<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ICU Medical, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] 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 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] 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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
ICU MEDICAL,INC.
951 Calle Amanecer
San Clemente, California 92673
--------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held April 23, 1999
-------------------------
This Annual meeting of Stockholders of ICU Medical, Inc. (the ''Company'') will
be held at the Country Side Inn and Suites, 35 Calle de Industrias, San
Clemente, California, Friday, April 23, 1999 at 10:00 a.m., Pacific Daylight
Time, for the following purposes:
1. To elect two directors of the Company to serve for a term of three
years and until their successors have been elected and qualified;
2. To consider a proposal to approve an amendment of the ICU Medical,
Inc. Amended and Restated 1993 Stock Incentive Plan to increase the number
of shares which may be purchased on the exercise of options granted under
the 1993 Plan;
3. To ratify the selection of Arthur Andersen LLP, independent
certified public accountants, as auditors for the Company for the year
ending December 31, 1999; and
4. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
The Board of Directors has determined that only holders of Common Stock of
record at the close of business on March 9, 1999 will be entitled to receive
notice of, and to vote at, the Annual Meeting or any adjournment thereof.
The Board of Directors
/s/ Francis J. O'Brien
Francis J. O'Brien, Secretary
San Clemente, CA
March 11, 1999
YOUR VOTE IS IMPORTANT
Please complete, sign, date and return the enclosed proxy promptly even
though you plan to attend the meeting in person. If you attend the meeting, you
may withdraw your proxy and vote in person.
THANK YOU FOR ACTING PROMPTLY
<PAGE>
ICU MEDICAL, INC.
951 Calle Amanecer
San Clemente, California 92673
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of ICU Medical, Inc. (the ''Company'') for use
at the Annual Meeting of Stockholders to be held April 23, 1999, at the Country
Side Inn and Suites, 35 Calle de Industrias, San Clemente, California at 10:00
a.m., Pacific Daylight Time, and at any adjournments thereof, for the purposes
set forth herein and in the accompanying Notice. The approximate date of mailing
of this Proxy Statement and the accompanying proxy is March 11,1999.
Proxy Information
A stockholder giving a proxy may revoke it at any time before it is
exercised by filing with the Secretary of the Company a written notice of
revocation or a duly executed proxy bearing a later date. The powers of the
proxy holders will be suspended if the person executing the proxy is present at
the Annual Meeting and elects to vote in person. Subject to such revocation or
suspension, all shares represented by each properly executed proxy received by
the Company will be voted in accordance with the instructions indicated thereon,
and if instructions are not indicated, will be voted in favor of (i) the
election of the nominees for director named in, or otherwise nominated as set
forth in, this Proxy Statement, (ii) amendment of the Amended and Restated 1993
Stock Incentive Plan (the "1993 Plan"), and (iii) the proposal to ratify the
selection of independent certified public accountants.
Record Date and Voting
As of March 9, 1999, the outstanding voting securities of the Company
consisted of 8,184,993 shares of $.10 par value Common Stock. Each stockholder
of record at the close of business on March 9, 1999, is entitled to one vote for
each share then held on each matter submitted to a vote of stockholders. The
presence in person or by proxy of holders of a majority of the issued and
outstanding Common Stock will constitute a quorum for the transaction of such
business as shall properly come before the meeting.
Generally, stockholder approval of a matter, other than the election of
directors, requires the affirmative vote of a majority of the shares present in
person or represented by proxy and entitled to vote on the matter. Directors are
elected by a plurality of the votes of the shares present in person or by proxy
and entitled to vote on the election of directors. Shares voted to abstain on a
matter will be treated as entitled to vote on the matter and will thus have the
same effect as "no" votes. Broker non-votes are not counted as entitled to
vote on a matter in determining the number of affirmative votes required for
approval of the matter, but are counted as present for quorum purposes. The term
"broker non-votes: refers to shares held by a broker in street name which are
present by proxy but are not voted on a matter pursuant to rules prohibiting
brokers from voting on non-routine matters without instructions from the
beneficial owner of the shares. The election of directors and ratification of
the selection of independent certified public accountants are generally
considered to be routine matters on which brokers may vote without instructions
from beneficial owners.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as to shares of Common Stock
owned as of March 9, 1999, by (i) each person who, insofar as the Company has
been able to ascertain, beneficially owned more than five percent of the
outstanding Common Stock; (ii) each director, (iii) each nominee for election as
a director; and (iv) all directors and officers as a group. Unless otherwise
indicated in the footnotes following the table, and subject to community
property laws where applicable, the Company believes that the persons as to whom
the information is given have sole voting and investment power over the shares
listed as beneficially owned. The business address of the George A. Lopez, M.D.
Second Family Limited Partnership, George A. Lopez, M.D. and Diana K. Lopez,
M.D. is 951 Calle Amanecer, San Clemente, California 92673.
1
<PAGE>
<TABLE>
<CAPTION>
Shares Percent
Owned of
Beneficially Class(1)
------------------- --------------
<S> <C> <C>
Wasatch Advisors................................................................. 1,741,806(8) 18.5%
68 South Main Street, Salt Lake City, UT 84101
George A. Lopez, M.D............................................................. 1,882,397(3) 20.0%
George A. Lopez, M.D. Second Family Limited Partnership.......................... 791,742(2) 8.4%
Diana K. Lopez, M.D.............................................................. 1,053,748(4) 11.2%
FMR Corporation.................................................................. 553,000(8) 5.9%
82 Devonshire Street, Boston, MA 02109
Dimensional Fund Advisors Inc.................................................... 423,500(8) 4.5%
1299 Ocean Avenue, Santa Monica, CA 90401
Jack W. Brown.................................................................... 17,000(5) *
John J. Connors.................................................................. 14,500(5) *
Michael T. Kovalchik III, M.D.................................................... 20,275(6) *
Richard H. Sherman, M.D.......................................................... 78,834(5) 1.0%
Robert S. Swinney, M.D........................................................... 20,275 *
All officers and directors as a group (8 persons)................................ 2,234,040(7) 23.7%
---------------
* Less than one percent
</TABLE>
(1) Based on total shares of Common Stock outstanding plus outstanding options
to acquire stock currently exercisable or exercisable within 60 days held by
the beneficial owner(s) whose percent of outstanding stock is calculated.
(2) George A. Lopez, M.D. and Diana K. Lopez, M.D., his wife, are the general
partners of the George A. Lopez, M.D. Second Family Limited Partnership (the
"Partnership") and hold a one- percent general partnership interest in the
Partnership. As general partners, they share power to vote and power to
dispose of the 791,739 shares owned by the Partnership and may be deemed to
be beneficial owners of such shares. Trusts for the benefit of the Lopez'
children, the Christopher George Lopez Children's Trust and the Nicholas
George Lopez Children's Trust, own a 99% limited partnership interest in the
Partnership. The Drs. Lopez are not trustees of and have no interest in
their children's Trusts. Except to the extent of their undivided one
percent general partnership interest in the assets of the Partnership, the
Drs. Lopez disclaim any beneficial ownership of the shares owned by the
Partnership.
(3) Includes options to acquire 1,090,655 shares. Also includes the 791,742
shares owned by the George A. Lopez, M.D. Second Family Limited Partnership,
as to which shares Dr. Lopez disclaims any beneficial ownership except to
the extent described in Note (2). Does not include 12,006 shares owned by
his wife, as to which Dr. Lopez disclaims beneficial ownership, and as to
which he has no voting and investment power. Also does not include 250,000
held by Dr. Lopez' wife as Trustee of the Lopez CRT #1 for the benefit of
Dr. Lopez and his wife, as to which shares Dr. Lopez has no voting or
investment power.
(4) Includes 12,006 shares owned by Diana K. Lopez, M.D. and 250,000 shares held
by her as trustee of the Lopez CRT #1 for the benefit of Diana K. Lopez,
M.D. and George A. Lopez, M.D. Also includes 791,742 shares owned by the
Partnership as to which Dr. Lopez disclaims any beneficial ownership except
to the extent described in Note (2).
(5) Includes options to acquire 7,500 shares.
(6) Includes options to acquire 7,500 shares. Includes 1,700 shares held by Dr.
Kovalchik as custodian for his children. Does not include 1,650 shares
beneficially owned by his wife. Dr. Kovalchik disclaims beneficial ownership
of all of the shares held as custodian and the shares beneficially owned by
his wife.
(7) Includes options to acquire 1,231,064 shares.
(8) Information included solely in reliance information included in a Statement
on Schedule 13D on Form 13G filed with the Securities and Exchange
Commission by the indicated holder.
2
<PAGE>
ELECTION OF DIRECTORS
Nominees and Directors
Two directors, of the six directors currently constituting the Board of
Directors, are to be elected at the Annual Meeting and to hold office until the
year 2002 Annual Meeting and until their successors are elected and qualified.
