<PAGE> 1
As filed with the Securities and Exchange Commission on August 12, 1998
Registration No. 333-56655
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
POST-EFFECTIVE AMENDMENT
NO. 1
ON
FORM S-8
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933*
---------------
Cardinal Health, Inc.
---------------------
(Exact name of registrant as specified in its charter)
Ohio 31-0958666
---- ----------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
5555 Glendon Court, Dublin, Ohio 43016
-------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
---------------
R.P. Scherer Corporation 1990 Nonqualified Stock Option Plan, as amended
R.P. Scherer Corporation 1990 Nonqualified Performance Stock Option
Plan A, as amended
R.P. Scherer Corporation 1990 Nonqualified Performance Stock Option
Plan B, as amended
R.P. Scherer Corporation 1992 Stock Option Plan, as amended July, 1995
R.P. Scherer Corporation 1997 Stock Option Plan
R.P. Scherer Corporation Director Stock Options
-----------------------------------------------
(Full title of the plans)
---------------
George H. Bennett, Jr.,
Executive Vice President, Secretary and General Counsel
Cardinal Health, Inc.
5555 Glendon Court
Dublin, Ohio 43016
(Name and address of agent for service)
(614) 717-5000
(Telephone number, including area code, of agent for service)
---------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==========================================================================================================================
Title of Amount Proposed Proposed Amount of
securities to to be maximum offering maximum aggregate registration
be registered registered(1) price per share(1) offering price fee
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares,
without par value 2,371,167 (2) (2) (2)
==========================================================================================================================
<FN>
(1) Also includes an indeterminable number of additional shares that may
become issuable pursuant to the anti-dilution provisions of the
Plans.
(2) Not applicable. All filing fees payable in connection with the
registration of the issuance of these securities were paid in
connection with the filing of the Registrant's Form S-4 Registration
Statement (333-56655) on June 12, 1998.
* Filed as a Post-Effective Amendment on Form S-8 to such Form S-4
Registration Statement pursuant to the procedure described in Part II
under "Introductory Statement."
</TABLE>
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
INTRODUCTORY STATEMENT
Cardinal Health, Inc. (the "Company" or the "Registrant") hereby
amends its Registration Statement on Form S-4 (No. 333-56655) (the "Form S-4")
by filing this Post-Effective Amendment No. 1 on Form S-8 ("Amendment No. 1")
with respect to up to 2,371,167 of the Registrant's Common Shares, without par
value ("Common Shares"), issuable in connection with the following plans
(collectively, the "Plans") and option agreements ("Option Agreements") of
R.P. Scherer Corporation ("Scherer"): 1990 Nonqualified Stock Option Plan, as
amended, 1990 Nonqualified Performance Stock Option Plan A, as amended, 1990
Nonqualified Performance Stock Option Plan B, as amended, 1992 Stock Option
Plan, as amended July 1995, 1997 Stock Option Plan and Director Stock Options.
All such Common Shares were previously included in the Form S-4.
On August 7, 1998, GEL Acquisition Corp., a Delaware corporation and
a wholly owned subsidiary of the Registrant ("Merger Sub"), was merged with
and into Scherer (the "Merger") pursuant to an Agreement and Plan of Merger
dated as of May 17, 1998 (the "Merger Agreement"), among the Registrant,
Merger Sub and Scherer. As a result of the Merger, each outstanding share of
Scherer Common Stock (with certain specified exceptions) was converted into
.95 Common Shares of the Registrant (the "Exchange Ratio"). Also as a result
of the Merger, shares of Scherer Common Stock are no longer issuable upon the
exercise of options to purchase Scherer Common Stock ("Scherer Options")
pursuant to the Plans or Option Agreements. Instead, participants in the Plans
and holders of Director Stock Options will receive in lieu of Scherer Common
Stock that number of Common Shares of the Registrant equal to the number of
shares of Scherer Common Stock issuable immediately prior to the effective
time of the Merger upon exercise of a Scherer Option multiplied by the
Exchange Ratio of .95, with an exercise price for such option equal to the
exercise price which existed under the corresponding Scherer Option divided by
the Exchange Ratio of .95.
The designation of Amendment No. 1 as Registration No. 333-56655-01
denotes that Amendment No. 1 relates only to the Common Shares issuable
pursuant to the Plans and Option Agreements and that this is the first
Post-Effective Amendment to the S-4 filed with respect to such shares.
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The documents listed below are incorporated by reference in the
registration statement. All documents filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), subsequent to the date of the filing of this
registration statement and prior to the filing of a post-effective amendment
that indicates that all securities registered hereunder have been sold, or
that de-registers all securities then remaining unsold, shall be deemed to be
incorporated by reference in the registration statement and to be a part
hereof from the date of the filing of such documents.
(a) The Annual Report on Form 10-K of the Company for the fiscal year
ended June 30, 1997 filed with the Commission on September 29, 1997, as
amended by Form 10-K/A (Amendment No. 1) filed with the Commission on January
7, 1998;
(b) The information contained in the Company's Proxy Statement dated
October 13, 1997 for its Annual Meeting of Shareholders held on November 5,
1997 that was filed with the Commission on Schedule 14A on October 13, 1997,
other than the information contained therein under the captions "Report of the
Committee on Executive Compensation" and "Performance Graphs;"
(c) The Quarterly Report on Form 10-Q of the Company for the fiscal
quarter ended September 30, 1997 filed with the Commission on November 14,
1997, as amended by Form 10-Q/A filed with the Commission on January 7, 1998;
(d) The Quarterly Report on Form 10-Q of the Company for the fiscal
quarter ended December 31, 1997 filed with the Commission on February 11,
1998;
<PAGE> 3
(e) The Quarterly Report on Form 10-Q of the Company for the fiscal
quarter ended March 31, 1998 filed with the Commission on May 13, 1998;
(f) The Current Report on Form 8-K of the Company filed with the
Commission on August 10, 1998 in connection with the mutual termination of the
Agreement and Plan of Merger, dated as of August 23, 1997, by and among the
Company, Bruin Merger Corp., a New Jersey corporation and wholly owned
subsidiary of the Company ("Bruin"), and Bergen Brunswig Corporation, a New
Jersey corporation ("Bergen"), as amended by the First Amendment, dated as of
March 16, 1998, by and among the Company, Bruin and Bergen.
(g) The description of the Company's Common Shares contained in the
Company's Registration Statement on Form 8-A dated August 19, 1994, pursuant
to Section 12 of the Exchange Act.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL.
The legality of the Common Shares offered hereby has been passed upon
for the Company by Paul S. Williams, Assistant General Counsel of the Company.
Mr. Williams holds vested and unvested options to purchase Common Shares of
the Company.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 1701.13(E) of the Ohio Revised Code sets forth conditions and
limitations governing the indemnification of officers, directors, and other
persons.
Article 6 of the Company's Restated Code of Regulations ("Code of
Regulations"), as amended, contains certain indemnification provisions adopted
pursuant to authority contained in Section 1701.13(E) of the Ohio Revised
Code. The Company's Code of Regulations provides for the indemnification of
its officers, directors, employees, and agents against all expenses with
respect to any judgments, fines, and amounts paid in settlement, or with
respect to any threatened, pending, or completed action, suit, or proceeding
to which they were or are parties or are threatened to be made parties by
reason of acting in such capacities, provided that it is determined, either by
a majority vote of a quorum of disinterested directors of the Company or the
shareholders of the Company or otherwise as provided in Section 1701.13(E) of
the Ohio Revised Code, that (a) they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interest of the
Company; (b) in any action, suit, or proceeding by or in the right of the
Company, they were not, and have not been adjudicated to have been, negligent
or guilty of misconduct in the performance of their duties to the Company; and
(c) with respect to any criminal action or proceeding, that they had no
reasonable cause to believe that their conduct was unlawful. Section
1701.13(E) provides that to the extent a director, officer, employee, or agent
has been successful on the merits or otherwise in defense of any such action,
suit, or proceeding, he shall be indemnified against expenses reasonably
incurred in connection therewith. At present there are no material claims,
actions, suits, or proceedings pending where indemnification would be required
under these provisions, and the Company does not know of any such threatened
claims, actions, suits, or proceedings which may result in a request for such
indemnification.
The Company has entered into indemnification contracts with its
directors and executive officers. These contracts generally: (i) confirm the
existing indemnity provided to them under the Company's Code of Regulations
and assure that this indemnity will continue to be provided; (ii) provide that
if the Company does not maintain directors' and officers' liability insurance,
the Company will, in effect, become a self-insurer of the coverage; and (iii)
provide that, in addition, the directors and officers shall be indemnified to
the fullest extent permitted by law against all expenses (including legal
fees), judgments, fines, penalties, and settlement amounts paid or incurred by
them in any action or proceeding, including any action by or in the right of
the Company, on account of their service as a director, officer, employee, or
agent of the Company or at the request of the Company as a director, officer,
employee, trustee, fiduciary, manager, member or agent of another corporation,
partnership, trust, limited liability company, employee benefit plan or other
enterprise; and (iv) provide for the mandatory advancement of expenses to the
executive officer or director in connection with the defense of any
proceedings, provided the executive officer or director agrees to reimburse
the Company for that advancement if it is ultimately determined that the
executive officer or director is not entitled to indemnification for that
proceeding under the agreement. Coverage under the contracts is excluded: (A)
on account of conduct which is finally adjudged to be
-2-
<PAGE> 4
knowingly fraudulent, deliberately dishonest, or willful misconduct; or (B) if
a final court of adjudication shall determine that such indemnification is not
lawful; or (C) in respect of any suit in which judgment is rendered for
violations of Section 16(b) of the Securities and Exchange Act or similar
provisions of any federal, state or local statutory law; or (D) on account of
any remuneration paid which is finally adjudged to have been in violation of
law; or (E) on account of conduct occurring prior to the time the executive
officer or director became an officer, director, employee, or agent of the
Company or its subsidiaries (but in not event earlier than the time such
entity became a subsidiary of the Company); or (F) with respect to proceedings
initiated or brought voluntarily by the executive officer or director and not
by way of defense, except for proceedings brought to enforce rights under the
indemnification agreement.
ITEM 8. EXHIBITS.
Exhibit Number Description of Exhibit
- -------------- ----------------------
5 Opinion of Paul S. Williams as to legality of the Common
Shares being registered
23(a) Consent of Deloitte & Touche LLP, Columbus, Ohio
23(b) Consent of Deloitte & Touche LLP, Costa Mesa, California
23(c) Consent of Arthur Andersen LLP
23(d) Consent of Ernst & Young LLP
23(e) Consent of PricewaterhouseCoopers LLP
23(f) Consent of Paul S. Williams (included in Opinion filed as
Exhibit 5 hereto)
99(a) R.P. Scherer Corporation 1990 Nonqualified Stock Option Plan,
as amended
99(b) R.P. Scherer Corporation 1990 Nonqualified Performance Stock
Option Plan A, as amended
99(c) R.P. Scherer Corporation 1990 Nonqualified Performance Stock
Option Plan B, as amended
99(d) R.P. Scherer Corporation 1992 Stock Option Plan, as amended
July, 1995
99(e) R.P. Scherer Corporation 1997 Stock Option Plan
99(f) Form of R.P. Scherer Corporation Director Stock Option
Agreement
ITEM 9. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement: (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act of
1933, as amended (the "Securities Act"); (ii) to reflect in the prospectus any
facts or events arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or
-3-
<PAGE> 5
high end of the estimated maximum offering range may be reflected in the form
of prospectus filed with the Securities and Exchange Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent no
more than 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and (iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that clauses (i) and (ii) of this paragraph do not apply if
the information required to be included in a post-effective amendment by those
clauses is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by the Registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in the
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 6 above or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
-4-
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing this Post-Effective Amendment No.1 on Form
S-8 to Form S-4 Registration Statement and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dublin, State of Ohio, on the 12th day of August,
1998.
CARDINAL HEALTH, INC.
By: /s/ Robert D. Walter
----------------------------------
Robert D. Walter,
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No.1 on Form S-8 to Form S-4 Registration Statement
has been signed by the following persons in the capacities indicated on the
12th day of August, 1998.
Signature Title
- --------- -----
/s/ Robert D. Walter Chief Executive Officer (principal
- ----------------------- executive officer) and Director
Robert D. Walter
/s/ David Bearman Executive Vice President and Chief
- ----------------------- Financial Officer (principal financial
David Bearman officer)
/s/Richard J. Miller Vice President, Controller and Principal
- ----------------------- Accounting Officer
Richard J. Miller
/s/ John F. Finn Director
- -----------------------
John F. Finn
/s/ Robert L. Gerbig Director
- ------------------------
Robert L. Gerbig
/s/ John F. Havens Director
- ------------------------
John F. Havens
/s/ Regina E. Herzlinger Director
- ------------------------
Regina E. Herzlinger
-5-
<PAGE> 7
/s/ John C. Kane Director
- ------------------------
John C. Kane
/s/ J. Michael Losh Director
- ------------------------
J. Michael Losh
/s/ George R. Manser Director
- ------------------------
George R. Manser
/s/ John B. McCoy Director
- ------------------------
John B. McCoy
/s/ Jerry E. Robertson Director
- ------------------------
Jerry E. Robertson
/s/ L. Jack Van Fossen Director
- ------------------------
L. Jack Van Fossen
/s/ Melburn G. Whitmire Director
- ------------------------
Melburn G. Whitmire
/s/ Aleksander Erdeljan Director
- ------------------------
Aleksander Erdeljan
-6-
<PAGE> 8
EXHIBIT INDEX
-------------
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------ -------------------
5 Opinion of Paul S. Williams as to legality of the
Common Shares being registered
23(a) Consent of Deloitte & Touche LLP, Columbus, Ohio
23(b) Consent of Deloitte & Touche LLP, Costa Mesa, California
23(c) Consent of Arthur Andersen LLP
23(d) Consent of Ernst & Young LLP
23(e) Consent of PricewaterhouseCoopers LLP
23(f) Consent of Paul S. Williams (included in Opinion filed as
Exhibit 5 hereto)
99(a) R.P. Scherer Corporation 1990 Nonqualified Stock Option Plan,
as amended
99(b) R.P. Scherer Corporation 1990 Nonqualified Performance Stock
Option Plan A, as amended
99(c) R.P. Scherer Corporation 1990 Nonqualified Performance Stock
Option Plan B, as amended
99(d) R.P. Scherer Corporation 1992 Stock Option Plan, as amended
July, 1995
99(e) R.P. Scherer Corporation 1997 Stock Option Plan
99(f) Form of R.P. Scherer Corporation Director Stock Option Agreement
-7-
<PAGE> 1
EXHIBIT 5
August 12, 1998
Cardinal Health, Inc.
