<PAGE>
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
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-12
MERIDIAN MEDICAL TECHNOLOGIES, 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 O-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:
/ / 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.:
3) Filing Party:
4) Date Filed:
<PAGE>
MERIDIAN MEDICAL TECHNOLOGIES, INC.
10240 OLD COLUMBIA ROAD
COLUMBIA, MARYLAND 21046
December 11, 2000
Dear Stockholder:
We are pleased to enclose your Notice of Annual Meeting and Proxy
Statement for the Annual Meeting of Stockholders of Meridian Medical
Technologies, Inc. (the "Company") to be held on Wednesday, January 11, 2001, at
9:30 a.m., local time, at Linden Hall, 4725 Dorsey Hall Drive, Ellicott City,
Maryland 21042.
The Board of Directors hopes that you will be able to attend this
stockholders' meeting. We look forward to meeting each of you and discussing
with you significant events that have occurred during the Company's last year
and its current prospects. If you are unable to be present in person or to be
otherwise represented, please execute the enclosed proxy and return it at your
earliest convenience in the enclosed envelope. You are urged to read the
enclosed Proxy Statement, which contains information relevant to the actions to
be taken at the meeting.
Very truly yours,
/s/ James H. Miller
------------------------
James H. Miller
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
<PAGE>
MERIDIAN MEDICAL TECHNOLOGIES, INC.
10240 OLD COLUMBIA ROAD
COLUMBIA, MARYLAND 21046
(410) 309-6830
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
MERIDIAN MEDICAL TECHNOLOGIES, INC.:
Notice is hereby given that the Annual Meeting of Stockholders of
Meridian Medical Technologies, Inc. (the "Company") will be held on Wednesday,
January 11, 2001, at 9:30 a.m., local time, at Linden Hall, 4725 Dorsey Hall
Drive, Ellicott City, Maryland 21042, for the following purposes:
(1) To elect one director to a term of three years or until a
successor has been elected and qualified;
(2) To approve the Company's Employee Stock Purchase Plan;
(3) To approve the Company's 2000 Stock Incentive Plan;
(4) To consider and vote upon the ratification of the selection by
the Board of Directors of Ernst & Young LLP as independent
auditors of the Company for the current fiscal year; and
(5) To transact such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on November 27,
2000 are entitled to notice of and to vote at the meeting or any adjournment or
adjournments thereof.
By Order of the Board of Directors,
/s/ Tiffany Roebuck
-----------------------------
Tiffany Roebuck
ASSISTANT CORPORATE SECRETARY
Columbia, Maryland
December 11, 2000
<PAGE>
MERIDIAN MEDICAL TECHNOLOGIES, INC.
10240 OLD COLUMBIA ROAD
COLUMBIA, MARYLAND 21046
(410) 309-6830
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
------------
INTRODUCTION
The Board of Directors of Meridian Medical Technologies, Inc. (the
"Company"), the executive offices of which are located at 10240 Old Columbia
Road, Columbia, Maryland 21046, hereby solicits your proxy in the form enclosed
for use at the Annual Meeting of Stockholders to be held on Wednesday, January
11, 2001, at 9:30 a.m., or any adjournment or adjournments thereof ("Annual
Meeting"). The expenses of soliciting your proxy will be borne by the Company.
This Proxy Statement and the accompanying form of proxy are first being released
for mailing to the stockholders on or about December 11, 2000.
At the Annual Meeting, stockholders will be asked to elect one director
of the Company to serve a three-year term, to approve the Company's Employee
Stock Purchase Plan, to approve the Company's 2000 Stock Incentive Plan and to
ratify the selection of Ernst & Young LLP as independent auditors of the Company
for the current fiscal year.
We urge you to date, sign and return your proxy in the enclosed
envelope promptly to make certain that your shares will be voted at the Annual
Meeting.
The principal executive offices of the Company are located at 10240 Old
Columbia Road, Columbia, Maryland 21046, telephone (410) 309-6830.
<PAGE>
MEETING INFORMATION
DATE, TIME AND PLACE
The Annual Meeting will be held on Wednesday, January 11, 2001, at 9:30
a.m., local time, at Linden Hall, 4725 Dorsey Hall Drive, Ellicott City,
Maryland 21042.
RECORD DATE; VOTING RIGHTS
Only stockholders of record at the close of business on November 27,
2000 will be entitled to vote at the Annual Meeting. On November 27, 2000, there
were 3,038,641 outstanding shares of Common Stock, each of which is entitled to
one vote. The presence in person or by proxy at the Annual Meeting of the
holders of a majority of the outstanding shares of Common Stock and entitled to
vote will constitute a quorum for the transaction of business.
With respect to Proposal 1, a nominee for election as director who
receives the greatest number of votes cast at the Annual Meeting, assuming that
a quorum is present, will be elected as director. A withheld vote will not have
any effect on the outcome of the vote for election of the director.
With respect to Proposals 2, 3 and 4, approval will require the
affirmative vote of a majority of the total votes cast on the proposal in person
or represented by proxy at the Annual Meeting. An abstention will have the
effect of a vote against the proposal.
Brokers who hold shares of Common Stock in street name may not have the
authority to vote on certain matters for which they have not received
instructions from beneficial owners. Such broker non-votes (arising from the
lack of instructions from beneficial owners), although present for quorum
purposes, will not change the number of votes cast for or against Proposals 2,
3, or 4.
VOTING AND REVOCATION OF PROXIES
If the enclosed form of proxy is properly executed and returned to the
Company in time to be voted at the Annual Meeting, the shares of Common Stock
represented thereby will be voted in accordance with the instructions marked
thereon. Executed but unmarked proxies will be voted "FOR" the nominee proposed
by the Board of Directors, "FOR" the approval of the Company's Employee Stock
Purchase Plan, "FOR" the approval of the Company's 2000 Stock Incentive Plan and
"FOR" the ratification of the selection of auditors. The duly appointed proxies
may, in their discretion, vote upon such other matters as may properly come
before the Annual Meeting.
Any proxy may be revoked at any time before it is exercised by giving
written notice of such revocation or delivering a later dated proxy to the
Assistant Corporate Secretary of the Company prior to the meeting, or by the
vote of the stockholder in person at the meeting.
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SOLICITATION OF PROXIES
The cost of soliciting proxies in the form enclosed will be borne by
the Company. In addition to the solicitation of proxies by mail, the Company,
through its directors, officers and regular employees, may also solicit proxies
personally or by telephone. The Company also will request persons, firms and
corporations holding shares of Common Stock in their names or in the name of
their nominees, which are beneficially owned by others, to send proxy material
to and obtain proxies from the beneficial owners and will reimburse the holders
for their reasonable expenses in so doing. The Company has engaged the services
of Chase Mellon Shareholder Services for the purpose of assisting in the
solicitation of proxies at a cost of $7,500 plus reimbursement of certain
expenses.
PROPOSAL 1 - ELECTION OF DIRECTORS
GENERAL
The Company's Amended and Restated By-Laws provide that the number of
members of the Board of Directors shall be fixed and determined from time to
time by resolution of the Board of Directors. The Board of Directors has acted
to fix the number of directors at five. Pursuant to the terms of the Company's
First Amended and Restated Certificate of Incorporation, the Board of Directors
is divided into three classes, as nearly equal in number as reasonably possible,
with terms currently expiring at the upcoming annual meeting of stockholders
("Class I"), the annual meeting of stockholders following fiscal 2001 ("Class
II") and the annual meeting of stockholders following fiscal 2002 ("Class III"),
respectively.
The Board of Directors has nominated E. Andrews Grinstead, III, the
incumbent Class I director, to serve as a Class I director for a three-year term
expiring at the annual meeting following the Company's 2003 fiscal year or until
the election and qualification of a successor.
The proxies solicited hereby, unless directed to the contrary therein,
will be voted for the nominee. The nominee has consented to being named in this
Proxy Statement and to serve if elected. If the nominee for election as a
director becomes unavailable as a candidate or unable to serve, it is intended
that the shares of Common Stock represented by proxies will be voted for such
substitute nominee as the Chairman of the Board of Directors, in his sole
discretion, may designate.
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The following table sets forth certain information regarding the
nominee for election to the Board of Directors, whose term will expire after
fiscal year 2003, and the directors who will continue in office for the
remainder of their terms. Unless otherwise indicated, each director held the
position indicated or another senior executive position with the same entity for
the last five years.
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS SINCE
------------ -------------------------------------------- -----
<S> <C> <C>
CLASS I DIRECTOR AND NOMINEE
WHOSE TERM WILL EXPIRE
FOLLOWING FISCAL 2000
E. Andrews Grinstead, III Chief Executive Officer, Hybridon, Inc. (biotechnology); 1996
Age 53 Director, Pharmos Corporation (pharmaceutical company)
CLASS II DIRECTORS WHOSE
TERMS WILL EXPIRE FOLLOWING
FISCAL 2001
Bruce M. Dresner Vice President for Investments, Columbia University 1985
Age 52
David L. Lougee Managing Partner, Mirick, O'Connell, DeMallie & Lougee 1996
Age 60 (law firm); Director, Vialog Corporation (teleconferencing
service provider)
CLASS III DIRECTORS WHOSE
TERMS WILL EXPIRE FOLLOWING
FISCAL 2002
James H. Miller Chairman, President and Chief Executive Officer of the 1989
Age 62 Company
Robert G. Foster Chairman, President and Chief Executive Officer, 1996
Age 62 Commonwealth BioVentures, Inc. (venture capital firm)
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEE NAMED
HEREIN.
MEETINGS AND COMMITTEES OF THE BOARD
During the fiscal year ended July 31, 2000 ("fiscal 2000"), the Board
of Directors held ten meetings, four of which were by telephone conference.
During their term, all of the then incumbent directors were present for at least
75 percent of the meetings of the Board and the committees of the Board on which
they serve other than Mr. Grinstead. Mr. Grinstead has been on medical leave
from his principal employment at Hybridon, Inc. and from the Company's Board.
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The Compensation and Stock Option Committee ("Committee") of the Board
of Directors presently consists of Messrs. Foster, Grinstead and Lougee
(Chairman). The Committee is empowered to administer the Company's 1986 Stock
Option Plan ("1986 Plan") and 1997 Long-Term Incentive Plan ("1997 Plan"), which
includes the power to grant stock options and stock appreciation rights and to
award restricted stock and incentive shares. The Committee also is responsible
for the determination of the compensation for the president and chief executive
officer. The Committee (or the Board acting as the Committee) met three times
during fiscal 2000.
In addition, the Board of Directors has an Executive Committee, whose
present membership consists of Messrs. Foster and Miller (Chairman).
The Board of Directors does not have a nominating committee or
committee performing similar functions. The Board of Directors will consider
stockholder nominations for directors submitted in accordance with the procedure
set forth in Section 2.10(b) of the Company's Amended and Restated By-Laws. The
procedure provides that a notice relating to the nomination must be timely given
in writing to the secretary of the Company prior to the meeting. To be timely,
the notice must be delivered not later than the time permitted for submission of
a stockholder proposal as described under "2001 Annual Meeting of Stockholders."
Such notice must be accompanied by the nominee's written consent to serve if
elected and contain information relating to the business experience and
background of the nominee, and information with respect to the nominating
stockholder and persons acting in concert with the nominating stockholder.
The Audit Committee of the Board of Directors has certain duties
relating to the year-end audit, the Company's interim financial statements, the
Company's internal accounting controls and the Company's relationship with its
independent auditors. The Board of Directors has adopted a written charter for
the Audit Committee, a copy of which is attached as Exhibit A to this proxy
statement. Messrs. Dresner (Chairman), Grinstead and Lougee are the current
members of the Audit Committee. All members of the Audit Committee are
independent as defined by Rule 4200(a)(14) of the National Association of
Securities Dealers' listing standards. The Audit Committee met twice during
fiscal 2000 and, subsequent to the end of fiscal 2000, twice with respect to
fiscal 2000 matters.
AUDIT COMMITTEE REPORT
In discharging its oversight responsibility as to the audit process,
the Audit Committee has reviewed and discussed with management the Company's
audited financial statements included in the Company's Annual Report on Form
10-K for the year ended July 31, 2000. In addition, the Audit Committee has
discussed with the independent auditors the matters required to be discussed by
Statements on Auditing Standards (SAS) No. 61 "Communication with Audit
Committees."
The Audit Committee has obtained from the independent auditors a formal
written statement describing all relationships between the auditors and the
Company that might bear on the auditors' independence consistent with the
Independence Standards Board Standard No. 1, discussed with the
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auditors any relationships that may impact their objectivity and independence
and satisfied itself as to the auditors' independence.
Based on the review and discussions referred to above in this report,
the Audit Committee has recommended to the Board of Directors that the audited
financial statements be included in the Company's Annual Report on Form 10-K for
the last fiscal year for filing with the SEC.
BRUCE M. DRESNER
E. ANDREWS GRINSTEAD, III
DAVID L. LOUGEE
COMPENSATION OF DIRECTORS
Each of the Company's directors other than Mr. Miller received, during
fiscal 2000, a $10,000 retainer fee payable in quarterly installments, $1,500
for each meeting of the Board personally attended (other than meetings held by
telephone conference as to which no fee is paid) and an automatic grant on the
date of each annual meeting of nonstatutory stock options covering 5,700 shares
of Common Stock under the 1997 Plan. In addition, non-employee directors who
have served for at least one year and who will continue to serve as directors
immediately following the annual meeting receive on the date of each annual
meeting automatic grants of nonstatutory stock options covering 1,300 shares of
Common Stock under the 1986 Plan (which continues in effect until the earlier of
the termination of the 1986 Plan or the unavailability of shares of Common Stock
for grants thereunder). Options so granted have an exercise price equal to the
fair market value of the Common Stock on the date of grant, become exercisable
in 25 percent cumulative annual installments and generally expire 10 years from
the date of grant. If a director is removed from office, all options granted to
such director pursuant to the automatic grants will expire immediately upon such
removal. During fiscal 2000, Messrs. Dresner, Foster, Grinstead and Lougee were
each granted options covering 1,300 shares of Common Stock pursuant to the 1986
Plan at an exercise price of $6.063 per share. In addition, during fiscal 2000,
Messrs. Dresner, Foster, Grinstead and Lougee were each granted options covering
5,700 shares of Common Stock pursuant to the 1997 Plan at an exercise price of
$6.063 per share. Mr. Grinstead has declined receipt of Board fees during the
period of his medical leave. For information regarding future grants of
nonstatutory stock options to non-employee directors, see "Awards Pursuant to
the 2000 Plan."
