Exhibit 10.1

 

STERIS CORPORATION

 

AMENDED AND RESTATED NON-QUALIFIED STOCK OPTION PLAN

 

(as amended through January 5, 2000)

 

1. Purpose.

 

This Amended and Restated Non-Qualified Stock Option Plan (the “Plan”) of STERIS
Corporation (the “Company”) is intended to advance the interests of the Company
and its shareholders. The purposes of the Plan are to attract and retain key
employees for the Company and its Subsidiaries, to provide key employees with a
proprietary interest in the Company, and to stimulate the interest of key
employees and of independent members of the Board of Directors of the Company
(the “Board) in the development and financial success of the Company.

 

2. Administration.

 

The Plan shall be administered by a committee which shall consist of not less
than two directors of the Company (the “Committee”) appointed by the Board. The
Board may also appoint one or more directors as alternate members of the
Committee. No officer or employee of the Company or of a Subsidiary shall be a
member or alternate member of the Committee. The Committee shall at all times be
so comprised as to satisfy the disinterested administration standard contained
in Rule 16b-3, promulgated under the Securities Exchange Act of 1934 (the “1934
Act”), if required to qualify for the exemption from Section 16(b) of the 1934
Act that is available under Rule 16b-3 (the “Rule 16b-3 Exemption”). The members
of the Committee shall serve at the pleasure of the Board, which may remove
members from the Committee or appoint new members to the Committee from time to
time, and members of the Committee may resign by written notice to the Chairman
of the Board or the Secretary of the Company. The Committee may adopt any rules
it considers appropriate for the conduct of its business or the administration
of the Plan, may make interpretations of the Plan, may take any other actions it
considers appropriate in connection with the Plan (including, if the Committee
deems appropriate, accelerating the date on which outstanding Options may be
exercised), and shall have such additional authority as the Board may determine
to be desirable from time to time.

 

3. Shares Subject to the Plan.

 

The aggregate number of Common Shares of the Company that may be issued upon
exercise of Options granted under the Plan shall be 1,181,750 Common Shares,
which may be authorized but unissued Common Shares or issued Common Shares
reacquired by the Company and held as treasury shares. If any Option granted
under the Plan expires or terminates for any reason without having been fully
exercised, the unpurchased Common Shares that had been subject to that Option
shall again be available for other Options to be granted under the Plan. The
authorized number of 1,181,750 Common Shares takes into account the 6-for-1
stock split authorized by the shareholders of the Company on March 30, 1992 and
includes Options outstanding prior to March 30, 1992 covering 681,750 Common
Shares. The aggregate number of Common Shares subject to the Plan shall be
subject to adjustment under Section 8 hereof.

 

4. Participants in Plan.

 

Only those individuals who are either “Eligible Employees,” as defined in
Section 4(a) or “Independent Directors,” as defined in Section 4(b) shall be
eligible to receive Options under the Plan.

 

(a) “Eligible Employees” shall include only employees of the Company or a
Subsidiary who are executive, administrative, professional, or technical
personnel who have responsibilities affecting the management, development, and
financial success of the Company or of a Subsidiary.

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(b) “Independent Directors” shall include only individuals who are members of
the Board and are neither employed by the Company or a Subsidiary nor affiliated
with any institutional investor that holds more than two percent of the
Company’s outstanding Common Shares.

 

5. Grants to Eligible Employees.

 

The Committee shall designate from time to time, in its discretion, the Eligible
Employees to whom Options shall be granted under the Plan and the number of
Common Shares which shall be subject to each Option granted under the Plan. All
actions of the Committee under this section shall be conclusive, and no Eligible
Employee shall have a right to be granted any Options unless, and except to the
extent, so designated by the Committee. No Options shall be granted under the
Plan after March 29, 2002.

 

6. Option Agreements.

 

Each Option granted to an Eligible Employee pursuant to the Plan shall be
authorized by the Committee and shall be evidenced by a written Non-Qualified
Stock Option Agreement (the “Agreement”), in form approved by the Committee,
which shall be dated as of the date on which the Option is granted, shall be
signed by the President or another officer of the Company authorized by the
Committee, and shall be signed by the individual to whom the Option is granted
(the “Optionee”). The Agreement shall set forth the number of Common Shares
covered by the Option, the price per Common Share at which the Option may be
exercised (the “Exercise Price”), the term of the Option, and such other
provisions as the Committee shall approve. Unless the Committee specifies
another date, the date on which the Committee approves the granting of an Option
shall be deemed the date on which the Option is granted. The Agreement shall not
be inconsistent with the Plan, including without limitation, in the case of
Options granted to Eligible Employees, the following provisions, but may contain
more restrictive provisions than the Plan provisions:

 

(a) Term of Option. The term of each option shall be for a period ending not
more than ten years and one week from the date of the Agreement. The Option
shall expire at the close of regular business hours at the Company’s principal
office on the last day of the term of the Option or, if earlier, on the
applicable expiration date provided for in the Agreement.