5555 Glendon Court
Dublin, OH 43016
Gentlemen:
I have acted as counsel to Cardinal Health, Inc., an Ohio
corporation (the "Company"), in connection with Post-Effective Amendment No. 1
on Form S-8 to the Company's Registration Statement on Form S-4 (the
"Registration Statement") filed under the Securities Act of 1933, as amended,
(the "Act") relating to the issuance of up to 2,371,167 Common Shares, without
par value (the "Common Shares"), of the Company pursuant to the following plans
and agreements (collectively, the "Plans") of R.P. Scherer Corporation:
R.P. Scherer Corporation 1990 Nonqualified Stock Option Plan, as
amended
R.P. Scherer Corporation 1990 Nonqualified Performance Stock Option
Plan A, as amended
R.P. Scherer Corporation 1990 Nonqualified Performance Stock Option
Plan B, as amended
R.P. Scherer Corporation 1992 Stock Option Plan, as amended July, 1995
R.P. Scherer Corporation 1997 Stock Option Plan
R.P. Scherer Corporation Director Stock Options
In connection with the foregoing, I have examined: (a) the
Amended and Restated Articles of Incorporation, as amended, and Restated Code of
Regulations, as amended, of the Company, (b) the Plans, and (c) such records of
the corporate proceedings of the Company and such other documents as I deemed
necessary to render this opinion.
Based on such examination, I am of the opinion that the Common
Shares available for issuance under the Plans, when issued, delivered and paid
for in accordance with the terms and conditions of the Plans, will be legally
issued, fully paid and nonassessable.
I hereby consent to the filing of this Opinion as Exhibit 5 to
the Registration Statement and the reference to me in Item 5 of Part II of the
Registration Statement. In giving such consent, I do not thereby admit that I am
in the category of persons whose consent is required under Section 7 of the Act
or the rules and regulations of the Securities and Exchange Commission.
Very truly yours,
/s/ Paul S. Williams
Paul S. Williams, Esq.
<PAGE> 1
Exhibit 23(a)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Cardinal Health, Inc. on Form S-8 filed as Post Effective Amendment No. 1 to
Registration Statement No. 333-56655 on Form S-4 of our report dated August 12,
1997, except for Note 16 as to which the date is August 23, 1997 and Note 17 as
to which the date is December 30, 1997 (which report expresses an unqualified
opinion and includes an explanatory paragraph relating to the restatement
described in Note 17), appearing in the Annual Report of Form 10-K/A of Cardinal
Health, Inc. for the year ended June 30, 1997.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Columbus, Ohio
August 10, 1998
<PAGE> 1
Exhibit 23(b)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Cardinal Health, Inc. on Form S-8 filed as Post Effective Amendment No. 1 to
Registration Statement No. 333-56655 on Form S-4 of our report dated October
31, 1997, appearing in the Annual Report on Form 10-K of Bergen Brunswig
Corporation for the fiscal year ended September 30, 1997.
/s/ Deloitte & Touche LLP
Costa Mesa, California
August 10, 1998
<PAGE> 1
EXHIBIT 23(c)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Post-Effective Amendment No. 1 on Form S-8 (Registration
Statement File No. 333-56655-01) to Registration Statement file No. 333-56655
on Form S-4, of our report dated April 27, 1998 (except with respect to the
matter discussed in Note 16, as to which the date is May 17, 1998) included in
R.P. Scherer Corporation's Annual Report on Form 10-K for the year ended March
31, 1998.
/s/ Arthur Andersen LLP
Detroit, Michigan
August 10, 1998
<PAGE> 1
EXHIBIT 23(d)
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in Post-Effective Amendment No. 1
on Form S-8 to the Registration Statement (Form S-4 No. 333-56655) of Cardinal
Health, Inc of our report dated August 2, 1996, with respect to the
consolidated financial statements of Pyxis Corporation, included in the Annual
Report (Form 10-K/A) of Cardinal Health, Inc. for the year ended June 30,
1997, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
San Diego, California
August 10, 1998
<PAGE> 1
EXHIBIT 23(e)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 filed as Post Effective Amendment
No. 1 to Registration Statement on Form S-4 (No. 333-56655) of Cardinal
Health, Inc. of our report dated January 30, 1997 related to the
financial statements of Owen Healthcare, Inc. which appears on page 11
of Cardinal Health, Inc.'s Annual Report on Form 10-K/A (Amendment No.
1) for the year ended June 30, 1997.
/s/ PricewaterhouseCoopers
LLP
PricewaterhouseCoopers
LLP
Houston, Texas
August 10, 1998
<PAGE> 1
Exhibit 99(a)
R.P. SCHERER CORPORATION
(f/k/a RPS CORPORATION)
------------------------
1990 NONQUALIFIED STOCK OPTION PLAN
1. PURPOSE. The purpose of this 1990 Nonqualified Stock Option Plan (this
"Option Plan") is to provide a means by which certain employees of RPS
Corporation, a Delaware corporation (the "Company"), R.P. Scherer Corporation, a
Delaware corporation and a wholly owned subsidiary of the Company ("R.P.
Scherer"), or any subsidiary thereof, may be given an opportunity to purchase
common stock, par value $.01 per share (the "Common Stock"), and Series B
Redeemable Preferred Stock, par value $.01 per share (the "Preferred Stock", and
together with the Common Stock, the "Stock") of the Company. This Option Plan is
intended to advance the interests of the Company by encouraging stock ownership
on the part of certain employees, by enabling the Company and R.P. Scherer to
secure and retain the services of highly qualified persons, and by providing
employees with an additional incentive to advance the success of the Company.
2. STOCK SUBJECT TO OPTION. Subject to adjustment as provided in Section
4(e) hereof, options may be granted by the Company in accordance with the
provisions of Section 4 hereof to purchase up to an aggregate of 90,794 shares
of authorized but unissued Common Stock and up to an aggregate of 181,590 shares
of the authorized but unissued Preferred Stock. Shares of Stock that by reason
of the expiration of an option or otherwise are no longer subject to purchase
pursuant to an option granted under this Option Plan may be the subject of other
options granted under this Option Plan or any other option, incentive or
compensatory plan adopted by the Company.
3. PARTICIPANTS. All key employees of the Company, R.P. Scherer or any of
its subsidiaries, as determined by the Board of Directors of the Company (the
"Board") or the
<PAGE> 2
Committee (as such term is defined in Section 4(a) hereof), may be granted
options under this Option Plan. A person who holds an option granted hereunder
that has not expired is referred to as an "Optionee"; PROVIDED, HOWEVER, that in
the event of such person's death or Disability (as hereinafter defined) such
person's estate, personal representative or beneficiary following the death or
incapacity or such person (an "Optionee's Representative") shall be able to
exercise the rights otherwise available to the Optionee.
4. TERMS AND CONDITIONS OF OPTIONS. The Committee may grant options from
time to time pursuant to this Option Plan. Such options shall be evidenced by
written agreements substantially in the form of the Nonqualified Stock Option
Agreement (the "Stock Option Agreement"), which is attached hereto as Appendix
A, and shall not be inconsistent with this Option Plan. The shares of Stock
subject to each option shall, upon issuance, be subject to the terms and
conditions, including restrictions on transferability, contained in an agreement
substantially in the form of the Stockholders Purchase Agreement attached hereto
as Appendix B to be entered into by the Company and the Optionees (the
"Stockholders Purchase Agreement"), or, with respect to certain Optionees, the
Management Stock Subscription Agreement between the Company and such Optionees
(the "Stock Subscription Agreement"). Nothing in this Option Plan or an option
granted hereunder shall govern the employment rights and duties between an
Optionee and the Company or R.P. Scherer, or any subsidiary thereof, nor in any
way be deemed to constitute an employment agreement among such parties.
(a) OPTION PRICE. The price per share of the Common Stock subject to
each option (the "Common Stock Option Price") shall be set by a
Compensation Committee (the "Committee") of the Board; PROVIDED, HOWEVER,
that the Common Stock Option Price may be less than the fair market value
of a share of Common Stock on the Date of
- --------------------------------------------------------------------------------
Page 2
<PAGE> 3
Grant, as such date is set forth in the applicable Stock Option Agreement.
For purposes of the foregoing, the fair market value of the Common Stock on
the Date of Grant shall be the fair market value established by the
Committee acting in good faith, and the fair market value may be more or
less than the book value of the Common Stock. The price per share of the
Preferred Stock subject to each option (the "Preferred Stock Option Price")
shall be the liquidation preference of each such underlying share of
Preferred Stock. The Common Stock Option Price and the Preferred Stock
Option Price are collectively referred to as the "Option Price."
(b) TERM OF OPTION. Notwithstanding any other provision of this Option
Plan, each option granted under this Option Plan shall expire not more than
ten years and one day from the date the option is granted, except that
under the circumstances described in Sections 4(d), 4(f) and 4(g), options
may expire and terminate at an earlier date.
(c) NON-TRANSFERABILITY OF OPTION RIGHTS. No option shall be
assignable or transferable otherwise than by will or by the laws of descent
and distribution. During the lifetime of an Optionee, the option is
exercisable only by such Optionee or, as provided in Section 3, such
Optionee's Representative.
(d) TERMINATION OF EMPLOYMENT.
(i) Subject to the provisions of Sections 4(d)(ii), 4(d)(iii),
4(d)(iv) and 4(d)(v), in the event that an Optionee's employment by
the Company, R.P. Scherer or any subsidiary thereof shall terminate,
all options granted to such Optionee pursuant to this Option Plan
shall terminate immediately and shall not be exercisable.
(ii) In the event that an Optionee's employment is terminated
because of death or Disability, the Company shall have the right, but
not the obligation, for a period
- --------------------------------------------------------------------------------
Page 3
<PAGE> 4
of 120 days from the date of termination of employment due to death or
Disability (the "Call Period"), to repurchase an Optionee's options
granted pursuant to this Option Plan, or a portion thereof, to the
extent (and only to the extent) that such options, or a portion
thereof, entitle the Optionee to purchase the Exercisable Shares (as
hereinafter defined) existing on the date of such Optionee's death or
Disability. The Company may exercise its repurchase right under this
Section 4(d)(ii) at any time during the Call Period by delivering
written notice (the "Call Notice") to such Optionee or such Optionee's
Representative of the Company's exercise of this right. During the
Call Period, the Optionee (or the Optionee's Representative) may send
written notice to the Company to repurchase, and the Company shall
repurchase, such Optionee's options, or a portion thereof, to the same
extent as if the Company had exercised its repurchase right under this
Section 4(d)(ii). The repurchase price for each option repurchased
pursuant to this Section 4(d)(ii) shall be equal to the sum of (A) the
product obtained by multiplying the number of Exercisable Shares which
are shares of Common Stock by an amount which shall equal the excess,
if any, of the Fair Market Value (as hereinafter defined) per share of
the underlying Common Stock, over the Common Stock Option Price, and
(B) the product obtained by multiplying the number of Exercisable
Shares which are shares of Preferred Stock by an amount which shall
equal the liquidation preference per share of the underlying Preferred
Stock over the Preferred Stock Option Price. The closing of any
repurchase of any options pursuant to this Section 4(d)(ii) shall be
held at the principal executive offices of R.P. Scherer at 10:00 a.m.
local time on the tenth business day following the date of delivery of
a Call Notice or a Put Notice, as the case may be, or at such other
date, time and place as the parties may mutually agree upon. Options
granted
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<PAGE> 5
to an Optionee pursuant to this Option Plan, or any portion thereof,
shall terminate immediately upon such Optionee's death or Disability
and shall not be exercisable to the extent that such options, or any
portion thereof, do not entitle such Optionee to purchase Exercisable
Shares pursuant to this Section 4(d)(ii).
The term "Disability" shall mean an Optionee's physical or
mental disability (so that the Optionee is not reasonably able to
render his full service to the Company, R.P. Scherer or any
subsidiary thereof) for any consecutive period exceeding three
months or as determined by agreement of a majority of the members
of the Board in their reasonable discretion. The date of such
Disability shall be on the last day of such three-month period or
the day selected by the Board, as the case may be.
The term "Fair Market Value shall mean, with respect to each
share of underlying Common Stock, (A) the fair market value of
the Company as determined within six months prior to the
applicable date or, if no such determination has been made within
six months, then within 75 days of the applicable date determined
as of the applicable date, in each case by the Board, divided by
(B) the number of shares of Common Stock then outstanding
(assuming the exercise of all outstanding stock options, warrants
or rights for the purchase of Common Stock).
(iii) If neither the Company nor the Optionee (or the Optionee's
Representative) has exercised its repurchase right pursuant to Section
4(d)(ii) upon the Optionee's death or Disability, such Optionee (or
such Optionee's Representative) shall have the right, at any time
within 120 days following the end of the Call Period, to exercise the
options granted to Optionee pursuant to this Option Plan to purchase
the Exercisable Shares which existed on the date of such Optionee's
death or Disability.
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Options granted to an Optionee pursuant to this Option Plan, or any
portion thereof, shall terminate at the end of the 120-day period
following the Call Period and shall not be exercisable to the extent
that such options, or any portion thereof, are neither repurchased by
the Company pursuant to Section 4(d)(ii) nor exercised by the Optionee
or the Optionee's Representative pursuant to this Section 4(d)(iii).
(iv) In the event that an Optionee's employment is terminated by
reason of Termination without Cause (as hereinafter defined), the
Company shall have the right, but not the obligation, for a period of
120 days from the date of termination of employment of the Optionee,
to repurchase an Optionee's option granted pursuant to this Option
Plan, or a portion thereof, to the extent (and only to the extent)
that such options, or a portion thereof, entitle the Optionee to
purchase the Exercisable Shares existing on the date of such
Optionee's termination of employment. The Company may exercise its
repurchase right under this Section 4(d)(iv) at any time during the
120-day period by delivering written notice to an Optionee of its
exercise of this right. The repurchase price for each option, or
portion thereof, repurchased pursuant to this Section 4(d)(iv) shall
be equal to the sum of (A) the product obtained by multiplying the
number of Exercisable Shares which are shares of Common Stock by an
amount which shall equal the excess, if any, of the lesser of (x)
Termination Book Value (as hereinafter defined) per share of the
underlying Common Stock and (y) the Fair Market Value per share of the
underlying Common Stock, over the Common Stock Option Price and (B)
the product obtained by multiplying the number of Exercisable Shares
which are shares of Preferred Stock by an amount which shall equal the
liquidation preference per share of the underlying Preferred Stock
over the Preferred Stock Option Price. The closing of any repurchase
of any
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<PAGE> 7
options pursuant to this Section 4(d)(iv) shall be held at the
principal executive offices of R.P. Scherer at 10:00 a.m. local time
on the tenth business day following the date of delivery of the
Company's written notice of the exercise of its repurchase right, or
at such other date, time and place as the parties may mutually agree
upon. Options granted to an Optionee under this Option Plan, or any
portion thereof, shall terminate immediately upon such Optionee's
Termination without Cause and shall not be exercisable to the extent
that such options, or any portion thereof, do not entitle such
Optionee to purchase Exercisable Shares pursuant to this Section
4(d)(iv).
The term "Termination without Cause" shall mean termination of
employment of an Optionee by reason of any occurrence other than death
or Disability of such Optionee, termination for Cause or the voluntary
termination by such Optionee of his employment by resignation or any
other means, that results in such Optionee no longer being employed by
the Company, R.P. Scherer or any subsidiary thereof.
