the total number of shares as to which he would be
entitled to exercise at the date of his death, that is, those shares free of all
the restrictions on exercise imposed by Section 7 hereof.

If the Optionee shall cease to serve as a director or director emeritus of
the Company before the Option shall have terminated, the Optionee may exercise
the Option within ninety (90) days after the date on which he ceases to serve as
a director or director emeritus of the Company, as to those shares which at the
close of business on the date of cessation of service as a director or director
emeritus are free of all restrictions on exercise imposed by Section 7 hereof.

6. EXERCISE OF OPTIONS

An Optionee electing to exercise an Option under the Plan shall give
written notice to the Company of such election and of the number of shares the
Optionee has elected to acquire. Until the Optionee has been issued a
certificate or certificates for the shares so acquired, the Optionee shall
possess no stockholder rights with respect to any such shares.

7. RESTRICTIONS ON THE EXERCISE OF THE OPTIONS AND SALE OF SHARES
ISSUED FOR SUCH OPTIONS

Options granted pursuant to Section 4(A) and Section 4(B) hereof shall not
be exercised by the Optionee while serving as a non-employee director or
director emeritus except as provided in the following paragraph.

While serving as a director or director emeritus the restriction against
exercise shall lapse cumulatively to the extent of five thousand shares per
year, beginning one year from the date of grant and thereafter on each
anniversary of the date of grant.

Upon the occurrence of the earlier of the death of the Optionee or the
Optionee's cessation of service as a director and director emeritus of the
Company, Options as to which the restrictions on exercise shall not have lapsed
under the Plan, shall immediately lapse and revert to the Plan.

No shares shall be issued upon exercise of Options granted under this Plan
prior to the effective date of an Registration Statement for said shares with
the Securities and Exchange Commission, which the Company shall undertake to do,
or in violation of the requirements of Section 16 of the Securities and Exchange
Act of 1934 and the rules thereunder.

Any questions as to whether and when there has been a cessation of service
as a director or director emeritus shall be determined by the Board and its
determination of such questions shall be final.

8. ACCELERATION OF EXERCISABILITY ON CHANGE IN CONTROL

Upon a Change in Control of the Company, all options theretofore granted
and not previously exercisable for any reason shall become fully exercisable to
the same extent and in the same manner as if they had become exercisable by
passage of time in accordance with the provisions of the Plan relating to
periods of exercisability.

For purposes of the Plan, a "Change in Control" of the Company shall mean a
change in control of a nature that would be required to be reported in response
to Item 6(e) of Schedule

A-3
<PAGE> 38

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: (A) 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 Corporation representing 20% or more of the
combined voting power of the Company's then outstanding stock; (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 a majority thereof,
unless the election, or the nomination for election by the Company's
shareholders, 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 business of the Company for which the Optionee's services are
principally performed is disposed of by the Corporation pursuant to a partial or
complete liquidation of the Company or a sale of all or substantially all the
assets of the Corporation.

A Change in Control shall also be deemed to occur if the Company enters
into an agreement, the consummation of which would result in the occurrence of a
Change in Control of the Company.

9. PAYMENT

The option exercise price shall be payable upon the exercise of the Option
and shall be payable in cash, by check or in shares of Medex Common Stock of the
Company. If shares of Common Stock are tendered as payment of the option
exercise price, the value of such shares shall be their fair market value (last
transaction price as listed in the "NASDAQ National Market System" quotation) as
of the date of exercise. If such tender would result in the issuance of
fractional shares of Common Stock, the Company shall instead return the
difference in cash or by check to the Optionee.

10. AMENDMENTS TO THE PLAN

The Board of Directors of the Company may terminate or from time to time
amend the Plan, provided that no such termination or amendment without the
approval of the stockholders of the Company shall:

(a) increase the maximum number of shares which may be issued under
the Plan in the aggregate or to each individual.

(b) Modify the requirements as to eligibility for participation in the
Plan.

11. TERMINATION DATE OF THE PLAN

The Plan shall terminate four years from the date of its approval by the
Board of Directors; provided, however, Options granted on or before any
termination of the Plan shall remain outstanding and exercisable, in accordance
with their respective terms, after the termination of the Plan; and provided,
further, that the Plan shall terminate as of the date of the next annual
shareholders' meeting of the Company if it is not approved by a majority of the
total votes cast on the proposal in person or by proxy.