 

(b) Exercise Date. Unless otherwise specified by the Committee, each Option
shall be exercisable to the extent of:

 

(i) from and after the first anniversary date of the Agreement, 25% of the
Common Shares subject to the Option;

 

(ii) from and after the second anniversary date of the Agreement, an additional
25% of the Common Shares subject to the Option;

 

(iii) from and after the third anniversary date of the Agreement, an additional
25% of the Common Shares subject to the Option; and

 

(iv) from and after the fourth anniversary date of the Agreement, the remaining
25% of the Common Shares subject to the Option.

 

All Options granted on or before March 30, 1992, are by their terms exercisable
in full from and after the sale of Common Shares pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the “1933
Act”); provided that such sale yields proceeds to the Company and the selling
shareholders (if any) of not less than $7,500,000 and is made at a public
offering price per share not less than three times the quotient of (a) $11.50
divided by (b) the number of Common Shares into which a Class B 6% Convertible
Preferred Share of the Company is convertible at the time of such sale (the
“Initial Public Offering”). Unless expressly so provided by the Committee at the
time of the grant, no Option granted after March 30, 1992 shall be accelerated
to any extent by the Initial Public Offering. Except as provided in subsections
(c) and (d) below, no Option granted to an Eligible Employee may be exercised at
any time unless the Optionee is an employee of the Company or a Subsidiary,
unless the Committee otherwise determines. If, by reason of the application of
subsection (c) or (d) below, an Option may be exercised at a time when an
Optionee is no longer an employee of

 

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the Company, and, on the date upon which the Optionee, for any reason, ceased to
be an employee of the Company (the “Employment Termination Date”), the Optionee
held any Options that were not then otherwise fully exercisable, each such
Option shall be exercisable as of the Employment Termination Date: (A) to the
extent that it was exercisable pursuant to the foregoing schedule, plus (B) a
percentage determined by multiplying 25 by a fraction the numerator of which is
the number of days between the Employment Termination Date and the immediately
preceding anniversary date of the Optionee’s Agreement (or, if no anniversary
date has occurred, the numerator will be the number of days between the
Employment Termination Date and the date of the Optionee’s Agreement) and the
denominator of which is 365.

 

(c) Death or Disability. If an Optionee dies while in the employ of the Company
or within the period available to the Optionee to exercise the Optionee’s option
rights under the circumstances provided for in the last sentence of this
subsection (c) (dealing with disability) or in subsection (d) below, then within
the year next succeeding such death (but within the term of the Option under
subsection (a) above), the person entitled by will or the applicable laws of
descent and distribution may exercise the Option to the extent that the Optionee
was entitled to exercise the same as of the Optionee’s date of death. If an
Optionee’s employment is terminated on account of disability, then the Optionee
may during the year next succeeding such termination date (but within the term
of the Option under subsection (a) above) exercise the Option to the extent that
the Optionee was entitled to exercise the same as of the termination date of the
Optionee’s employment.

 

(d) Other Termination. Except as provided in the last sentence of this
subsection (d), if an Optionee’s employment with the Company is terminated for
any reason other than death or disability, the Optionee, at any time within the
three month period following such termination of employment (but within the term
of the Option under subsection (a) above), may exercise the Option to the extent
that he was entitled to exercise the same as of the termination date of the
Optionee’s employment. If an Optionee’s employment is terminated by reason of
fraud, theft, embezzlement or other felonious conduct, proven or admitted, in
connection with that employment, all rights of the Optionee under any Agreement
shall terminate immediately and all outstanding Options held by the Optionee
shall expire immediately.

 

(e) Limitations on Transfer. No Option may be transferred other than by will or
the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Internal Revenue Code of 1986, as amended, or
Title I of the Employee Retirement Income Security Act, or the rules thereunder.

 

(f) No Employment Rights. Nothing in the Plan or in any Agreement shall confer
upon any Optionee any right to continue in the employ of the Company, or to
interfere with or limit the right of the Company to terminate the Optionee’s
employment at any time.