The term "Cause" used in connection with the termination of
employment of an Optionee shall mean a termination of employment due
to (i) the commission by such Optionee of an act of fraud upon, or bad
faith or willful misconduct toward, the Company, R.P. Scherer or any
subsidiary thereof (including the unauthorized disclosure of
confidential or proprietary information of the Company, R.P. Scherer
or any subsidiary thereof), (ii) a conviction of such Optionee by a
court of competent jurisdiction (or a plea of NOLO CONTENDERE or the
equivalent under the laws of any other country or political
subdivision thereof) of a crime involving, in the reasonable
determination of the Board, fraud or dishonesty, or a crime which in
the reasonable determination of the Board would tend to be injurious
to the reputation of the Company,
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R.P. Scherer or any of its subsidiaries, or of such Optionee, (iii)
misconduct by such Optionee which, in the reasonable determination of
the Board, has been or is likely to be materially injurious to the
Company, R.P. Scherer or any subsidiary thereof; or (iv) the failure
of such Optionee substantially to perform the duties and obligations
imposed upon him by R.P. Scherer or any subsidiary thereof.
"Termination Book Value" shall mean the book value of the
Company (excluding the amount of stockholders' equity attributable to
the Company's 17% Senior Cumulative Exchangeable Preferred Stock, par
value $.01 per share, the Preferred Stock and to the Company's Series
C Redeemable Preferred Stock, par value $.01 per share) per
outstanding share of Common Stock (assuming the exercise of all
outstanding stock options, warrants or rights for the purchase of
Common Stock) as of the last day of the fiscal quarter ended
immediately preceding the date on which the termination of employment
occurs, as determined from the Company's consolidated balance sheet
prepared, in accordance with generally accepted accounting principles
as applied in the United States, by the management of the Company and
R.P. Scherer and reviewed by the independent public accountants
regularly employed by the Company.
(v) If the Company has not, pursuant to Section 4(d)(iv),
exercised its repurchase right upon the Optionee's termination of
employment by reason of Termination without Cause, such Optionee shall
have the right, at any time within 120 days following the end of the
120-day period provided for in Section 4(d)(iv), to exercise the
options granted to such Optionee pursuant to this Option Plan to
purchase the Exercisable Shares which existed on the date of such
Optionee's termination of employment. Options granted to an Optionee
pursuant to this Option Plan, or any portion
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<PAGE> 9
thereof, shall terminate at the end of the 120-day period following the
120-day period provided for in Section 4(d)(iv) and shall not be
exercisable to the extent that such options, or any portion thereof, are
neither repurchased by the Company pursuant to Section 4(d)(iv) nor
exercised by the Optionee pursuant to this Section 4(d)(v).
(e) ADJUSTMENT OF OPTIONS ON RECAPITALIZATION. The aggregate number of
shares of Stock of which options may be granted to persons participating
under this Option Plan, the number of shares of Stock covered by each
outstanding option and the Option Price for the shares of Stock subject to
each such option may be appropriately adjusted for any increase or decrease
in the number of issued shares of Stock resulting from a recapitalization,
the subdivision or consolidation of shares, or the payment of a stock
dividend after the Date of Grant; PROVIDED, HOWEVER, that any options to
purchase fractional shares of Stock resulting from any such adjustment
shall be cancelled.
(f) SALE OF THE COMPANY. In the event the Company proposes to engage
in a Sale of the Company (as hereinafter defined), the Company shall give
each Optionee written notice of such Sale on or before 15 days (or shorter
time if, in the sole discretion of the Company, 15 days' notice is
impracticable) before the consummation of such Sale, and, unless otherwise
agreed to by the Company and the Optionee, each option granted under this
Option Plan may be exercised after receipt of such notice and prior to such
Sale to purchase all of the Stock subject to each option granted under this
Option Plan. Options not exercised prior to such Sale shall expire on the
occurrence of such Sale, and no payment shall be owed to such Optionee with
respect to such options; PROVIDED, HOWEVER, that if the proposed Sale of
the Company is not consummated and the Board in good faith determines that
the proposed Sale of the Company will not be consummated, the option
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granted hereunder shall, upon such determination of the Board, cease to be
exercisable pursuant to this Section 4(f). A "Sale of the Company" shall
mean (i) a merger or consolidation of the Company with or into another
entity (other than a subsidiary or affiliate of the Company) in which the
holders of Stock are required to exchange their Stock for cash, property
and/or securities, or (ii) a sale or lease of all or substantially all of
the assets of the Company or R.P. Scherer except to a subsidiary or
affiliate of the Company.
(g) DISSOLUTION OF ISSUER OF THE STOCK. In the event of the proposed
dissolution or liquidation of the Company, the Company shall give each
Optionee not less than 30 days' prior written notice of the date of the
proposed dissolution or liquidation, and, unless otherwise agreed to by the
Company and the Optionee, each option granted under this Option Plan may be
exercised during the 30-day period preceding the dissolution or liquidation
to purchase all of the Stock subject to each option granted under this
Option Plan. Options not exercised prior to such dissolution or liquidation
shall expire on the occurrence of such dissolution or liquidation, and no
payment shall be owed to such Optionee with respect to such options;
PROVIDED, HOWEVER, that if the proposed dissolution or liquidation of the
Company is not consummated and the Board in good faith determines that the
proposed dissolution or liquidation of the Company will not be consummated,
the options granted hereunder shall, upon such determination of the Board,
cease to be exercisable pursuant to this Section 4(g). The provisions of
this Section 4(g) shall not be applicable if the Optionee receives notice
under Section 4(f) at a time earlier than the notice provided for herein.
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(h) RIGHTS AS A STOCKHOLDER. An Optionee shall have no rights as a
stockholder with respect to any shares of Stock held under option until the
date of issuance of the stock certificates to him for such shares. Except
as provided in Section 4(e) hereof, no adjustment to the option shall be
made for dividends, distributions or rights attributable to shares of Stock
the record date for which is prior to the date of issuance of Stock upon
exercise of the option.
(i) TIME OF GRANTING OPTIONS. The grant of an option shall occur only
when a Stock Option Agreement shall have been duly executed and delivered
by or on behalf of the Company and the employee to whom such option shall
be granted.
(j) STOCK LEGEND. Certificates evidencing shares of Stock purchased
upon the exercise of options issued under this Option Plan shall be
endorsed with a legend in substantially the form contained in the
Optionee's Stock Subscription Agreement or Stockholders Purchase Agreement,
as the case may be.
(k) DEFERRAL OF PURCHASES. (i) The Company shall not be obligated to
purchase any options granted pursuant to this Option Plan at any time
pursuant to Section 4(d)(ii) or 4(d)(9v) hereof, regardless of whether it
has delivered a notice of its election to purchase any such options, (A) to
the extent that the purchase of such options (together with any other
purchases of options or Stock, as the case may be, pursuant to Sections
4(d)(ii) or 4(d)(9v) hereof from other Optionees, and pursuant to similar
provisions in the 1990 RPS Corporation Nonqualified Performance Stock
Option Plan A (the "Performance Stock Option Plan A") and the agreements
relating thereto and pursuant to similar provisions in any Optionee's Stock
Subscription Agreement or Stockholders Purchase Agreement, of which the
Company has at such time been given notice) would
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(1) result in a violation of any law, statute, rule, regulation, policy,
guideline, order, writ, injunction, decree or judgment promulgated or
entered by any federal, state, local or foreign court or governmental
authority applicable to the Company, R.P. Scherer or any of their
subsidiaries or any of its or their property or (2) after giving effect
thereto, result in a Financing Default, or (B) if immediately prior to such
purchase there exists a Financing Default. The term "Financing Default"
shall mean an event which constitutes (or with notice or lapse of time or
both would constitute) an event of default (which event of default has not
been cured or waived) under any of the following as they may be amended
from time to time: (A) the Credit Facilities Agreement (the "Credit
Facilities Agreement") dated as of October 3, 1989, among R.P. Scherer and
the other borrowers named therein (the "Borrowers"), the guarantors named
therein (the "Guarantors"), Citibank, N.A. and CIBC International Trust
Limited as lead managers, Citicorp Investment Bank Limited, as facility
agent and the banks parties thereto, and any extensions, renewals,
refinancing or refunding thereof in whole or in part; (B) the Credit
Agreement (the "Revolving Credit Agreement") dated as of October 3, 1989
between R.P Scherer and Citibank, N.A. and any extensions, renewals,
refinancing or refunding thereof in whole or in part; (C) any notes
executed and delivered by any of the Borrowers under the Credit Facilities
Agreement, or by R.P. Scherer under the Revolving Credit Agreement and any
extensions, renewals, refinancing or refunding thereof in whole or in part;
(D) any guaranties executed by any of the Guarantors under the Credit
Facilities Agreement and any extensions, renewals, refinancing or refunding
thereof in whole or in part; (E) the Senior Subordinated Loan Agreement,
dated as of June 5, 1989, among Shearson Lehman Hutton Holdings Inc., the
Company and RPS Acquisition Corporation
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("Acquisition") and any extensions, renewals, refinancing or refunding
thereof in whole or in part; (F) any notes executed and delivered by
Acquisition under the Senior Subordinated Loan Agreement and any
extensions, renewals, refinancing or refunding thereof in whole or in part;
(G) the Indenture (the "Subordinated Debenture Indenture") to be entered
into between R.P. Scherer and The First National Bank of Boston, as trustee
relating to the Senior Subordinated Debentures due 1999; (H) the Indenture
(the "Exchange Debenture Indenture") to be entered into between the Company
and Ameritrust Company National Association, as trustee, relating to the
17% Subordinated Exchange Debentures; and (I) any of the securities issued
pursuant to or whose terms are governed by the terms of any of the
agreements set forth in clauses (A) through (H) above.
(ii) If at any time consummation of all purchases of options to
be made by the Company pursuant to Sections 4(d)(ii) or 4(d)(iv)
hereof (and pursuant to similar provisions for the purchase of options
or Stock, as the case may be, contained in the Performance Stock
Option Plan A and the agreements relating thereto and in the Stock
Subscription Agreements and Stockholders Purchase Agreements) is not
required because of the applicability of clause (A) of Section 4(k)(i)
hereof and similar provisions for the purchase of options or Stock, as
the case may be, in the Performance Stock Option Plan A and the
agreements relating thereto and in the Stock Subscription Agreements
and Stockholders Purchase Agreements, but clause (B) of Section
4(k)(i) hereof or similar provisions for the purchase of options or
Stock, as the case may be, in the Performance Stock Option Plan A and
the agreements relating thereto and in the Stock Subscription
Agreements and Stockholders Purchase Agreements are not applicable,
then the
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Company shall purchase (in accordance with the following sentence)
from the Optionee or the Optionee's Representative, as the case may
be, desiring or obligated to sell to the Company options pursuant to
this Option Plan and from the other persons and entities having the
right or obligation to sell options or Stock, as the case may be,
pursuant to provisions in the Performance Stock Option Plan A and the
agreements relating thereto and in the Stock Subscription Agreements
and Stockholders Purchase Agreements, the maximum number of options
and shares of Stock of which it is able to repurchase without the
events described in Section 4(k)(i)(A) resulting; PROVIDED, HOWEVER,
that, subject to the last sentence of this Section 4(k)(ii), the
provisions of Section 4(k)(iii) hereof shall apply in respect of all
options not purchased under Section 4(d)(ii) or 4(d)(iv) hereof
because of the operation of Sections 4(k)(i) or 4(k)(ii) hereof. In
the event any of the events described in Section 4(k)(i)(A) would
result from the purchase of any options pursuant to Sections 4(d)(ii)
or 4(d)(iv) hereof, the Board, in its sole discretion, may determine
priorities among the Optionee or the Optionee's Representative, as the
case may be, and the other persons having the right or obligation to
sell options or Stock, as the case may be, pursuant to the Performance
Stock Option Plan A and the agreements relating thereto and in the
Stock Subscription Agreements and Stockholders Purchase Agreements,
taking into account relative hardship and such other factors as it
deems relevant, and may elect to cause the Company to consummate
purchases of options hereunder according to such priorities (such
options which are to be so purchased are hereinafter called the
"Purchased Options" and such options which are not to be so purchased
are hereinafter called the "Unpurchased Options"); the Company shall
pay the Optionee or the Optionee's Representatives, as the case may
be, holding Unpurchased
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Options the applicable purchase price for such options on the tenth
business day after the Company learns it is no longer precluded from
paying for such options.
(iii) Anything to the contrary contained in Section 4(d)(ii) or
4(d)(iv) hereof notwithstanding, any options which the Optionee or the
Optionee's Representative, as the case may be, has elected to sell to
the Company or which the Company has elected to purchase from the
Optionee or the Optionee's Representative, as the case may be, but
which in accordance with Sections 4(k)(i) and 4(k)(ii) hereof are not
purchased at the applicable time provided in Section 4(d)(ii) or
4(d)(iv) hereof, shall be purchased by the Company on the tenth day
after such date or dates that the Company after due inquiry learns
that (after taking into account any purchases of options or Stock, as
the case may be, to be made at such time pursuant to the Performance
Stock Option Plan A and the agreements relating thereto, and in the
Stock Subscription Agreements and Stockholders Purchase Agreements) it
is no longer permitted to defer purchasing such options under Sections
4(k)(i) and 4(k)(ii) hereof, and the Company shall give seven days
prior notice of any such purchase; PROVIDED, HOWEVER, that the
Optionee (or the Optionee's Representative) shall not be obligated to
sell a lesser number of options at any one time pursuant to this
Section 4(k)(iii) had they not been so delayed; and, PROVIDED,
FURTHER, that if the Optionee (or the Optionee's Representative)
exercises its right to have options repurchased pursuant to
Section 4(d)(ii) or the Company exercises its repurchase rights
pursuant to Section 4(d)(ii), and the purchase of the options cannot
be consummated by reason of Sections 4(k)(i) and 4(k)(ii), the
purchase price for such options shall be calculated pursuant to
Sections 4(d)(ii) as of the time the repurchase right is exercised,
including interest on the aggregate purchase price for such options at
a rate
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per annum equal to the yield to maturity on U.S. Treasury obligations
having a maturity equal to a period of three months. If the Optionee elects
pursuant to Section 4(k)(ii) to rescind or defer his election to sell any
or all of the Purchased Options, the Optionee or the Optionee's
Representative, as the case may be, may exercise his right pursuant to
Section 4(d)(ii) to require the Company to purchase his options for a
period of ten days after receiving notice that the Company is no longer
precluded from purchasing such options.