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information for the three fiscal
years ended July 31, 2000 as to compensation paid for services rendered to
the Company by the President and Chief Executive Officer and the three other
executive officers of the Company who were employed by the Company as of July
31, 2000 and whose total annual salary and bonus for fiscal 2000 exceeded
$100,000 (the "Named Executives").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
-------------------
ANNUAL COMPENSATION SECURITIES
----------------------- UNDERLYING ALL OTHER
NAME AND FISCAL SALARY BONUS OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($) (#) ($)(2)
--------------------------- ------ ------- ------- ------------------- ------------
<S> <C> <C> <C> <C> <C>
James H. Miller 2000 375,000 210,000 60,000 37,294
Chairman, President and CEO 1999 365,384 - 25,000 29,483
1998 325,000 - 50,000 23,143
Dennis P. O'Brien (3) 2000 151,462 79,900 45,000 9,390
Vice President - Finance 1999 63,269 - - 5,000
and Chief Financial Officer 1998 - - - -
Peter A. Garbis 2000 134,800 44,800 20,000 12,369
Vice President 1999 128,654 - 19,600 5,693
1998 113,983 - 1,285 5,824
Gerald L. Wannarka (4) 2000 157,577 56,400 25,000 11,039
Sr. Vice President 1999 147,154 - 22,900 11,434
1998 81,250 - 7,000 785
</TABLE>
(1) Includes amounts deferred at the election of the Named
Executive under the Company's 401(k) Plan.
(2) Includes Company matching contributions under the Company's
401(k) Plan in the following amounts for fiscal 2000:
Mr. Miller, $2,942; Mr. O'Brien, $1,695; Mr. Garbis, $4,849;
and Dr. Wannarka $3,272. The Company provides group
accidental death and disability and term life insurance to
all its employees who work more than 30 hours per week. The
death and disability benefit and life insurance benefit under
the Company's plan is up to 200% of the insured person's
annual compensation (as defined in the plan), except in the
case of certain employees, including the Named Executives,
with respect to whom benefits are up to 300% of the insured
person's annual income. Premiums paid attributable to such
benefits in fiscal 2000 were as follows: Mr. Miller, $23,582;
Mr. O'Brien, $1,696; Mr. Garbis $1,520; and Dr. Wannarka,
$1,767.
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(3) Mr. O'Brien was named Vice President - Finance and Chief
Financial Officer as of March 8, 1999.
(4) Dr. Wannarka was hired as a Vice President as of December 15,
1997 and subsequently promoted to Senior Vice President as of
September 30, 1998.
STOCK OPTIONS
The following table sets forth further information regarding grants
of options to purchase Common Stock made by the Company during fiscal 2000 to
the Named Executives.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
-----------------------------------------------------------------------------------------------
Potential Realizable Value
Number of Percent of Total at Assumed Annual Rates of
Securities Options/SARs Stock Price Appreciation
Underlying Granted to for Option Term(1)
Options/SARs Employees in Exercise Price Expiration --------------------------
Name Granted(2) Fiscal 2000 per Share Date 5% ($) 10% ($)
------------------------ ------------ ---------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
James H. Miller 40,000 21.3% $5.625 09/28/2009 $141,501 $358,592
20,000 $8.625 06/07/2010 $108,484 $274,921
Dennis P. O'Brien 25,000 16.0% $5.625 09/28/2009 $88,438 $224,120
20,000 $8.625 06/07/2010 $108,484 $274,921
Peter A. Garbis 20,000 7.1% $5.625 09/28/2009 $70,751 $179,296
Gerald L. Wannarka 25,000 8.9% $5.625 09/28/2009 $88,438 $224,120
</TABLE>
(1) Disclosures of the 5% and 10% assumed annual compound rates of
stock appreciation are mandated by the rules of the SEC and do
not represent the Company's estimate or projection of future
Common Stock prices. The actual value realized may be greater
or less than the potential realizable value set forth in the
table.
(2) Consists of stock options granted pursuant to the 1986 Stock
Option Plan and the 1997 Long-Term Incentive Plan. Each option
granted vests in cumulative annual installments of 25%,
commencing one year from the date of grant and expires ten
years from the date of grant. The exercise price of each
option granted is equal to the last reported sale price on the
date of grant.
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The following table summarizes certain information regarding
outstanding options held by the Named Executives as of July 31, 2000. No
stock options were exercised by the Named Executives during fiscal 2000.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
-----------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised Options/SARS at In-the-Money
Fiscal Year End (#) Options/SARS at Fiscal Year End ($)(1)
-------------------------------------- --------------------------------------
Name Exercisable/Unexercisable Exercisable/Unexercisable
---------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
James H. Miller 106,250/113,750(2) $127,422/$444,453
Dennis P. O'Brien 2,500/52,500 $16,094/$277,969
Peter A. Garbis 9,543/35,343 $38,810/$204,597
Gerald L. Wannarka 9,225/45,675 $38,489/$255,842
</TABLE>
(1) Value is calculated as the difference between the fair market
value of a share of Common Stock on July 31, 2000 ($12.063
per share) and the exercise price of the options.
(2) Excludes 148,512 shares underlying exercisable and
unexercisable options assumed by the Company in connection
with the 1996 merger. Such options are exercisable for $.005
per share.
EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS
The Company is party to an employment agreement (the "Employment
Agreement"), effective in fiscal 1997, with James H. Miller. Under the
Employment Agreement, the Company will employ Mr. Miller as President and
Chief Executive Officer. The Employment Agreement has an initial term of
three years, provides for a minimum base salary (currently $400,000) and
customary benefits, and has been extended annually to maintain a three year
term. The Company may terminate the Employment Agreement upon disability or
retirement or for "Cause" (as defined in the Employment Agreement). If the
Company terminates the Employment Agreement for any reason other than
disability, retirement or Cause, or Mr. Miller terminates the Employment
Agreement for "Good Reason," as defined in the Employment Agreement,
Mr. Miller will be entitled to receive a lump sum payment equal to 200% of his
base salary for the preceding 12 months and continued life, disability,
accident and health insurance coverage for up to 24 months. In addition, all
stock options previously awarded under the Company's stock option plans would
become immediately exercisable and any transfer restrictions on restricted
securities would lapse. The Employment Agreement further provides that any
benefits or payments pursuant to these provisions will be reduced to the
extent that such amounts received (together with any other amounts received
that must be included in such determination) would constitute an "excess
parachute payment" as defined in Section 280G of the Internal Revenue Code of
1986, as amended ("Code").
The Company is party to change of control agreements (the "Change of
Control Agreements") with Peter Garbis, Robert Kilgore, Gerald Wannarka and
Dennis O'Brien (the
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<PAGE>
"Executives"). These Change of Control Agreements each have a term of three
years, beginning in fiscal 1999 with respect to Messrs. Garbis, Wannarka and
O'Brien. The Change of Control Agreement with Mr. Kilgore also has a term of
three years, beginning in fiscal 2000. Under these Change of Control
Agreements, the Company will continue to pay the Executives their Base Salary
(as defined in the Change of Control Agreements) as well as continue life and
health insurance coverage for a period of 12 months following the occurrence
of both a Change of Control and a Termination Event (as such terms are
defined in the Change of Control Agreements). In addition, pursuant to
certain of each Executive's stock option agreements, certain stock options
awarded under the Company's stock option plans would become immediately
exercisable following both a Change of Control and termination of the
Executive's employment by the Company for any reason other than Cause or by
the Executive for Good Reason (as such terms are defined in the stock option
agreements).
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee (the "Committee")
advises the Board of Directors on issues concerning the Company's
compensation philosophy and the compensation of executive officers and other
individuals compensated by the Company. The Committee is empowered to
administer the Company's 1986 Stock Option Plan ("1986 Plan") and 1997
Long-Term Incentive Plan ("1997 Plan"), which includes the power to grant
stock options and stock appreciation rights and to award restricted stock and
incentive shares. The Committee also is responsible for the determination of
the compensation for the president and chief executive officer (the "CEO").
GENERAL COMPENSATION POLICY. The Committee's policy is to provide
the executive officers with compensation opportunities that are based upon
their personal performance, the financial performance of the Company and
their contribution to that performance, and that are competitive enough to
attract and retain highly skilled individuals. In addition, the compensation
programs should support the short-term and long-term strategic goals and
values of the Company and should reward individual contribution to the
Company's success. Accordingly, each executive officer's compensation package
may be comprised of three elements: (i) base salary; (ii) annual cash bonuses;
and (iii) long-term stock based incentive awards designed to strengthen the
mutuality of interests between the executive officers and the Company's
stockholders.
BASE SALARY. Salary ranges and individual salaries for executive
officers are reviewed annually. In determining individual salaries, the
Committee considers the scope of job responsibilities, individual
contribution, business performance, labor market conditions and current
compensation as compared to market practice. The Company's compensation
policy with respect to executive officers other than the CEO includes
position descriptions for all non-contract employees. Each position is
assigned a grade level based on competitive salaries for positions with a
similar range of responsibilities at companies having comparable annual
revenues to those of the Company.
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ANNUAL CASH BONUSES. The Committee may provide for the payment of
cash bonuses to executive officers through awards under the Meridian Medical
Technologies, Inc. Employee Incentive Program (the "Incentive Program") or
the payment of an annual cash bonus. The Incentive Program is designed to
assist the Corporation in attracting, retaining and providing incentives to
management employees (other than the CEO) and to promote the identification
of their interests with those of the Company's shareholders by providing for
the payment of incentive awards subject to the achievement of specified
performance goals. The annual incentive award for each management employee is
based on a percentage of each individual's base salary, but is adjusted to
reflect the actual financial performance of the Company in comparison to the
Company's business plan as well as the individual employee's performance.
The Committee also may make discretionary cash awards in order to
reward outstanding individual performance by the CEO and certain executive
officers during the fiscal year. The amount of the annual cash bonus is
within the sole discretion of the Committee and takes into account the
financial needs of the Company and the Committee's subjective assessment of
the CEO's or the executive officer's performance. On June 7, 2000, in order
to recognize the results that Mr. Miller and Mr. O'Brien had achieved in
improving the Company's financial performance, the Committee unanimously
determined to pay Mr. Miller and Mr. O'Brien discretionary cash bonuses in
the amounts of $70,000 and $30,000, respectively. On September 27, 2000, the
Committee also awarded Mr. Miller a discretionary cash bonus of $120,000 in
recognition of his performance during fiscal 2000.
LONG-TERM INCENTIVE COMPENSATION. The Committee believes that stock
options provide a useful incentive for future performance and for retaining
executives of outstanding ability. Stock option grants also serve to link the
interests of the employees and the Company's stockholders because increases
in the value of the stock options are directly tied to increases in
stockholder value. The Committee's philosophy in administering the Company's
stock option plans is to afford a broad group of non-contract employees an
opportunity to share in the ownership of the Company and the Company's
success. Accordingly, the Company historically has granted stock options to a
broad class of employees and not limited grants solely to executive officers.
The CEO has complete authority to administer the 1997 Plan with respect to
all employees other than those subject to Section 16 of the Securities
Exchange Act of 1934, as amended ("Exchange Act").
Each option allows the officer to acquire shares of the Company's
Common Stock at a fixed price per share over a specified period of time. Each
option generally becomes exercisable in installments over a fixed period,
contingent upon the officer's continued employment with the Company.
Accordingly, the option will provide a return to the officer only if he or
she remains employed by the Company during the vesting period, and then only
if the market price of the underlying shares appreciates over the option term.
CEO COMPENSATION. The Board of Directors believes that the Company
must provide a total CEO compensation package that will motivate and retain a
CEO of outstanding ability who is capable of directing the strategic focus of
the Company. The Committee will consider several factors
-11-
<PAGE>
in determining CEO compensation including job performance, competitive market
conditions for executive compensation, and the actual financial performance
of the Company in comparison to the Company's business plan. The Company's
CEO compensation program has three primary components: a base salary, a
discretionary cash bonus and a long-term incentive award.
Mr. Miller's base salary was not increased during fiscal 2000. On
September 27, 2000, after discussion and consideration of Mr. Miller's job
performance in fiscal 2000 and a review of competitive compensation
information, the Committee has unanimously determined to increase
Mr. Miller's annual salary from $375,000 to $400,000 for fiscal 2001.
In addition to the discretionary cash bonuses described above, on
September 28, 1999, the Committee granted Mr. Miller a retention award of
$20,000. The Committee noted that Mr. Miller did not receive a salary
increase in fiscal 1997 or fiscal 1998 and had not received a cash bonus
since 1996. It was also noted that the Company experienced increases over
past fiscal years in sales, operating income, gross margins and earnings
before interest, taxes, depreciation and amortization (EBITDA).
On September 28, 1999, Mr. Miller was granted an option covering
40,000 shares of Common Stock at an exercise price of $5.625 per share. On
June 7, 2000, Mr. Miller was granted an option covering 20,000 shares of
Common Stock at an exercise price of $8.625 per share. Under the terms of
each grant, each option vests in cumulative annual installments of 25%,
commencing one year from the date of grant and expires ten years from the
date of grant. See "Executive Compensation-Stock Options."
The Committee did not calculate the size of Mr. Miller's stock
option awards with reference to the compensation practices of a peer group or
other objective criteria. Instead, the number of shares of Common Stock
subject to the options was determined in the Committee's discretion based, in
part, on the awards made to Mr. Miller in prior fiscal years and its belief
that Mr. Miller should continue to have a substantial equity interest in the
Company.
ROBERT G. FOSTER
E. ANDREWS GRINSTEAD, III
DAVID L. LOUGEE
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Stock Option Committee of the Board of Directors
(the "Committee") is comprised of only non-employee directors of the Company.
Messrs. Foster, Grinstead and Lougee currently serve as members of the
Committee. Mr. Lougee is the Managing Partner of the law firm of Mirick,
O'Connell, DeMallie & Lougee. From time to time, attorneys with the firm provide
legal services to the Company.
-12-
<PAGE>
BENEFICIAL OWNERSHIP
Set forth below is a table showing certain information with respect
to those persons known to the Company to be the beneficial owners of more
than 5% of the outstanding shares of Common Stock, the Named Executives, each
director of the Company and all executive officers and directors of the
Company as a group as of November 27, 2000.