The Company's Board of Directors is divided into three classes. Each year a
different class of directors is elected at the Annual Meeting to a three-year
term.
In the election of directors, the proxy holders intend to vote for the
election of John J. Connors and Michael T. Kovalchik, III, M.D., who are now
members of the Board and whose current term of office is expiring. It is not
anticipated that the nominees will decline or be unable to serve as directors.
If, however, that should occur, the proxy holders will vote the proxies in their
discretion for any nominee designated to fill the vacancy by the present Board
of Directors.
<TABLE>
<CAPTION>
Current
Director Term
Name Age since Expires Principal Occupation
- ------------------------------------ ----- --------- ----------- ---------------------------------------------------
<S> <C> <C> <C> <C>
George A. Lopez, M.D................ 51 1984 2001 Chairman of the Board, President and Chief
Executive Officer of the Company
Jack W. Brown....................... 59 1992 2000 Chairman of the Board and President of Gish
Biomedical, Inc., disposable medical devices
John J. Connors..................... 59 1992 1999 Patent Attorney
Michael T. Kovalchik III, M.D....... 53 1989 1999 Physician and Director of the Dialysis Unit,
Charlotte Hungerford Hospital, Torrington,
Connecticut
Richard H. Sherman, M.D............. 52 1990 2000 Physician and Director of the Cardiology
Laboratory and Cardiac Rehabilitation for Milford
Hospital, Milford, Delaware
Robert S. Swinney, M.D.............. 53 1998 2001 Physician and member of the faculty of the Los
Angeles County-University of Southern California
Medical Center
</TABLE>
Dr. Lopez is the founder of the Company and has served as Chairman of the
Board, President and Chief Executive Officer for more than five years. He also
served as Secretary and Chief Financial Officer from January 1994 to October
1994. Dr. Lopez has held various offices and served as a director of the Company
since its founding in 1984 with some interruptions in service.
Messrs. Brown and Connors and Drs. Kovalchik, Sherman and Swinney have been
engaged in their current occupations for more than five years. Mr. Connors
served as Secretary, Treasurer and Chief Financial Officer of the Company from
April 30, 1996 until November 1, 1996 on an interim basis during a search for a
candidate to fill those positions permanently. Mr. Connors previously served as
a director from December 1988 to July 1989.
Dr. Swinney previously served as a director from 1989 to October 1995, and
was elected to the Board on June 10, 1998, filling the vacancy that existed
since he had last served on the Board.
3
<PAGE>
Special Committees and Attendance at Meetings
The Board of Directors has an Audit Committee, which consists of Messrs.
Brown and Connors and Dr. Kovalchik. The Audit Committee makes recommendations
regarding the selection of independent public accountants, reviews reports from
the Company's independent public accountants and reviews with them the scope and
results of the audit engagement. The Audit Committee met twice in 1998.
The Board of Directors has a Compensation Committee of the Board,
consisting of Mr. Brown and Drs. Kovalchik and Sherman. The Compensation
Committee, as more fully described in the Compensation Report, approves salary
practices for executive personnel, establishes the compensation of executive
officers and authorizes the grant of stock options. The Compensation Committee
met six times in 1998.
During 1998, the Board met 10 times. Each director attended more than 75%
of the total of all meetings of the Board and any committees on which he serves.
Executive Compensation
Compensation Committee Report
The Compensation Committee (the ''Committee'') consists of three directors
who are not employees or former employees of, or consultants to, the Company.
The Committee approves salary practices for executive personnel, reviews the
performance of the Company and the executive officers, sets performance
objectives, establishes the compensation of executive officers, including the
Chief Executive Officer, and authorizes the grant of options under the 1993
Stock Incentive Plan.
The Company's policy in compensating executive officers is to establish
methods and levels of compensation that will provide strong incentives to
promote the profitability and growth of the Company and reward superior
performance and that are sufficiently competitive to attract, retain and
motivate highly competent management personnel. Compensation of executive
officers includes base salary, performance-based incentive bonuses and stock-
based programs.
The Committee has adopted an executive compensation policy which provides a
base salary and, if certain performance objectives are met, incentive bonuses
and stock options which are awarded and paid semi-annually. The Committee
considers total compensation paid to executive officers holding comparable
positions in comparable companies and for 1998 set base salaries of the
Company's executive officers at low percentiles of the range of comparable
compensation. In addition to the base salary, upon achievement of performance
objectives established by the Committee, officers received bonuses in amounts
ranging from 25% to 75% of their base salaries. The policy also provided for
award of stock options ranging in value from 25% to 75% of base salary, based on
an option valuation model, which were awarded as described below. If
performance objectives are achieved and officers receive the entire amount of
incentive compensation available to them, their compensation could be at the
highest percentiles of compensation for comparable positions. The Committee
believes that performance-based and stock-based compensation serve to align the
interests of the executive officers with the interests of the Company's
stockholders.
Stock options to be received by officers pursuant to the executive
compensation policy described above are awarded under the 1993 Plan. Options
granted under the 1993 Plan become exercisable on the achievement of performance
objectives established by the Committee or 10 years from the date of grant. The
1993 Plan and the performance objectives are designed so that the options will
motivate the officers toward and reward them for achievement of the performance
objectives.
In November 1997, the Committee accelerated option grants to officers of
the Company, other than Dr. Lopez, by a one-time grant of options covering the
estimated number of shares which otherwise would be covered by options that the
Company would expect to award over a five year period under the executive
compensation policy described above. The options were granted with the
understanding that no additional options would be granted to the recipients
under the executive compensation policy for five years. At the time that the
options were granted, the Committee established a series of performance
objectives, which, if met, would cause the options to become exercisable earlier
than 10 years from the date of grant. It is expected that the performance
objectives will
4
<PAGE>
not be met until at least several years after the expected awards normally would
have been made. The Committee further provided that options could not be
exercised as to more than 20% cumulatively of the covered shares each year from
1998 through 2002. A similar award was made to Dr. Lopez in January 1998, but
related only to options that might have been awarded in 1998.
The Committee guaranteed the 1997 and 1998 incentive bonuses for one
officer without regard to the achievement of the performance goals established
under the executive compensation policy. The bonuses were guaranteed in
recognition of the fact that the officer, who had only recently joined the
Company, would require time to acquaint himself with the Company's operations
and affairs before he could be expected to contribute significantly to the
achievement of the performance objectives.
Bonuses were paid to officers who were deemed to have met the performance
objectives for the first and second halves of 1998. Options were granted to Dr.
Lopez in January 1998 for the estimated number of shares which otherwise would
be covered by options that the Company would expect to award in 1998 for the
same reasons that the November 1997 options were granted to the other executive
officers. No options were granted to officers, other than Dr. Lopez, as a
result of achievement of the performance objectives for 1998 because of the
grants awarded in November 1997 as described above.
The base salary paid to Dr. Lopez in 1998 was set by the Committee in
accordance with the Company's executive compensation policy at a low percentile
of the range of total compensation paid to Chief Executive Officers of companies
that the Committee deemed to be comparable to the Company. Under the executive
compensation policy, Dr. Lopez received incentive bonuses of 75% of his base
salary. In January 1998, Dr. Lopez received certain options, which would have
been granted to him in 1997 but were not granted because of limitations on
aggregate annual option grants. The executive compensation policy sets the
incentive bonuses and the value of stock options to be awarded to Dr. Lopez at a
higher percentage of his base salary than that awarded to other officers. The
Committee believes that in view of the Chief Executive Officer's overall
responsibility for the success of the Company, it is appropriate that a larger
portion of his compensation be contingent on performance.
In 1999, the Committee amended its overall executive compensation policy.
Officers' total compensation will remain at the highest percentiles for
comparable positions if performance objectives are achieved; however, base
salaries will be set to equal a higher percentage of total compensation than in
the past because the Committee believed base salaries were low in relation to
base salaries of other companies.
March 9, 1999
COMPENSATION COMMITTEE
Jack W. Brown
Michael T. Kovalchik III, M.D.
Richard H. Sherman, M.D.
5
<PAGE>
Summary of Cash and Certain Other Compensation
The following table shows the compensation earned for the past three years
by each of the Company's executive officers whose 1998 compensation exceeded
$100,000 (the "named executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
---------------------------------- Securities Underlying
Name and Position Year Salary ($) Bonus(1) Options(#)
- ----------------------------------------- ------ ------------- --------------- ----------------------------
<S> <C> <C> <C> <C>
George A. Lopez.......................... 1998 $ 166,000 $ 124,500 750,000
Chairman of the Board, 1997 166,000 124,500 750,000(2)
President and Chief Executive Officer 1996 149,990 --- 750,000(3)
Francis J. O'Brien (5)................... 1998 150,000 65,000 2,000
Secretary, Treasurer and 1997 150,000 125,150(4)
Chief Financial Officer 1996 25,000 8,333 45,509
Richard A. Costello (6).................. 1998 100,000 115,870 2,000
Vice President of Sales 1997 102,185 55,750 69,111
Evelyn L. Foss........................... 1998 95,000 47,500 2,000
Vice President of Marketing 1997 117,657 47,500 105,949
1996 95,122 --- 15,000
</TABLE>
(1) Bonus amounts for 1997 and 1998 represent bonuses earned during the 12-
month period ended December 31, 1997 and 1998, respectively, a portion of
which was paid in 1998 and 1999, respectively. Amounts are included in the
year earned rather than the year actually paid.