(l) PAYMENT FOR OPTIONS. If at any time the Company elects or is
required to purchase any options pursuant to Sections 4(d)(ii) or 4(d)(iv),
the Company shall pay the purchase price for the options it purchases to
the extent permitted by any loan agreement, indenture or other agreement to
which the Company is a party, by the Company's delivery of a bank cashier's
check or certified check for the purchase price, if any, and, then, at the
Company's sole discretion, to the extent permitted by any loan agreement,
indenture or other agreement to which the Company or R.P. Scherer is a
party, by the Company's delivery of a junior subordinated promissory note
(which shall be subordinated and subject in right of payment to the prior
payment of all indebtedness of the Company including, without limitation,
any debt outstanding under the Credit Facilities Agreement, the Senior
Subordinated Loan Agreement, the Subordinated Debenture Indenture, the
Exchange Debenture Indenture and any modifications, renewals, extensions,
replacements and refunding of all such indebtedness) of the Company (a
"Junior Subordinated Note") equal to the remainder, if any, of the purchase
price payable in five equal annual installments commencing on the first
anniversary of the issuance thereof and bearing interest payable annually
at the publicly announced
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prime rate of the facility agent under the Credit Facilities Agreement on
the date of issuance, against delivery of the certificates or other
instruments representing the options so purchased. If, in a purchase
pursuant to Section 4(d)(ii), the Company elects to pay all or any portion
of the purchase price for the options with a Junior Subordinated Note, the
Company shall give the Optionee or the Optionee's Representative, as the
case may be, notice of the amount of such note at least twenty days prior
to such purchase, and the Optionee or the Optionee's Representative, as the
case may be, shall have ten days thereafter to rescind their election to
sell the options.
5. EXERCISE OF OPTIONS.
(a) During the term of this Option Plan, as set forth in Section 7
hereof, the options granted to each Optionee hereunder shall become
exercisable in accordance with the terms and conditions of this Section 5
and (i) in the case of a Sale of the Company, in accordance with Section
4(f) hereof, (ii) in the case of a dissolution or liquidation of the
Company, in accordance with Section 4(g) hereof and (iii) in the case of a
termination of employment of an Optionee, in accordance with Section
4(d)(iii) or 4(d)(v) hereof. The Committee may accelerate the time at which
an option may be exercised and reserves the right to delay and/or reduce
the periods during which options may be exercised in order to comply with
federal and state securities law.
(b) EXERCISABLE SHARES. The total number of shares of Stock for which
an option shall be exercisable (the "Exercisable Shares") shall be the
number of shares of Common Stock and Preferred Stock subject to such option
multiplied by the percentages set forth below for the applicable time
period:
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Applicable Time Applicable
Period Percentage
--------------- ----------
Prior to October 5, 1990 0%
on or after October 5, 1990 33-1/3%
and prior to October 5, 1991
on or after October 5, 1991 66-2/3%
and prior to October 5, 1992
on or after October 5, 1992 100%
The number of Exercisable Shares which are shares of Common Stock and
the number of Exercisable Shares which are shares of Preferred Stock shall
be in the same proportion to the total number of shares of Common Stock and
Preferred Stock, respectively, issuable upon exercise of any option granted
hereunder.
(c) MANNER OF EXERCISE. Shares of Stock purchased upon exercise of
options shall at the time of purchase be paid in full in cash or as
otherwise permitted by the Committee. Options may be exercised in whole or
in part from time to time by written notice to the Company stating the full
number of shares of Stock with respect to which the option is being
exercised and the time of delivery thereof, which shall be at least 15 days
after the giving of such notice unless an earlier date shall have been
mutually agreed upon, accompanied by full payment for the shares of Stock
by certified or official bank check or the equivalent thereof acceptable to
the Company; PROVIDED, HOWEVER, that any such exercise must be for both
Common Stock and Preferred Stock in the same proportion to the total number
of shares of Common Stock and Preferred Stock, respectively, issuable to
the Optionee upon exercise of the option granted hereunder. At the time of
delivery, the Company shall, without stock transfer or issue tax to an
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Optionee, deliver to such Optionee at the principal executive offices of
R.P. Scherer, or such other place as shall be mutually agreed upon, a
certificate or certificates for such shares of Stock; PROVIDED, HOWEVER,
that the time of delivery may be postponed by the Company for such period
as may be required for it with reasonable diligence to comply with any
requirements of law, including making provision for the deduction and
withholding of amounts required to be deducted and withheld under
applicable local, state, and federal income tax laws (which provision may
require additional payment by such Optionee). The Company shall pay any
stock transfer tax or issue tax resulting from the issuance of shares of
Stock upon the exercise of any option. If Stock issuable upon exercise of
any option is not registered under the Securities Act, the Company at the
time of exercise shall require in addition that the Optionee or Optionee's
Representative deliver an investment representation in form acceptable to
the Company and its counsel, and the Company shall place a legend on the
certificate for such Stock restricting the transfer of such Stock. At no
time shall the Company have any obligation or duty to register under the
Securities Act the Stock issuable upon exercise of options. The Company
shall not be required to issue or deliver any certificate for shares of
Stock purchased upon the exercise of any option or portion thereof prior to
the Optionee or the Optionee's Representative; PROVIDED, HOWEVER, that
those Optionees who have executed a Stock Subscription Agreement shall not
be required to execute a Stockholders Purchase Agreement.
6. ADMINISTRATION.
(a) This Option Plan shall be administered by the Committee consisting
of not fewer than three directors to be appointed by the Board. If
necessary to secure the
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exemption pursuant to Rule 16b-3 which has been adopted by the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as
amended (as such Rule or its equivalent is then in effect) ("Rule 16b-3"),
no person shall be eligible to serve on the Committee unless he is then a
"disinterested person" within the meaning of paragraph (d)(3) of Rule
16b-3. The Board may, from time to time, remove members from or add members
to the Committee. Vacancies in the Committee, however caused, shall be
filled by the Board. The Committee shall select a chairman from among its
members and shall hold meetings at such times and places as it may
determine. The Committee may appoint a secretary and, subject to the
provisions of this Option Plan and to policies determined by the Board, may
make such rules and regulations for the conduct of its business as it shall
deem advisable. A majority of the Committee shall constitute a quorum. All
action of the Committee shall be taken by a majority of its members. Any
action may be taken by a written instrument signed by a majority of the
members, and action so taken shall be fully as effective as if it had been
taken by a vote of the majority of the members at a meeting duly called and
held. The Board may act in lieu of the Committee and shall act in lieu of a
Committee at any time such a Committee has not been created.
(b) Subject to the express terms and conditions of this Option Plan,
the Committee shall have full power to grant options under this Option
Plan, to construe or interpret this Option Plan, to prescribe, amend and
rescind rules and regulations relating to it and to make all other
determinations necessary or advisable for its administration.
(c) The Committee may, from time to time, determine which employees of
the Company, R.P. Scherer and any subsidiary thereof shall be granted
options under this
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Option Plan, the number of shares of Stock subject to each option, and the
time or times at which options shall be granted, and the Company may grant
such options under this Option Plan.
(d) No member of the Board or of the Committee shall be liable for any
action or determination made in good faith with respect to this Option Plan
or to any option.
7. EFFECTIVE DATE AND TERMINATION.
(a) The effective date of this Option Plan is __________, 1990.
(b) This Option Plan shall terminate on ________, 2000, but the Board
may terminate this Option Plan at any time prior to such date. Termination
of this Option Plan shall not alter or impair, without the consent of the
Optionee, any of the rights or obligations and any option theretofore
granted under this Option Plan.
8. NOTICES. Whenever it is provided in this Option Plan that any notice be
given between the Company and an Optionee, such notice shall be delivered in
person or by registered or certified mail, return receipt requested, postage
prepaid, first class mail, to the following address:
If to the Company:
RPS Corporation
c/o R.P. Scherer Corporation
2075 W. Big Beaver Road
Troy, Michigan 48007-7060
Attention: Robert J. Lollini
If to an Optionee:
At the address listed beside such Optionee's name on the signature
page of the Stock Option Agreement executed by such Optionee.
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Any party hereto may change the address designated for mailing by written
notice to the other party. All such notices shall be deemed to be delivered when
delivered in person, or if placed in the mail, two days thereafter.
9. GOVERNING LAW. THIS OPTION PLAN SHALL BE CONSTRUED IN ACCORDANCE WITH,
AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES THEREOF REGARDING CONFLICTS OF LAWS.
10. AMENDMENTS. The Board may, from time to time, alter, amend, suspend or
discontinue this Option Plan, or alter or amend any and all option agreements
granted thereunder, PROVIDED, HOWEVER, that no such action of the Board may
alter the provisions of this Option Plan so as to alter any outstanding Stock
Option Agreement to the detriment of an Optionee without his consent.
11. STATUS OF OPTIONS. Options granted pursuant to this Option Plan are not
intended to qualify as Incentive Stock Options within the meaning of Section
422A of the Internal Revenue Code of 1986 (the "Code"), and the terms of this
Option Plan and options granted hereunder shall be so construed; PROVIDED,
HOWEVER, that nothing in this Option Plan shall be interpreted as a
representation, guarantee or other undertaking on the part of the Company that
the options granted pursuant to this Option Plan are not, or will not be,
determined to be Incentive Stock Options, within the meaning of Section 422A of
the Code.
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I hereby certify that the foregoing Option Plan was duly adopted by the
Board on June 18, 1990.
Executed as of this 29th day of November, 1990.
----------------------------------------
Secretary
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APPENDIX A
----------
FORM OF NONQUALIFIED STOCK OPTION AGREEMENT
RPS Corporation (the "Company"), in consideration of the value of the
continuing services of ___________________________ (hereinafter called the
"Optionee") as an employee of the Company, R.P. Scherer Corporation, a Delaware
corporation and a wholly owned subsidiary of the Company ("R.P. Scherer"), or
any subsidiary thereof, which continuing services the grant of this option is
designed to secure, and in consideration of the undertakings made herein by
Optionee, and pursuant to its 1990 Nonqualified Stock Option Plan (the "Option
Plan"), hereby grants to Optionee an option (the "Option"), evidenced by this
Nonqualified Stock Option Agreement, exercisable for the period and upon the
terms hereinafter set forth, to purchase ______ shares of the Company's Common
Stock, par value $.01 per share (the "Common Stock") at a price of $10 per share
(the "Common Stock Option Price"), and _____ shares of the Company's Series B
Redeemable Preferred Stock, par value $.01 per share (the "Preferred Stock", and
together with the Common Stock, the "Stock"), at a price of $10 per share (the
"Preferred Stock Option Price"). Capitalized terms defined in the Option Plan
shall have the same meaning when used herein, unless otherwise defined herein.
1. TERM OF OPTION. This Option is granted and dated on the date set forth
on the signature page (sometimes hereinafter called the "Date of Grant") and
shall terminate and expire, to the extent not previously exercised, ten years
and one day after the Date of Grant, except that under the circumstances
described in Sections 4, 6 and 7 hereof this Option may expire and terminate at
an earlier date.
2. EXERCISE OF OPTION. (a) During the term of this Option, as set forth in
Section 1 hereof, the Company shall determine the extent of exercisability of
this Option in accordance
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with the terms and conditions of this Section 2 and (i) in the case of a Sale of
the Company (as hereinafter defined), in accordance with Section 6 hereof, (ii)
in the case of a dissolution or liquidation of the Company, in accordance with
Section 7 hereof and (iii) in the case of a termination of employment of
Optionee, in accordance with Sections 4(c) and 4(e) hereof. The Compensation
Committee (the "Committee") of the Board of Directors of the Company (the
"Board") may accelerate the time at which termination may be exercised and
reserves the right to delay and/or reduce the periods during which this Option
may be exercised in order to comply with federal and state securities laws.
(b) EXERCISABLE SHARES. The total number of shares of Stock for which
this Option shall be exercisable (the "Exercisable Shares") shall be the
number of shares of Common Stock and Preferred Stock subject to this Option
multiplied by the percentages set forth below for the applicable time
period:
Applicable Time Applicable
Period Percentage
--------------- ----------
Prior to October 5, 1990 0%
on or after October 5, 1990 33-1/3%
and prior to October 5, 1991
on or after October 5, 1991 66-2/3%
and prior to October 5, 1992
on or after October 5, 1992 100%
The number of Exercisable Shares which are shares of Common Stock on the number
of Exercisable Shares which are shares of Preferred Stock shall be in the same
proportion to the total number of shares of Common Stock and Preferred Stock,
respectively, issuable upon exercise of this Option.
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(c) MANNER OF EXERCISE. Shares of Stock purchased upon exercise of
this Option shall at the time of purchase be paid for in full in cash or as
otherwise permitted by the Committee. This Option may be exercised in whole
or in part from time to time by written notice to the Company stating the
full number of shares of Stock with respect to which this Option is being
exercised and the time of delivery thereof, which shall be at least 15 days
after the giving of such notice unless an earlier date shall have been
mutually agreed upon, accompanied by full payment for the shares of Stock
by certified or official bank check or the equivalent thereof acceptable to
the Company; PROVIDED, HOWEVER, that any such exercise must be for both
Common Stock and Preferred Stock in the same proportion to the total number
of shares of Common Stock and Preferred Stock, respectively, issuable to
Optionee upon exercise of this Option. At the time of delivery, the Company
shall, without stock transfer or issue tax to Optionee, deliver to Optionee
at the principal executive offices of R.P. Scherer, or such other place as
shall be mutually agreed upon, a certificate or certificates for such
shares of Stock; PROVIDED, HOWEVER, that the time of delivery may be
postponed by the Company for such period as may be required for it with
reasonable diligence to comply with any requirements of law, including
making provision for the deduction and withholding of amounts required to
be deducted and withheld under applicable local, state, and federal income
tax laws (which provision may require additional payment by Optionee). The
Company shall pay any stock transfer tax or issue tax resulting from the
issuance of shares of Stock upon the exercise of this Option. If Stock
issuable upon exercise of this Option is not registered under the
Securities Act of 1933, as amended (the "Securities Act"), the Company at
the time of exercise shall require in addition that Optionee or Optionee's
Representative deliver an investment representation in form acceptable to
the Company and its counsel, and the Company shall place a legend on the
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certificate for such Stock restricting the transfer of such Stock. At no time
shall the Company have any obligation or duty to register under the Securities
Act the Stock issuable upon exercise of this Option. The Company shall not be
required to issue or deliver any certificate for shares of Stock purchased upon
the exercise of this Option or portion thereof prior to the execution by
Optionee or Optionee's Representative of the Stockholders Purchase Agreement or
the Stock Subscription Agreement.
3. NON-TRANSFERABILITY OF OPTION RIGHTS. This Option is not assignable or
transferable otherwise than by will or by the laws of descent and distribution.
During the lifetime of Optionee, this Option shall be exercisable only by him or
Optionee's Representative.
4. TERMINATION OF EMPLOYMENT. (a) Subject to the provisions of Sections
4(b), 4(c), 4(d) and 4(e), in the event that Optionee's employment by the
Company, R.P. Scherer or any subsidiary thereof shall terminate, this Option
shall terminate immediately and shall not be exercisable.
(b) In the event that Optionee's employment is terminated because of
death or Disability (as hereinafter defined), the Company shall have the right,
but not the obligation, for a period of 120 days from the date of termination of
employment due to Optionee's death or Disability (the "Call Period"), to
repurchase this Option or a portion thereof, to the extent (and only to the
extent) that this Option, or a portion thereof, entitles Optionee to purchase
the Exercisable Shares existing on the date of Optionee's death or Disability.