A-4
<PAGE> 39
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

Shares issued under the Plan shall be subject to the terms, conditions and
restrictions specified in the Plan.

<PAGE> 40

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

<PAGE> 41

eligible to be exercised until all the granted Options
are free of this limitation.

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

<PAGE> 42

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

<PAGE> 43

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

<PAGE> 44

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.

A change in control shall also be deemed to occur if the Company enters into an
agreement, the consummation of which would result in the occurrence of a change
in control of the Company.

<PAGE> 45

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
<PAGE> 46
MEDEX, INC.
1994 EXECUTIVE STOCK OPTION PLAN

ARTICLE I - GENERAL

1.01. PURPOSE.

The purposes of this Executive Stock Option Plan (the "Plan") are to
(1) closely associate the interests of the management of Medex, Inc. and its
subsidiaries (collectively referred to as the "Company") with the shareholders
by reinforcing the relationship between participants' rewards and shareholder
gains; (2) provide management with an equity ownership in the company
commensurate with the Company performance, as reflected in increased shareholder
value; (3) maintain competitive compensation levels; and (4) provide an
incentive to management for continuous employment with the Company.

1.02. ADMINISTRATION.

(a) The Plan shall be administered by the Board of Directors
of Medex, Inc. (the "Board"), as constituted from time to time.

(b) The Board shall have the authority, in its sole discretion and from
time to time to:

(i) designate the employees or classes of employees eligible to
participate in the Plan;

(ii) grant options provided in the Plan in such form and amount as
the Board shall determine;

(iii) impose such limitations, restrictions and conditions upon any
such options as the Board shall deem appropriate; and

(iv) interpret the Plan, adopt, amend and rescind rules and
regulations relating to the Plan, and make all other
determinations and take all other action necessary or
advisable for the implementation and administration of the
Plan.

(c) Decisions and determinations of the Board on all matters relating
to the Plan shall be in its sole discretion and shall be conclusive. No member
of the Board shall be liable for any action taken or decision made in good faith
relating to the Plan or any award thereunder.

(d) 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 Plan
Administrators or participants fail to comply, it shall be deemed null and void,
to the extent permitted by law an deemed advisable by the Plan Administrators.

1.03. ELIGIBILITY FOR PARTICIPATION.

Participants in the Plan shall be selected by the Board from
the executive officers and other key employees of the Company who

<PAGE> 47

occupy responsible managerial or professional positions and who have the
capability of making a substantial contribution to the success of the Company.
In making this selection and in determining the form and amount of awards, the
Board shall consider any factors deemed relevant, including the individual's
performance, functions, responsibilities, value of services to the Company and
past and potential contributions to the Company's profitability and sound
growth.

1.04. TYPES OF AWARDS UNDER PLAN.

Awards under the Plan may be in the form of any one or more of the
following:

(i) Nonqualified Stock Options, as described in Article II;

(ii) Incentive Stock Options, as described in Article III;

1.05. AGGREGATE LIMITATION AWARDS.

The stock which may be purchased pursuant to options granted under this
Plan shall be authorized capital stock of the Company, either unissued or
reacquired. No option shall be granted if as a result thereof, the aggregate
number of shares optioned under this Plan would exceed 500,000 shares, provided,
however, in the event of any change as a result of recapitalization, merger,
consolidation, stock dividend, stock split, combination or exchanges of shares,
or otherwise, in character or amount of the Corporation's authorized and
outstanding capital stock subsequent to approval of this plan by the
shareholders, the Board may appropriately adjust the number of shares available
for option under this Plan, the number of shares of Common Stock subject to
options previously granted under the Plan and the option price of options
previously granted under the Plan. However, in the event that any option granted
under this Plan shall terminate for any reason or be surrendered without having
been exercised in full, the shares not purchased under such option shall again
become available for the purposes of the Plan.

1.06. EFFECTIVE DATE AND TERM OF PLAN.

(a) The Plan shall become effective on the date approved by the holders
of a majority of the shares of Common Stock present in person or by proxy and
entitled to vote at the 1994 Annual Meeting of Shareholders of Medex, Inc. When
so approved, the plan shall be deemed to have been in effect from the date of
its adoption by the Board of Directors of the Company. Prior to Shareholder
approval, the Board may grant options under the Plan, but such options shall be
void if the Plan is not subsequently approved by the Shareholders.