<TABLE>
<CAPTION>
Number of Shares
Beneficially Owned
Beneficial Owner Directly or Indirectly(1)(2) Percent of Class(3)
----------------------------------- ---------------------------- -------------------
<S> <C> <C>
Commonwealth BioVentures Entities 406,447(4) 12.7%
4 Milk Street
Portland, ME 04101
Mylan Laboratories, Inc. 272,229(5)(6) 8.8%
P.O. Box 4310
781 Chestnut Ridge Road
Morgantown, West Virginia 26504
EM Industries, Incorporated 243,476(5)(7) 7.9%
7 Skyline Drive
Hawthorne, New York 10532
Munder Capital Management 190,100 6.3%
480 Pierce Street
Birmingham, Michigan 48009
Nomura Holding America Inc. 204,770(5)(8) 6.3%
2 World Financial Center, Building B
New York, New York 10281
Internationale Nederlanden 174,491(5)(9) 5.4%
(U.S.) Investment Corporation
135 East 57th Street
New York, New York 10022
Bruce M. Dresner 40,475 1.3%
Robert G. Foster(10) 54,285(11) 1.8%
Peter A. Garbis 10,763 *
E. Andrews Grinstead, III 26,475 *
David L. Lougee 19,343 *
James H. Miller 291,680(12) 8.8%
</TABLE>
-13-
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
Beneficially Owned
Beneficial Owner Directly or Indirectly(1)(2) Percent of Class(3)
----------------------------------- ---------------------------- -------------------
<S> <C> <C>
Dennis P. O'Brien 9,050 *
Gerald L. Wannarka 12,450 *
All directors and executive officers as a 464,521 13.3%
group (8 persons)
----------------------
* Less than 1%
</TABLE>
(1) Unless otherwise indicated, includes shares held directly by
the individual as well as by such individual's spouse, shares
held in trust and in other forms of indirect ownership over
which shares the individual effectively exercises sole voting
and investment power and shares which the named individual
has a right to acquire within sixty days of
November 27, 2000, pursuant to the exercise of stock
options or warrants.
(2) Includes the following number of shares of Common Stock
issuable upon exercise of stock options exercisable within 60
days of November 27, 2000: Mr. Dresner, 38,975; Mr. Foster,
18,975; Mr. Garbis, 10,763; Mr. Grinstead, 26,475;
Mr. Lougee, 18,975; Mr. Miller, 281,012; Mr. O'Brien,
8,750; Dr. Wannarka, 12,450; and all directors and executive
officers as a group, 416,375.
(3) Based upon 3,038,641 shares of Common Stock outstanding as of
the record date, plus shares of Common Stock issuable within
60 days of November 27, 2000 under option or warrant.
(4) Consists of shares and warrants owned by Commonwealth
BioVentures IV Limited Partnership (54,040 shares and
warrants to purchase 32,842 shares which may be exercised
within 60 days) and Commonwealth BioVentures V Limited
Partnership (189,651 shares and warrants to purchase
129,914 shares which may be exercised within 60 days)
(collectively the "Funds"). Robert G. Foster is President
and a director, and David L. Lougee is a director, of
Commonwealth BioVentures, Inc. ("CBI"), which is the general
partner of BioVentures Limited Partnership ("BPLP"), which,
in turn, is the general partner of each of the Funds. These
numbers exclude certain shares and warrants held by
Mr. Foster or Mr. Lougee, held jointly by Mr. Foster and his
spouse or children, and held by Mr. Foster in a profit
sharing plan with CBI. CBI disclaims beneficial ownership of
the shares and warrants owned by the Funds except
to the extent of its 1% beneficial interest in the Funds. See
footnotes 10 and 11.
(5) The information set forth in the table above is derived solely
from a Schedule 13D or 13G or the most recent amendment
thereof filed with the Commission.
(6) Includes 43,556 shares of Common Stock subject to presently
exercisable warrants.
(7) Includes 29,038 shares of Common Stock subject to presently
exercisable warrants.
(8) Includes 204,770 shares of Common Stock subject to presently
exercisable warrants.
(9) Includes warrants to purchase Company Common Stock exercisable
for 174,491 shares of non-voting Common Stock, convertible, on
a one-for-one basis, into shares of voting Common Stock.
(10) Mr. Foster, a director of the Company, is the President of
CBI, which is the general partner of BPLP, which, in turn, is
the general partner of each of the Funds. Mr. Foster disclaims
beneficial ownership of all shares held by such entities. See
footnote 4.
-14-
<PAGE>
(11) Includes 13,619 shares of Common Stock held jointly by
Mr. Foster with his wife or children, 2,900 shares
Mr. Foster disclaims, 18,975 shares subject to options
exercisable within 60 days and 18,791 shares subject to
warrants exercisable within 60 days.
(12) Includes 6,726 shares of Common Stock subject to presently
exercisable warrants and 3,942 shares of Common Stock, but
excludes 760 shares of Common Stock held by Mr. Miller's
children and grandchildren. Mr. Miller disclaims beneficial
ownership of the shares of Common Stock held by his children
and grandchildren.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors
and executive officers, and persons who beneficially own more than ten
percent of a registered class of the Company's equity securities, to file
with the SEC initial reports of ownership and reports of changes in ownership
of Common Stock of the Company. Executive officers, directors and greater
than ten percent stockholders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file. To the Company's
knowledge, based solely upon a review of the copies of such reports furnished
to the Company and written representations that no other reports were
required during fiscal 2000, all Section 16(a) filing requirements applicable
to its officers, directors and greater than ten percent stockholders were
complied with.
CERTAIN TRANSACTIONS
The Company is party to a loan agreement providing for a term loan
and a revolving credit facility with Internationale Nederlanden (U.S.)
Capital Corporation ("ING"), which is an affiliate of Internationale
Nederlanden (U.S.) Investment Corporation, which in turn is the beneficial
owner of in excess of 5% of the outstanding Common Stock representing
warrants received by ING in financing transactions with the Company. See
"Beneficial Ownership." The term loan was in an aggregate principal amount of
$3.75 million at July 31, 2000, and matures on March 31, 2003. The term loan
bears interest at a rate of either the Eurodollar loan rate plus 3.5%; or the
greater of the prime rate plus 1.5% (11.0% at July 31, 2000) or the federal
funds rate plus 2.0%. The Company's line of credit with ING was increased in
fiscal 1999 in order to permit the Company to borrow up to a maximum of $8.5
million and bears interest at either the Eurodollar rate plus 3.25%; or the
greater of the prime rate plus 1.25% (10.75% at July 31, 2000) or the federal
funds rate plus 1.75%. On October 31, 2000, the Company's line of credit
reverted back to a maximum of $6.5 million.
Nomura Holding America Inc. ("Nomura") owns $15 million aggregate
principal amount of senior subordinated notes issued by the Company. The
notes mature on April 30, 2005 and bear 12% interest, payable quarterly in
arrears. In connection with the issuance of the notes, Nomura received
warrants to purchase in excess of 5% of the Company's outstanding Common
Stock at an exercise price of $11.988 per share. See "Beneficial Ownership."
Since their issuance in April 1998, the warrants have been adjusted to reduce
the exercise price to $4.625 per share.
-15-
<PAGE>
Dey Laboratories, an affiliate of EM Industries, Inc. ("EM"), a
beneficial owner of in excess of 5% of the outstanding Common Stock, is the
exclusive distributor of the Company's EpiPen-Registered Trademark- line of
auto-injectors. The Company's contract with EM extends until the year 2010,
so long as certain minimum quantity requirements are met, and generated
revenues of approximately $23.9 million to the Company in fiscal 2000. In
January 1996, a predecessor to Dey Laboratories provided a
non-interest-bearing loan to the Company in the amount of $375,000. The loan
was repaid in full during fiscal 2000.
The Company is party to a development, manufacturing and supply
agreement with Mylan Laboratories, Inc. ("Mylan"), a beneficial owner of in
excess of 5% of the outstanding Common Stock. The Company supplies vials and
pre-filled syringes containing certain drug products to be marketed by Mylan.
The agreement generated revenue of approximately $637,000 in fiscal 2000,
which consisted of a $325,000 license fee and $312,000 of product sales. The
contract extends until January 1, 2010.
-16-
<PAGE>
PERFORMANCE GRAPH
The following graph shows the cumulative stockholder return on the
Company's Common Stock during the five-year period ended July 31, 2000 as
compared to (i) an overall stock market index, the NASDAQ (U.S.) Index, and
(ii) a peer group index, the S&P Medical Products and Supplies Index. The
graph assumes that $100 was invested on August 1, 1995, and the yearly points
marked on the horizontal axis correspond to July 31 of the indicated year.
PERFORMANCE GRAPH
[GRAPH]
<TABLE>
<CAPTION>
STOCKHOLDER VALUE AT FISCAL YEAR END
-------------------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NASDAQ (U.S.) Index $100 $109 $161 $189 $270 $385
-------------------------------------------------------------------------------------------------------------
Meridian Medical Technologies, Inc. $100 $118 $82 $148 $90 $161
-------------------------------------------------------------------------------------------------------------
S&P Medical Products & Supplies Index $100 $114 $175 $220 $250 $287
-------------------------------------------------------------------------------------------------------------
</TABLE>
- 17 -
<PAGE>
PROPOSAL 2 - APPROVAL OF THE COMPANY'S EMPLOYEE STOCK PURCHASE PLAN
On September 27, 2000, the Board of Directors adopted, subject to
stockholder approval, the Meridian Medical Technologies, Inc. Employee Stock
Purchase Plan (the "Purchase Plan") and reserved 250,000 shares of Common Stock
for issuance under the Purchase Plan subject to the stockholder approval
solicited by this proxy statement.
DESCRIPTION OF THE PLAN
The purpose of the Purchase Plan is to provide eligible employees of
the Company and its designated affiliates with an opportunity to purchase shares
of Common Stock of the Company through accumulated payroll deductions. It is the
Company's intention that the Purchase Plan qualify as an employee stock purchase
plan under Section 423 of the Code.
The following summary of the material terms of the Purchase Plan is
qualified in its entirety by reference to the full text of the Purchase Plan, a
copy of which is available by writing to the Company at its principal executive
office, 10240 Old Columbia Road, Columbia, Maryland 21046, Attention: Assistant
Corporate Secretary. Unless otherwise specified, capitalized terms used herein
have the meaning assigned to them in the Purchase Plan.
ELIGIBILITY. Shares are purchased under the Purchase Plan by means of
the grant of Options to participants on the first day of recurring Option
Periods (described below) which Options are then exercised on the last day of
the respective Option Periods. As of the commencement of the first Option Period
occurring at least 90 days after becoming an employee, any individual who is
customarily employed by the Company or any designated affiliate for at least 20
hours per week will be eligible to participate in the Purchase Plan. As of
November 1, 2000, approximately 330 employees would have been eligible to
participate in the Purchase Plan if the Purchase Plan were in effect as of such
date.
A participant is not eligible for the grant of an Option to purchase
shares under the Purchase Plan if, immediately after such grant, the participant
would own capital stock constituting five percent (5%) or more of the total
combined voting power or value of all classes of capital stock of the Company or
of any affiliate of the Company. For purposes of determining whether a
participant meets this five percent (5%) limit, stock which may be purchased
under all outstanding options is treated as stock owned by the participant.
SHARES SUBJECT TO PURCHASE. A total of 250,000 shares of Common Stock
are available for sale pursuant to the Purchase Plan, subject to adjustment
pursuant to antidilution provisions. Should any shares covered by an Option fail
to be sold at the end of any Option Period, such shares may again be available
for purchase in subsequent Option Periods.
- 18 -
<PAGE>
ADMINISTRATION. The Purchase Plan will be administered by an
Administrator appointed by the Board of Directors. Unless otherwise determined
by the Board, the Company's Chief Executive Officer will be the Administrator.
The Administrator shall have full authority to adopt such rules and procedures
as it may deem necessary for proper plan administration and to interpret the
provisions of the Purchase Plan.
OPTION PERIODS. Shares will be issued through a series of successive
Option Periods, each of approximately six (6) months duration, subject to the
right of the Administrator to change the duration of Option Periods. Each
participant will be granted a separate Option to purchase shares of Common Stock
for each Option Period in which he or she participates. Options under the
Purchase Plan will be granted on the first Business Day of January and July of
each year and will be automatically exercised on the last Business Day in the
immediately succeeding June and December, respectively, of each year. Each
Option entitles the participant to purchase the number of shares of Common Stock
obtained by dividing the participant's payroll deductions for the Option Period
by the purchase price in effect for such period. The Administrator has the power
to change the duration and/or frequency of Option Periods without stockholder or
participant approval.
PURCHASE PROVISIONS. Each participant may authorize periodic payroll
deductions in any multiple of one percent (1%) of his or her cash Compensation,
up to a maximum of fifteen percent (15%). A participant may not increase his or
her rate of payroll deduction for an Option Period after the start of that
period, but he or she may decrease the rate once per Option Period. On the last
Business Day of each Option Period, the accumulated payroll deductions of each
participant will automatically be applied to the purchase of shares of Common
Stock at the Option Price in effect for that Option Period.
OPTION PRICE. The Option Price per share of Common Stock that will be
purchased on the participant's behalf for each Option Period will be equal to
eighty-five percent (85%) of the lower of (i) the fair market value per share of
Common Stock on the start date of that Option Period or (ii) the fair market
value per share of Common Stock on the last day of that Option Period. In no
event shall the Option Price per share be less than the par value per share of
the Common Stock.
LIMITATIONS. The Purchase Plan imposes certain limitations on a
participant's rights to acquire Common Stock. No participant may purchase more
than 5,000 shares of Common Stock (subject to adjustment pursuant to
antidilution provisions) with respect to any Option Period. Furthermore, no
Option granted to a participant may permit such individual to purchase Common
Stock at a rate greater than $25,000 worth of such Common Stock (valued at the
time such Option is granted) for each calendar year during which the Option is
outstanding at any time.
WITHDRAWAL; TERMINATION OF PURCHASE RIGHTS. A participant may withdraw
from participation in the Purchase Plan during an Option Period by giving
written notice of withdrawal at least five (5) Business Days before the end of
the applicable Option Period. Upon withdrawal
- 19 -
<PAGE>
from participation in the Purchase Plan, the participant's accumulated
payroll deductions will be refunded as soon as possible without interest. An
employee is eligible to participate in the Purchase Plan during subsequent
Option Periods after withdrawing from participation in the Purchase Plan
during an Option Period.
A participant's Option will immediately terminate as of the date the
participant ceases to be an employee for any reason, and his or her accumulated
payroll deductions will be promptly refunded, without interest.
DURATION, AMENDMENT AND TERMINATION. The Purchase Plan will terminate
upon the earliest to occur of (i) September 27, 2010 or (ii) the date on which
all available shares are issued. The Board of Directors may at any time amend or
terminate the Purchase Plan. Any amendment of the Purchase Plan must be approved
by stockholders of the Company to the extent stockholder approval is required by
applicable law or regulations or the requirements of the principal securities
exchange upon which the Common Stock then is listed. In addition, any amendment
of the Purchase Plan must be approved by each affected participant if such
amendment or termination would adversely affect his or her rights or obligations
under any Option granted prior to the date of such amendment or termination.
SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion briefly summarizes certain federal income tax
consequences of participation in the Purchase Plan and does not attempt to
describe all possible federal or any foreign, state, local or other tax
consequences of such participation or tax consequences based upon particular
circumstances.
The Purchase Plan is intended to be an "employee stock purchase plan"
within the meaning of Section 423 of the Code. A participant will be taxed on
amounts withheld for the purchase of shares as if such amounts were actually
received by the participant. No other income with respect to the shares
purchased will be taxable to the participant until disposition of the shares
acquired or the participant's death. The tax consequences upon disposition will
generally depend upon the holding period of the purchased shares.
If a participant disposes of purchased shares within two (2) years
after the first day of the Option Period in which such shares were acquired (the
"Option Grant Date") or within one (1) year after the last day of such Option
Period (the "Option Exercise Date") (the "required holding period"), then the
participant will recognize ordinary income in the year of sale or disposition
equal to the amount by which the fair market value of the shares on the Option
Exercise Date exceeded the purchase price paid for those shares. In addition,
the participant will recognize (i) capital gain equal to the excess, if any, of
the proceeds from the sale over the fair market value of the shares as of the
applicable Option Exercise Date, or (ii) capital loss equal to the amount the
proceeds from disposition of the shares are less than the fair market value of
the shares as of the Option Exercise Date. The Company will be entitled to a
deduction for federal income tax
- 20 -
<PAGE>
purposes equal to the amount of ordinary income a participant recognizes upon
disposition of the shares prior to expiration of the required holding period.
If a participant disposes of the purchased shares (i) more than two (2)
years after the Option Grant Date and more than one (1) year after the actual
purchase date of those shares or (ii) in the event of the participant's death,
then the participant will recognize ordinary income in the year of sale or
disposition equal to the lesser of (i) the amount by which the fair market value
of the shares on the date of disposition or the date of the participant's death
exceeded the purchase price paid for those shares or (ii) fifteen percent (15%)
of the fair market value of the shares on the Option Grant Date. The participant
will recognize capital gain equal to the excess, if any, of the proceeds from
the disposition over the sum of the purchase price paid by the participant for
the shares and the amount of ordinary income the participant recognizes. If the
proceeds from the disposition of the shares are less than the purchase price
paid by the participant, the participant will be entitled to a capital loss. The
Company will not be entitled to any income tax deduction with respect to such
sale or disposition.
The rules governing employee stock purchase plans are very technical,
so that the above description of the tax consequences is general in nature and
does not purport to be complete. Moreover, statutory provisions are subject to
change, as are their interpretations, and their application may vary in
individual circumstances. Finally, the consequences under applicable state and
local income tax laws may not be the same as under the federal income tax laws.
ACCOUNTING TREATMENT
Under current accounting principles utilized by the Company, the
issuance of Common Stock under the Purchase Plan will not require any charge
against earnings. The Company is required to disclose in a footnote to its
financial statements the pro forma effects of stock-based compensation
arrangements on net income and earnings per share, based on the fair value of
the purchase rights granted under the Purchase Plan.
CERTAIN OTHER INFORMATION
Approval of the Purchase Plan requires the affirmative vote of a
majority of the total votes cast on the proposal in person or represented by
proxy at a meeting at which a quorum is present.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE
COMPANY'S EMPLOYEE STOCK PURCHASE PLAN.
- 21 -
<PAGE>
PROPOSAL 3 - APPROVAL OF THE COMPANY'S 2000 STOCK INCENTIVE PLAN
On September 27, 2000, the Board of Directors adopted the Meridian
Medical Technologies, Inc. 2000 Stock Incentive Plan (the "2000 Plan") and
reserved 500,000 shares of Common Stock for issuance under the 2000 Plan subject
to the stockholder approval solicited by this proxy statement.
DESCRIPTION OF THE PLAN
The Board of Directors and management believe that the ability to make
grants under stock option plans has enhanced the Company's ability to attract
and retain qualified employees. They further believe that it is in the best
interests of the Company and its stockholders to recognize the contributions of
all employees in the success of the Company by providing appropriate incentives
to its employees, including grants of options.
The Company has had stock option plans for a number of years, the most
recent of which are the Company's 1986 Stock Option Plan ("1986 Plan") and 1997
Long-Term Incentive Plan ("1997 Plan"). As of November 11, 2000, 6,958 and
13,455 shares of Common Stock remain available for future grants under the 1986
Plan and the 1997 Plan, respectively. The Board of Directors has adopted the
2000 Plan in order to ensure that the Company can continue to make grants in the
event that all shares of Common Stock remaining available for future grants
under the 1986 Plan and the 1997 Plan are issued. Unlike the 1986 Plan and 1997
Plan, grants under the 2000 Plan are limited to options and restricted stock.
Furthermore, options granted under the 2000 Plan may not be repriced.
The purpose of the 2000 Plan is to assist management in attracting,
retaining and providing incentives to key employees and others who provide
services to the Company by offering them the opportunity to acquire or increase
their proprietary interest in the Company and to promote the identification of
their interests with those of the stockholders of the Company.
The following summary of the material terms of the 2000 Plan is
qualified in its entirety by reference to the full text of the 2000 Plan, a copy
of which is available by writing to the Company at its principal executive
office, 10240 Old Columbia Road, Columbia, Maryland 21046, Attention: Assistant
Corporate Secretary. Unless otherwise specified, capitalized terms used herein
have the meaning assigned to them in the 2000 Plan.
ELIGIBILITY. The 2000 Plan provides for grants of nonstatutory stock
options, incentive stock options and restricted stock, referred to herein as the
"Awards", to employees, directors, persons hired to be employees of the Company,
and consultants or independent contractors to the Company. Incentive stock
options may not be granted to persons who are not employees of the Company or an
affiliate.
SHARES AVAILABLE FOR GRANTS AND AWARDS. Pursuant to the terms of the
2000 Plan, the maximum number of shares that may be issued under the 2000 Plan
is 500,000 shares, subject to adjustment pursuant to antidilution provisions.
The maximum number of shares with respect to
- 22 -
<PAGE>
which any employee may be granted Awards under this Plan during its term is
200,000 shares, subject to adjustment pursuant to antidilution provisions.
Subject to the terms of the 2000 Plan, if an option expires or
terminates without having been fully exercised, or if shares of restricted stock
are forfeited, the unissued or forfeited shares of Common Stock which had been
covered thereby will become available for the grant of additional Awards under
the 2000 Plan.
ADMINISTRATION. The 2000 Plan is administered by such committee(s),
subcommittee(s), or person(s) appointed by the Board of Directors, herein
referred to as the "Committee". If no such appointment is in effect at any time,
the Committee means the Board of Directors. Subject to the terms of the 2000
Plan, the Committee is authorized to make Awards and to otherwise administer the
2000 Plan. Subject to the terms of the 2000 Plan, the Chief Executive Officer of
the Company has the power to administer the 2000 Plan and has the full authority
of the Committee with respect to Awards granted to employees who are not subject
to the requirements of Section 16(a) of the Exchange Act.
The 2000 Plan provides that it will terminate on September 27, 2010.
The Board of Directors may at any time amend or terminate the 2000 Plan. Any
amendment of the 2000 Plan must be approved by stockholders of the Company to
the extent stockholder approval is required by applicable law or regulations or
the requirements of the principal securities exchange upon which the Common
Stock is then listed. In addition, any amendment to the 2000 Plan must be
approved by each affected participant if such amendment or termination would
adversely affect his or her rights or obligations under any Award granted prior
to the date of such amendment or termination. The 2000 Plan will remain in
effect after its termination for the purpose of administering outstanding
Awards.
Except as otherwise provided by the Committee, Awards under the 2000
Plan may not be assigned, alienated or encumbered.
LIMITS ON AGGREGATE AWARDS. The 2000 Plan limits the number of shares
of Common Stock with respect to which any employee may receive Awards during the
term of the 2000 Plan to 200,000 shares, subject to adjustment pursuant to
antidilution provisions. Under current tax law requirements, to the extent that
the aggregate fair market value of stock with respect to which incentive stock
options granted under the 2000 Plan (and other stock option plans maintained by
the Company) are exercisable for the first time by a participant during any
calendar year exceeds $100,000 (determined at the time of the grant of the
option), the option will not be treated as an incentive stock option for federal
income tax purposes.
STOCK OPTIONS. The 2000 Plan authorizes the grant of nonstatutory
stock options and incentive stock options. The exercise of an option permits
the participant to purchase shares of Common Stock at a specified exercise
price per share. Options granted under the 2000 Plan are exercisable upon
such terms and conditions as the Committee shall determine.
- 23 -
<PAGE>
The exercise price per share and manner of payment for shares
purchased pursuant to options are determined by the Committee, subject to the
terms of the 2000 Plan. The per share exercise price of incentive stock
options and nonstatutory stock options granted under the 2000 Plan may not be
less than the fair market value per share of the Common Stock at the time of
the grant, except that incentive stock options granted to a participant who
is a ten percent (10%) stockholder (after applying certain stock ownership
attribution rules) may not have an exercise price less than one hundred ten
percent (110%) of such fair market value.
The 2000 Plan provides that the term during which options may be
exercised shall be determined by the Committee, except that no option may be
exercised after ten years (five years in the case of incentive stock options
granted to a participant who is a ten percent (10%) stockholder, after applying
certain stock ownership attribution rules) following its date of grant.
RESTRICTED STOCK. Restricted stock grants consist of shares of Common
Stock, granted without payment of cash consideration by the grantee unless
otherwise specified in the agreement relating thereto, that are restricted
against transfer, subject to forfeiture and subject to such other terms,
conditions and restrictions, for such period or periods, as shall be determined
by the Committee. Such terms may provide, in the discretion of the Committee,
for the vesting of restricted stock grants to be contingent upon the achievement
of one or more performance goals established by the Committee and specified in
the agreement. The performance goals may be based on earnings or earnings
growth, sales, return on assets, equity or investment, regulatory compliance,
satisfactory internal or external audits, improvement of financial ratings,
achievement of balance sheet, income statement or other financial statement
objectives, or any other objective goals established by the Committee and
specified in the agreement. The goals may be absolute in their terms or measured
against or in relationship to other companies similarly or otherwise situated.
Restricted stock granted under the 2000 Plan and the right to vote
shares of such restricted stock and to receive dividends thereon may not be
sold, assigned, transferred, exchanged, pledged, hypothecated or otherwise
encumbered during the restriction period. With the exception of these
restrictions, the recipient of a restricted stock award has all other rights of
a stockholder including, but not limited to, the right to receive dividends and
the right to vote shares granted.
SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following discussion briefly summarizes certain federal income tax
consequences of stock options and restricted stock granted under the 2000 Plan
and does not attempt to describe all possible federal or any foreign, state,
local or other tax consequences of such participation or tax consequences based
on particular circumstances.
INCENTIVE STOCK OPTIONS. In general, a participant who disposes of
shares acquired pursuant to the exercise of an incentive stock option more than
two years after the date such incentive stock option is granted and more than
one year after the incentive stock option is exercised to acquire such shares,
is not required to recognize income on the grant or exercise of an incentive
stock option. However, the difference between the exercise price and the fair
market value of the stock on the
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exercise date is an adjustment item for purposes of the alternative minimum
tax. If a participant does not exercise an incentive stock option within
certain specified periods of time after termination of employment, the option
is treated for federal income tax purposes in the same manner as a
nonstatutory stock option, as described below.
The general rule is that gain or loss from the sale or exchange of
shares acquired on the exercise of an incentive stock option will be treated as
a capital gain or loss. If certain holding period requirements are not
satisfied, however, the participant generally will recognize ordinary income at
the time of the disposition. Gain recognized on the disposition in excess of the
ordinary income resulting therefrom will be capital gain, and any loss
recognized will be a capital loss.
NONSTATUTORY STOCK OPTIONS. A participant generally is not required to
recognize income on the grant of a nonstatutory stock option. Instead, ordinary
income generally is required to be recognized on the date the nonstatutory stock
option is exercised. In general, the amount of ordinary income required to be
recognized is an amount equal to the excess, if any, of the fair market value of
the shares on the exercise date over the exercise price.
RESTRICTED STOCK. Shares of restricted stock granted under the 2000
Plan will generally be subject to a substantial risk of forfeiture for the
period of time specified in the grant. Unless a participant who is granted
shares of restricted stock makes an election under Section 83(b) of the Code as
described below, the participant generally is not required to recognize ordinary
income at the time of the grant of the restricted stock. Instead, on the date
the substantial risk of forfeiture lapses, the participant will be required to
recognize ordinary income in an amount equal to the fair market value of the
shares on such date, less the amount, if any, paid for the shares. If a
participant makes a Section 83(b) election to recognize ordinary income on the
date the shares are granted, the amount of ordinary income required to be
recognized is an amount equal to the fair market value of the shares on the date
of grant over the amount, if any, paid for the shares. In such case, the
participant will not be required to recognize additional ordinary income when
the substantial risk of forfeiture lapses.
GAIN OR LOSS ON SALE OR EXCHANGE OF 2000 PLAN SHARES. In general, gain
or loss from the sale or exchange of shares granted under the 2000 Plan will be
treated as capital gain or loss, provided that the shares are held as capital
assets at the time of the sale or exchange. However, if certain holding period
requirements are not satisfied at the time of a sale or exchange of shares
acquired upon exercise of an incentive stock option (a "disqualifying
disposition"), a participant may be required to recognize ordinary income upon
such disposition.
DEDUCTIBILITY BY COMPANY. The Company generally is not allowed a
deduction in connection with the grant or exercise of an incentive stock option.
However, if a participant is required to recognize ordinary income as a result
of a disqualifying disposition, the Company will be entitled to a deduction
equal to the amount of ordinary income so recognized. In the case of a
nonstatutory stock option (including an incentive stock option that is treated
as a nonstatutory stock option, as described above) or a grant of restricted
stock, at the same time the participant is
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<PAGE>
required to recognize ordinary income, the Company generally will be allowed
a deduction in an amount equal to the amount of ordinary income so recognized.
Subject to certain exceptions, Section 162(m) of the Code disallows
federal income tax deductions for compensation paid by a publicly-held company
to certain executives to the extent it exceeds $1 million for the taxable year.
The 2000 Plan has been designed to allow the Committee to make awards under the
2000 Plan that qualify under an exception to the deduction limit for
"performance-based compensation."