The Company may exercise its repurchase right under this Section 4(b) at any
time during the Call Period by delivering written notice (the "Call Notice") to
Optionee (or Optionee's Representative) of its exercise of this right. During
the Call Period, Optionee (or Optionee's Representative) may send written notice
to the Company (the "Put Notice") that such person wishes the Company to
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repurchase, and the Company shall repurchase, this Option, or a portion
thereof, to the same extent as if the Company had exercised its repurchase
right under this Section 4(b). The repurchase price for the repurchase of
this Option pursuant to this Section 4(b) shall be equal to the sum of (i)
the product obtained by multiplying the number of Exercisable Shares which
are shares of Common Stock by an amount which shall equal the excess, if
any, of the Fair Market Value (as hereinafter defined) per share of the
underlying Common Stock, over the Common Stock Option Price, and (ii) the
product obtained by multiplying the number of Exercisable Shares which are
shares of Preferred Stock by an amount which shall equal the liquidation
preference per share of the underlying Preferred Stock over the Preferred
Stock Option Price. The closing of a repurchase of this Option pursuant to
this Section 4(b) shall be held at the principal executive offices of R.P.
Scherer at 10:00 a.m. local time on the tenth business day following the
date of delivery of a Call Notice or a Put Notice, as the case may be, or
at such other date, time and place as the parties may mutually agree upon.
This Option, or any portion thereof, shall terminate immediately upon
Optionee's death or Disability and shall not be exercisable to the extent
that this Option, or any portion thereof, does not entitle Optionee to
purchase Exercisable Shares pursuant to this Section 4(b).
The term "Disability" shall mean an Optionee's physical or mental
disability (so that the Optionee is not reasonably able to render his full
service to the Company, R.P. Scherer or any subsidiary thereof) for any
consecutive period exceeding three months or as determined by agreement of a
majority of the members of the Board in their reasonable discretion. The date of
such Disability shall be on the last day of such three-month period or the day
selected by the Board, as the case may be.
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The term "Fair Market Value" shall mean, with respect to each share of
underlying common Stock, (i) the fair market value of the Company as
determined within six months prior to the applicable date or, if no such
determination has been made within six months, then within 75 days of the
applicable date determined as of the applicable date, in each case by the
Board, divided by (ii) the number of shares of Common Stock then
outstanding (assuming the exercise of all outstanding stock options,
warrants or rights for the purchase of Common Stock).
(c) If neither the Company nor Optionee (or Optionee's Representative)
has exercised its right pursuant to Section 4(b) upon the Optionee's death
or Disability, Optionee (or Optionee's Representative) shall have the
right, at any time within 120 days following the end of the Call Period, to
exercise this Option to purchase the Exercisable Shares which existed on
the date of his death or Disability. This Option, or any portion thereof,
shall terminate at the end of the 120-day period following the Call Period
and shall not be exercisable to the extent that this Option, or any portion
thereof, is neither repurchased by the Company pursuant to Section 4(b) nor
exercised by Optionee (or Optionee's Representative) pursuant to this
Section 4(c).
(d) In the event that Optionee's employment is terminated by reason of
Termination without Cause (as hereinafter defined), the Company shall have
the right, but not the obligation, for a period of 120 days from the date
of termination of employment of Optionee, to repurchase this Option, or a
portion thereof, to the extent (and only to the extent) that this Option,
or a portion thereof, entitles Optionee to purchase the Exercisable Shares
existing on the date of his termination of employment. The Company may
exercise its repurchase right under this Section 4(d) at any time during
the 120-day period by delivering written notice to Optionee of its exercise
of this right. The repurchase price applicable to a repurchase pursuant to
this
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Section 4(d) shall be equal to the sum of (i) the product obtained by
multiplying the number of Exercisable Shares which are shares of Common
Stock by an amount which shall equal the excess, if any, of the lesser of
(A) the Termination Book Value (as hereinafter defined) per share of the
underlying Common Stock and (B) the Fair Market Value per share of the
underlying Common Stock, over the Common Stock Option Price, and (ii) the
product obtained by multiplying the number of Exercisable Shares which are
shares of Preferred Stock by an amount which shall equal the liquidation
preference per share of the underlying Preferred Stock over the Preferred
Stock Option Price. The closing of the repurchase of this Option, or a
portion thereof, pursuant to this Section 4(d) shall be held at the
principal executive offices of R.P. Scherer at 10:00 a.m. local time or the
tenth business day following the date of delivery of such written notice,
or at such other date, time and place as the parties may mutually agree
upon. This Option, or any portion thereof, shall terminate immediately upon
Optionee's Termination without Cause and shall not be exercisable to the
extent that this Option, or any portion thereof, does not entitle Optionee
to purchase Exercisable Shares pursuant to this Section 4(d).
The term "Termination without Cause" shall mean termination of
employment of Optionee by reason of any occurrence other than death or
Disability of Optionee, termination for Cause or the voluntary termination
of Optionee of his employment by resignation or any other means, that
results in Optionee no longer being employed by the Company, R.P. Scherer
or any subsidiary thereof.
The term "Cause" used in connection with the termination of
employment of Optionee shall mean a termination of employment due to (i)
the commission by Optionee of an act of fraud upon, or bad faith or willful
misconduct toward, the Company, R.P. Scherer or any subsidiary thereof
(including the unauthorized disclosure of confidential or proprietary
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information of the Company, R.P. Scherer or any subsidiary thereof), (ii) a
conviction of Optionee by a court of competent jurisdiction (or a plea of NOLO
CONTENDERE or the equivalent under the laws of any other country or political
subdivision thereof) or a crime involving, in the reasonable determination of
the Board, fraud or dishonesty, or a crime which in the reasonable determination
of the Board would tend to be injurious to the reputation of the Company, R.P.
Scherer or any subsidiary thereof, or of Optionee, (iii) misconduct by Optionee
which, in the reasonable determination of the Board, has been or is likely to be
materially injurious to the Company, R.P. Scherer or any subsidiary thereof, or
(iv) the failure of Optionee substantially to perform the duties and obligations
imposed upon him by R.P. Scherer or any subsidiary thereof.
"Termination Book Value" shall mean the book value of the Company
(excluding the amount of stockholders' equity attributable to the Company's 17%
Senior Cumulative Exchangeable Preferred Stock, par value $.01 per share, the
Preferred Stock and to the Company's Series C Redeemable Preferred Stock, par
value $.01 per share) per outstanding share of Common Stock (assuming exercise
of all outstanding stock options, warrants or rights for the purchase of Common
Stock) as of the last day of the fiscal quarter ended immediately preceding the
date on which the termination of employment occurs, as determined from the
Company's consolidated balance sheet prepared, in accordance with generally
accepted accounting principles as applied in the United States, by the
management of the Company and R.P. Scherer and reviewed by the independent
public accountants regularly employed by the Company.
(e) If the Company has not, pursuant to Section 4(d), exercised its
repurchase right upon Optionee's termination of employment by reason of
Termination without Cause, Optionee shall have the right, at any time
within 120 days following the end of the 120-day
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period provided for in Section 4(d), to exercise this Option to purchase the
Exercisable Shares which existed on the date of Optionee's termination of
employment. This Option, or any portion thereof, shall terminate at the end of
120 days following the 120-day period provided for in Section 4(d) and shall not
be exercisable to the extent that this Option, or any portion thereof, is
neither repurchased by the Company pursuant to Section 4(d) nor exercised by
Optionee pursuant to this Section 4(e).
5. ADJUSTMENTS ON RECAPITALIZATION. The aggregate number of shares of Stock
subject to this Option and the Option Price may be appropriately adjusted for
any increase or decrease in the number of issued shares of Stock resulting from
a recapitalization, the subdivision or consolidation of shares, or the payment
of a stock dividend, after the Date of Grant; PROVIDED, HOWEVER, that any option
to purchase fractional shares of Stock resulting from such adjustments shall be
cancelled.
6. SALE OF THE COMPANY. In the event the Company proposes to engage in a
Sale of the Company (as hereinafter defined), the Company shall give Optionee
written notice of such Sale on or before 15 days (or shorter time if, in the
sole discretion of the Company, 15 days' notice is impracticable) before the
consummation of such Sale, and, unless otherwise agreed to by the Company and
Optionee, this Option may be exercised after receipt of such notice and prior to
such Sale to purchase all of the Stock subject to this Option. This Option, if
not exercised prior to a Sale of the Company, shall expire on the occurrence of
such Sale and no payment shall be owed to Optionee with respect to this Option;
PROVIDED, HOWEVER, that if the proposed Sale of the Company is not consummated
and the Board in good faith determines that the proposed Sale of the Company
will not be consummated, this Option shall, upon such determination of the
Board, cease to be exercisable pursuant to this Section 6. A "Sale of the
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Company" shall mean (i) a merger or consolidation of the Company with or into
another entity (other than a subsidiary or affiliate of the Company) in which
the holders of Stock are required to exchange their Stock for cash, property
and/or securities or (ii) a sale or lease of all or substantially all of the
assets of the Company or R.P. Scherer except to a subsidiary or affiliate of the
Company.
7. DISSOLUTION OF ISSUER OF THE STOCK. In the event of the proposed
dissolution or liquidation of the Company, the Company shall give Optionee not
less than 30 days' prior written notice of the date of such proposed dissolution
or liquidation, and, unless otherwise agreed to by the Company and Optionee,
this Option may be exercised during the 30-day period preceding the dissolution
or liquidation to purchase all of the Stock subject to this Option. This Option,
if not exercised prior to a dissolution or liquidation of the Company, shall
expire upon the occurrence of such dissolution or liquidation, and no payment
shall be owed to Optionee with respect to this Option; PROVIDED, HOWEVER, that
if the proposed dissolution or liquidation of the Company is not consummated and
the Board in good faith determines that the proposed dissolution or liquidation
of the Company will not be consummated, this Option shall, upon such
determination of the Board, cease to be exercisable pursuant to this Section 7.
The provisions of this Section 7 shall not be applicable if Optionee receives
notice under Section 6 at a time earlier than the notice provided for in this
Section 7.
8. DEFERRAL OF PURCHASES. (a) The Company shall not be obligated to
purchase this Option (or any portion thereof) at any time pursuant to Section
4(b) or 4(d) hereof, regardless of whether it has delivered a notice of its
election to purchase this Option (or any portion thereof), (i) to the extent
that the purchase of this Option (or any portion thereof) together with any
other purchases of options or Stock pursuant to Sections 4(b) or 4(d) hereof, as
the case
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may be, from other Optionees, and pursuant to similar provisions in the 1990 RPS
Corporation Non-qualified Performance Stock Option Plan A (the "Performance
Stock Option Plan A") and the agreements relating thereto and pursuant to
similar provisions in Optionee's Stock Subscription Agreement or Stockholders
Purchase Agreement, of which the Company has at such time been given or has
given notice) would (A) result in a violation of any law, statute, rule,
regulation, policy, guideline, order, writ, injunction, decree or judgment
promulgated or entered by any federal, state, local or foreign court or
governmental authority applicable to the Company, R.P. Scherer or any of their
subsidiaries or any of its or their property or (B) after giving effect thereto,
result in a Financing Default, or (ii) if immediately prior to such purchase
there exists a Financing Default. The term "Financing Default" shall mean an
event which constitutes (or with notice or lapse of time or both would
constitute) an event of default (which event of default has not been cured or
waived) under any of the following as they may be amended from time to time: (A)
the Credit Facilities Agreement (the "Credit Facilities Agreement") dated as of
October 3, 1989, among R.P. Scherer and the other borrowers named herein (the
"Borrowers"), the guarantors named therein (the "Guarantors"), Citibank, N.A.
and CIBC International Trust Limited as lead managers, Citicorp Investment Bank
Limited, as facility agent and the banks parties thereto, and any extensions,
renewals, refinancing or refunding thereof in whole or in part; (B) the Credit
Agreement (the "Revolving Credit Agreement") dated as of October 3, 1989,
between R.P. Scherer and Citibank, N.A. and any extensions, renewals,
refinancing or refunding thereof in whole or in part; (C) any notes executed and
delivered by any of the Borrowers under the Credit Facilities Agreement, or by
R.P. Scherer under the Revolving Credit Agreement and any extensions, renewals,
refinancing or refunding thereof in whole or in part; (D) any guaranties
executed by any of the Guarantors under the Credit Facilities Agreement and any
extensions,
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renewals, refinancing or refunding thereof in whole or in part; (E) the Senior
Subordinated Loan Agreement, dated as of June 5, 1989, among Shearson Lehman
Hutton Holdings Inc., the Company and RPS Acquisition Corporation
("Acquisition") and any extensions, renewals, refinancing or refunding thereof
in whole or in part; (F) any notes executed and delivered by Acquisition under
the Senior Subordinated Loan Agreement and any extensions, renewals, refinancing
or refunding thereof in whole or in part; (G) the Indenture (the "Subordinated
Debenture Indenture") to be entered into between R.P. Scherer and The First
National Bank of Boston, as trustee relating to the Senior Subordinated
Debentures due 1999; (H) the Indenture, (the "Exchange Debenture Indenture") to
be entered into between the Company and Ameritrust Company National Association,
as trustee, relating to the 17% Subordinated Exchange Debentures; and (I) any of
the securities issued pursuant to or whose terms are governed by the terms of
any of the agreements set forth in clauses (A) through (H) above.
(b) If at any time consummation of all purchases of this Option (or
any portion thereof) to be made by the Company pursuant to Sections 4(b) or 4(d)
hereof (and pursuant to similar provisions for the purchase of options or Stock,
as the case may be, contained in the Performance Stock Plan A and the agreements
relating thereto and in the Stock Subscription Agreements and Stockholders
Purchase Agreements) is not required because of the applicability of clause (i)
of Section 8(a) hereof and similar provisions for the purchase of options or
Stock, as the case may be, in the Performance Stock Option Plan A and the
agreements relating thereto and in the Stock Subscription Agreements and
Stockholders Purchase Agreements, but clause (ii) of Section 8(a) hereof or
similar provisions for the purchase of options or Stock, as the case may be, in
the Performance Stock Option Plan A and the agreements relating thereto and in
the Stock Subscription Agreements and Stockholders Purchase Agreements are not
applicable, then the
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Company shall purchase (in accordance with the following sentence) from Optionee
or Optionee's Representative, as the case may be, desiring or obligated to sell
to the Company this Option (or any portion thereof) pursuant to this Option
Agreement and from the other persons and entities having the right or obligation
to sell options or Stock, as the case may be, pursuant to provisions in the
Performance Stock Option Plan A and the agreements relating thereto and in the
Stock Subscription Agreements and Stockholders Purchase Agreements, the maximum
number of options and shares of Stock of which it is able to repurchase without
the events described in Section 8(a)(i) resulting; PROVIDED, HOWEVER, that
subject to the last sentence of this Section 8(b), the provisions of Section
8(c) hereof shall apply in respect of this Option (or any portion thereof) not
purchased under Section 4(b) or 4(d) hereof because of the operation of Sections
8(a) or 8(b) hereof. In the event any of the events described in Section 8(a)(i)
would result from the purchase of any Option pursuant to Sections 4(b) or 4(d),
the Board, in its sole discretion, may determine priorities among Optionee or
Optionee's Representative, as the case may be, and the other persons having the
right or obligation to sell options or Stock, as the case may be, pursuant to
the Performance Stock Option Plan A and the agreements relating thereto and in
the Stock Subscription Agreements and Stockholders Purchase Agreements, taking
into account relative hardship and such other factors as it deems relevant, and
may elect to cause the Company to consummate purchases of this Option (or any
portion thereof) according to such priorities (such portion of this Option which
is to be so purchased is hereinafter called the "Purchased Option" and such
portion of this Option which is not to be so purchased is hereinafter called the
"Unpurchased Option"); the Company shall pay Optionee or Optionee's
Representatives, as the case may be, holding such Unpurchased Option the
applicable purchase
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price for such option on the tenth business day after the Company learns it is
no longer precluded from paying for such options.