(b) The Plan shall terminate ten years from its adoption by the Board
of Directors provided, however, all options granted under the Plan prior to such
date shall remain in effect until such options have been exercised or terminated
in accordance with the Plan and the terms of such grants.

<PAGE> 48

ARTICLE II - NONQUALIFIED STOCK OPTIONS

2.01. AWARD OF STOCK OPTIONS.

The Board may from time to time, and subject to the provisions of the
Plan and such other terms and conditions as the Board may prescribe, grant to
any participant in the Plan one or more options to purchase for cash or shares
the number of shares of Common Stock ("Stock Options") allotted by the Board.
The date a Stock Option is granted shall mean the date selected by the Board as
of which the Board allots a specific number of shares to a participant pursuant
to the Plan.

2.02. STOCK OPTION AGREEMENTS.

The grant of a Stock Option shall be evidenced by a written Stock
Option Agreement, executed by the Company and the holder of a Stock Option (the
"optionee"), stating the number of shares of Common Stock subject to the Stock
Option evidenced thereby, and in such form as the Board may from time to time
determine.

2.03. STOCK OPTION PRICE.

The option price per share of Common Stock deliverable upon the
exercise of a Stock Option shall be 100% of the fair market value of a share of
Common Stock on the date the Stock Option is granted.

2.04. TERM AND EXERCISE.

Each Stock Option shall be fully exercisable six months from the date
of its grant and unless a shorter period is provided by the Board or by another
Section of this Plan, may be exercised during a period of five years from the
date of grant thereof (the "option term"). No Stock Option shall be exercisable
after the expiration of its option term.

2.05. MANNER OF PAYMENT.

Each Stock Option Agreement shall set forth the procedure governing the
exercise of the Stock Option granted thereunder, and shall provide that, upon
such exercise in respect of any shares of Common Stock subject thereto, the
optionee shall pay to the Company, in full, the option price for such shares
with cash or with previously owned Common Stock.

As soon as practicable after receipt of payment, the Company shall
deliver to the optionee a certificate or certificates for such shares of Common
Stock. The optionee shall become a shareholder of the Company with respect to
Common Stock represented by share certificates so issued and such shall be fully
entitled to receive dividends, to vote and to exercise all other rights of a
shareholder.

2.06. DEATH OF OPTIONEE.

(a) Upon the death of the optionee, any rights to the extent
exercisable on the date of death may be exercised by the optionee's estate, or
by a person who acquires the right to exercise such

<PAGE> 49

Stock Option by bequest or inheritance or by reason of the death of the
optionee, provided that such exercise occurs within both the remaining effective
term of the Stock Option and one year after the optionee's death.

(b) The provisions of this Section shall apply notwithstanding the fact
that the optionee's employment may have terminated prior to death, but only to
the extent of any rights exercisable on the date of death.

2.07. RETIREMENT OR DISABILITY.

Upon termination of the optionee's employment by reason of retirement
or permanent disability (as each is determined by the Board), the optionee may,
within 36 months from the date of termination, exercise any Stock Options to the
extent such options are exercisable during such 36-month period.

2.08. TERMINATION FOR OTHER REASONS.

Except as provided in Sections 2.6 and 2.7, or except as otherwise
determined by the Board, all Stock Options shall terminate upon the termination
of the optionee's employment.

ARTICLE III - INCENTIVE STOCK OPTIONS

3.01. AWARD OF INCENTIVE STOCK OPTIONS.

The Board may, from time to time and subject to the provisions of the
Plan and such other terms and conditions as the Board may prescribe, grant to
any participant in the Plan one or more "incentive stock options" (intended to
qualify as such under the provisions of section 422 of the Internal Revenue Code
of 1986, as amended ("Incentive Stock Options") to purchase for cash or shares
the number of shares of Common Stock allotted by the Board. The date an
Incentive Stock Option is granted shall mean the date selected by the Board as
of which the Board allots a specific number of shares to a participant pursuant
to the Plan. Notwithstanding the foregoing, Incentive Stock Options shall not be
granted to any owner of 10% or more of the total combined voting power of the
Company and its subsidiaries.

3.02. INCENTIVE STOCK OPTION AGREEMENTS.

The grant of an Incentive Stock Option shall be evidenced by a written
Incentive Stock Option Agreement, executed by the Company and the holder of an
Incentive Stock Option (the "optionee"), stating the number of shares of Common
Stock subject to the Incentive Stock Option evidenced thereby, and in such form
as the Board may from time to time determine.