Where payments to certain employees that are contingent on a change in
control exceed limits specified in the Code, the employee generally is liable
for a twenty percent (20%) excise tax on, and the Company or other entity making
the payment generally is not entitled to any deduction for, a specified portion
of such payments. The Committee may grant options and restricted stock for which
the vesting is accelerated by a change in control of the Company. Such
accelerated vesting would be relevant in determining whether the excise tax and
deduction disallowance rules would be triggered with respect to certain Company
employees.
The rules governing the tax treatment of Awards granted under the 2000
Plan are very technical, so that the above description of tax consequences is
general in nature and does not purport to be complete. Moreover, statutory
provisions are subject to change, as are their interpretations, and their
application may vary in individual circumstances. Finally, the consequences
under applicable state and local income tax laws may not be the same as under
federal income tax laws.
ACCOUNTING TREATMENT
Under current accounting principles utilized by the Company, neither
the grant nor the exercise of an incentive stock option or a nonstatutory stock
option under the 2000 Plan with an exercise price not less than the fair market
value of Common Stock at the date of grant requires any charge against earnings.
The Company is required to disclose in a footnote to its financial statements
the pro forma effects of stock-based compensation arrangements on net income and
earnings per share, based on the estimated grant date fair value of stock
options that are expected to vest.
Restricted stock will require a charge to earnings representing the
value of the benefit conferred, which may be spread over the restrictive period.
Such charge is based on the market value of the shares transferred at the time
of issuance.
AWARDS PURSUANT TO THE 2000 PLAN
Subject to stockholder approval of the 2000 Plan, the Board of
Directors has granted Mr. Miller an option under the 2000 Plan covering 25,000
shares at an exercise price of $15.00 per share. The option vests in cumulative
annual installments of 25%, commencing one year from the date of grant and
expires ten years from the date of grant. It is also anticipated that, subject
to
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stockholder approval of the 2000 Plan, the 2000 Plan will be used to continue
the Company's program of nonstatutory stock option grants to non-employee
directors.
CERTAIN OTHER INFORMATION
Approval of the 2000 Plan requires the affirmative vote of a majority
of the total votes cast on the proposal in person or represented by proxy at a
meeting at which a quorum is present.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE
COMPANY'S 2000 STOCK INCENTIVE PLAN.
PROPOSAL 4 - RATIFICATION OF INDEPENDENT AUDITORS
On September 27, 2000, the Board of Directors selected the firm of
Ernst & Young LLP as independent auditors of the Company for fiscal year 2001.
This nationally known firm has no direct or indirect financial interest in the
Company.
Although not legally required to do so, the Board of Directors is
submitting the selection of Ernst & Young LLP as the Company's independent
auditor for fiscal 2001 for ratification by the stockholders at the Annual
Meeting. If a majority of the shares of Common Stock represented in person or by
proxy at the meeting is not voted for ratification, the Board will reconsider
its appointment of Ernst & Young LLP as independent auditors for the current
fiscal year.
A representative of Ernst & Young LLP will be present at the Annual
Meeting and will have the opportunity to make a statement if he desires to do
so. It is anticipated that such representative will be available to respond to
appropriate questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS AUDITORS FOR FISCAL 2001.
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OTHER BUSINESS
The Company does not presently know of any matters that will be
presented for action at the meeting other than those set forth herein. If other
matters properly come before the meeting, proxies submitted on the enclosed form
will be voted by the persons named in the enclosed form of proxy in accordance
with their best judgment.
ANNUAL REPORTS
The Company's Annual Report to Stockholders is enclosed with this Proxy
Statement. The Company also has filed with the SEC an Annual Report on Form
10-K, as amended, for the fiscal year ended July 31, 2000 (the "Form 10-K").
COPIES OF THE FORM 10-K ARE AVAILABLE UPON WRITTEN REQUEST TO THE COMPANY AT ITS
PRINCIPAL EXECUTIVE OFFICE, 10240 OLD COLUMBIA ROAD, COLUMBIA, MARYLAND 21046,
ATTENTION: ASSISTANT CORPORATE SECRETARY AND ALSO MAY BE ACCESSED ELECTRONICALLY
BY MEANS OF THE SEC'S HOME PAGE ON THE INTERNET AT "http://www.sec.gov." The
Form 10-K report and Annual Report to Stockholders are not part of these proxy
solicitation materials.
2001 ANNUAL MEETING OF STOCKHOLDERS
It presently is contemplated that the annual meeting of stockholders
following fiscal 2001 will be held on or about January 8, 2002. Under the
current rules of the Securities and Exchange Commission, in order for any
appropriate stockholder proposal to be considered for inclusion in the proxy
materials of the Company for the fiscal 2001 annual meeting of stockholders, it
must be received by the secretary of the Company no later than August 13, 2001,
by certified mail, return receipt requested. In addition, pursuant to Section
2.10 of the Company's Amended and Restated By-Laws, notice of a stockholder
proposal or of a nomination by stockholders of individuals for election to the
Company's Board of Directors, whether or not such nomination or proposal is
proposed to be included in the Company's proxy materials, must be received by
the secretary of the Company no later than August 13, 2001, by certified mail,
return receipt requested and must be accompanied by a written notice setting
forth with particularity the names and addresses of the proponents and all
persons acting in concert with the proponent, the names and addresses of the
proponent and all persons acting in concert with the proponent as they appear on
the Company's books (if they so appear), the class and number of shares of
Common Stock of the Company beneficially owned by the proponent, a description
of the proposal setting forth all material information and other such
information as the Board of Directors reasonably determines is necessary or
appropriate.
In addition, the proxies appointed by the Company may exercise
discretionary authority when voting on a stockholder proposal properly presented
at the Company's 2001 annual meeting of stockholders that is not included in the
Company's proxy statement for such meeting if such proposal is received by the
Company after August 13, 2001. If notice of such a stockholder proposal is
received by the Company on or prior to such date, such proposal is properly
presented at the 2001
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<PAGE>
annual meeting and is not included in the Company's proxy statement for such
meeting, the proxies appointed by the Company may exercise discretionary
authority if, in such proxy statement, the Company advises stockholders on
the nature of such proposal and how the proxies appointed by the Company
intend to vote on such proposal, unless the stockholder submitting such
proposal satisfies certain requirements of the Securities and Exchange
Commission, including the mailing of a separate proxy statement to the
Company's stockholders.
By Order of the Board of Directors,
/s/ Tiffany Roebuck
-----------------------------
Tiffany Roebuck
ASSISTANT CORPORATE SECRETARY
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<PAGE>
EXHIBIT A
MERIDIAN MEDICAL TECHNOLOGIES, INC.
AUDIT COMMITTEE CHARTER
ORGANIZATION
This charter governs the operations of the audit committee. The committee shall
review and reassess the charter at least annually and obtain the approval of the
board of directors of any proposed changes in compliance with applicable
requirements of self-regulatory organizations. The committee shall be appointed
by the board of directors and shall comprise at least three directors, each of
whom are independent of management and the Company. The members of the committee
will meet the applicable independence and experience requirements of
self-regulatory organizations.
STATEMENT OF POLICY
The audit committee shall assist the board of directors in fulfilling its
oversight responsibility relating to the Company's financial statements and the
financial reporting process and the annual independent audit of the Company's
financial statements. In so doing, there shall be free and open communication
between the committee, independent auditors, and management of the Company. In
discharging its oversight role, the committee is empowered to investigate any
matter brought to its attention with full access to all books, records,
facilities, and personnel of the Company and the power to retain outside
counsel, or other experts for this purpose. All employees will be directed to
cooperate with respect thereto as requested by members of the audit committee.
RESPONSIBILITIES AND PROCESSES
The primary responsibility of the audit committee is to oversee the Company's
financial reporting process on behalf of the board and report the results of its
activities to the board. It is not the duty of the audit committee to plan or
conduct audits or to determine that the Company's financial statements are
complete and accurate and are in accordance with generally accepted accounting
principles. Management is responsible for preparing the Company's financial
statements, and the independent auditors are responsible for auditing those
financial statements. The committee in carrying out its responsibilities
believes its policies and procedures should remain flexible, in order to best
react to changing conditions and circumstances.
The following shall be the principal recurring processes of the audit committee
in carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the committee may supplement them as
appropriate.
1
<PAGE>
- The committee shall have a clear understanding with management and
the independent auditors that the independent auditors are
ultimately accountable to the board and the audit committee, as
representatives of the Company's shareholders. The board shall
have the ultimate authority and responsibility to evaluate and,
where appropriate, replace the independent auditors. The committee
shall discuss with the auditors their independence from management
and the Company and the matters included in the written
disclosures required by the Independence Standards Board.
Annually, the committee shall review and recommend to the board
the selection of the Company's independent auditors.
- The committee shall discuss with the independent auditors the
overall scope and plans for their audit including the adequacy of
staffing and compensation. Also, the committee shall discuss with
management, and the independent auditors the adequacy and
effectiveness of the accounting and financial controls. Further,
the committee shall meet with the independent auditors, with and
without management present, to discuss the results of their
examinations.
- To the extent practicable, the committee shall review the interim
financial statements with management and the independent auditors
prior to the filing of the Company's Quarterly Report on Form
10-Q. Also, the committee shall discuss the results of the
quarterly review and any other matters required to be communicated
to the committee by the independent auditors under generally
accepted auditing standards. The chair of the committee may
represent the entire committee for the purposes of this review.
- The committee shall review with management and the independent
auditors the financial statements to be included in the Company's
Annual Report on Form 10-K (or the annual report to shareholders
if distributed prior to the filing of Form 10-K), including their
judgment about the quality, not just acceptability, of accounting
principles, the reasonableness of significant judgments, and the
clarity of the disclosures in the financial statements. Also, the
committee shall discuss the results of the annual audit and any
other matters required to be communicated to the committee by the
independent auditors under generally accepted auditing standards.
2
<PAGE>
MERIDIAN MEDICAL TECHNOLOGIES, INC.
EMPLOYEE STOCK PURCHASE PLAN
1. DEFINITIONS. In this Plan, except where the context otherwise
indicates, the following definitions apply:
1.1. "Administrator" means such committee(s) or person(s)
as the Board may appoint to administer the Plan. Unless otherwise determined
by the Board, the Company's Chief Executive Officer shall be the
Administrator.
1.2. "Affiliate" means a parent or subsidiary corporation
of the Company, as defined in Sections 424(e) and (f) of the Code (but
substituting "the Company" for "employer corporation"), including parents or
subsidiaries of the Company that become such after adoption of the Plan.
1.3. "Board" means the Board of Directors of the Company.
1.4. "Business Day" means any day other than a Saturday,
Sunday or legal holiday in New York, New York, except as otherwise determined
by the Administrator.
1.5. "Code" means the Internal Revenue Code of 1986, as
amended
1.6. "Common Stock" means the common stock, par value $.01
per share, of the Company.
1.7. "Company" means Meridian Medical Technologies, Inc., a
Delaware corporation, and any successor thereto.
1.8. "Compensation" means the base salary (consisting of
regular straight time gross earnings, including holiday, vacation and sick
pay and any salary reduction contribution by an Employee to a plan described
in Section 401(k) or Section 125 of the Code that is maintained by the
Company or a Designated Affiliate), commissions, payments for overtime, shift
premiums and shift differentials paid to an Employee by the Company or a
Designated Affiliate in accordance with established payroll procedures. By
way of illustration and not by way of limitation, "Compensation" shall not
include relocation assistance payments, geographical hardship pay, noncash
compensation, prizes, awards, automobile allowances, severance-type payments,
deferred compensation, income realized as a result of participation in any
stock option, stock purchase or similar plan maintained by the Company or a
Designated Affiliate, contributions (other than payroll deduction
contributions) by the Company or a Designated Affiliate to a plan described
in Section 401(k) or Section 125 of the Code that is maintained by the
Company or a Designated Affiliate and other special payments or
reimbursements.
<PAGE>
1.9. "Custodian" means a custodian, or any successor
thereto, as appointed by the Administrator from time to time with respect to
Shares issued under this Plan.
1.10. "Designated Affiliate" means any Affiliate that has
been designated by the Board or the Administrator as eligible to participate
in the Plan.
1.11. "Employee" means any person who is an employee of the
Company or a Designated Affiliate and whose customary employment by the
Company or a Designated Affiliate is at least twenty (20) hours per week. The
status of a person as an Employee shall not be affected by a leave of absence
from employment agreed to in writing by the Company or a Designated
Affiliate, as the case may be, provided that such leave is for a period of
not more than ninety (90) days or reemployment upon the expiration of such
leave is guaranteed by contract, policy, or statute.
1.12. "Enrollment Form" means the form prescribed by the
Administrator, that must be (a) completed and executed by an Employee who
elects to participate in the Plan and (b) filed with the Administrator.
1.13. "Exercise Date" means June 30th and December 31st of
each Plan Year and/or such other date(s) as may be specified by the
Administrator; provided, however, that if any Exercise Date shall not be a
Business Day in any Plan Year, then for purposes of that Plan Year such
Exercise Date shall be the first Business Day following such Exercise Date,
except that if any Exercise Date falling on December 31st shall not be a
Business Day, then such Exercise Date shall be the next Business Day
preceding such December 31st.
1.14. "Fair Market Value" means, unless otherwise
determined by the Administrator, an amount equal to the last reported sale
price for a Share in the Nasdaq Stock Market as reported by such source as
the Administrator may select, or, if such price quotations of the Common
Stock are not then reported, then the fair market value of a Share, as
determined by the Administrator, pursuant to a reasonable method adopted in
good faith for such purpose.
1.15. "Notice" means a notice provided by an Employee to
the Administrator (or other designated party) in such form (which may be
written, telephonic, electronic, or other means of communication) as may be
specified by the Administrator (or other designated party).
1.16. "Offering Date" means January 1st and July 1st of
each Plan Year and/or such other date(s) as may be specified by the
Administrator; provided, however, that (a) if any Offering Date shall not be
a Business Day in any Plan Year, then for purposes of that Plan Year such
Offering Date shall be the first Business Day following such Offering Date,
and (b) no Offering Date shall occur prior to the date the Plan is approved
by the Company's stockholders.
1.17. "Option" means an option granted pursuant to Section
7 hereof.
<PAGE>
1.18. "Option Period" means the period beginning on an
Offering Date and ending on the next succeeding Exercise Date.
1.19. "Option Price" means the purchase price of shares of
Common Stock hereunder as provided in Section 8 hereof.
1.20. "Participant" means any Employee who (a) is eligible
to participate in the Plan under Section 5 hereof and (b) elects with respect
to an Offering Period to participate in this Plan pursuant to Section 5
hereof.
1.21. "Plan" means the Meridian Medical Technologies, Inc.