(2) Represents the cancellation and granting of 750,000 options.
(3) Represents the grant of 660,000 options and the cancellation and granting
of 90,000 grants.
(4) Represents the grant of 124,150 options and the cancellation and granting
of 1,000 options.
(5) Mr. O'Brien became Chief Financial Officer on November 1, 1996.
(6) Mr. Costello was elected Vice President of Sales on December 18, 1997.
Stock Option Grants
Options to purchase Common Stock of the Company were granted in 1998 to
employees under the 1993 Plan, which provides for the grant of options to
purchase up to 3,275,000 shares. The exercise price of options granted under
the 1993 Plan is the fair market value of the Common Stock on the date of grant.
Options granted under the 1993 Plan expire eleven years from issuance and are
time-accelerated options which vest upon the earlier of the Company achieving
specific operating performance levels or ten years from the date of grant.
6
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at
Assumed Annual Rates
of
Stock Price
Appreciation
Individual Grants for Option Term
---------------------------------------------------------------------- ------------------------
Number of % of Total Exercise
Securities Options or Base
Underlying Granted to Price
Options Employees Per Share Expiration
Name Granted (#) in 1998 ($/Sh) Date 5% ($) (1) 10% ($) (1)
- ------------------------ --------------- --------------- -------------- ---------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
George A. Lopez, M.D. 750,000 82% $ 12.25 1/2/09 $ 6,626,243 $ 17,025,510
Francis J. O'Brien 1,000 * 12.25 1/2/09 8,702 22,701
1,000 * 14.69 7/1/09 10,433 27,218
Richard A. Costello 1,000 * 12.25 1/2/09 8,702 22,701
1,000 * 14.69 7/1/09 10,433 27,218
Evelyn L. Foss 1,000 * 12.25 1/2/09 8,702 22,701
1,000 * 14.69 7/1/09 10,4 27,218
- ---------------
* Less than one percent
</TABLE>
(1) The rates of stock appreciation reflected in the table are assumed solely
for the purpose of compliance with the rules of the Securities and Exchange
Commission relating to the disclosure of executive compensation. The
Company's Common Stock has at times appreciated at rates substantially
different than the assumed rates and at other times the value of the Common
Stock has declined. Neither the assumed appreciation rates nor the actual
changes in the share value since the dates of option grants are necessarily
indicative of any future value of the Common Stock. The actual realizable
value of the options may be substantially greater or less than that
reflected in the table depending on the actual changes in the share value
during the options' terms.
Stock Option Exercises and Holdings
AGGREGATED OPTION EXERCISES IN 1998 AND YEAR-END OPTION VALUES
The following table contains information about stock options exercised
during 1998, and stock options held at December 31, 1998, by the named executive
officers of the Company.
<TABLE>
<CAPTION>
Value of Unexercised
Shares Number of Unexercised In-the-Money Options at
Acquired Value Options at Year-End(#)(1) Year-End($)(1)
Name on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
- ---------------------------- ------------- ------------ --------------------------- ----------------------------------
<S> <C> <C> <C> <C>
George A. Lopez, M.D........ 262,008 $ 1,687,688 298,000 / 1,510,000 $ 4, 116,125 / $ 14,737,500
Francis J. O'Brien.......... --- --- 1,000 / 170,659 13,688 / 2,030,819
Richard A. Costello......... --- --- 4,000 / 91,637 37,625 / 1,107,874
Evelyn L. Foss.............. --- --- 0 / 152,949 0 / 1,810,625
- ----------------------------
</TABLE>
(1) Exercisable options and related values exclude options (and related value)
that became exercisable in January 1999 based on achievement of operating
performance goals as of December 31, 1998 as follows: Dr. Lopez 792,655
($7,743,386), F. O'Brien 45,509 ($651,410), R. Costello 28,607 ($409,693), E.
Foss 57,359 ($758,223). Those options are included with unexercisable
options at December 31, 1998.
7
<PAGE>
Performance Graph
The following graph shows the total stockholder return on the Company's
Common Stock based on the market price of the Common Stock from January 1, 1993
to December 31, 1998 and the total returns of the Nasdaq Stock Market National
Market Tier Index and Common Stocks of a peer group selected by the Company for
the same period.
COMPARISON OF TOTAL RETURN FROM JANUARY 1, 1994 TO DECEMBER 31, 1998
AMONG ICU MEDICAL, INC., THE NASDAQ STOCK MARKET INDEX AND PEER GROUP
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) ICU Medical, Inc. Nasdaq Peer Group
- --------------------- ----------------- --------- ----------
<S> <C> <C> <C>
12/31/93 $100.0 $100.0 $100.0
12/31/94 $ 95.4 $ 97.8 $ 88.9
12/31/95 $104.6 $138.3 $193.0
12/31/96 $ 48.5 $170.0 $175.2
12/31/97 $ 76.2 $208.3 $122.6
12/31/98 $135.4 $293.5 $114.5
</TABLE>
Assumes $100 invested on January 1, 1994 in the Company's Common Stock, the
Nasdaq Stock Market National Market Tier Index and the Peer Group.
The companies in the peer group selected by the Company are Gish
Biomedical, Inc., Luther Medical Products, Inc., Merit Medical Systems, Inc.,
Utah Medical Products, Inc. and Vital Signs, Inc. The basis for the selection of
the companies in the peer group is that, like the Company, they are all small to
mid-size producers of medical products for use in intravenous systems. The peer
group for the graph above has been changed from the peer group for the 1997
performance graphs, by including Merit and Vital Signs in place of Marquest
Medical Products, Inc. and Quest Medical, Inc. because there has been no public
market for Marquest and Quest shares since their acquisitions prior to December
31, 1998.
Directors' Compensation
During 1998, the Company paid directors who were not employees of the
Company an annual retainer of $10,000 plus $1,000 per day for attendance at
meetings of the Board and $500 if the meeting is conducted telephonically. Pay
for attendance at meetings of Committees of the Board is $750 per day, and $375
if the meeting is conducted telephonically. In addition, under the Directors'
Stock Award Plan, the Company automatically awards 1,000 shares of Common Stock
to each non-employee director on the date of each Annual Meeting.
8
<PAGE>
Employment Agreements
The Company has an employment agreement with each named executive officer,
which provides for an annual base salary and a bonus payable in cash and options
to acquire the Company's Common Stock under the 1993 Plan based on achievement
of specified performance goals. Unless earlier terminated, the employment
agreements expire on June 30, 1999, at which time they may be renewed for
successive six-month periods. The provisions for the bonus payable in options
to acquire the Company's Common Stock for all except Dr. Lopez was, in effect,
superceded by an award of stock options in November 1997 in place of options
that might have been awarded over the succeeding five years. A similar award
was made to Dr. Lopez in January 1998, but related only to options that might
have been awarded in 1998. Options vest only upon the earliest of the Company
achieving specific operating performance levels or ten years from the date of
grant.
Certain Transactions and Relationships
The Company has, from time to time, made personal loans to Richard A.
Costello, who became Vice President of Sales of the Company on December 18,
1997. The largest amount outstanding during 1998 was $67,652. Outstanding
amounts bore interest at 4% to 7%. $30,000 of the loans were forgiven as a
bonus to Mr. Costello in 1998 and the balance was repaid on February 17, 1999.
In January, 1999 the Company agreed to make a loan secured by a second mortgage
of up to $150,000 to Mr. Costello to assist him in acquiring a home.
APPROVAL OF ICU MEDICAL, INC. AMENDED 1993 STOCK INCENTIVE PLAN
General
On January 30, 1993, the Board of Directors adopted, subject to stockholder
approval, the ICU Medical, Inc. 1993 Stock Incentive Plan under which 1,275,000
(after adjustment for a 50% stock dividend payable March 31, 1993) shares of
Common Stock were reserved for issuance upon the exercise of options. That Plan
was approved by the stockholders on April 21, 1993. On April 3, 1996, the Board
of Directors adopted the Amended and Restated 1993 Stock Incentive Plan (the
"1993 Plan"). That amendment and restatement increased the number of shares
reserved for issuance on the exercise of options from 1,275,000 to 3,275,000 and
limited the number of shares which may be subject to options granted to any one
employee in any one year period to 750,000. That amendment and restatement of
the 1993 Plan was approved by the stockholders on June 4, 1996. The 1993 Plan
authorizes the grant of stock options from time to time to key employees of the
Company.