(c) Anything to the contrary contained in Section 4(b) or 4(d) hereof
notwithstanding, this Option (or any portion thereof) which Optionee or
Optionee's Representative, as the case may be, has elected to sell to the
Company or which the Company has elected to purchase from Optionee or Optionee's
Representative, as the case may be, but which in accordance with Sections 8(a)
and 8(b) hereof is not purchased at the applicable time provided in Section 4(b)
or 4(d) hereof, shall be purchased by the Company on the tenth day after such
date or dates that the Company after due inquiry learns that (after taking into
account any purchases of options or Stock, as the case may be, to be made at
such time pursuant to the Performance Stock Option Plan A and the agreements
relating thereto, and in the Stock Subscription Agreements and Stockholders
Purchase Agreements) it is no longer permitted to defer purchasing this Option
(or any portion thereof) under Sections 8(a) and 8(b) hereof, and the Company
shall give seven days prior notice of any such purchase; PROVIDED, HOWEVER, that
Optionee (or Optionee's Representative) shall not be obligated to sell a lesser
portion of this Option at any one time pursuant to this Section 8(c) had it not
been so delayed; and, PROVIDED, FURTHER, that if Optionee (or Optionee's
Representative) exercises its right to have this Option (or any portion thereof)
repurchased pursuant to Section 4(b) or the Company exercises its repurchase
rights pursuant to Section 4(b), and the purchase of the Option (or any portion
thereof) cannot be consummated by reason of Sections 8(a) and 8(b), the purchase
price for the Option (or any portion thereof) shall be calculated pursuant to
Sections 4(b) as of the time the repurchase right is exercised, including
interest on the aggregate purchase price for the Option at a rate per annum
equal to the yield to maturity on U.S. Treasury obligations having a maturity
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equal to a period of three months. If Optionee elects pursuant to Section 8(b)
to rescind or defer his election to sell any or all of the Purchased Option,
Optionee or Optionee's Representative, as the case may be, may exercise his
right pursuant to Section 4(b) to require the Company to purchase the Option (or
any portion thereof) for a period of ten days after receiving notice that the
Company is no longer precluded from purchasing the Option (or any portion
thereof).
9. PAYMENT FOR OPTIONS. If at any time the Company elects or is required to
purchase this Option (or any portion thereof) pursuant to Sections 4(b) or 4(d),
the Company shall pay the purchase price for this Option (or any portion
thereof) to the extent permitted by any loan agreement, indenture or other
agreement to which the Company is a party, by the Company's delivery of a bank
cashier's check or certified check for the purchase price, if any, and, then, at
the Company's sole discretion, to the extent permitted by any loan agreement,
indenture or other agreement to which the Company or R.P. Scherer is a party, by
the Company's delivery of a junior subordinated promissory note (which shall be
subordinated and subject in right of payment to the prior payment of all
indebtedness of the Company including, without limitation, any debt outstanding
under the Credit Facilities Agreement, the Senior Subordinated Loan Agreement,
the Subordinated Debenture Indenture, the Exchange Debenture Indenture and any
modifications, renewals, extensions, replacements and refunding of all such
indebtedness) of the Company (a "Junior Subordinated Note") equal to the
remainder, if any, of the purchase price payable in five equal annual
installments commencing on the first anniversary of the issuance thereof and
bearing interest payable annually at the publicly announced prime rate of the
facility agent under the Credit Facilities Agreement on the date of issuance,
against delivery of the certificates or other instruments representing this
Option (or any portion thereof) so purchased. If, in a purchase pursuant to
Section 4(b), the Company elects to pay all or any
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<PAGE> 39
portion of the purchase price for this Option (or any portion thereof) with a
Junior Subordinated Note, the Company shall give Optionee or the Optionee's
Representative, as the case may be, notice of the amount of such note at least
twenty days prior to such purchase, and Optionee or Optionee's Representative,
as the case may be, shall have ten days thereafter to rescind their election to
sell this Option (or any portion thereof).
10. SUBJECT TO OPTION PLAN. This Option is subject to all the terms and
conditions of the Option Plan, and specifically to the power of the Committee to
make interpretations of the Option Plan and of options granted thereunder, and
of the Board to alter, amend, suspend or discontinue the Option Plan subject to
the limitations expressed in the Option Plan. By acceptance hereof, Optionee
acknowledges receipt of a copy of the Option Plan and recognizes and agrees that
all determinations, interpretations or other actions respecting the Option Plan
may be made by the Board of the Committee, and that such determinations,
interpretations or other actions are final, conclusive and binding upon all
parties, including Optionee.
11. GOVERNING LAW. THIS NONQUALIFIED STOCK OPTION AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICTS OF LAWS.
12. JURISDICTION. Any suit, action or proceeding against Optionee with
respect to this Agreement, or any judgment entered by any court in respect of
any thereof, may be brought in any court of competent jurisdiction in the State
of New York, as the Company may elect in its sole discretion, and Optionee
hereby submits to the exclusive jurisdiction of such courts for the purpose of
any such suit, action, proceeding or judgment. Optionee hereby irrevocably
waives any objections which he may now or hereafter have to the laying of the
venue of any suit, action
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<PAGE> 40
or proceeding arising out of or relating to this Agreement brought in any court
of competent jurisdiction in the State of New York, and hereby further
irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in any inconvenient forum. No suit, action or
proceeding against the Company with respect to this Agreement may be brought in
any court, domestic or foreign, or before any similar domestic or foreign
authority other than in a court of competent jurisdiction in the State of New
York, and Optionee hereby irrevocably waives any right which he may otherwise
have had to bring such an action in any other court, domestic or foreign, or
before any similar domestic or foreign authority. The Company hereby submits to
the jurisdiction of such courts for the purpose of any such suit, action or
proceeding.
IN WITNESS WHEREOF, this Nonqualified Stock Option Agreement is executed as
of the ____ day of ____________, 19__.
RPS CORPORATION
By: ____________________________________
Name: __________________________________
Title: _________________________________
The undersigned Optionee hereby accepts the benefits of the foregoing
Nonqualified Stock Option Agreement.
----------------------------------------
----------------------------------------
Address of Optionee:
----------------------------------------
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FIRST AMENDMENT TO
RPS CORPORATION
1990 NONQUALIFIED STOCK OPTION PLANS
WHEREAS, RPS Corporation, a Delaware corporation, established the RPS
CORPORATION 1990 NONQUALIFIED STOCK OPTION PLAN, the RPS CORPORATION 1990
NONQUALIFIED PERFORMANCE STOCK OPTION PLAN A and the RPS CORPORATION 1990
NONQUALIFIED PERFORMANCE STOCK OPTION PLAN B; and
WHEREAS, RPS CORPORATION changed its name to R.P. Scherer Corporation in
1991 (the "Company"); and
WHEREAS, the Company desires to amend the RPS CORPORATION 1990 NONQUALIFIED
STOCK OPTION PLAN, the RPS CORPORATION 1990 NONQUALIFIED PERFORMANCE STOCK
OPTION PLAN A and the RPS CORPORATION 1990 NONQUALIFIED PERFORMANCE STOCK OPTION
PLAN B.
NOW, THEREFORE, the RPS CORPORATION 1990 NONQUALIFIED STOCK OPTION PLAN,
the RPS CORPORATION 1990 NONQUALIFIED PERFORMANCE STOCK OPTION PLAN A and the
RPS CORPORATION 1990 NONQUALIFIED PERFORMANCE STOCK OPTION PLAN B (each
individually referred to respectively as the "1990 Plan," the "1990 Plan A" and
the "1990 Plan B" and collectively, the "1990 Plans") are amended effective
February __, 1994, with respect to each of the 1990 Plans subject to subsequent
shareholder approval as follows:
1. The last sentence of Section 3 of each of the 1990 Plans is amended
by adding the phrase "to the extent options are not transferred to a
grantor trust pursuant to Section 4(c)."
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<PAGE> 42
2. Effective as of February 18, 1994, Section 4(c) of each of the 1990
Plans is amended in its entirety to read as follows:
(c) NON-TRANSFERABILITY OF OPTION RIGHTS. No option shall be
assignable or transferable otherwise than (i) by will, (ii) by the
laws of descent and distribution, or (iii) to one or more grantor
trusts provided that with regard to a transfer to one or more such
grantor trusts the Optionee's Stock Option Agreement expressly so
provides for such transfer, is approved by the Committee, and the
Optionee does not receive any consideration for the transfer. The
option is exercisable only by such Optionee or grantor trust trustee
or, as provided in Section 3, such Optionee's Representative.
3. Effective as of February 18, 1994, a new Section 12 is added to
each of the 1990 plans as follows:
12. TRUSTS. For all purposes of the Plan, a grantor trust trustee
that is a transferee pursuant to Section 4(c) is the "Optionee";
provided, however, for purposes of determining the rights and
obligations of the Company and such grantor trust trustee under
Section 4(d), the employee granted the Options shall be deemed the
Optionee whose termination, disability or death will effectuate such
rights or obligations.
IN WITNESS WHEREOF, these Amendments have been adopted by the Company this
18th day of February, 1994.
ATTEST R.P. SCHERER CORPORATION
/s/ By: /s/ Aleksandar Erdeljan
- ---------------------------------- ------------------------------------
Its: President
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<PAGE> 43
SECOND AMENDMENT TO
RPS CORPORATION
1990 NONQUALIFIED STOCK OPTION PLANS
The RPS Corporation 1990 Nonqualified Stock Option Plan, the RPS
Corporation 1990 Nonqualified Performance Stock Option Plan A, and the RPS
Corporation 1990 Nonqualified Performance Stock Option Plan B (each individually
referred to respectively as the "1990 Plan," the "1990 Plan A" and the "1990
Plan B" and collectively referred to as the "1990 Plans") are amended effective
September 1, 1994, as follows:
1. AMENDMENT TO SECTION 1. The first sentence of Section 1 of each of
the 1990 Plans is amended in its entirety to read as follows:
"The purpose of this plan (this "Option Plan") is to provide a
means by which certain employees of R.P. Scherer Corporation (formerly
RPS Corporation), a Delaware corporation (the "Company"), R.P. Scherer
International Corporation (formerly R.P. Scherer Corporation) , a
Delaware corporation and a wholly owned subsidiary of the Company
("R.P. Scherer"), or any subsidiary thereof, may be given an
opportunity to purchase common stock, par value $0.01 per share (the
"Common Stock") , and prior to conversion to Common Stock of Series B
Redeemable Preferred Stock and conversion of the related options by
operation of Section 4(e) to options for Common Stock (the
"Conversion"), Series B Redeemable Preferred Stock, par value $0.01
per share (the "Preferred Stock," and together with the Common Stock,
the "Stock") of the Company."
2. AMENDMENT TO SECTION 2. Section 2 of each of the 1990 Plans is
amended by adding the phrase "prior to the Conversion" immediately following the
phrase "Subject to adjustment as provided in Section 4(e) hereof," and by adding
at the end of the first sentence the phrase, "and after the Conversion a number
of shares of Common Stock pursuant to Section 4(e)."
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<PAGE> 44
3. AMENDMENTS TO SECTION 4 OF THE PLANS. Section 4 of the 1990 Plans
is amended as follows:
(i) Subject to shareholder ratification, Section 4(a) of each of
the 1990 Plans is deleted and a new Section 4(a) is included to read
as follows:
"(a) TERMS AND CONDITIONS OF OPTIONS. The Committee may
grant options from time to time pursuant to this Option Plan.
Such options shall be evidenced by written agreements
substantially in the form of the Nonqualified Stock Option
Agreement (the "Stock Option Agreement"), Appendix A to the
Option Plan as originally adopted, but pursuant to and
interpreted in accordance with, and not inconsistent with, this
Option Plan as amended. The shares of Stock subject to each
option shall, (i) upon issuance, but in no event after September
1, 1994, be subject to the terms and conditions, including
restrictions on transferability, contained in an agreement
substantially in the form of the Stockholders Purchase Agreement,
Appendix B to the Option Plan as originally adopted, entered into
by the Company and the Optionees (the "Stockholders Purchase
Agreement"), or, (ii) with respect to certain Optionees, unless
terminated by the Company, the Management Stock Subscription
Agreement between the Company and such Optionees (the "Stock
Subscription Agreement") as amended and restated from time to
time. Notwithstanding anything to the contrary herein, however,
no insider, as defined for purposes of Section 16 of the
Securities Exchange Act of 1934, as amended, may sell shares of
Stock subject to an option granted hereunder after August 31,
1994, and prior to March 2, 1995. Nothing in this Option Plan or
an option granted hereunder shall govern the employment rights
and duties between an Optionee and the Company or R.P. Scherer,
or any subsidiary thereof, nor in any way be deemed to constitute
an employment agreement among such parties. Effective September
1, 1994 any Stockholders Purchase Agreement in the form attached
hereto as Appendix B entered into by the Company and Optionee
shall be terminated."
(ii) Section 4(b) of each of the 1990 Plans is amended by
inserting the phrase "(as effective, pursuant thereto, prior to
September 1, 1994)" immediately after the reference to Section 4(d)
and adding a new sentence to the end of Section 4(b) to read "The
termination date, which is not more than 10 years and 1 day from the
date the option is granted and which is set forth in an Optionee's
Option Agreement, shall be referred to as the "Termination Date."
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<PAGE> 45
(iii) Subject to shareholder ratification, Section 4(d)(i) of
both the 1990 Plan and the 1990 Plan A are deleted and replaced with a
new Section 4(d)(i)(A) and 4(d)(i)(B) to read as follows:
"(i)(A) Prior to September 1, 1994, subject to the
provisions of Sections 4(d)(ii), 4(d)(iii) , 4(d)(iv) and
4(d)(v), in the event that an Optionee's employment by the
Company, R.P. Scherer or any subsidiary thereof shall terminate,
all options granted to such Optionee pursuant to this Option Plan
shall terminate immediately and shall not be exercisable; and
(i)(B) On and after September 1, 1994, Sections 4(d)(ii),
4(d)(iii), 4(d)(iv) and 4(d)(v) shall be inapplicable, and
notwithstanding an Optionee's termination of employment, options
shall not terminate until their Termination Date and shall not be
exercisable thereafter."