3.03. INCENTIVE STOCK OPTION PRICE.

The option price per share of Common Stock deliverable upon the
exercise of an Incentive Stock Option shall be 100% of the fair market value of
a share of Common Stock on the date the Incentive Stock Option is granted.

<PAGE> 50

3.04. TERM AND EXERCISE.

Each Incentive Stock Option shall be fully exercisable six months from
the date of its grant and unless a shorter period is provided by the Board or
another Section of this Plan, may be exercised during a period of five years
from the date of grant thereof (the "option term"). No Incentive Stock Option
shall be exercisable after the expiration of its option term.

3.05. LIMITATION ON INCENTIVE OPTIONS.

The aggregate fair market value (determined at the time the option is
granted) of the stock with respect to which Incentive Stock Options are
exercisable for the first time by such individual during any calendar year
(under all plans of the Company) shall not exceed $100,000.

3.06. DEATH OF OPTIONEE.

(a) Upon the death of the optionee, any Incentive Stock Option
exercisable on the date of death may be exercised by the optionee's estate or by
a person who acquires the right to exercise such Incentive Stock Option by
bequest or inheritance or by reason of the death of the optionee, provided that
such exercise occurs within both the remaining option term of the Incentive
Stock Option and one year after the optionee's death.

(b) The provisions of this Section shall apply notwithstanding the fact
that the optionee's employment may have terminated prior to death, but only to
the extent of any Incentive Stock Options exercisable on the date of death.

3.07. RETIREMENT OR DISABILITY.

Upon the termination of the optionee's employment by reason of
permanent disability or retirement (as each is determined by the Board), the
optionee may, within 36 months from the date of such termination of employment,
exercise any Incentive Stock Options to the extent such Incentive Stock Options
were exercisable at the date of such termination of employment. Notwithstanding
the foregoing, the tax treatment available pursuant to Section 422 of the
Internal Revenue Code of 1986 upon the exercise of an Incentive Stock Option
will not be available to an optionee who exercises any Incentive Stock Options
more than (i) 12 months after the date of termination of employment due to
permanent disability or (ii) three months after the date of termination of
employment due to retirement.

3.08. TERMINATION FOR OTHER REASONS.

Except as provided in Sections 3.6 and 3.7 or except as otherwise
determined by the Board, all Incentive Stock Options shall terminate upon the
termination of the optionee's employment.

3.09. MANNER OF PAYMENT.

Each Incentive Stock Option Agreement shall set forth the procedure
governing the exercise of the Incentive Stock Option

<PAGE> 51

granted thereunder, and shall provide that, upon such exercise in respect of any
shares of Common Stock subject thereto, the optionee shall pay to the Company,
in full, the option price for such shares with cash or with previously owned
Common Stock.

ARTICLE IV - MISCELLANEOUS

4.01. GENERAL RESTRICTIONS.

Each option award under the Plan shall be subject to the requirement
that, if at any time the Board shall determine that (i) the listing,
registration or qualification of the shares of Common Stock subject or related
thereto upon any securities exchange or under any state or Federal law, or (ii)
the consent or approval of any government regulatory body, or (iii) an agreement
by the grantee of an award with respect to the disposition of shares of Common
Stock, is necessary or desirable as a condition of, or in connection with, the
granting of such award or the issue or purchase of shares of Common Stock
thereunder, such award may not be consummated in whole or in part unless such
listing, registration, qualification, consent, approval or agreement shall have
been effected or obtained free of any conditions not acceptable to the Board. No
individual participant in the Plan shall receive options exceeding the 300,000
aggregate limit contained in Section 1.05.

4.02. NON-ASSIGNABILITY.

No award under the Plan shall be assignable or transferable by the
recipient thereof, except by will or by the laws of descent and distribution.
During the life of the recipient, such award shall be exercisable only by such
person or by such person's guardian or legal representative.

4.03. WITHHOLDING TAXES.

Whenever, under the plan, the exercise of a stock option will result in
the recognition of taxable income by the participant, the Company shall be
entitled to require as a condition of delivery to the participant of shares that
the participant remit to the corporation an amount sufficient to satisfy all
federal, state, and other withholding tax requirements related to the income
recognized by the participant. If a participant makes a disqualifying
disposition of stock acquired upon the exercise of an incentive stock option the
Company shall be entitled to require the participant to remit to the Company an
amount sufficient to satisfy all federal, state, and other withholding tax
requirements related to the income realized by the participant on the
disqualifying disposition. In any case under this Section 4.03 where withholding
by the Company is required, the Company shall have the right to withhold any
such amounts from compensation otherwise due to the participant.