The purpose of the 1993 Plan is to assist the Company in attracting,
motivating and retaining key employees and to provide long-term, performance-
based incentives that will further its development and success and unify the
interests of key employees and stockholders through increased employee stock
ownership.
On October 1, 1998 the Board of Directors amended the 1993 Plan, subject to
stockholder approval, to increase the number of shares reserved for issuance on
the exercise of options from 3,275,000 to 4,775,000. That amendment will permit
the Company to continue to grant options to attract, motivate and retain key
employees.
Through February 28, 1999, the Company has issued and sold an aggregate of
414,207 shares of Common Stock on the exercise of options granted under the 1993
Plan, and options to purchase an additional 2,752,474 shares of Common Stock are
currently outstanding under the 1993 Plan. The number of additional shares for
which options could be granted under the 1993 Plan is limited to 108,319.
Because the 1993 Plan will continue in existence until January 2003, unless
sooner terminated, the increase in the number of shares for which options can be
granted will permit the Company to continue to grant additional options for a
number of years into the future.
9
<PAGE>
Description of the Amended and Restated 1993 Plan
The following summary of certain provision of the 1993 Plan is qualified in
its entirety by the full text of the 1993 Plan, a copy of which is attached as
Exhibit "A" to this Proxy Statement.
Eligibility and Grant of Options. Certain employees of the Company, who
currently number approximately 166, are eligible to receive options granted
under the 1993 Plan. Each new employee, other than the employees determined to
be "Ineligible Nonresidents," as defined in the 1993 Plan, is deemed a key
employee and automatically receives an option to purchase 1,000 shares on the
first day of employment. Thereafter, each employee, other than Ineligible
Nonresidents, automatically receives an option to purchase 1,000 shares every
fifth year on the anniversary of the employee's first day of employment as long
the employee remains continuously employed. The exercise price of options
granted automatically is the fair market value of the Common Stock on the
employee's first day of employment or such fifth anniversary date.
Except for options granted automatically on the first day and fifth
anniversaries of employment, the Compensation Committee of the Board of
Directors (the "Committee") will determine which employees of the Company will
be granted additional options. The Committee will also determine the number of
shares subject to each option and the price, terms and conditions, consistent
with the 1993 Plan, of each option, except to the extent such matters are
determined automatically for options granted automatically on the first day of
employment. In some cases, officers of the Company are entitled by terms of
their employment agreements to receive semiannual grants of options having a
specified grant date value, determined by means of an option valuation model, if
certain predetermined performance objectives are achieved. See "Election of
Directors Executive Compensation." The number of shares subject to options
granted to any one employee in any calendar year may not exceed 750,000.
The Committee may require as a condition to the grant of an option to a
participant that the participant surrender for cancellation some of all of any
previously granted unexercised options held by such participant. An option
granted upon such surrender may have a lower or higher exercise price, cover
more or fewer shares and have different terms, than the surrendered options.
Exercise Price and Payment. The exercise price of options granted under
the 1993 Plan may not be less than 100% of the fair market value of the Common
Stock on the date of grant. The closing price of the Common Stock on the Nasdaq
Stock Market National Market Tier on February 28, 1999 was $21.00. The exercise
price may be paid in cash by delivery of a bank cashier's or certified check or
at the discretion of the Committee, a check issued by a broker-dealer which is a
member of the New York Stock Exchange, Incorporated, by delivery of shares of
the Company's Common Stock already owned by the participant, by delivery of a
full-recourse promissory note of the participant of any combination of the
foregoing.
Exercise of Stock Options. The Committee from time to time establishes
performance objectives for the vesting of options, which may be expressed in
terms of the Company's operating results, such as sales, sales of particular
products, net income or operating ratios, or may be stated in terms of the
performance of individual participants. Upon achievement of the performance
objectives related to specific options, those options will become exercisable in
such installments as the Committee determines at the time of grant. If the
performance objectives are not achieved, options will not be exercisable until
10 years and one day after the date of grant. Unexercised options will expire
11 years after the date of grant.
Options will automatically become fully exercisable in the event of a
hostile tender offer for voting securities of the Company which could result in
any person or group controlling sufficient voting securities to elect a majority
of the directors to be elected at any stockholders meeting. Options also will
automatically become fully exercisable if any person or group who first becomes
a beneficial owner of more than five percent of the Company's outstanding voting
securities after stockholder approval of the 1993 Plan commences a proxy
contest.
Options may be exercised for a period of 30 days after a participant's
termination of employment with the Company for any reason other than normal
retirement, permanent disability or death. Options may be exercised for 90 days
after normal retirement or one year after termination of employment because of
permanent disability. Options may be exercised for a period of one year after
the death of a participant who dies while an employee or
10
<PAGE>
within 90 days after termination of employment because of retirement or
permanent disability by the participant's estate of any person who acquired the
right to exercise the options by will or the laws of the descent and
distribution. Except in the case of certain change in control events described
below, options exercised after a participant ceases to be an employee may only
be exercised to the extent they were exercisable at the date employment ceased.
Change in Control. If within one year following a change in control of the
Company, a participant's employment is terminated involuntarily for any reason
or voluntarily after a material lessening of his or her duties or a material
reduction in his or her base salary any option held by such optionee shall
become immediately and fully exercisable, unless it became fully exercisable
before such change in control. A change in control is defined in the 1993 Plan
as an acquisition of the Company not approved by the Board of Directors in
advance if a majority of the directors of the successor company after the
acquisition did not comprise a majority of the Company's Board of Directors
before the acquisition, or a change in a majority of the Company's Board of
Directors effected by the vote of a person or group who acquires sufficient
voting securities of the Company to do so after stockholder approval of the 1993
Plan.
Administration and Operation of the 1993 Plan. The Amended and Restated
1993 Plan is administered by the Committee. In addition to determining the
terms of and granting options, the Committee will interpret the 1993 Plan, adopt
any rules and regulations necessary for its proper administration and take any
other action it deems necessary or advisable for the 1993 Plan.
Adjustment of Shares. The 1993 Plan provides for adjustments to the number
of shares subject to the 1993 Plan, the exercise price and number of shares
subject to outstanding options and the Option Limit in the event of any stock
dividend, recapitalization, split-up, combination or exchange of the Common
Stock. In the event that the Company distributes to its stockholders shares of
a subsidiary of the Company, any option outstanding under the Plan at the date
of such distribution shall automatically become an option to purchase the number
of shares of Common Stock of the Company as to which the option has not yet been
exercised plus, for each such unexercised option share, the same number of
shares or fraction of a share of the subsidiary as was distributed in respect of
one share of Common Stock of the Company. In the event of liquidation or
dissolution, or a corporate reorganization in which the Company is not the
survivor (other than a reorganization resulting from a change in control), the
options terminate unless the Committee accelerates the time of exercise to a
date prior to such event or unless the options are assumed by, and replaced by
options of, the Company's successor. If options expire or terminate without
having been exercised in full, the unpurchased shares may again be subject to
additional options granted under the 1993 Plan. No options will be granted
under the 1993 Plan after January 30, 2003.
Federal Income Tax Consequences
The grant of an option under the 1993 Plan has no immediate tax consequence
to the Company or to the participant. Upon the exercise of an option, the
participant generally is treated as having received compensation taxable as
ordinary income (subject to withholding) in an amount equal to the excess over
the exercise price of the fair market value of the shares at the time of
exercise. (Special rules may apply to a participant subject to Section 16(b) of
the Securities Exchange Act of 1934, as amended.) The Company will be entitled
to a deduction in the same amount. The tax basis of the shares received by the
participant is their fair market value on the exercise date. Upon a subsequent
disposition of any shares purchased on the exercise of options, any difference
between the tax basis of the shares and the amount realized on the disposition
is treated as long-term capital gain or loss, depending on the holding period of
the shares.
Exercise of options which become exercisable as a result of a change in
control could also result in an excise tax on the participant's option income
(subject to withholding) and a loss of the Company's deduction. If a
participant uses shares to satisfy withholding taxes, the participant may
recognize income at ordinary income rates and may not be entitled to offset the
tax basis in those shares against such ordinary income.
11
<PAGE>
Vote Required to Approve the Amendment to the 1993 Plan
Approval of the Amendment to the 1993 Plan will require the affirmative
vote of a majority of the votes cast on the proposal at the Annual Meeting.
The 1993 Plan includes provisions, described above, which make options
fully exercisable in the event of a tender offer or proxy contest and which
permit options to be exercised in full under certain circumstances following a
change in control. The Board of Directors believes that these provisions are
appropriate to safeguard the interests of participants in the event of changes
in the Company's policies or priorities which might be implemented by new
management. These provisions could, however, have the effect of discouraging
takeover attempts or delaying or preventing a change in control of the Company.