Employee Stock Purchase Plan, as amended from time to time.
1.22. "Plan Account" or "Account" means a bookkeeping
account established and maintained hereunder by the Administrator and /or the
Custodian in the name of each Participant.
1.23. "Plan Year" means the twelve (12) month period
beginning January 1 of each year and ending on the following December 31;
provided, however, that the first Plan Year shall begin on the date the Plan
is approved by the Company's stockholders and end the following December 31.
1.24. "Share" means a share of Common Stock.
2. PURPOSE
The purpose of this Plan is to provide Employees of the Company and
its Designated Affiliates with an opportunity to purchase shares of Common
Stock of the Company and thereby to encourage Employee participation in the
ownership and economic success of the Company. It is the Company's intention
that this Plan qualify as an employee stock purchase plan under Section 423
of the Code and be construed in a manner consistent with the requirements
thereof.
3. ADMINISTRATION OF PLAN
3.1. The Administrator shall administer the Plan. Subject
to the provisions of the Plan, the Administrator shall have plenary authority
and full power to construe and interpret the Plan and any Enrollment Form or
Notice, to prescribe, adopt, amend and rescind rules and regulations not
inconsistent with the Plan or Section 423 of the Code relating to and, in the
Administrator's discretion, deemed desirable and appropriate for, the
administration of the Plan, and to make all other determinations deemed
necessary or advisable for the administration of the Plan. The
interpretations, determinations and decisions of the Administrator in respect
to the Plan shall be final, binding and conclusive. The Administrator shall
have the authority to appoint any other person (or persons) or entity (or
entities) to manage the Plan (or specified aspects thereof) and to delegate
to them such authority with respect to the administration of the Plan as the
Administrator, in its sole discretion, deems advisable from time to time.
<PAGE>
3.2. The Custodian shall act as custodian with respect to
Shares issued under the Plan, and shall perform such duties as are set forth
in the Plan and in any agreement between the Company and the Custodian.
4. EFFECTIVE DATE; TERM OF PLAN
4.1. The Plan and any amendment thereto shall become
effective on the date established by the Board.
4.2. Unless sooner terminated pursuant to Section 15 hereof
or Section 21 hereof, the Plan shall terminate on the earlier of the tenth
(10th) anniversary of the date on which the Plan is adopted by the Board or
approved by the Company's stockholders. Upon any termination of the Plan, the
amount, if any, credited to each Participant's Account shall be refunded to
each such Participant or, in cases where such a refund may not be possible,
otherwise disposed of in accordance with policies and procedures prescribed
by the Administrator.
5. ELIGIBILITY
An Employee shall be eligible to participate in the Plan as of the
first Offering Date occurring at least ninety (90) days after becoming an
Employee. An eligible Employee may become a Participant as of such Offering
Date or as of any subsequent Offering Date by executing and filing an
Enrollment Form with the Administrator at least fifteen (15) days prior to
the applicable Offering Date. Notwithstanding any other provision of this
Plan, no Employee may participate in the Plan if, immediately after an
Offering Date, such Employee would be deemed for purposes of Section
423(b)(3) of the Code to possess five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or any
Affiliate.
6. PAYROLL DEDUCTIONS
6.1. Payment by a Participant for Shares to be purchased by
the Participant under the Plan shall be made by authorized payroll deductions
from each payment of Compensation to the Participant on each payday during an
Option Period in an amount not less than one percent (1%) and not more than
fifteen percent (15%) of the Participant's Compensation on each such payday
in accordance with the Enrollment Form executed by the Participant.
6.2. Payroll deductions for each Option Period shall
commence on the first payday following the Offering Date for the applicable
Option Period and shall end on the last payday prior to the Exercise Date of
the applicable Option Period; provided, however, that any payday within five
(5) Business Days preceding the Exercise Date shall be included in the
immediately subsequent Option Period and shall, for purposes of this Plan, be
treated as if occurring during such subsequent Option Period.
6.3. All amounts deducted from a Participant's Compensation
pursuant to this Section 6 shall be credited to such Participant's Account. A
Participant may not
<PAGE>
have any additional payments or contributions credited to his or her Account
other than payroll deductions pursuant to the provisions of this Section 6.
6.4. A Participant may not increase the percentage of his
or her payroll deductions during any Option Period. A Participant may
decrease the percentage of his or her payroll deductions once during any
Option Period by executing and filing a new Enrollment Form with the
Administrator. Any such decrease in percentage shall be effective as of the
beginning of the next calendar month following the date of such filing if
such filing occurred at least ten (10) Business Days (or such other period as
may be specified by the Administrator) prior to the beginning of such month
or, if such filing did not occur at least ten (10) Business Days (or such
other period as may be specified by the Administrator) prior to the beginning
of such month, as of the beginning of the next succeeding calendar month
following the date of filing by the Participant of such new Enrollment Form.
6.5. A Participant may increase or decrease the percentage
of his or her payroll deductions for any subsequent Option Period by
executing and filing a new Enrollment Form with the Administrator at least
fifteen (15) days prior to the Offering Date on which such subsequent Option
Period commences.
6.6. By filing Notice with the Administrator, a Participant
may discontinue his or her payroll deductions during an Option Period and
have the payroll deductions previously made by him or her during that Option
Period remain in the Participant's Account to purchase Shares on the Exercise
Date for such Option Period, provided that he or she is an Employee as of
that Exercise Date. If a Participant discontinues payroll deductions during
an Option Period pursuant to this Section 6.6, any amount remaining in the
Participant's Account after the purchase of Common Stock on the Exercise Date
shall be refunded without interest to the Participant. Any Participant who
discontinues payroll deductions during an Option Period pursuant to this
Section 6.6 may again become a Participant for a subsequent Option Period by
executing and filing a new Enrollment Form in accordance with Section 5
hereof.
7. GRANT OF OPTION
Subject to the provisions of the Plan, on the Offering Date for each
Option Period, each Participant shall be granted an Option to purchase the
largest number of Shares that can be purchased with the Participant's Account
balance. Unless otherwise determined by the Administrator, Shares purchased
shall include fractional Shares calculated to at least three decimal places.
The number of Shares purchased during an Option Period shall be determined by
dividing the Participant's Account balance as of such Exercise Date by the
Option Price per Share.
8. OPTION PRICE
The Option Price per Share purchased by a Participant pursuant to
the exercise of an Option shall be eighty-five percent (85%) of Fair Market
Value on either the Offering Date or the Exercise Date for the applicable
Option Period, whichever is lower, but in no
<PAGE>
event shall the Option Price per share be less than the par value per share
of the Common Stock.
9. PURCHASE OF SHARES
Subject to the provisions of the Plan, on the Exercise Date for each
Option Period, the Option granted to each Participant under Section 7 hereof
on the Offering Date for such Option Period shall be exercised automatically
and the largest number of Shares, including fractional Shares (unless
otherwise determined by the Administrator), subject to such Option shall be
purchased by the Participant by charging the Participant's Account with the
amount equal to the product of (a) the Option Price of such Option and (b)
the number of Shares covered by the Option as determined in accordance with
Section 7 hereof. If fractional Shares are not to be purchased for a
Participant's Account, any payroll deductions accumulated in a Participant's
Account not sufficient to purchase a full Share shall be retained in the
Participant's Account for the subsequent Offering Period, subject to earlier
withdrawal by the Participant pursuant to Section 18 hereof.
10. LIMITATIONS ON PURCHASE
Subject to adjustment pursuant to Section 14 hereof, no Participant
shall purchase more than 5,000 Shares with respect to any Option Period.
Notwithstanding any provision of this Plan to the contrary, no Participant
shall be granted an Option under Section 7 hereof that gives the Participant
the right to purchase Shares that will exceed the limitations imposed by
Section 423(b)(8) of the Code (relating to an annual $25,000 per Participant
limitation on purchases of Shares under the Plan).
11. TRANSFERABILITY OF RIGHTS
During a Participant's lifetime, an Option granted to a Participant
hereunder shall be exercisable only by the Participant. Neither amounts
credited to a Participant's Account nor any rights of a Participant with
regard to an Option may be assigned, alienated, encumbered, transferred,
pledged or otherwise disposed of in any way by the Participant other than by
will or the laws of descent and distribution. Any attempt by a Participant to
make any such prohibited assignment, alienation, encumberment, transfer,
pledge or disposition shall be null and void and without effect, provided
that the Administrator may treat any such attempted assignment, transfer,
pledge or disposition as a withdrawal Notice in accordance with Section 18
hereof.
12. DELIVERY
As promptly as practicable after each Option Period, the Company
shall arrange for the Shares purchased by each Participant on the Exercise
Date for such Option Period to be delivered to the Custodian for crediting to
the Participant's Account.
13. COMMON STOCK SUBJECT TO THE PLAN
13.1. Subject to adjustment as provided in Section 14
hereof, the maximum number of Shares that may be issued under the Plan shall
be 250,000 Shares.
<PAGE>
13.2. If an Option shall terminate for any reason without
being exercised under Section 9 hereof, the unissued Shares which had been
subject to such Option shall be available for the grant of additional Options
and for issuance and sale under the Plan.
14. CAPITAL ADJUSTMENTS
In the event of any change or adjustment in the outstanding Shares
by reason of any stock dividend, stock split (or reverse stock split),
recapitalization, reclassification, reorganization, reincorporation,
combination or exchange of shares, merger, consolidation, liquidation or
other similar change in corporate structure or otherwise, the Administrator,
in its discretion, may make or provide for a substitution for, or adjustment
in, (a) the number and class of stock or other securities that may be
reserved for purchase or purchased under the Plan, (b) the number of Shares
covered by each Option that has not yet been exercised, (c) the maximum
number of Shares that may be purchased by a Participant with respect to any
Option Period, (d) the Option Price, and (e) the aggregate number and class
of Shares that may be issued and purchased under the Plan.
15. INSUFFICIENT SHARES
Notwithstanding any provision of this Plan to the contrary, if the
aggregate funds available for the purchase of Shares on any Exercise Date
would cause an issuance of Shares in excess of the number of Shares then
available for issuance and sale under the Plan, then (a) the Administrator
shall proportionately reduce the number of Shares which would otherwise be
purchased by each Participant on such Exercise Date in order to eliminate
such excess, and (b) the Plan shall automatically terminate immediately after
such Exercise Date. In such event, the Company shall give Notice of such
reduction to each Participant affected thereby.
16. CONFIRMATION
Each purchase of Shares under the Plan by a Participant shall be
confirmed by the Company in writing to the Participant.
17. RIGHTS AS STOCKHOLDERS
17.1. Shares purchased by a Participant on any Exercise
Date shall, for all purposes, be deemed to have been issued, sold and
transferred to the Participant as of the close of business on such Exercise
Date. Prior to such time, none of the rights or privileges of a stockholder
of the Company shall exist with respect to such Shares and the Participant
shall have no interest or voting rights in such Shares.
17.2. As of the close of business on the Exercise Date for
the applicable Option Period, each Participant shall be entitled to vote the
number of Shares credited to his or her Participant Account (including
fractional Shares credited to such Account) on any matter as to which the
approval of the Company's stockholders is sought. If a Participant does not
vote or grant a valid proxy with respect to Shares credited to his or her
Account, such Shares shall be voted by the Custodian in accordance with any
stock exchange or other rules governing the Custodian in the voting of shares
held for customer
<PAGE>
accounts. Similar procedures shall apply in the case of any consent
solicitation of Company stockholders.
17.3. Cash dividends on any Share credited to a
Participant's Account shall be automatically reinvested in additional Shares,
unless otherwise directed by the Administrator. All cash dividends paid on
Shares credited to Participants' Accounts shall be paid over by the Company
to the Custodian at the dividend payment date. The Custodian shall aggregate
all purchases of Shares in connection with the Plan for a given dividend
payment date. Purchases of Shares for purposes of dividend reinvestment shall
be made as promptly as practicable (but not more than 30 days) after a
dividend payment date. The Custodian shall make such purchases, as directed
by the Administrator, either (a) in transactions on any securities exchange
upon which the Shares are traded, or if the Shares are not so traded, in the
over-the-counter market or in negotiated transactions, or (b) directly from
the Company at 100% of the Fair Market Value of a Share on the dividend
reinvestment date. Any Shares distributed as a dividend or distribution in
respect of Shares or in connection with a split of the Shares shall be
credited to the Participants' Accounts. In the event of any other non-cash
dividend or distribution with respect to Shares credited to Participants'
Accounts, the Custodian shall, if reasonably practicable and at the direction
of the Administrator, sell any property received in such dividend or
distribution as promptly as practicable and use the proceeds to purchase
additional Shares in the same manner as cash paid to the Custodian for
purposes of dividend reinvestment.
18. VOLUNTARY WITHDRAWAL
18.1. A Participant may withdraw from participation in the
Plan by filing with the Administrator a withdrawal Notice at least five (5)
Business Days prior to an Exercise Date. Upon withdrawal, (a) the entire
amount, if any, credited to a Participant's Account shall be refunded to the
Participant without interest as soon as practicable after receipt of the
Participant's withdrawal Notice, (b) the Participant's Option for the Option
Period during which the Participant filed a withdrawal Notice automatically
shall be terminated, (c) the Participant shall not purchase any Shares under
Section 9 hereof on the Exercise Date for such Option Period, (d) no further
payroll deductions for the purchase of Shares under the Plan may be made by
the Participant during such Option Period, and (e) the withdrawing
Participant shall cease to be a Participant with respect to subsequent Option
Periods. Any Participant who withdraws from the Plan pursuant to this Section
18 may again become a Participant with respect to subsequent Option Periods
in accordance with Section 5 hereof.
18.2. Following the completion of two years from the first
day of an Option Period, a Participant may elect to withdraw Shares acquired
on the Exercise Date for such Option Period from his or her Account in
certificated form or to transfer such Shares from his or her Account to an
account of the Participant maintained with a broker-dealer, financial
institution or such other person or entity as may be permitted by the
Administrator. During the first two years from the first day of the Option
Period, all sales and transfers shall only be effectuated by the Custodian on
the Participant's behalf. If a Participant elects to withdraw Shares, one or
more certificates for whole Shares shall
<PAGE>
be issued in the name of, and delivered to, the Participant, with such
Participant receiving cash in lieu of fractional Shares based on the Fair
Market Value of a Share on the date of withdrawal. If Shares are transferred
from a Participant's Account to a broker-dealer, financial institution or
other permitted recipient, only whole Shares shall be transferred and cash in
lieu of any fractional Share shall be paid to such Participant based on the
Fair Market Value of a Share on the date of transfer. A Participant seeking
to withdraw or transfer Shares shall provide instructions to the Custodian in
such manner and form as may be prescribed by the Administrator and the
Custodian, which instructions shall be acted upon as promptly as practicable.