<PAGE> 52

4.04. RIGHT TO TERMINATE EMPLOYMENT.

Nothing in the Plan or in any agreement entered into pursuant to the
Plan shall confer upon any participant the right to continue in the employment
of the Company or effect any right which the Company may have to terminate the
employment of such participant.

4.05. NON-UNIFORM DETERMINATIONS.

The Board's determinations under the Plan (including without limitation
determinations of the persons to receive awards, the form, amount and timing of
such awards, the terms and provisions of such awards and the agreements
evidencing same) need not be uniform and may be made by it selectively among
persons who receive, or are eligible to receive, awards under the Plan, whether
or not such persons are similarly situated.

4.06. RIGHTS AS A SHAREHOLDER.

The recipient of any option under the Plan shall have no rights as a
shareholder with respect thereto unless and until certificates for shares of
Common Stock are issued to him.

4.07. DEFINITIONS.

In this Plan the following definitions shall apply:

(a) "Subsidiary" means any corporation of which, at the time more than
50% of the shares entitled to vote generally in an election of directors are
owned directly or indirectly by Medex, Inc. or any subsidiary thereof.

(b) "Fair market value" as of any date and in respect of any share of
Common Stock means the "Last Transaction" price on such date or on the next
business day, if such date is not a business day, of a share of Common Stock
reflected in the NASDAQ National Market System quotation, provided that, if
deemed appropriate by the Board for any reason, the fair market value of shares
of Common Stock shall be determined by the Board in such other manner as it may
deem appropriate. In no event shall the fair market value of any share of Common
Stock be less than its par value.

4.08. LEAVES OF ABSENCE.

The Board shall be entitled to make such rules, regulations and
determinations as it deems appropriate under the Plan in respect of any leave of
absence taken by the recipient of any award. Without limiting the generality of
the foregoing, the Board shall be entitled to determine (i) whether or not any
such leave of absence shall constitute a termination of employment within the
meaning of the Plan and (ii) the impact, if any, of any such leave of absence on
awards under the Plan theretofore made to any recipient who takes such leave of
absence.

4.09. AMENDMENT OF THE PLAN.

(a) The Board may, without further action by the shareholders and
without receiving further consideration from the participants, amend this Plan
or condition or modify awards under this Plan in

<PAGE> 53

response to changes in securities, tax or other laws or rules, regulations or
regulatory interpretations thereof applicable to this Plan or to comply with
stock exchange rules or requirements.

(b) The Board may at any time and from time to time terminate or modify
or amend the Plan in any respect, except that without shareholder approval the
Board may not (i) increase the maximum number of shares of Common Stock which
may be issued under the Plan (other than increases pursuant to Section 1.05),
(ii) extend the period during which any award may be granted or exercised, (iii)
extend the term of the Plan, (iv) materially increase benefits accruing to
participants under the Plan, or (v) materially modify the requirements as to
eligibility for participation in the Plan. The termination or any modification
or amendment of the Plan, except as provided in subsection (a), shall not
without the consent of a participant, affect his or her rights under an award
previously granted to him or her.

4.10. ACCELERATION OF EXERCISABILITY ON CHANGE IN CONTROL.

Upon a change in control of the Company, all Options
theretofore granted and not previously exercisable 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

<PAGE> 54

(d) The Company shall have sold substantially all of its assets to
another corporation or other entity or person.

A change in control shall also be deemed to occur if the Company enters
into an agreement, the consummation of which would result in the occurrence of a
change in control of the Company.

<PAGE> 55
MEDEX, INC.

EMPLOYEES STOCK PURCHASE PLAN

1. PURPOSE

The purpose of this Plan is to provide the additional incentives
inherent in stock ownership to the employees of Medex, Inc., upon whom rest the
major responsibilities for the success of the Company and thereby to bring them
into closer identity with the future of the Company; to strengthen the desire of
such employees to remain in the service of the Company; and in the future to
secure and retain the services of able and dedicated employees.