The Board of Directors recommends that stockholders vote FOR adoption of the
Amendment to the 1993 Plan
SELECTION OF AUDITORS
The Board of Directors of the Company has appointed Arthur Andersen LLP,
independent certified public accountants, as auditors of the Company for the
year ending December 31, 1999, and has further directed that management submit
the selection of auditors for ratification by the stockholders at the Annual
Meeting. Arthur Andersen LLP has audited the Company's financial statements for
the last nine years. Representatives of Arthur Andersen LLP are expected to be
present at the Annual Meeting and will have an opportunity to make a statement
if they so desire and respond to appropriate questions.
OTHER MATTERS
The Company knows of no other matters to be brought before the Annual
Meeting. If any other matters are properly presented for action, the persons
named in the accompanying proxy intend to vote on such matters in their
discretion.
ANNUAL REPORT
The Company's Annual Report for the year ended December 31, 1998, is
included in the document of which this Proxy Statement is a part. Any
stockholder who has not received a copy may obtain one by writing to the
Company.
THE COMPANY WILL ALSO PROVIDE, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT
ON FORM 10-K, INCLUDING FINANCIAL STATEMENTS AND RELATED SCHEDULES, FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION UPON REQUEST IN WRITING FROM ANY PERSON
WHO WAS A HOLDER OF RECORD, OR WHO REPRESENTS IN GOOD FAITH THAT HE OR SHE WAS A
BENEFICIAL OWNER, OF COMMON STOCK OF THE COMPANY ON MARCH 9, 1999. ANY SUCH
REQUEST SHALL BE ADDRESSED TO THE SECRETARY OF THE COMPANY AT 951 CALLE
AMANECER, SAN CLEMENTE, CA 92673.
NOMINATION OF DIRECTORS AND
SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder who intends to nominate persons for election as directors
at an annual meeting shall, not less than 50 days nor more than 75 days prior to
the date of the annual meeting, deliver a notice to the Secretary of the Company
setting forth (a) as to each nominee whom the stockholder proposes to nominate
for election or reelection as a director, (i) the name, age, business address
and residence address of the nominee, (ii) the principal occupation or
employment of the nominee, (iii) the class and number of shares of capital stock
of the corporation which are beneficially owned by the nominee and (iv) any
other information concerning the nominee that would be
12
<PAGE>
required under the rules of the Securities and Exchange Commission in a proxy
statement soliciting proxies for the election of such nominee; and (b) as to the
stockholder giving the notice, (i) the name and record address of the
stockholder and (ii) the class and number of shares of capital stock of the
Company which are beneficially owned by the stockholder. Such notice shall
include a signed consent of each such nominee to serve as director of the
Company, if elected. The Company may require any proposed nominee to furnish
such other information as may reasonably be required by the Company to determine
the eligibility for such proposed nominee to serve as a director of the Company.
Any stockholder who intends to propose any business at a meeting shall, not less
than 50 days nor more than 75 days prior to the date of the meeting, deliver a
notice to the Secretary of the Company setting forth as to each matter the
stockholder proposes to bring before the meeting (i) a brief description of the
business to be brought before the meeting and the reasons for conducting the
business at the meeting, (ii) the name and record address of the stock holder
giving the notice, (iii) the class and number of shares of capital stock of the
Company that are beneficially owned by the stockholder, and by any other
stockholders known by the stockholder giving the notice to be supporting the
proposal and (iv) any material or financial interest of the stockholder in such
business. A proposal that a stockholder wants the Company to include in the
Proxy Statement for the 2000 Annual Meeting must be received by the Company at
its principal executive offices by November 12, 1999, to be included in the
Proxy Statement for that meeting, and all other conditions for such inclusion
must be satisfied.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and persons who own more than 10% of the Company's Common
Stock to file reports on prescribed forms regarding ownership of and
transactions in the Common Stock with the Securities and Exchange Commission and
to furnish copies of such forms to the Company. Based solely on a review of the
forms received by it, the Company believes that with respect to 1998 the
following Section 16(a) filings were not filed on a timely basis: Form 4s for
Richard H. Sherman, M.D. and Jesus Mejia, Trustee of the Christopher George
Lopez Children's Trust and Nicholas George Lopez Children's Trust, for one
filing each.
SOLICITATION OF PROXIES
The cost of this solicitation of proxies will be borne by the Company.
Solicitations will be made by mail, telephone or telegram and personally by
directors, officers and other employees of the Company, but such persons will
not receive compensation for such services over and above their regular
salaries. The Company will reimburse brokers, banks, custodians, nominees and
fiduciaries holding stock in their names or in the names of their nominees for
their reasonable charges and expenses in forwarding proxies and proxy material
to the beneficial owners of such stock.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Francis J. O'Brien
Francis J. O'Brien, Secretary
13
<PAGE>
EXHIBIT A
Annotated to show
amendments adopted:
January 31, 1997;
March 4, 1998; and
October 31, 1998
ICU MEDICAL, INC.
AMENDED AND RESTATED 1993 STOCK INCENTIVE PLAN
1. Purpose
The purpose of the Amended and Restated ICU Medical, Inc. 1993 Stock
Incentive Plan is to assist ICU Medical, Inc. in attracting, motivating and
retaining key Employees and to provide long-term, performance-based incentives
that will further its development and success and will unify the interests of
key Employees and stockholders through increased Employee Stock ownership.
2. Definitions
For purposes of this Plan:
"Beneficial Ownership" has the meaning set forth in Rule 13d-3 under the
Exchange Act.
"Board" means the Board of Directors of the Company.
"Change in Control" means (a) an acquisition of the Company by means of a
merger or consolidation of the Company with or into another corporation or a
purchase of substantially all of the Company's assets, not approved in advance
by a resolution of the Board, following which a majority of the board of
directors of the successor or acquiring corporation is not constituted of
individuals who constituted a majority of the Company's Board immediately prior
to the merger, consolidation or purchase of assets, or (b) a change in the
composition of a majority of the members of the Company's Board effected by the
vote of a person who, following the original approval of this Plan by the
Company's stockholders in 1993, attains Beneficial Ownership of a number of
voting securities of the Company sufficient to elect a majority of the directors
to be elected at any stockholders' meeting. As used in this definition, the term
"person" shall include two or more persons acting as a partnership, limited
partnership, syndicate or other group for the purpose of acquiring, holding,
disposing of or voting the voting securities of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Stock Option Committee appointed pursuant to Section
13 of this Plan.
"Company" means ICU Medical, Inc., a Delaware corporation.
"Director" means any person who is a member of the Board.
"Employee" means any person who is an employee of the Company or of any
Subsidiary Corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
************
The following definition was added to Section 2 of the Plan on October 31,
--------------------------------------------------------------------------
1998:
- -----
"Ineligible Nonresident" means a New Employee or Employee who is a resident
of and/or has his or her principal place of employment in a country (other than
the United States of America) where, as determined by the Treasurer of this
corporation in his or her sole discretion (with notice to the Committee), the
grant of Options to
<PAGE>
New Employees or Employees resident and/or having their principal place of
employment in such country, or the exercise of such Options, would have
significant adverse consequences to New Employees or Employees and/or this
corporation under the tax or securities laws of such country or would require
this corporation to effect a registration or qualification under, or perfect an
exemption from or other compliance with, the securities laws of such country
that the Treasurer of this corporation deems, in his or her sole discretion, to
be unduly burdensome.
************
"New Employee" means a full-time Employee hired on or after May 26, 1994,
excluding (i) any temporary and leased employees; and (ii) any employees who,
prior to or upon becoming full-time Employees, are deemed by the Committee to be
an officer, director or ten percent stockholder of the Company for purposes of
Section 16 of the Securities and Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.
"Option" means an option granted under this Plan to purchase shares of
Stock.
"Participant" means a person to whom an Option is granted under this Plan.
"Permanent Disability" means permanent and total disability within the
meaning of Code Section 22(e) (3), which reads, in pertinent part, as follows:
An individual is permanently and totally disabled if he is unable to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or which
has lasted or can be expected to last for a continuous period of not less than
12 months.
"Plan" means this ICU Medical, Inc. Amended and Restated 1993 Stock
Incentive Plan.
"Retirement" means normal retirement of an Employee under policies
established by his or her employer.
"Stock" means the Common Stock of the Company. Unless the context
expressly indicates otherwise, "shares" means shares of Stock.
"Subsidiary Corporation" shall have the meaning set forth in Code Section
424 (f).
Section 3 of the Plan has been amended, subject to stockholder approval.
------------------------------------------------------------------------
3. Shares Subject to Plan
Options may be granted under this Plan to acquire an aggregate of up to
3,275,000 shares of Stock, subject to adjustment as provided in Section 7 of
this Plan. If Options terminate, expire or are cancelled without having been
fully exercised, the number of shares subject to such Options (but only to the
extent not exercised prior to termination, expiration or cancellation) may again
be subject to Options granted under this Plan.