(iv) Subject to shareholder ratification, Section 4(d) of the
1990 Plan B is amended by adding the phrase "Prior to September 1,
1994" at the beginning of the first sentence of the Section, and a new
sentence shall be added at the end of Section 4(d) of the 1990 Plan B
to read as follows:
"On and after September 1, 1994, notwithstanding an
Optionee's termination of employment, options shall not terminate
until their Termination Date and shall not be exercisable
thereafter."
(v) Subject to shareholder ratification, Section 4(f) of both the
1990 Plan and the 1990 Plan A are deleted and a new Section 4(f) is
included to read as follows:
"(f) In the event the Company proposes to engage in a Sale
of the Company (as hereunder defined and sometimes referred to as
"Sale"), the Company shall give each Optionee written notice of
such Sale on or before 15 days (or shorter time if, in the sole
discretion of the Company, 15 days notice is impracticable)
before the consummation of such Sale, and unless otherwise agreed
to by the Company and the Optionee, each option shall, after
receipt of such notice and prior to such Sale, automatically
become exercisable for the Exercisable Shares existing on the
date the Company gives written notice of the Sale. The Committee
may, in its sole discretion, provide that the options not
exercised prior to such Sale shall expire 30 days after the
occurrence of such Sale, provided, however, that the Compensation
Committee may not terminate options pursuant to this Section
prior to March 2 1995. If options are not exercised in connection
with such Sale, and provided the Committee does not provide for
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<PAGE> 46
the termination of such options, then following consummation of
the Sale, such Optionee upon exercise of his options, will only
be entitled to receive the kind and amount of stock, securities,
or assets that such Optionee would have received had such
Optionee exercised his or her options immediately prior to such
Sale; PROVIDED, HOWEVER, that if the proposed Sale of the Company
is not consummated and the Board in good faith determines that
the proposed Sale of the Company will not be consummated, the
options granted hereunder shall, upon such determination of the
Board, cease to be exercisable pursuant to this Section 4(f). A
"Sale of the Company" shall mean (i) a merger or consolidation of
the Company with or into another entity (other than a subsidiary
or affiliate of the Company), (ii) a sale or lease of all or
substantially all of the assets of the Company or R.P. Scherer
except to a subsidiary or affiliate of the Company, (iii) 50% or
more of the Company's then outstanding shares of voting stock is
acquired by another corporation, person or entity (other than a
subsidiary or affiliate of the Company), or (iv) the Company
recapitalizes or enters into any similar transaction, and as a
result of which the Common Stock either (A) is no longer a voting
equity security of the Company or (B) is no longer listed on a
national securities exchange or authorized for quotation on an
inter-dealer quotation system of a national securities
association."
(vi) Section 4(j) of the 1990 Plan and of the 1990 Plan A and
Section 4(h) of the 1990 Plan B are amended by adding the phrase "Prior to
September 1, 1994", at the beginning thereof.
4. AMENDMENTS TO SECTION 5.
(i) Section 5(c)(iii) of the 1990 Plan A is amended effective
September 1, 1994 to read as follows:
"(iii) in the case of termination of employment of an Optionee
pursuant to Section 4(d)."
(ii) Section 5(a) of the 1990 Plan is amended effective September 1,
1994 to read as follows:
"(iii) in the case of termination of employment of an Optionee
pursuant to Section 4(d)."
(iii) Subject to shareholder ratification, Section 5(a)(vi) of the
1990 Plan B shall be amended in its entirety to read as follows:
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<PAGE> 47
"(vi) "Sale of the Company" shall mean (i) a merger or
consolidation of the Company with or into another entity (except a
subsidiary or Affiliate of the Company), (ii) a sale or lease of all
or substantially all of the assets of the Company or R.P. Scherer
except to a subsidiary or Affiliate of the Company, (iii) 50% or more
of the Company's then outstanding shares of voting stock is acquired
by another corporation, person or entity (other than a subsidiary
Affiliate of the Company), or (iv) the Company recapitalizes or enters
into any similar transaction, and as a result of which the Common
Stock either (A) is no longer a voting equity security of the Company
or (B) is no longer listed on a national securities exchange or
authorized for quotation on an inter-dealer quotation system of a
national securities association."
(iv) Subject to shareholder ratification, the fourth sentence of
Section 5(c) of the 1990 Plan B is deleted and replaced with the following:
"The Committee may, in its sole discretion, provide that the
options not exercised prior to a Sale of the Company shall expire 30
days after the occurrence of such Sale, provided, however, that the
Compensation Committee may not terminate options pursuant to this
Section prior to March 2, 1995. If options are not exercised in
connection with such Sale, and provided the Committee does not provide
for the termination of such options, then following consummation of
the Sale, such Optionee upon exercise of his option, will only be
entitled to receive the kind and amount of stock, securities, or
assets that such Optionee would have received had such Optionee
exercised his or her option immediately prior to such Sale; PROVIDED,
HOWEVER, that if the proposed Sale of the Company is not consummated
and the Board in good faith determines that the proposed Sale of the
Company will not be consummated, the options granted hereunder shall,
upon such determination of the Board, cease to be exercisable pursuant
to this Section."
5. AMENDMENTS TO SECTION 6. Section 6 of the 1990 Plans is amended as
follows:
(i) The last sentence of Section 6(a) of each of the Plans is
amended to read as follows:
"The Board may act in lieu of the Committee with directors
who are not "disinterested persons" abstaining and shall act in
lieu of a Committee with directors who are not "disinterested
persons" abstaining at any time such a Committee has not been
created."
(ii) Subject to shareholder ratification, a new paragraph is
added to Section 6(b) of the Plans to read as follows:
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<PAGE> 48
"Notwithstanding anything to the contrary in the Plan as
amended, other than Section 4(d) and Section 4(c), the Committee
may grant options to eligible employees who are not United States
citizens or residents on such terms and conditions as may, in the
judgment of the Committee, be necessary or desirable to foster
the purposes of the Plan. In furtherance of the purposes of the
Plan, the Committee may adopt such modifications to the terms of
Options and such procedures and guidelines, and may cause the
Company to take such other actions, as may be necessary or
advisable to comply with foreign laws and practices."
IN WITNESS WHEREOF, the Corporation has adopted this Amendment this 29 day
of September, 1994.
ATTEST: R.P. SCHERER CORPORATION
/s/ By: /s/ Aleksandar Erdeljan
- ---------------------------------- ------------------------------------
Secretary Its: President & CEO
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<PAGE> 1
Exhibit 99(b)
R.P. SCHERER CORPORATION
(f/k/a RPS CORPORATION)
------------------------
1990 NONQUALIFIED PERFORMANCE STOCK OPTION PLAN A
1. PURPOSE. The purpose of this 1990 Nonqualified Performance Stock Option
Plan A (this "Performance Plan") is to provide a means by which certain
employees of RPS Corporation, a Delaware corporation (the "Company"), R.P.
Scherer Corporation, a Delaware corporation and a wholly owned subsidiary of the
Company ("R.P. Scherer"), or any subsidiary thereof, may be given an opportunity
to purchase common stock, par value $.01 per share (the "Common Stock"), and
Series B Redeemable Preferred Stock, par value $.01 per share (the "Preferred
Stock" and together with the Common Stock, the "Stock") of the Company. This
Performance Plan is intended to advance the interests of the Company by
encouraging stock ownership on the part of certain employees, by enabling the
Company and R.P. Scherer to secure and retain the services of highly qualified
persons, and by providing employees with an additional incentive to advance the
success of the Company.
2. STOCK SUBJECT TO OPTION. Subject to adjustment as provided in Section
4(e) hereof, options may be granted by the Company in accordance with the
provisions of Section 4 hereof to purchase up to an aggregate of 90,798 shares
of the authorized but unissued Common Stock and up to an aggregate of 181,596
shares of the authorized but unissued Preferred Stock. Shares of Stock that by
reason of the expiration of an option or otherwise are no longer subject to
purchase pursuant to an option granted under this Performance Plan may be the
subject of other options granted under this Performance Plan or any other
option, incentive or compensatory plan adopted by the Company.
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1
<PAGE> 2
3. PARTICIPANTS. All key employees of the Company, R.P. Scherer or any of
its subsidiaries, as determined by the Board of Directors of the Company (the
"Board") or the Committee (as such term is defined in Section 4(a) hereof), may
be granted options under this Performance Plan. A person who holds an option
granted hereunder that has not expired is referred to as an "Optionee";
PROVIDED, HOWEVER, that in the event of such person's death or Disability (as
hereinafter defined) such person's estate, personal representative or
beneficiary following the death or incapacity of such person (an "Optionee's
Representative") shall be able to exercise the rights otherwise available to the
Optionee.
4. TERMS AND CONDITIONS OF OPTIONS. The Committee may grant options from
time to time pursuant to this Performance Plan. Such options shall be evidenced
by written agreements substantially in the form of the Nonqualified Performance
Stock Option Agreement A (the "Performance Stock Option Agreement"), which is
attached hereto as Appendix A, and shall not be inconsistent with this
Performance Plan. The shares of Stock subject to each option shall, upon
issuance, become subject to the terms and conditions, including restrictions on
transferability, contained in an agreement substantially in the form of the
Stockholders Purchase Agreement attached hereto as Appendix B to be entered into
by the Company and the Optionee (the "Stockholders Purchase Agreement"), or,
with respect to certain Optionees, a Management Stock Subscription Agreement
between the Company and such Optionee (the "Stock Subscription Agreement").
Nothing in this Performance Plan or an option granted hereunder shall govern the
employment rights and duties between an Optionee and the
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2
<PAGE> 3
Company or R.P. Scherer or any subsidiary thereof, nor in any way be deemed to
constitute an employment agreement among such parties.
(a) OPTION PRICE. The price per share of the Common Stock subject to
each option (the "Common Stock Option Price") shall be set by a
Compensation Committee (the "Committee") of the Board; PROVIDED, HOWEVER,
that the Common Stock Option Price per share may be less than the fair
market value of a share of Common Stock on the Date of Grant, as such date
is set forth in the applicable Performance Stock Option Agreement. For
purposes of the foregoing, the fair market value of the Common Stock on the
Date of Grant shall be the fair market value established by the Committee
acting in good faith, and the fair market value may be more or less than
the book value of the Common Stock. The price per share of the Preferred
Stock subject to each option (the "Preferred Stock Option Price") shall be
the liquidation preference of each such underlying share of Preferred
Stock. The Common Stock Option Price and the Preferred Stock Option Price
are collectively referred to as the "Option Price."
(b) TERM OF OPTION. Notwithstanding any other provision of this
Performance Plan, each option granted under this Performance Plan shall
expire not more than ten years and one day from the date the option is
granted, except that under the circumstances described in Sections 4(d),
4(f) and 4(g), options may expire and terminate at an earlier date.
(c) NON-TRANSFERABILITY OF OPTION RIGHTS. No option shall be
assignable or transferable otherwise than by will or by the laws of descent
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3
<PAGE> 4
and distribution. During the lifetime of an Optionee, the option is
exercisable only by such Optionee or, as provided in Section 3, such
Optionee's Representative.
(d) TERMINATION OF EMPLOYMENT.
(i) Subject to the provisions of Sections 4(d)(ii), 4(d)(iii),
4(d)(iv) and 4(d)(v), in the event that an Optionee's employment by
the Company, R.P. Scherer or any subsidiary thereof shall terminate,
all options granted to such Optionee pursuant to this Performance Plan
shall terminate immediately and shall not be exercisable.
(ii) In the event that an Optionee's employment is terminated
because of death or Disability, the Company shall have the right, but
not the obligation, for a period of 120 days from the date of
termination of employment due to such Optionee's death or Disability
(the "Call Period"), to repurchase an Optionee's options granted
pursuant to this Performance Plan, or a portion thereof, to the extent
(and only to the extent) that such options, or a portion thereof,
entitle the Optionee to purchase the Exercisable Shares (as
hereinafter defined) existing on the date of such Optionee's death or
Disability. The Company may exercise its repurchase right under this
Section 4(d)(ii) at any time during the Call Period by delivering
written notice (the "Call Notice") to such Optionee or such Optionee's
Representative of the Company's exercise of this right. During the
Call Period, the Optionee (or the Optionee's Representative) may send
written notice to the Company (the "Put Notice") that such person
wishes the Company to repurchase, and the
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4
<PAGE> 5
Company shall repurchase, such Optionee's options, or a portion
thereof, to the same extent as if the Company had exercised its
repurchase right under this Section 4(d)(ii). The repurchase price for
each option repurchased pursuant to this Section 4(d)(ii) shall be
equal to the sum of (A) the product obtained by multiplying the number
of Exercisable Shares which are shares of Common Stock by an amount
which shall equal the excess, if any, of the Fair Market Value (as
hereinafter defined) per share of the underlying Common Stock, over
the Common Stock Option Price, and (B) the product obtained by
multiplying the number of Exercisable Shares which are shares of
Preferred Stock by an amount which shall equal the liquidation
preference per share of the underlying Preferred Stock over the
Preferred Stock Option Price. The closing of any repurchase of any
options pursuant to this Section 4(d)(ii) shall be held at the
principal executive offices of R.P. Scherer at 10:00 a.m. local time
on the tenth business day following the date of delivery of a Call
Notice or a Put Notice, as the case may be, or at such other date,
time and place as the parties may mutually agree upon. Option granted
to an Optionee pursuant to this Performance Plan, or any portion
thereof, shall terminate immediately upon such Optionee's death or
Disability and shall not be exercisable to the extent that such
options, or any portion thereof, do not entitle such Optionee to
purchase Exercisable Shares pursuant to this Section 4(d)(ii).
The term "Disability" shall mean an Optionee's physical or
mental disability (so that the Optionee is not reasonably able to
render his full service to the Company, R.P. Scherer or any
subsidiary thereof) for any
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5
<PAGE> 6
consecutive period exceeding three months or as determined by
agreement of a majority of the members of the Board in their
reasonable discretion. The date of such Disability shall be on the
last day of such three-month period or the day selected by the Board,
as the case may be.
The term "Fair Market Value" shall mean, with respect to
each share of underlying Common Stock, (A) the fair market value of
the Company as determined within six months prior to the applicable
date or, if no such determination has been made within six months,
then within 75 days of the applicable date determined as of the
applicable date, in each case by the Board, divided by (B) the number
of shares of Common Stock then outstanding (assuming the exercise of
all outstanding stock options, warrants or rights for the purchase of
Common Stock).
(iii) If neither the Company nor the Optionee (or the Optionee's
Representative) has exercised its right pursuant to Section 4(d)(i)
upon the Optionee's death or Disability, such Optionee (or such
Optionee's Representative) shall have the right, at any time within
120 days following he end of the Call Period, to exercise the options
granted to such Optionee pursuant to this Performance Plan to purchase
the Exercisable Shares which existed on the date of such Optionee's
death or Disability. Options granted to an Optionee pursuant to this
Performance Plan, or any portion thereof, shall terminate at the end
of the 120 day period following the Call Period and shall not be
exercisable to the extent that such options, or any portion thereof,
are neither repurchased by the Company pursuant to Section 4(d)(ii)
nor exercised
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6
<PAGE> 7
by the Optionee or the Optionee's Representative pursuant to this
Section 4(d)(iii).