2. STOCK TO BE OFFERED FOR PURCHASE

The stock which may be purchased pursuant to options granted under this
plan shall be authorized capital stock of the Company, either unissued or
reacquired. No option shall be granted if as a result thereof the aggregate
number of shares optioned under this plan would exceed 260,000 shares, provided
however, in the event of any change as a result of recapitalization, merger,
consolidation, stock dividend, split-up, combination or exchanges of shares, or
otherwise, in character or amount of the Company's authorized and outstanding
capital stock subsequent to November 14, 1980, the number of shares available
for option under this plan shall be the number to which a holder would be
entitled if the unissued options had been outstanding at the time of the
occurrences of the change. However, in the event that any option granted under
this plan shall terminate for any reason or be surrendered without having been
exercised in full, the shares not purchased under such option shall again become
available for the purposes of the plan.

3. ELIGIBILITY

Options are to be granted to those employees of the Company or of its
subsidiaries who are eligible under applicable provisions of law to receive an
option pursuant to employer stock purchase plan as defined in Sections 423 of
the Internal Revenue Code of 1954 as amended by the Revenue Act of 1964, or in
any comparable taxing statute subsequently enacted and applicable at the time of
granting such options including the provision that no option can be granted to
an employee if that option results in the employee owning stock, having five
percent of the voting power or value of the Company's outstanding stock.
Further, in order to be eligible, an employee must not be, both an officer of
the Company and a highly compensated employee within the meaning of Section
414(q) of the Internal Revenue Code. All employees shall be eligible to receive
options except: 1) Employees who have been employed less than one year. 2)
Employees whose customary employment is 20 hours or less per week. 3) Employees
whose customary employment is not
<PAGE> 56
for more than 5 months in any calendar year. 4) No option shall be granted or
exercised which does not comply with the provisions of Section 423(B) of the
Internal Revenue Code, or any comparable provisions subsequently enacted. 5) All
employees granted options shall have the same rights and privileges. 6) Each
employee shall be granted, upon the employee's written request, an option to
purchase one share for each one hundred dollars of total compensation received
by the employee in the last full calendar year of employment, and further option
each year thereafter with the number computed in the same manner. All options
shall be for a minimum of 10 shares, the total compensation shall be the amount
shown for federal income tax purposes on the employees Form W-2, and Form 1099.
7) No employee may be granted an option allowing the purchase of more than
$25,000 of Company stock in any one year.

4. PURCHASE PRICE

The purchase price of the shares under each option shall be 87.5% of
the fair market value of the stock at the time such option is granted,
determined by the "Last Transaction" price (or price of the stock ion the last
trade) at which shares of the Company's stock are listed in the "NASDAQ National
Market System" quotation on 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. In any transaction to which the Internal Revenue
Code, or any comparable provision subsequently enacted is applicable, the
purchase price shall be determined in a manner consistent therewith.

5. LIMITATION ON THE RIGHT TO EXERCISE OPTION

(a) Except as otherwise provided by Articles 6 and 7 hereof, no option
shall be exercised unless at the time of such exercise the holder of the option
is in the employment of the Company or one of its subsidiaries. In no event
shall any option be exercised after the expiration of twenty-seven (27) months
from the date of granting such option. Each option will be exercisable during
such option period as follows: The Board of Directors (hereinafter "The Board")
from time to time as provided in Section 9 hereof, shall promulgate rules and
regulations for the exercise of these options including payment therefore by
payroll deduction and otherwise These rules and regulations shall be uniform in
their application as to all employees and shall be consistent with the
provisions of this plan and Section 423 of the Internal Revenue Code.

(b) No option granted under this plan shall be assignable or
transferable otherwise than by will or the laws of descent and distribution and
an option may be exercised during the lifetime of the holder thereof only by
him. The holder of an option or his

2
<PAGE> 57
legal representatives, legatees, or distributees, as the case may be, shall have
none of the rights of a shareholder with respect to any shares subject to such
option until such shares have been issued to him under the terms of this plan.
In no case may anyone exercise an option for a fraction of a share.

6. 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 he shall have been continuously so employed for one year from and after
the date of granting his option, he may, but only within three months next
succeeding such retirement or cessation of employment, exercise his option to
the extent that he was entitled to exercise it at the date of such retirement or
cessation. Leaves of absence duly authorized by the Company shall not be deemed
cessations of employment This Plan will not confer upon a holder of any option
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.