************
The first sentence of Section 3 of the Plan was amended, subject to stock
-------------------------------------------------------------------------
holder approval, on October 31, 1998 to read as follows:
- --------------------------------------------------------
Options may be granted under this Plan to acquire an aggregate of up to
4,775,000 shares of Stock, subject to adjustment as provided in Section 7 of
this Plan.
************
2
<PAGE>
4. Eligibility
Any key Employee shall be eligible to become a Participant and to acquire
an Option to purchase Stock. Additional Options may be granted to a Participant
while such Participant continues as an Employee. The Committee may exclude
otherwise eligible persons.
Section 5 of the Plan has been amended.
---------------------------------------
5. Grant of Options
The Committee shall, from time to time and in its absolute discretion,
determine which Employees are key Employees and which eligible persons shall
become Participants. The Committee also shall determine the number of shares of
Stock to be subject to each Option and the price, terms and conditions,
consistent with this Plan, of each Option. Notwithstanding any other provision
of this Plan, the number of shares subject to Options granted to any one
employee in any calendar year may not exceed 750,000, provided that such limit
shall be subject to adjustment as provided in Section 7 of this Plan.
Without limiting the generality of the preceding paragraph, the Committee
may, in its discretion and on such terms as it deems appropriate, require as a
condition to the grant of an Option to an Employee, that the Employee surrender
for cancellation some or all of any unexercised Options which have been
previously granted to the Employee. An Option, the grant of which is
conditioned upon such surrender, may have an option price lower or higher than
the option price of the surrendered Option, may cover the same, or a lesser or
greater, number of shares as the surrendered Option, may contain such other
terms as the Committee deems appropriate and shall be exercisable in accordance
with its terms, without regard to the number of shares, price, option period or
any other term or condition of the surrendered Option.
Notwithstanding the foregoing, each New Employee shall be deemed to be a
key employee of the Company and shall become a Participant. Without any action
by the Committee, each New Employee automatically shall be granted an Option, on
such New Employee's first full day of actual employment by the Company or by any
Subsidiary Corporation, to purchase 1,000 shares of Stock. The Committee may,
from time to time and in its absolute discretion (i) suspend the operation of
this paragraph; and (ii) grant additional Options to any Participant while such
Participant continues as an Employee.
************
The third paragraph of Section 5 of the Plan was amended on January 31,
-----------------------------------------------------------------------
1997 to read as follows:
- ------------------------
Notwithstanding the foregoing, each New Employee and each Employee shall be
deemed to be a key employee of the Company and shall become a Participant.
Without any action by the Committee, each New Employee automatically shall be
granted an Option, on such New Employee's first full day of actual employment by
the Company or by any Subsidiary Corporation, to purchase 1,000 shares of Stock.
Without any action by the Committee, each Employee automatically shall be
granted an Option, every fifth year on the anniversary of such Employee's first
full day of actual employment by the Company or by any Subsidiary Corporation so
long as such Employee remains continuously employed by the Corporation or by any
Subsidiary Corporation, to purchase 1,000 shares of Stock. The Committee may,
from time to time and in its absolute discretion (i) suspend the operation of
this paragraph; and (ii) grant additional Options to any Participant while such
Participant continues as an Employee.
The third paragraph of Section 5 of the Plan was amended on October 31,
-----------------------------------------------------------------------
1998 to read as follows:
- ------------------------
Notwithstanding the foregoing, each New Employee and each Employee, other
than an Ineligible Nonresident, shall be deemed to be a key employee of the
Company and shall become a Participant. Without any action by the Committee,
each New Employee, other than an Ineligible Nonresident, automatically shall be
granted an Option, on such New Employee's first full day of actual employment by
the Company or by any Subsidiary Corporation, to purchase 1,000 shares of Stock.
Without any action by the Committee, each Employee, other than an Ineligible
Nonresident, automatically shall be granted an Option, every fifth year on the
anniversary of such Employee's first full day of actual employment by the
Company or by any Subsidiary Corporation so long as such
3
<PAGE>
Employee remains continuously employed by the Corporation or by any Subsidiary
Corporation, to purchase 1,000 shares of Stock. This paragraph is intended only
to facilitate the automatic grant of Options to New Employees upon their
employment by the Company and to Employees every fifth year after they are first
employed by the Company without the necessity of action by the Committee and is
not intended to grant to any New Employee or Employee any right to be granted an
Option. Neither the Company nor any officer, director or member of the Committee
shall have any liability to any New Employee or Employee for the failure to
grant an Option or any determination that any New Employee or Employee is an
Ineligible Nonresident. The Committee may, from time to time and in its absolute
discretion (i) suspend the operation of this paragraph; and (ii) grant
additional Options to any Participant while such Participant continues as an
Employee.
************
Section 6 of the Plan has been amended.
---------------------------------------
6. Option Terms
Each Option shall be evidenced by a written Stock Option Agreement in a
form approved by the Committee. Each Stock Option Agreement shall be executed
by the Company and by the Participant receiving the Option. Each Option shall
be subject to the following terms and conditions and to such other terms and
conditions as the Committee may deem appropriate:
6.1 Number of Shares
Each Stock Option Agreement shall specify the number of shares of Stock
subject to the Option.
6.2 Option Price
The price of the shares subject to each Option shall be determined by the
Committee and shall be set forth in the Stock Option Agreement, provided that
the price per share shall not be less than the fair market value of such share
on the day the Option is granted. Notwithstanding the foregoing, the price per
share of the shares subject to each Option granted automatically to a New
Employee pursuant to the third paragraph of Section 5 shall be the fair market
value of such share on such New Employee's first full day of actual employment
by the Company.
************
The first paragraph of Section 6.2 of the Plan was amended on January 31,
-------------------------------------------------------------------------
1997 to read as follows:
- ------------------------
The price of the shares subject to each Option shall be determined by the
Committee and shall be set forth in the Stock Option Agreement, provided that
the price per share shall not be less than the fair market value of such share
on the day the Option is granted. Notwithstanding the foregoing, the price per
share of the shares subject to each Option granted automatically to a New
Employee and each Employee pursuant to the third paragraph of Section 5 shall be
the fair market value of such share on such New Employee's first full day of
actual employment by the Company or the applicable anniversary date of such
Employee's first full day of actual employment by the Company, as the case may
be.
************
For purposes of this Plan, the fair market value of a share on a given date
shall be: (a) if the Stock is traded on one or more securities exchanges, the
mean between the high and low sale prices of a share on such date on the
principal exchange on which the shares are traded or, if no shares were traded
on such date, then the next preceding trading day (not more than 10) on which
trading occurred; or (b) if the Stock is not traded on a securities exchange but
is quoted on NASDAQ or a successor interdealer quotation system, the mean
between the high and low sale prices (if a National Market System security) or
the mean between the representative bid and asked prices (in all other cases) on
such date as reported by NASDAQ or such successor quotation system or, if no
shares were traded or quoted on such date, then the next preceding day (not more
than 10) on which trading or such quotations occurred, or (c) if the Stock is
otherwise traded in the over-the-counter market, the mean between the high and
low
4
<PAGE>
bid quotations on such date; or, if there are no bid quotations on such date,
then the next preceding trading day (not more than 10) on which such quotations
occurred; or (d) if the Stock is not publicly traded on a securities exchange or
traded or quoted in the over- the-counter market or, if traded or quoted, there
are no transactions or quotations within the last 10 trading days or trading has
been halted for extraordinary reasons, the fair market value shall be determined
in good faith by the Committee with reference to the rules and principles of
valuation set forth in Section 20.2031-2 of the Treasury Regulations (concerning
the valuation of stocks and bonds for purposes of Code Section 2031).
6.3 Period of Exercise
No Option shall be exercisable in whole or in part until 10 years and one
day from the date of grant or after 11 years from the date of grant.
Notwithstanding the foregoing, Options shall become exercisable at such times
earlier than 10 years, but not less than six months, from the date of grant, and
in such installments (which may be cumulative) as the Committee shall provide in
each Stock Option Agreement upon the achievement of performance objectives
established by the Committee at the date of grant. Performance objectives may
be expressed in terms of the operating results or operating ratios of the
Company or its individual divisions or Subsidiary Corporations, including by way
of example, but without limitation, net sales, net sales of particular products,
gross margins, net income or return on investment, or may be expressed in terms
of the performance of individual Participants. Determination of the achievement
of the performance objectives may be based on objective or subjective criteria
and shall be in the sole discretion of the Committee unless the Committee
provides otherwise in each Stock Option Agreement.