Withdrawals and transfers shall be subject to any fees imposed in accordance
with Section 30 hereof.
18.3. Upon termination of employment of a Participant for
any reason, the Custodian shall continue to maintain the Participant's
Account until the earlier of such time as the Participant withdraws or
transfers all Shares in the Account or two years after the Participant ceases
to be employed by the Company and its Affiliates. Upon the expiration of such
two-year period, Shares credited to the Participant's Account shall be
withdrawn or transferred as elected by the Participant or, in the absence of
such election, as determined by the Administrator.
19. TERMINATION OF ELIGIBILITY
If a Participant ceases to be an Employee for any reason then, as of
the date such Participant ceases to be an Employee, (a) the entire amount, if
any, credited to the Participant's Account, shall as soon as practicable, be
refunded without interest to the Participant or, in the event of the
Participant's death, to the beneficiary designated by the Participant
pursuant to Section 26 hereof, (b) the Participant's Option for the Option
Period during which the Participant ceases to be eligible automatically shall
terminate, (c) the Participant shall not purchase any Shares under Section 9
hereof on the Exercise Date for such Option Period, and (d) no further
payroll deductions for the purchase of Shares under the Plan may be made by
the Participant during such Option Period.
20. NOTICES
Any Notice that a Participant provides pursuant to the Plan shall be
made in such form and manner as prescribed by the Administrator (or other
designated person) and any such Notice or other communications by a
Participant to the Administrator (or other designated person) under or in
connection with the Plan shall be effective when received by the
Administrator or by the person designated by the Administrator for receipt
thereof.
21. TERMINATION OR AMENDMENT OF PLAN
21.1. The Board may amend or terminate this Plan in any
respect at any time; provided, however, that, after this Plan has been
approved by the stockholders of the Company, no amendment or termination of
the Plan shall be made by the Board without approval of (a) the Company's
stockholders to the extent stockholder approval is required by applicable law
or regulations or the requirements of the principal securities exchange or
interdealer quotation system upon which the Common Stock then is listed or
<PAGE>
quoted, if any, and (b) each affected Participant if such amendment or
termination would adversely affect his or her rights or obligations under any
Option granted prior to the date of such amendment or termination. No Options
may be granted, no Shares may be issued and no payroll deductions may be made
under the Plan after any termination of the Plan. In the event of the
termination of the Plan during an Option Period, the entire amount, if any,
in the Participant's Account shall as soon as practicable be refunded without
interest to the Participant or, in the event of the Participant's death, to
the beneficiary designated by the Participant pursuant to Section 26 hereof.
21.2. Notwithstanding Section 21.1 hereof, the
Administrator shall have the power to change the duration and/or frequency of
Option Periods with respect to future offerings without stockholder or
Participant approval. Any such change shall be communicated to Participants
prior to the scheduled beginning of the first Option Period to be so affected.
22. USE OF FUNDS
All funds received by the Company in connection with this Plan may
be used by the Company for any corporate purpose, and the Company shall be
under no obligation to segregate such funds.
23. LEGAL RESTRICTIONS
23.1. Notwithstanding any other provision of the Plan, the
Company shall not be obligated to issue or sell Shares under the Plan (a)
unless the approval of all regulatory bodies deemed necessary by the
Administrator have been obtained and unless the issuance, sale and delivery
of such Shares pursuant to the Plan shall comply, to the Administrator's
complete satisfaction, with all provisions of federal, state or local law
deemed applicable by the Administrator and all rules and regulations
thereunder, and the requirements of any securities exchange upon which the
Common Stock may then be listed or interdealer quotation system upon which
the Common Stock is then quoted, or (b) if the Company determines that the
issuance, sale or delivery of such Shares pursuant hereto would violate any
applicable law or regulation.
23.2. The Administrator may require any person acquiring
Shares pursuant to the Plan hereunder to represent to, and agree with, the
Company in writing that such person is acquiring the Shares without a view to
distribution thereof. The certificates for such Shares may include any legend
that the Administrator deems appropriate to reflect any restrictions on
transfer. All certificates for Shares issued pursuant to this Plan shall be
subject to such stock transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange
upon which the Common Stock is then listed or interdealer quotation system
upon which the Common Stock is then quoted, and any applicable federal or
state securities laws. The Administrator may place a legend or legends on any
such certificates to make appropriate reference to such restrictions.
<PAGE>
24. GOVERNING LAW
The Plan and all rights and obligations thereunder shall be
governed, construed, administered and enforced in accordance with the laws of
the State of Delaware.
25. NOTICE OF DISPOSITION OF SHARES
Each Participant shall agree in such form as may be prescribed by
the Administrator to promptly provide Notice to the Administrator of any
disposition of Shares purchased under the Plan that occurs within two (2)
years after the date of grant of the Option pursuant to which such Shares
were purchased.
26. DESIGNATION OF BENEFICIARY
A Participant may file with the Administrator a written designation
of beneficiary who is to receive Shares or cash in the case of the
Participant's death. Such designation of beneficiary may be changed by the
Participant in writing at any time. In the event of the absence of a
beneficiary validly designated under the Plan who is living at the time of
the Participant's death, the Participant's beneficiary for purposes of the
Plan shall be the Participant's surviving spouse or, if the Participant is
not survived by a spouse, the executor or administrator of the Participant's
estate.
27. INDEMNIFICATION OF ADMINISTRATOR
In addition to such other rights of indemnification as they may have
as members of the Board or as the Administrator, each person serving as the
Administrator (either alone or with one or more other persons) shall be
indemnified by the Company against the reasonable expenses, including
attorneys' fees, actually and reasonably incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal
therein, to which such person may be a party by reason of any action taken or
failure to act under or in connection with the Plan or any Option and against
all amounts reasonably paid by such person in settlement thereof or paid by
such person in satisfaction of a judgment in any such action, suit or
proceeding, if such person acted in good faith and in a manner which such
person believed to be in, and not opposed to, the best interests of the
Company.
28. REPORTS
Individual accounts shall be maintained for all Participants. A
statement of account shall be provided to each Participant as soon as
possible following each Exercise Date, which statement shall set forth the
amounts credited to the Participant's Account, the Option Price per share for
Shares purchased by the Participant on such Exercise Date, the number of
Shares purchased on such Exercise Date and the remaining balance, if any,
credited to the Participant's Account.
<PAGE>
29. WITHHOLDING
The Company or any Designated Affiliate shall be authorized to
withhold from any payment to be made to a Participant, including any payroll
or other payments not related to the Plan, amounts of withholding and other
taxes due in connection with any transaction under the Plan, including any
disposition of Shares acquired under the Plan. A Participant's enrollment in
the Plan by executing an Enrollment Form shall be deemed to constitute his or
her consent to such withholding. At the time of a Participant's exercise of
an Option or the disposition of Shares acquired under the Plan, the Company
may require the Participant to make other arrangements to satisfy tax
withholding obligations as a condition to exercise of rights or the
distribution of Shares or other amounts credited to the Participant's
Account. If so required by the Administrator a Participant shall provide
Notice to the Company of sales and other dispositions of Shares acquired
under the Plan in order to permit the Company to comply with tax laws and to
claim any tax deductions to which the Company may be entitled with respect to
the Plan.
30. COSTS
Costs and expenses incurred in the administration of the Plan and
maintenance of Accounts shall be paid by the Company, including annual fees
of the Custodian, provided that brokerage fees and commissions for the
purchase of Shares upon reinvestment of dividends and in connection with
distributions shall be charged to Participants' Accounts to the extent not
paid by the Company. The Custodian may impose or charge to Participants'
Accounts a reasonable fee for the withdrawal of Shares in the form of stock
certificates, and reasonable fees for other services unrelated to the
purchase of Shares under the Plan, to the extent approved in writing by the
Company and communicated to Participants. In no event shall the Company pay
any brokerage fees and commissions for the sale of Shares acquired under the
Plan by a Participant.
31. MISCELLANEOUS
31.1. The establishment of the Plan shall not confer upon
any Employee any legal or equitable right against the Company, any Affiliate
or the Administrator, except as expressly provided in the Plan.
31.2. Participation in this Plan shall not give an Employee
any right to be retained in the service of the Company or any Affiliate.
31.3. Neither the adoption of the Plan nor its submission,
to or approval by, the stockholders of the Company shall be taken to impose
any limitations on the powers of the Company or its Affiliates to issue,
grant, or assume options otherwise than under this Plan, or to adopt other
stock option plans, stock purchase plans, or other plans, or to impose any
requirement of stockholder approval upon the same.
31.4. No interest shall accrue on any amounts credited to
Participants' Account under the Plan.
<PAGE>
MERIDIAN MEDICAL TECHNOLOGIES, INC.
2000 STOCK INCENTIVE PLAN
1. DEFINITIONS. In this Plan, except where the context otherwise
indicates, the following definitions shall apply:
1.1. "Affiliate" means a corporation, partnership, business
trust, limited liability company or other form of business organization at least
a majority of the total combined voting power of all classes of stock or other
equity interests of which is owned by the Company, either directly or through
one or more other Affiliates.
1.2. "Agreement" means a written agreement evidencing an
Award.
1.3. "Award" means a grant of an Option or shares of
Restricted Stock.
1.4. "Board" means the Board of Directors of the Company.
1.5. "Code" means the Internal Revenue Code of 1986, as
amended.
1.6. "Committee" means such committee(s), or subcommittee(s)
or person(s) appointed by the Board to administer this Plan or to make and/or
administer specific Awards hereunder. If no such appointment is in effect at any
time, "Committee" shall mean the Board.
1.7. "Common Stock" means the common stock, par value $.01 per
share, of the Company.
1.8. "Company" means Meridian Medical Technologies, Inc., a
Delaware corporation, and any successor thereto.
1.9. "Date of Exercise" means the date on which the Company
receives notice of the exercise of an Option in accordance with the terms of
Section 7.1 hereof.
1.10. "Date of Grant" means the date on which an Option or
shares of Restricted Stock are granted under this Plan.
1.11. "Eligible Person" means any person who is (a) an
Employee, (b) hired to be an Employee, (c) a Non-Employee Director, or (d) a
consultant or independent contractor to the Company or an Affiliate.
1.12. "Employee" means any person determined by the Committee
to be an employee of the Company or an Affiliate.
1.13. "Fair Market Value" means, unless otherwise determined
by the Committee, an amount equal to the last reported sale price for a Share in
the Nasdaq Stock Market as reported by such source as the Committee may select,
or, if such price
<PAGE>
quotations of the Common Stock are not then reported, then the fair market
value of a Share as determined by the Committee pursuant to a reasonable
method adopted in good faith for such purpose.
1.14. "Incentive Stock Option" means an Option granted under
this Plan that the Company designates as an incentive stock option under Section
422 of the Code.
1.15. "Non-Employee Director" means any member of the
Company's or an Affiliate's Board of Directors who is not an Employee.
1.16. "Nonstatutory Stock Option" means an Option granted
under this Plan that is not an Incentive Stock Option.
1.17. "Option" means an option to purchase Shares granted
under this Plan in accordance with the terms of Section 6 hereof.
1.18. "Option Period" means the period during which an Option
may be exercised.
1.19. "Option Price" means the price per Share at which an
Option may be exercised.
1.20. "Participant" means an Eligible Person who has been
granted an Award hereunder.
1.21. "Performance Goals" means performance goals established
by the Committee which may be based on earnings or earnings growth, sales,
return on assets, cash flow, total shareholder return, equity or investment,
regulatory compliance, satisfactory internal or external audits, improvement of
financial ratings, achievement of balance sheet or income statement objectives,
implementation or completion of one or more projects or transactions, or any
other objective goals established by the Committee, and may be absolute in their
terms or measured against or in relationship to other companies comparably,
similarly or otherwise situated. Such performance standards may be particular to
an Eligible Person or the department, branch, Affiliate or other division in
which he or she works, or may be based on the performance of the Company or the
Company and its Affiliates generally, and may cover such period as may be
specified by the Committee.
1.22. "Plan" means the Meridian Medical Technologies, Inc.
2000 Stock Incentive Plan, as amended from time to time.
1.23. "Restricted Stock" means Shares granted under the Plan
pursuant to the provisions of Section 8 hereof.
2
<PAGE>
1.24. "Section 422 Employee" means an Employee who is employed
by the Company or a "parent corporation" or "subsidiary corporation" (both as
defined in Section 424(e) and (f) of the Code) with respect to the Company.
1.25. "Share" means a share of Common Stock.
1.26. "Ten-Percent Stockholder" means a Section 422 Employee
who (applying the rules of Section 424(d) of the Code) owns stock possessing
more than 10% of the total combined voting power of all classes of stock of the
Company or an Affiliate.
2. PURPOSE. This Plan is intended to assist the Company and its
Affiliates in attracting and retaining Eligible Persons of outstanding ability
and to promote the identification of their interests with those of the
stockholders of the Company and its Affiliates.
3. ADMINISTRATION. The Committee shall administer this Plan and shall
have plenary authority, in its discretion, to grant Awards to Eligible Persons,
subject to the provisions of this Plan. The Committee shall have plenary
authority and discretion, subject to the provisions of this Plan, to determine
the Eligible Persons to whom Awards shall be granted, the terms (which terms
need not be identical) of all Awards, including without limitation the Option
Price of Options, the time or times at which Awards are made, the number of
Shares covered by Awards, whether an Option shall be an Incentive Stock Option
or a Nonstatutory Stock Option, any exceptions to non-transferability, any
Performance Goals applicable to Awards, any provisions relating to vesting, and
the period during which Options may be exercised and Restricted Stock shall be
subject to restrictions. In making these determinations, the Committee may take
into account the nature of the services rendered or to be rendered by Award
recipients, their present and potential contributions to the success of the
Company and its Affiliates, and such other factors as the Committee in its
discretion shall deem relevant. Subject to the provisions of the Plan, the
Committee shall have plenary authority to interpret the Plan, prescribe, amend
and rescind rules and regulations relating to it, and make all other
determinations deemed necessary or advisable for the administration of this
Plan. The determinations of the Committee on the matters referred to in this
Section 3 shall be binding and final. Notwithstanding the foregoing provisions,
the Chief Executive Officer of the Company shall have the power to administer
this Plan and have the full authority of the Committee hereunder with respect to
Awards granted to Eligible Persons who are not subject to the requirements of
Section 16 (a) of the Securities Exchange Act of 1934, as amended.