 

(g) Exercise of Option. An Optionee electing to exercise an Option shall deliver
to the Treasurer of the Company at its executive office: (i) a completed Notice
of Exercise of Option setting forth the number of Common Shares with respect to
which the Option is being exercised, the manner in which the Optionee’s name
shall appear on the share certificates, and the Optionee’s current address and
social security number, and (ii) payment of the full aggregate Exercise Price as
provided in subsection (h).

 

(h) Payment For Common Shares. Upon exercise of an Option by an Optionee, the
aggregate Exercise Price for the Common Shares with respect to which the Option
is being exercised shall be payable by the Optionee in cash or in such other
form of consideration as the Committee determines may be accepted, including,
without limitation, securities or other property, or any combination of cash,
securities, or other property, or by delivery by the Optionee (with the written
notice of election to exercise) of irrevocable instructions to a broker
registered under the 1934 Act to promptly deliver to the Company the amount of
sale or loan proceeds to pay the aggregate Exercise Price. The Committee, in its
sole discretion, may grant to an Optionee the right to transfer Common Shares
acquired upon the exercise of a part of an Option in payment of the aggregate
Exercise Price payable upon immediate exercise of a further part of the Option.

 

7. Grants to Independent Directors.

 

Each individual who is an Independent Director on the date of closing of the
Initial Public Offering (the “IPO Date”) shall be granted an Option, effective
on the IPO Date, to purchase such number of Common Shares as the Committee may
determine, at

 

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an exercise price equal to the price at which Common Shares are sold by the
Company in the Initial Public Offering. Each individual who becomes an
Independent Director after the IPO Date may be granted an Option, at the
discretion of the Committee, effective on the date on which the individual
becomes an Independent Director, to purchase such number of Common Shares as the
Committee may determine, at an exercise price equal to fair market value of the
Common Shares on the date on which the individual becomes an Independent
Director. Any Option granted under this Section 7 shall be exercisable in whole
or in part at the election of the Optionee at any time during the period
beginning six months after the date on which the Option is granted and ending
ten years and one week after the date on which the Option is granted. Except as
expressly provided in this Section 7, all of the provisions of Section 6 shall
be applicable to Options granted to Independent Directors (but taking into
account the Independent Director’s tenure as a director in place of an Eligible
Employee’s tenure as an employee of the Company or a Subsidiary).

 

8. Change in Capital Structure.

 

In the event the Company changes its outstanding Common Shares by reason of
stock splits, stock dividends, or any other increase or reduction of the number
of outstanding Common Shares without receiving consideration in the form of
money, services, or property, the aggregate number of Common Shares subject to
the Plan shall be adjusted, and the number of Common Shares and the option price
for each Common Share subject to the unexercised portion of any then-outstanding
Option shall be adjusted by the Committee as may be necessary and equitable to
continue in favor of the Optionee the benefits intended to be conferred by the
Option.

 

In the event of any other recapitalization or any merger, consolidation, or
other reorganization of the Company, the Committee shall make such adjustment,
if any, as it may deem appropriate to accurately reflect the number and kind of
Common Shares deliverable, and the option prices payable, upon subsequent
exercise of any then-outstanding Options.

 

The Committee’s determination of the adjustments appropriate to be made under
this Section 8 shall be conclusive upon all Optionees under the Plan.

 

9. Securities Law Restrictions.

 

Unless and until a registration statement under the 1933 Act has become
effective with respect to shares reserved under the Plan, notwithstanding any
provisions to the contrary in the Plan or any Agreement made pursuant to the
Plan:

 

(a) Ohio Securities Law. No Option shall be exercisable unless the Common Shares
subject thereto are exempt from registration under the Ohio securities law, are
the subject matter of an exempt transaction, are registered by description or
qualification, or are the subject matter of a transaction which has been
registered by description, as contemplated by Section 1707.03(G)(3) of the Ohio
Revised Code;

 

(b) Opinion of Counsel. No Option shall be exercisable unless the Company, upon
its request, receives an opinion of, or satisfactory to, its counsel that the
issuance of Common Shares upon such exercise would not violate the federal
securities laws or any applicable state securities laws; and

 

(c) Subsequent Transfers. Any Common Shares issued upon exercise of any Option
may not be sold or otherwise transferred, and the Company and its transfer agent
shall not be required to transfer any Common Shares so issued, unless they have
been registered under the federal and state securities laws or a valid exemption
from such registration is available.

 

The Company may imprint on each certificate evidencing the ownership of any
Common Shares a legend reflecting the restrictions of this Section 9 and may use
the following or any other appropriate legend for that purpose:

 

The shares represented by this certificate have not been registered under the
Securities Act of 1933, as amended, or any state securities law and may not be
sold or otherwise transferred without such registration unless a valid exemption
from such registration is available and the corporation has received an opinion
of, or satisfactory to, its counsel that such transfer would not violate any
federal or state securities laws.