7. DEATH OF HOLDER

In the event of the death of the holder of any 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 option shall be exercisable
only within one year following such death and then only (a) by his estate or by
the person or persons who acquire the right to exercise such option by bequest
or inheritance or by reason of the death of the decedent, and (b) if and to the
extent that he was entitled to exercise the option at the date of his death.

8. ADJUSTMENT OF SHARES

In the event of any change as a result of recapitalization, merger,
consolidation, stock dividend, split-up, 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 he would have been
entitled to receive had he 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

3
<PAGE> 58
so made shall be effective and binding for all purposes of the
Plan.

9. ADMINISTRATION

The Plan shall be administered by the Board. 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. The
Board from time to time may adopt rules and regulations for carrying out the
Plan.

10. TERMINATION AND AMENDMENTS

The Plan shall continue in effect until such time as it is terminated
by the Board. The Board may from time to time make such changes in and additions
to the Plan as it may deem proper; provided that no change shall be made that
increases the total number of shares covered by the Plan or effects any change
in who may receive options under the Plan or materially increases the benefits
accruing to optionees hereunder or changes the Corporations whose employees will
be offered options, unless such change is authorized by the holders of the
common stock of the Company. Notwithstanding the foregoing, the Board may amend
the Plan without shareholder approval, to the extent necessary to cause employee
stock options granted under the Plan to meet the requirements of Section 423 of
the Internal Revenue Code. If any provision of the Plan conflicts with any
requirements of Section 423 of the Internal Revenue Code, then that provision of
the Plan shall be void and of no effect.

11. 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 an option 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.

12. EFFECTIVE DATES AND EXTINGUISHMENT OF RIGHTS

The Plan shall become effective upon its approval by the Stockholders.
The date of granting an option shall be the date of its approval by the Board
and the certificate evidencing such option shall bear that date.

4
<PAGE> 59
PROXY

[LOGO] FOR NOVEMBER 13, 1996 Proxy is Solicited By
ANNUAL MEETING OF SHAREHOLDERS the Board of Directors
3637 Lacon Road
Hilliard, Ohio 43026

The undersigned acknowledges receipt of the Notice and Proxy Statement dated
October 17, 1996, and hereby appoints as the Proxy Committee, C. Craig
Waldbillig, Robert E. Boyd, Jr., and Bradley P. Gould, or a majority of them or
any of them acting singly in the absence of the others, with full power of
substitution, the attorneys and proxies of the undersigned at the Annual Meeting
of Shareholders of Medex, Inc., to be held at the Columbus Marriott North, 6500
Doubletree Avenue, Columbus, Ohio 43229, November 13, 1996, at 9:00 A.M. Eastern
Standard Time and at adjournments thereof, and thereat to vote the shares which
the undersigned would be entitled to vote if personally present:
1. Election of Directors for the terms as detailed in the Proxy Statement.
/ / For all nominees listed below.
/ / Withhold authority to vote for all nominees listed below:

Thomas A. Helmrath, M.D.; Thomas M. Jordan, Jr.; John B. Joyce, Jr.

INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below:

- ---------------------------------------------------------------

2. To approve the Medex, Inc. Non-Employee Director Restricted Stock Option Plan
IV under which options may be granted to non-employee directors of the
Company.
/ / FOR / / AGAINST / / ABSTAIN

Continued and to be signed on other side

3. To approve amendments to the Medex, Inc. Key Employee Nonstatutory Stock
Option Plan.
/ / FOR / / AGAINST / / ABSTAIN

4. To approve amendments to the Medex, Inc. 1994 Executive Stock Option Plan
including an increase in the number of shares authorized under the Plan.
/ / FOR / / AGAINST / / ABSTAIN

5. To approve amendment of the Medex, Inc. Employees Stock Purchase Plan to
increase the number of shares authorized under the Plan.
/ / FOR / / AGAINST / / ABSTAIN

6. To approve the selection of Deloitte & Touche LLP as auditors for the year
ending June 30, 1997.
/ / FOR / / AGAINST / / ABSTAIN

7. In their discretion, the proxies are authorized to vote upon such other
business as may come before the Meeting or any adjournment thereof.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 3, 4, 5 and 6.

Signature(s) should agree with name(s)
as printed on this proxy.

If signing as attorney, executor,
administrator, trustee, or guardian,
please give your full title as such.

Please date, sign and return promptly in
the enclosed envelope.

DATE __________ , 1996

----------------------------------------
Signature

----------------------------------------
Signature if held jointly