Notwithstanding anything to the contrary in this Section 6.3, an Option
shall automatically, without any action by the Committee, become fully
exercisable as to all shares covered thereby in the event that (a) any person
other than the Company makes a tender offer for voting securities of the Company
which is not approved in advance by a resolution of the Board or (b) any person,
other than the Board, who first attains Beneficial Ownership of more than five
percent of the outstanding voting securities of the Company after the original
approval of this Plan by the Company's stockholders in 1993 solicits proxies to
vote securities of the Company in a solicitation subject to Rule 14a-11 under
the Exchange Act or any rule which replaces or supersedes Rule 14a-11. As used
in this paragraph, the term "person" shall include two or more persons acting as
a partnership, limited partnership, syndicate or other group for the purpose of
acquiring, holding, disposing of voting the voting securities of the Company,
and the term "tender offer" shall have the meaning of such term as it is used in
Section 14(d) of the Exchange Act.
6.4 Manner and Conditions of Exercise
To exercise an Option or any portion thereof, the Participant or other
person then entitled to exercise such Option or portion thereof shall deliver to
the Secretary of the Company a notice in writing signed by the Participant or
such other person stating that such Option or portion is exercised, specifying
the number of shares to be acquired upon exercise and complying with all
applicable rules established by the Committee, together with the following:
(a) Full payment (in cash or bank cashiers' check) for the shares with
respect to which such Option or portion is being exercised; or
(b) With the consent of the Committee, shares of Stock owned by the
Participant, duly endorsed for transfer to the Company, with a fair market value
(as determined under Section 6.2 of this Plan) on the date of exercise equal to
the aggregate purchase price of the shares with respect to which such Option or
portion is being exercised; or
(c) With the consent of the Committee, a full recourse promissory note in a
form, bearing interest (at a rate at least equal to the minimum rate necessary
to avoid imputed interest under the Code) and payable upon such terms as may be
prescribed by the Committee; or
(d) With the consent of the Committee, a check issued by a broker-dealer
which is a member firm of the New York Stock Exchange, Incorporated for the
aggregate purchase price of the shares with respect to which such Option or
portion is being exercised; or
5
<PAGE>
(e) Any combination of the consideration permitted in accordance with the
foregoing subsections (a), (b), (c) and (d).
In the event that payment is made by a check issued by a broker-dealer, an
executed copy of the notice of exercise shall be delivered to the broker-dealer,
the notice of exercise shall instruct the Company to deliver certificates for
the shares to be purchased to the broker-dealer, and the Company shall confirm
that it will deliver such certificates to the broker-dealer.
No exercise shall be effective unless and until a proper notice and payment
have been delivered as provided above. No fractional shares shall be issued
under this Plan.
In the event that an Option or portion thereof shall be exercised pursuant
to Section 6.5 of this Plan by any person or persons other than the Participant,
appropriate proof of the right of such person or persons to exercise the Option
or portion thereof shall be delivered to the Company.
The Committee may require, as a condition to the exercise of an Option,
such representations and covenants as it, in its absolute discretion, deems
necessary to effect compliance with the Securities Act of 1933, as amended, any
state securities laws or rules and regulations thereunder.
The Participant, as a condition to exercising an Option, shall also make
any arrangements determined by the Committee to be necessary or appropriate to
satisfy any federal and state withholding tax resulting from the exercise of an
Option or from the termination or partial termination of any restriction
applicable to any share acquired on exercise of an Option, including the
retention of shares by the Company or the delivery of shares to the Company
equal in amount to all or a portion of the withholding tax obligation pursuant
to such arrangements as may be established by the Committee. Any shares
retained by or delivered to the Company under this Section shall be valued at
the date of exercise in the same manner as provided under Section 6.2 of this
Plan.
To insure that such exercise and any resales are made in compliance with
the Securities Act of 1933, as amended, and the Certificate of Incorporation and
Bylaws of the Company, the Company may imprint an appropriate legend on
certificates representing shares acquired on the exercise of an Option and issue
appropriate stop-transfer orders to its transfer agents. Any stock certificate
evidencing shares of Stock issued pursuant to the exercise of an Option shall
bear such other legends as the Committee, in the exercise of its absolute
discretion, shall require.
6.5 Cessation of Employment
If a Participant ceases to be an Employee other than by reason of
Retirement, death or Permanent Disability, the Participant shall be permitted to
exercise his or her Option, to the extent it was exercisable at the date of
cessation, until 30 days after such date, but in no event after its stated
expiration date.
If a Participant ceases to be an Employee because of Retirement, the
Participant shall be permitted to exercise his or her Option, to the extent it
was exercisable at the date of Retirement, until 90 days after such date, but in
no event beyond its stated expiration date.
If a Participant ceases to be an Employee because of Permanent Disability,
the Participant shall be permitted to exercise his or her Option, to the extent
it was exercisable at the date of cessation of employment, until one year after
the date he or she ceases to be an Employee, but in no event after its stated
expiration date.
If a Participant dies while an Employee or within 90 days after ceasing to
be an Employee because of Retirement or Permanent Disability, his or her Option
may be exercised by the Participant's estate or any person who acquired the
right to exercise the Option by will or the laws of descent and distribution, to
the extent it was exercisable at the date of cessation of employment, until one
year after the date of death, but in no event after its stated expiration date.
Transfers of employment between the Company and any Subsidiary Corporation
or between Subsidiary Corporations shall not be deemed cessation of employment
for purposes of any Option granted hereunder.
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<PAGE>
6.6 Nontransferability
During the lifetime of a Participant, his or her Option shall be
exercisable only by the Participant and no Option shall be transferable other
than by will or the laws of descent and distribution. No interest of any
Participant under this Plan or in any Option shall be subject to attachment,
execution, garnishment, sequestration, the laws of bankruptcy or any other legal
or equitable process.
Section 7 of the Plan has been amended.
---------------------------------------
7. Adjustment Upon Changes in Capitalization
************
The caption of Section 7 was amended on March 4, 1998 to read as
----------------------------------------------------------------
follows:
- --------
7. Adjustment Upon Changes in Capitalization or Spin-offs
************
In the event of any change in the Stock by reason of any stock dividend,
recapitalization, split-up, combination or exchange of shares, or by reason of
any similar change affecting the Stock (but not the issuance of additional
shares, securities convertible into shares or options or rights to acquire
shares of Stock or the Company's repurchase of shares), the number and class of
shares which thereafter may be acquired on exercise of Options under this Plan,
the number and class of shares subject to outstanding Options, the limit on the
number and class of shares subject to Options granted to any employee in any
year and the exercise price of each such share shall be appropriately adjusted
consistent with such change in such manner as the Committee may deem equitable
to prevent substantial dilution or enlargement of the rights granted to, or
available for, Participants. Any such adjustment shall be final and binding on
each Participant.
************
The following was added as a second paragraph to Section 7 on March 4,
----------------------------------------------------------------------
1998:
- -----
In the event that the Company distributes shares of capital stock of a
majority-owned subsidiary of the Company to its stockholders for no
consideration (a "Spin-off"), upon any exercise after the date of the Spin-off
(the "Distribution Date") of an Option that was granted before the Distribution
Date, the person entitled to exercise such Option shall receive, in
consideration of the payment of the exercise price in effect on the Distribution
Date or as subsequently adjusted thereafter pursuant to this Section 7, (a) the
shares of Stock as to which the Option is exercised, (b) for each share of Stock
as to which the Option is exercised, the same kind and amount of whole shares of
capital stock of the subsidiary as was received in the Spin-off by the holders
of Stock with respect to each share of Stock held by them at the Distribution
Date and (c) cash in an amount determined in the sole discretion of the
Committee in lieu of any fractional share of the subsidiary. The provisions of
this second paragraph of Section 7 shall not apply in respect of a particular
Spin-off to any Options granted on or after the Distribution Date of that Spin-
off. The provisions of the first paragraph of Section 7 shall apply mutatis
mutandis to changes effected after the Distribution Date of a Spin-off in the
capitalization of the stock of a subsidiary distributed in that Spin-off. Prior
to the Distribution Date of any Spin-off to which this paragraph of Section 7
may become applicable, the Board shall cause all necessary and appropriate
corporate action to be taken by the subsidiary whose shares are to be
distributed in the Spin-off to reserve for issuance on the exercise of Options
the appropriate number of shares of the subsidiary and otherwise to effect the
provisions of this second paragraph of Section 7.