4. ELIGIBILITY. Awards may be granted only to Eligible Persons;
provided, however, that Incentive Stock Options may only be granted to Eligible
Persons who are Section 422 Employees on the Date of Grant.
5. STOCK SUBJECT TO PLAN.
5.1. Subject to adjustment as provided in Section 9 hereof,
(a) the maximum number of Shares that may be issued under this Plan is 500,000
Shares and (b)
3
<PAGE>
the maximum number of Shares with respect to which an Employee may be granted
Awards under this Plan during its term is 200,000 Shares.
5.2. If an Option expires or terminates for any reason without
having been fully exercised or if shares of Restricted Stock are forfeited, the
unissued or forfeited Shares that had been subject to the Award shall available
for the grant of additional Awards.
6. OPTIONS.
6.1. Options granted under this Plan to Eligible Persons shall
be either Incentive Stock Options or Nonstatutory Stock Options, as designated
by the Committee; provided, however, that Incentive Stock Options may only be
granted to Eligible Persons who are Section 422 Employees on the Date of Grant.
Each Option granted under this Plan shall be clearly identified either as a
Nonstatutory Stock Option or an Incentive Stock Option and shall be evidenced by
an Agreement that specifies the terms and conditions of the Option. Options
shall be subject to the terms and conditions set forth in this Section 6 hereof
and such other terms and conditions not inconsistent with this Plan as the
Committee may specify.
6.2. The price per share of Common Stock at which an Option
granted under this Plan may be exercised shall not be less than one hundred
percent (100%) of the Fair Market Value of the Common Stock on the Date of
Grant. Notwithstanding the foregoing, in the case of an Incentive Stock Option
granted to an Employee who, at the time of grant, is a Ten Percent Shareholder,
the exercise price per share shall not be less than one hundred and ten percent
(110%) of the Fair Market Value of the Common Stock on the date on which the
Option is granted.
6.3. The Option Period shall be determined by the Committee
and specifically set forth in the Agreement; provided, however, that an Option
shall not be exercisable after ten years (five years in the case of an Incentive
Stock Option granted to a Ten-Percent Stockholder) from its Date of Grant.
7. EXERCISE OF OPTIONS.
7.1. An Option may, subject to the terms of the applicable
Agreement under which it was granted, be exercised in whole or in part by the
delivery to the Company of written notice of the exercise, in such form as the
Committee may prescribe, accompanied by (a) full payment for the Shares with
respect to which the Option is exercised or (b) irrevocable instructions to a
broker to deliver promptly to the Company cash equal to the Option Price of the
Option. To the extent provided in the applicable Agreement, payment may be made
in whole or in part by delivery (including constructive delivery) of Shares
(provided that such Shares, if acquired pursuant to an option granted hereunder
or under any other plan maintained by the Company or any Affiliate, have been
held by the Participant for at least six (6) months) valued at Fair Market Value
on the Date of Exercise or by delivery of a promissory note as provided in
Section 7.2 hereof.
4
<PAGE>
7.2. To the extent provided in an Agreement and permitted by
applicable law, the Committee may accept as partial payment of the Option Price
a promissory note executed by the Participant evidencing his or her obligation
to make future cash payment thereof. Promissory notes made pursuant to this
Section 7.2 shall be payable upon such terms as may be determined by the
Committee, shall be secured by a pledge of the Shares received upon exercise of
the Option or other securities the Committee may deem to be acceptable for such
purposes, and shall bear interest at a rate fixed by the Committee.
7.3. Awards granted under this Plan shall not be transferable
except by will, the laws of descent and distribution, except to the extent
provided in an Agreement.
8. RESTRICTED STOCK AWARDS.
8.1. Awards of Restricted Stock under this Plan shall consist
of Shares that are restricted as to transfer, subject to forfeiture, and subject
to such other terms and conditions as may be determined by the Committee. Such
terms and conditions may provide, in the discretion of the Committee, for the
lapse of such transfer restrictions or forfeiture provisions to be contingent
upon the achievement of one or more specified Performance Goals.
8.2. Restricted Stock awards under this Plan shall be
evidenced by Agreements specifying the terms and conditions of the Award. Each
Agreement evidencing the grant of Restricted Stock shall, except to the extent
otherwise determined by the Committee, contain the following:
(a) prohibitions against the sale, assignment,
transfer, exchange, pledge, hypothecation, or other encumbrance of (i) the
Shares granted as Restricted Stock, (ii) the right to vote the Shares, and (iii)
the right to receive dividends thereon, in each case during, the restriction
period applicable to the Shares; provided, however, that the Participant shall
have all the other rights of a stockholder including without limitation the
right to receive dividends and the right to vote the Shares;
(b) a requirement that each certificate representing
Restricted Stock shall be deposited with the Company, or its designee, and
shall bear the following legend:
"This certificate and the shares of stock represented
hereby are subject to the terms and conditions
(including the risks of forfeiture and restrictions
against transfer) contained in the Meridian Medical
Technologies, Inc. 2000 Stock Incentive Plan (the
"Plan"), and an Agreement entered into between the
registered owner and Meridian Medical Technologies,
Inc. Release from such terms and conditions shall be
made only in accordance with
5
<PAGE>
the provisions of the Plan and the Agreement, a copy
of each of which is on file in the office of the
Secretary of Meridian Medical Technologies, Inc."
(c) the terms and conditions upon which any
restrictions applicable to the Restricted Stock shall lapse and new
certificates free of the foregoing legend shall be issued to the Participant
or the Participant's legal representative; and
(d) such other terms, conditions and restrictions
as the Committee in its discretion may specify, including without limitation
terms that condition the lapse of forfeiture provisions and transfer
restrictions upon the achievement of one or more specified Performance Goals.
9. CAPITAL ADJUSTMENTS. In the event of any change in the outstanding
Common Stock by reason of any stock dividend, split-up, recapitalization,
reclassification, combination or exchange of shares, merger, consolidation,
liquidation or the like, the Committee may, in its discretion, provide for a
substitution for or adjustment in (a) the number and class of Shares subject to
outstanding Awards, (b) the Option Price of Options (c) the aggregate number and
class of Shares for which Awards thereafter may be made under this Plan, (d) the
maximum number of Shares with respect to which an Employee may be granted Awards
during the period specified in clause (b) of Section 5.1 hereof, and (e) the
number of Shares covered by, and exercise price of, Options that may be granted
pursuant to Section 6.1 hereof.
10. TERMINATION OR AMENDMENT. The Board may amend or terminate this
Plan in any respect at any time; provided, however, that, after this Plan has
been approved by the stockholders of the Company, no amendment or termination of
this Plan shall be made by the Board without approval of (a) the Company's
stockholders to the extent stockholder approval of the amendment is required by
applicable law or regulations or the requirements of the principal securities
exchange or interdealer quotation system upon which the Common Stock is listed
or quoted, if any, and (b) each affected Participant if such amendment or
termination would adversely affect such Participant's rights or obligations
under any Award granted prior to the date of such amendment or termination.
11. MODIFICATION AND SUBSTITUTION.
11.1. Subject to the terms and conditions of this Plan, the
Committee may modify the terms of any outstanding Awards; provided, however,
that (a) no modification of an Award shall, without the consent of the
Participant, alter or impair any of the Participant's rights or obligations
under such Award and (b) in no event may an Option be modified so as to reduce
the Option Price of the Option.
11.2. Anything contained herein to the contrary
notwithstanding, Awards may, at the discretion of the Committee, be granted
under this Plan in substitution for stock options and other awards covering
capital stock of another corporation which is merged into, consolidated with, or
all or a substantial portion of the
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property or stock of which is acquired by, the Company or one of its
Affiliates. The terms and conditions of the substitute Awards so granted may
vary from the terms and conditions set forth in this Plan to such extent as
the Committee may deem appropriate in order to conform, in whole or part, to
the provisions of the awards in substitution for which they are granted. Such
substitute Awards granted hereunder shall not be counted toward the Share
limit imposed by clause (b) of Section 5.1 hereof, except to the extent it is
determined by the Committee that counting such Awards is required in order
for Awards hereunder to be eligible to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code.
12. FOREIGN EMPLOYEES. Without amendment of this Plan, the Committee
may grant Awards to Eligible Persons, or to a trust established for the benefit
of Eligible Persons, who are subject to the laws of foreign countries or
jurisdictions on such terms and conditions different from those specified in
this Plan as may in the judgement of the Committee be necessary or desirable to
foster and promote achievement of the purposes of this Plan and, in furtherance
of such purposes. The Committee may make such modifications, amendments,
procedures, sub-plans and the like as may be necessary or advisable to comply
with provisions of laws of other countries or jurisdictions in which the Company
or any of its Affiliates operate or have employees.
13. EFFECTIVENESS OF THIS PLAN. This Plan and any amendments hereto
requiring stockholder approval pursuant to Section 10 hereof are subject to
approval by vote of the stockholders of the Company at the next annual or
special meeting of stockholders following adoption by the Board. Subject to such
stockholder approval, this Plan and any amendments hereto are effective on the
date on which they are adopted by the Board.
14. WITHHOLDING. The Company's obligation to deliver Shares pursuant to
the terms of any Award hereunder shall be subject to satisfaction of applicable
federal, state and local tax withholding requirements. To the extent provided in
the applicable Agreement and in accordance with rules prescribed by the
Committee, a Participant may satisfy any such withholding tax obligation by any
of the following means or by a combination of such means: (a) tendering a cash
payment, (b) authorizing the Company to withhold Shares otherwise issuable to
the Participant, or (c) delivering to the Company already-owned and unencumbered
Shares.
15. TERM OF PLAN. Unless sooner terminated by the Board pursuant to
Section 10 hereof, this Plan shall terminate on September 27, 2010, and no
Awards may be granted after such date. The termination of this Plan shall not
affect the validity of any Award outstanding on the date of termination.
16. INDEMNIFICATION OF COMMITTEE. In addition to such other rights of
indemnification as they may have as members of the Board or the Committee,
members of the Committee shall be indemnified by the Company against all
reasonable expenses, including attorneys' fees, actually and reasonably incurred
in connection with the defense
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of any action, suit or proceeding, or in connection with any appeal therein,
to which they or any of them may be a party by reason of any action taken or
failure to act under or in connection with this Plan or any Award granted
hereunder, and against all amounts reasonably paid by them in settlement
thereof or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, if such members acted in good faith and in a manner which
they believed to be in, and not opposed to, the best interests of the Company.
17. GENERAL PROVISIONS.
17.1. The establishment of this Plan shall not confer upon any
Eligible Person any legal or equitable right against the Company, any Affiliate
or the Committee, except as expressly provided in this Plan.
17.2. Participation in this Plan shall not give an Eligible
Person any right to be retained in the service of the Company or any Affiliate.
17.3. Neither the adoption of this Plan nor its submission to
the stockholders, shall be taken to impose any limitations on the powers of the
Company or its Affiliates to issue, grant, or assume options, or restricted
stock otherwise than under this Plan, or to adopt other stock option, restricted
stock, or other plans or to impose any requirement of stockholder approval upon
the same.
17.4. The interests of any Eligible Person under this Plan are
not subject to the claims of creditors and may not, in any way, be assigned,
alienated or encumbered except to the extent provided in an Agreement.
17.5. This Plan shall be governed, construed and administered
in accordance with the laws of the State of Delaware.
17.6. The Committee may require any person acquiring Shares
pursuant to Awards hereunder to represent to and agree with the Company in
writing that such person is acquiring the Shares without a view to distribution
thereof. The certificates for such Shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer. All
certificates for Shares issued pursuant to this Plan shall be subject to such
stock transfer orders and other restrictions as the Committee may deem advisable
under the rules, regulations and other requirements of the Securities and
Exchange Commission, any stock exchange upon which the Common Stock is then
listed or interdealer quotation system upon which the Common Stock is then
quoted, and any applicable federal or state securities laws. The Committee may
place a legend or legends on any such certificates to make appropriate reference
to such restrictions.
17.7. Notwithstanding any other provision of the Plan, the
Company shall not be obligated to issue or sell shares of Common Stock under the
Plan (a) unless the approval of all regulatory bodies deemed necessary by the
Committee has been obtained and unless the issuance, sale and delivery of such
Shares pursuant to the Plan
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shall comply, to the Committee's complete satisfaction, with all provisions
of federal, state or local law deemed applicable by the Committee and all
rules and regulations thereunder, and the requirements of any securities
exchange upon which the Common Stock may then be listed, or (b) if the
Company determines that the issuance, sale or delivery of such Shares
pursuant hereto would violate any applicable law or regulation.
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THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
MERIDIAN MEDICAL TECHNOLOGIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
JANUARY 11, 2001
The undersigned hereby appoints Dennis P. O'Brien and Tiffany Roebuck,
and either of them, proxies of the undersigned, with full power of substitution,
to vote all shares of Common Stock of Meridian Medical Technologies, Inc. (the
"Company") that the undersigned is entitled to vote, at the Annual Meeting of
Stockholders of the Company to be held on January 11, 2001, and at any
adjournments thereof with all powers the undersigned would possess if personally
present, as follows on the reverse side of this proxy card.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEE LISTED IN ITEM
1, AND FOR APPROVAL OF THE PROPOSALS LISTED IN ITEMS 2, 3 AND 4. THIS PROXY WHEN
PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEE LISTED IN ITEM 1 AND FOR
PROPOSALS 2, 3 AND 4.
(CONTINUED ON OTHER SIDE, PLEASE SIGN AND
DATE ON OTHER SIDE, AND RETURN IN ENCLOSED ENVELOPE)
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FOLD AND DETACH HERE
<PAGE>
---------------
Please mark
your votes as /X/
indicated in
example
---------------
--------------------------------------------------------------------------------
Item 1. Election of E.Andrews Grinstead, III to a three year term on the Board
of Directors
For Withhold Authority
/ / / /
--------------------------------------------------------------------------------
Item 2. Proposal to approve the Employee Stock Purchase Plan
For Against Abstain
/ / / / / /
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Item 3. Proposal to approve the 2000 Stock Incentive Plan
For Against Abstain
/ / / / / /
--------------------------------------------------------------------------------
Item 4. Proposal to ratify the appointment of Ernst & Young, LLP, as
auditors for fiscal 2001
For Against Abstain
/ / / / / /
--------------------------------------------------------------------------------
Item 5. In their discretion, such other matters as may properly come
before the meeting or adjournment thereof
--------------------------------------------------------------------------------
Date:
------------------, -------
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Signature(s)
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Signature(s)
Please sign here personally. Signature of stockholder(s) should correspond
directly with name(s) in which shares are registered. If the stock is registered
in more than one name, each joint owner or fiduciary should sign personally.
Only authorized officers should sign for a corporation.
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