 

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10. Shareholders’ Agreement Restriction.

 

If the Agreement with respect to the Option so provides, any Common Shares that
an Optionee may acquire by virtue of the exercise of an Option shall be subject
to the terms and provisions of the Shareholders’ Agreement, dated April 26,
1988, as amended from time to time, by and among the Company, Bill R. Sanford,
Primus Capital Fund, Primus Capital Fund II Limited Partnership, Invacare
Corporation, McDonald & Company Venture Capital Inc., II, Medical Ventures,
Ltd., A. T. Capital Corp., A. T. Venture Investments, Frontenac Venture V
Limited Partnership, Allsop Venture Partners III L.P., NYSTRS/NV Capital,
Limited Partnership, Robinson Investment Co., Raymond C. Kralovic, and Edward T.
Schneider so long as the Shareholders’ Agreement remains in effect.

 

11. Withholding of Taxes.

 

The Committee may, in its discretion and subject to such rules as the Committee
may adopt from time to time, permit or require an Optionee to satisfy, in whole
or in part, any withholding tax obligation that may arise in connection with
exercise of any Option by having the Company hold back some portion of the
Common Shares that would otherwise be delivered upon exercise of the Option or
by delivering to the Company an amount equal to the withholding tax obligation
arising with respect to such exercise in (a) cash, (b) Common Shares, or (c)
such combination of cash and Common Shares as the Committee may determine. The
fair market value of the Common Shares to be so held back by the Company or
delivered by the Optionee shall be determined as of the date on which the
obligation to withhold first arose. The Company shall apply the provisions of
this Section 11 only to meet required tax withholding (based on the minimum
statutory withholding rates for federal and state tax purposes, including
payroll taxes, that are applicable to the supplemental income recognized by an
employee) and shall not withhold (or repurchase) Common Shares in excess of the
minimum number required for tax withholding.

 

12. Rights as Shareholder.

 

No Optionee or his executor, administrator, heirs, or legatees shall have any
rights of a shareholder in the Company with respect to the Common Shares covered
by his Option unless and until the Common Shares are transferred of record on
the books of the Company’s transfer agent.

 

13. Definition of Subsidiary.

 

The term “Subsidiary” when used in the Plan or any Agreement made pursuant to
the Plan means a subsidiary corporation in which the Company owns directly or
indirectly 50% or more of the total combined voting power of all classes.

 

14. Definition of Fair Market Value.

 

For purposes of the Plan, the “Fair Market Value” of Common Shares as of any
date shall be the average of the closing sales prices of the Common Shares as
reported on the national securities exchange on which the Common Shares are
traded, or, if applicable, as reported on the National Association of Securities
Dealers Automated Quotation System (“NASDAQ”) National Market, on the last five
trading days preceding that date. If the Common Shares are not or cease to be
traded on a national securities exchange or on the NASDAQ National Market, the
“Fair Market Value” of Common Shares shall be determined in the manner
prescribed by the Committee.

 

15. Amendment or Termination of Plan.

 

The Board may amend or terminate the Plan at any time, but no such amendment or
termination shall affect the rights of the Optionee of any then-outstanding
Option without the consent of the Optionee.

 

16. Government Regulations.

 

Notwithstanding any provision of the Plan or any Agreement made pursuant to the
Plan, the Company’s obligations under the Plan and any Agreement shall be
subject to all applicable laws, rules, and regulations and to such approvals as
may be required by any governmental or regulatory agencies.

 

17. Governing Law.

 

The Plan shall be construed and governed by the laws of the State of Ohio.

 

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18. Genders and Numbers.

 

When permitted by the context, each pronoun used in the Plan includes the same
pronoun in other genders and numbers.

 

19. Captions.

 

The captions of the various sections of the Plan are not part of the context of
the Plan, but are only labels to assist in locating those sections, and shall be
ignored in construing the Plan.

 

20. Effective Date.

 

The Company first adopted the Non-Qualified Stock Option Plan effective
September 25, 1987 and subsequently amended that Plan effective on each of July
12, 1988, July 25, 1989, and August 22, 1991. The plan was further amended by
action of the Board on March 20, 1992, which action was approved by the
Shareholders of the Company on March 30, 1992, effective as of March 20, 1992.
This document amends and restates the Plan, effective January 5, 2000, pursuant
to a resolution of the Compensation Committee adopted on that date.

 

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