************
8. Merger, Consolidation, Etc.
In its absolute discretion, and on such terms and conditions as it deems
appropriate, the Committee may provide by the terms of any Option that such
Option cannot be exercised after the merger or consolidation of the
7
<PAGE>
Company with or into another corporation, the acquisition by another corporation
or person of all or substantially all of the Company's assets or the liquidation
or dissolution of the Company, unless by the terms of such merger, consolidation
or acquisition of assets the Options are assumed by, and replaced by options of,
such other person or corporation; and if the Committee so provides, it may, in
its absolute discretion and on such terms and conditions as it deems
appropriate, also provide, either by the terms of such Option or by a resolution
adopted prior to the occurrence of such merger, consolidation, acquisition,
liquidation or dissolution, that, for some period of time prior to such event,
such Option shall become exercisable as to all shares covered thereby,
notwithstanding anything to the contrary in Section 6.3 of this Plan or any
installment provisions of such Option. Notwithstanding the foregoing, in the
event of a merger or consolidation of the Company with or into another
corporation or the acquisition by another corporation or person of all or
substantially all of the Company's assets which transaction constitutes a Change
in Control or occurs following a Change in Control, Options outstanding under
this Plan shall not terminate but shall, upon the effectiveness of such
transaction become options to acquire, for each share of Stock subject thereto,
the same kind and amount of cash, securities, property or other consideration
received or to be received in such transaction by holders of Stock with respect
to each share of Stock held by them, all on the terms of the Options.
9. Change in Control
In the event that, within 12 months following a Change in Control, there
should occur, without a Participant's consent, a material lessening of his or
her duties and responsibilities as an Employee or a material reduction in his or
her base salary from the rate in effect as of the date of grant and, if,
following such material lessening of duties or responsibilities or a material
reduction in his or her base salary, the Participant shall, by providing written
notice to the Company, voluntarily terminate his or her employment by the
Company or any Subsidiary Corporation, then, unless such Participant's Option
became exercisable as to all of the shares covered thereby prior to such Change
in Control, such Option shall become exercisable as to all shares covered
thereby (or such cash, securities, property or other consideration covered
thereby pursuant to the last sentence of Section 8 of this Plan) immediately
upon the giving of such notice, notwithstanding anything to the contrary in
Section 6.3 of this Plan, provided, however, that in no event may an Option be
exercised after the expiration date thereof.
In the event that, within 12 months following a Change in Control, a
Participant's employment by the Company or any Subsidiary Corporation (or any
successor by reason of such Change in Control) is terminated involuntarily,
then, unless such Participant's Option became exercisable as to all of the
shares covered thereby (or such cash, securities, property or other
consideration covered thereby pursuant to the last sentence of Section 8 of this
Plan) prior to such Change in Control, such Option shall become exercisable as
to all shares covered thereby immediately upon such termination, notwithstanding
anything to the contrary in Section 6.3 of this Plan, provided, however, that in
no event may an Option be exercised after the expiration date thereof.
10. No Rights as a Shareholder
No Participant shall have any rights or privileges as a shareholder with
respect to any shares subject to Options prior to the date of issuance to him or
her of a certificate for such shares.
11. No Right To Continued Employment
Neither this Plan nor any Option granted under this Plan shall confer upon
any Participant or any other person any right to continued employment by the
Company or any Subsidiary Corporation, nor shall it interfere in any way with
the right of his or her employer to terminate his or her employment at any time
for any reason whatsoever, with or without cause.
12. Compliance With Laws and Regulations
This Plan, the grant and exercise of Options under this Plan and the
obligation of the Company to sell and deliver shares under Options shall be
subject to all applicable federal and state laws, rules and regulations and to
any approvals by any government or regulatory agency as may be required. The
Company shall not be required to issue or deliver any certificate for shares of
Stock either (a) prior to (i) the listing of such shares on any stock exchange
on which the Stock may then be listed or inclusion on any interdealer quotation
system on which the Stock may be
8
<PAGE>
quoted, and (ii) the completion of any registration or qualification of such
shares which is required under any federal or state law, or any ruling or
regulation of any government body, and which the Company shall, in its sole
discretion, determine to be necessary or advisable, or (b) until exemptions from
such registration and qualification requirements are established to the
reasonable satisfaction of the Company and its counsel.
13. Administration
The Board shall appoint a Stock Option Committee consisting of two or more
Directors to administer this Plan. The Committee members shall serve at the
pleasure of the Board. If the Board does not appoint a Committee, the Board
shall administer this Plan and shall have the powers and duties granted to the
Committee in this Plan.
So long as Stock is registered under Section 12 of the Securities Exchange
Act of 1934, as amended, no Director shall be appointed to, or shall serve on,
the Committee unless he or she shall be a "disinterested person" within the
meaning of Rule 16b-3 under such Act as presently in effect or hereafter
amended. No Options may be granted to a Committee member during his or her
tenure on the Committee.
The Committee shall administer this Plan in accordance with its provisions
and shall have full authority to interpret this Plan, prescribe, amend and
rescind any rules and regulations necessary or appropriate for the
administration of this Plan and make such other determinations and take such
other action as it deems necessary or advisable, except as otherwise expressly
reserved to the Board in this Plan. Without limiting the generality of the
preceding sentence, the Committee may, in its discretion, determine that for
Option purposes a Participant remains an Employee during all or any portion of a
leave of absence approved by the Company. Any interpretation, determination, or
other action made or taken by the Committee shall be final and binding upon all
Participants.
No member of the Committee and no officer of the Company shall be
personally liable for any action, determination or interpretation made in good
faith with respect to this Plan or any Option, and all such persons shall be
fully indemnified and protected by the Company, to the full extent that the
Company is permitted to provide such indemnification and protection, in respect
to any such action, determination or interpretation.
14. Effective Date
This Plan shall be effective as of the date of adoption by the Board.
15. Approval by Stockholders
This Plan (as hereby amended and restated) will be submitted for the
approval by holders of a majority of the shares of stock voting thereon within
twelve months after the Board's adoption of this Plan. Options may be granted
prior to such stockholder approval, provided that such Options shall not be
exercisable prior to the time when the Plan is approved by stockholders and, if
such approval is not obtained by the end of the twelve-month period, all Options
previously granted shall thereupon be cancelled, except to the extent such
Options could have been granted prior to such amendment and restatement.
16. Amendment and Discontinuance
The Board may from time to time amend, suspend or discontinue this Plan;
provided that, without approval of the holders of a majority of the shares of
stock voting thereon, no action of the Board shall (a), except as provided in
Section 7 of this Plan, increase the number of shares reserved for Options
pursuant to Section 3 of this Plan, (b) increase the limit provided in Section 5
of this Plan on the number of shares subject to Options granted to any employee
in any calendar year, (c) permit the grant of any Option at a price less than
that determined in accordance with Section 6.2 of this Plan or (d) permit the
grant of Options which expire beyond the periods provided for in Section 6.3 of
this Plan. Without the written consent of a Participant, no such amendment,
suspension or discontinuance of this Plan shall alter or impair any Option
previously granted to such Participant pursuant to this Plan.
9
<PAGE>
17. Term
Unless terminated earlier pursuant to Section 17 of this Plan, this Plan
shall expire on, and no further Options shall be granted pursuant to this Plan
on or after, ten years after the date of adoption of this Plan by the Board.
This ICU Medical, Inc. Amended and Restated 1993 Stock Incentive Plan was
adopted by the Board on April 3, 1996 and approved by holders of a majority of
the shares of Stock voting thereon on June 4, 1996.
___________________________________ ________________________________
GEORGE A LOPEZ JOHN J. CONNORS
Chairman of the Board and President Secretary and Treasurer
10
<PAGE>
[MAP APPEARS HERE]
<PAGE>
ICU MEDICAL, INC.
Annual Meeting of Stockholders
April 23, 1999
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints George A. Lopez, M.D. and Francis J. O'Brien,
and each of them, proxies of the undersigned, each with full power to act
without the other and with power of substitution, to represent the undersigned
and vote as directed on the reverse all shares of stock of ICU Medical, Inc.
(the "Company") which the undersigned may be entitled to vote at the Annual
Meeting of Stockholders to be held on Friday, April 23, 1999, or any
adjournments thereof, and in their discretion upon such other business as may
properly come before the Annual Meeting or any adjournments thereof.
- --------------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(Continued and to be signed on other side)
FOLD AND DETACH HERE
<PAGE>
- --------------------------------------------------------------------------------
Please mark
[X] your votes
as indicated
The shares represented by this Proxy will be voted as directed herein, but if
no directions are indicated, will be voted FOR the election of all nominees of
the Board of Directors, and FOR Proposals 2 and 3.
Item 1-Election of directors WITHHELD
John J. Connors, and FOR FOR ALL
Michael T. Kovalchik, III, M.D. [_] [_]
Item 2-The proposal to approve an FOR AGAINST ABSTAIN
amendment of the ICU Medical, Inc. Amended [_] [_] [_]
and Restated 1993 Stock Incentive Plan; and
Item 3-The proposal to ratify the selection FOR AGAINST ABSTAIN
of Arthur Andersen LLP as auditors [_] [_] [_]
for the Company.
- -------
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
Signature(s) __________________________ Date _________________________, 1999
NOTE: Please sign exactly as your name appears hereon. When signing as
attorney, executor, administrator, trustee, or guardian, set forth your full
title. When shares are held in more than one name, both parties should sign.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