(iv) In the event that an Optionee's employment is terminated by
reason of Termination without Cause (as hereinafter defined), the
Company shall have the right, not the obligation, for a period of 120
days from the date of termination of employment of the Optionee, to
repurchase an Optionee's options granted pursuant to this Performance
Plan, or a portion thereof, to the extent (and only to the extent)
that such options, or a portion thereof, entitle the Optionee to
purchase the Exercisable Shares existing on the date of such
Optionee's termination of employment. The Company may exercise its
repurchase right under this Section 4(d)(iv) at any time during the
120-day period by delivering written notice to the Optionee of its
exercise of this right. The repurchase price for each option, or
portion thereof, repurchased pursuant to this Section 4(d)(iv) shall
be equal to the sum of (A) the product obtained by multiplying the
number of Exercisable Shares which are shares of Common Stock by an
amount which shall equal the excess, if any, of the lesser of (x) the
Termination Book Value (as hereinafter defined) per share of the
underlying Common Stock and (y) the Fair Market Value per share of the
underlying Common Stock, over the Common Stock Option Price, and (B)
the product obtained by multiplying the number of Exercisable Shares
which are shares of Preferred Stock by an amount which shall equal the
liquidation preference per share of the underlying Preferred Stock
over the Preferred Stock Option Price. The closing of any repurchase
of any options
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<PAGE> 8
pursuant to this Section 4(d)(iv) shall be held at the principal
executive offices of R.P. Scherer at 10:00 a.m. local time on the
tenth business day following the date of delivery of the Company's
written notice of the exercise of its repurchase right, or at such
other date, time and place as the parties may mutually agree upon.
Options granted to an Optionee under this Performance Plan, or any
portion thereof, shall terminate immediately upon such Optionee's
Termination without Cause and shall not be exercisable to the extent
that such options, or any portion thereof, do not entitle such
Optionee to purchase Exercisable Shares pursuant to this Section
4(d)(iv).
The term "Termination without Cause" shall mean termination
of employment of such Optionee by reason of any occurrence other than
death or Disability of such Optionee, termination for Cause or the
voluntary termination of such Optionee of his employment by
resignation or any other means, that results in such Optionee no
longer being employed by the Company, R.P. Scherer or any subsidiary
thereof.
The term "Cause" used in connection with the termination of
employment of an Optionee shall mean a termination of employment due
to (i) the commission by such Optionee of an act of fraud upon, or bad
faith or willful misconduct toward, the Company, R.P. Scherer or any
subsidiary thereof (including the unauthorized disclosure of
confidential or proprietary information of the Company, R.P. Scherer
or any subsidiary thereof), (ii) a conviction of such Optionee by a
court of competent jurisdiction (or a plea of NOLO CONTENDERE or the
equivalent under the laws of any other country or
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8
<PAGE> 9
political subdivision thereof) of a crime involving, in the
reasonable determination of the Board, fraud or dishonesty, or a
crime which in the reasonable determination of the Board would
tend to be injurious to the reputation of the Company, R.P.
Scherer or any of its subsidiaries, or of such Optionee, (iii)
misconduct by such Optionee which, in the reasonable
determination of the Board, has been or is likely to be
materially injurious to the Company, R.P. Scherer or any
subsidiary thereof; or (iv) the failure of such Optionee
substantially to perform the duties and obligations imposed upon
him by R.P. Scherer or any subsidiary thereof.
"Termination Book Value" shall mean the book value of the
Company (excluding the amount of stockholders' equity
attributable to the Company's 17% Senior Cumulative Exchangeable
Preferred Stock, par value $.01 per share, the Preferred Stock
and to the Company's Series C Redeemable Preferred Stock, par
value $.01 per share) per outstanding share of Common Stock
(assuming the exercise of all outstanding stock options, warrants
or rights for the purchase of Common Stock) as of the last day of
the fiscal quarter ended immediately preceding the date on which
the termination of employment occurs, as determined from the
Company's consolidated balance sheet prepared, in accordance with
generally accepted accounting principles as applied in the United
States, by management of the Company and R.P. Scherer and
reviewed by the independent public accountants regularly employed
by the Company (the "Accountants").
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<PAGE> 10
(v) If the Company has not, pursuant to Section 4(d)(iv),
exercised its repurchase right upon the Optionee's termination of
employment by reason of Termination Without Cause, such Optionee shall have
the right, at any time within 120 days following the end of the 120-day
period provided for in Section 4(d)(iv), to exercise the options granted to
such Optionee pursuant to this Performance Plan to purchase the Exercisable
Shares which existed on the date of such Optionee's termination of
employment. Any options granted to an Optionee pursuant to this Performance
Plan, or a portion thereof, shall terminate at the end of the 120-day
period following the 120-day period provided for in Section 4(d)(iv) and
shall not be exercisable to the extent that such options, or any portion
thereof, are neither repurchased by the Company pursuant to Section
4(d)(iv) nor exercised by the Optionee pursuant to this Section 4(d)(v).
(e) ADJUSTMENT OF OPTIONS ON RECAPITALIZATION. The aggregate number of
shares of Stock for which options may be granted to persons participating
under this Performance Plan, the number of shares of Stock covered by each
outstanding option and the Option Price for the shares of Stock subject to
each such option may be appropriately adjusted for any increase or decrease
in the number of issued shares of Stock resulting from a recapitalization,
the subdivision or consolidation of shares, or the payment of a stock
dividend after the Date of Grant; PROVIDED, HOWEVER, that any options to
purchase fractional shares of Stock resulting from any such adjustment
shall be cancelled.
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<PAGE> 11
(f) SALE OF THE COMPANY. In the event the Company proposes to engage
in a Sale of the Company (as hereinafter defined), the Company shall give
each Optionee written notice of such Sale on or before 15 days (or shorter
time if, in the sole discretion of the Company, 15 days' notice is
impracticable) before the consummation of such Sale, and, unless otherwise
agreed to by the Company and the Optionee, each option shall, after receipt
of such notice and prior to such Sale, automatically become exercisable for
the Exercisable Shares existing on the date the Company gives written
notice of the Sale. Options not exercised prior to such Sale shall expire
on the occurrence of such Sale, and no payment shall be owed to such
Optionee with respect to such options; PROVIDED, HOWEVER, that if the
proposed Sale of the Company is not consummated and the Board in good faith
determines that the proposed Sale of the Company will not be consummated,
the options granted hereunder shall, upon such determination of the Board,
cease to be exercisable pursuant to this Section 4(f). A "Sale of the
Company" shall mean (i) a merger or consolidation of the Company with or
into another entity (other than a subsidiary or affiliate of the Company)
in which the holders of Stock are required to exchange their Stock for
cash, property and/or securities, or (ii) a sale or lease of all or
substantially all of the assets of the Company or R.P. Scherer except to a
subsidiary or affiliate of the Company.
(g) DISSOLUTION OF ISSUER OF THE STOCK. In the event of the proposed
dissolution or liquidation of the Company, the Company shall give each
Optionee not less than 30 days prior written notice of the date of the
proposed
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11
<PAGE> 12
dissolution or liquidation, and, unless otherwise agreed to be the Company
and the Optionee, each Optionee shall have the right during the 30-day
period preceding the dissolution or liquidation to exercise such Optionee's
option for the Exercisable Shares existing on the date the Company gives
written notice of the proposed dissolution or liquidation of the Company.
Any options (or any portion thereof) granted hereunder, if not exercised
prior to the dissolution or liquidation of the Company, shall expire upon
the consummation of a dissolution or liquidation of the Company, and no
payment shall be owed to any Optionee; PROVIDED, HOWEVER, that if the
proposed dissolution or liquidation of the Company is not consummated and
the Board in good faith determines that the proposed dissolution or
liquidation of the Company will not be consummated, the options granted
hereunder shall, upon such determination of the Board, cease to be
exercisable pursuant to this Section 4(g). The provisions of this Section
4(g) shall not be applicable if the Optionee receives notice under Section
4(f) at a time earlier than the notice provided for herein.
(h) RIGHTS AS A STOCKHOLDER. An Optionee shall have no rights as a
stockholder with respect to any shares of Stock held under option until the
date of issuance of the stock certificates to him for such shares. Except
as provided in Section 4(e) hereof, no adjustment to the option shall be
made for dividends, distributions or rights attributable to shares of Stock
the record date for which is prior to the date of issuance of Stock upon
exercise of the option.
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<PAGE> 13
(i) TIME OF GRANTING OPTIONS. The grant of an option shall occur only
when a Performance Stock Option Agreement shall have been duly executed and
delivered by or on behalf of the Company and the employee to whom such
option shall be granted.
(j) STOCK LEGEND. Certificates evidencing shares of Stock purchased
upon the exercise of options issued under this Performance Plan shall be
endorsed with a legend in substantially the form contained in the
Optionee's Stock Subscription Agreement, or Stockholders Purchase
Agreement, as the case may be, as provided for in this Section 4 hereof.
(k) DEFERRAL OF PURCHASES.
(i) The Company shall not be obligated to purchase any options
granted pursuant to this Performance Plan at any time pursuant to
Section 4(d)(ii) or 4(d)(iv) hereof, regardless of whether it has
delivered a notice of its election to purchase any such shares, (A) to
the extent that the purchase of such options (together with any other
purchases of options or Stock, as the case may be, pursuant to
Sections 4(d)(ii) or 4(d)(iv) hereof from other Optionees, and
pursuant to similar provisions in the 1990 RPS Corporation
Nonqualified Stock Option Plan (the "Stock Option Plan") and the
agreements relating thereto and pursuant to similar provisions in any
Optionee's Stock Subscription Agreement or Stockholder's Purchase
Agreement, of which the Company has at such time been given or has
given notice) would (1) result in a violation of any law, statute,
rule, regulation, policy, guideline, order, writ, injunction, decree
or judgment promulgated or
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<PAGE> 14
entered by any federal, state, local or foreign court or governmental
authority applicable to the Company, R.P. Scherer or any of their
subsidiaries or any of its or their property or (2) after giving
effect thereto, result in a Financing Default, or (B) if immediately
prior to such purchase there exists a Financing Default. The term
"Financing Default" shall mean an event which constitutes (or with
notice or lapse of time or both would constitute) an event of default
(which event of default has not been cured or waived) under any of the
following as they may be amended from time to time: (A) the Credit
Facilities Agreement (the "Credit Facilities Agreement") dated as of
October 3, 1989, among R.P. Scherer and the other borrowers named
therein (the "Borrowers"), the guarantors named therein (the
"Guarantors"), Citibank, N.A. and CIBC International Trust Limited as
lead managers, Citicorp Investment Bank Limited, as facility agent and
the banks parties thereto, and any extensions, renewals, refinancing
or refunding thereof in whole or in part; (B) the Credit Agreement
(the "Revolving Credit Agreement") dated as of October 3, 1989 between
R.P. Scherer and Citibank, N.A. and any extensions, renewals,
refinancing or refunding thereof in whole or in part; (C) any notes
executed and delivered by any of the Borrowers under the Credit
Facilities Agreement, or by R.P. Scherer under the Revolving Credit
Agreement and any extensions, renewals, refinancing or refunding
thereof in whole or in part; (D) any guaranties executed by any of the
Guarantors under the Credit Facilities Agreement and any extensions,
renewals, refinancing or refunding thereof in whole or in part; (E)
the Senior Subordinated Loan Agreement,
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<PAGE> 15
dated as of June 5, 1989, among Shearson Lehman Hutton Holdings Inc.,
the Company and RPS Acquisition Corporation ("Acquisition") and any
extensions, renewals, refinancing or refunding thereof in whole or in
part; (F) any notes executed and delivered by Acquisition under the
Senior Subordinated Loan Agreement and any extensions, renewals,
refinancing or refunding thereof in whole or in part; (G) the
Indenture (the "Subordinated Debenture Indenture") to be entered into
between R.P. Scherer and The First National Bank of Boston, as trustee
relating to the Senior Subordinated Debentures due 1999; (H) the
Indenture (the "Exchange Debenture Indenture") to be entered into
between the Company and Ameritrust Company National Association, as
trustee, relating to the 17% Subordinated Exchange Debentures; and (I)
any of the securities issued pursuant to or whose terms are governed
by the terms of any of the agreements set forth in clauses (A) through
(H) above.
(ii) If at any time consummation of all purchases of options to
be made by the Company pursuant to Sections 4(d)(ii) or 4(d)(iv)
hereof (and pursuant to similar provisions for the purchase of options
or Stock, as the case may be, contained in the Stock Option Plan and
the agreements relating thereto and in the Stock Subscription
Agreements and Stockholders Purchase Agreements) is not required
because of the applicability of clause (A) of Section 4(k)(i) hereof
and similar provisions for the purchase of options or Stock, as the
case may be, in the Stock Option Plan and the agreements relating
thereto and in the Stock Subscription Agreements and Stockholders
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<PAGE> 16
Purchase Agreements, but clause (B) of Section 4(k)(i) hereof or
similar provisions for the purchase of options or Stock, as the case
may be, in the Stock Option Plan and the agreements relating thereto
and in the Stock Subscription Agreements and Stockholders Purchase
Agreements are not applicable, then the Company shall purchase (in
accordance with the following sentence) from the Optionee or the
Optionee's Representative, as the case may be, desiring or obligated
to sell to the Company options pursuant to this Performance Plan and
from the other persons and entities having the right or obligation to
sell options or Stock, as the case may be, pursuant to provisions in
the Stock Option Plan and the agreements relating thereto and in the
Stock Subscription Agreements and Stockholders Purchase Agreements,
the maximum number of options of which it is able to repurchase
without the events described in Section 4(k)(i)(A) resulting;
PROVIDED, HOWEVER, that, subject to the last sentence of this Section
4(k)(ii), the provisions of Section 4(k)(iii) hereof shall apply in
respect of all options not purchased under Section 4(d)(ii) or
4(d)(iv) hereof because of the operation of Sections 4(k)(i) or
4(k)(ii) hereof. In the event any of the events described in Section
4(k)(i)(A) would result from the purchase of any options pursuant to
Sections 4(d)(ii) or 4(d)(iv) hereof, the Board, in its sole
discretion, may determine priorities among the Optionee or the
Optionee's Representative, as the case may be, and the other persons
having the right or obligation to sell options or Stock, as the case
may be, pursuant to the Stock Option Plan and the agreements relating
thereto and in the Stock Subscription Agreements and
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<PAGE> 17
Stockholders Purchase Agreements, taking into account relative
hardship and such other factors as it deems relevant, and may elect to
cause the Company to consummate purchases of options hereunder
according to such priorities (such options which are to be so
purchased are hereinafter called the "Purchased Options" and such
options which are not to be so purchased are hereinafter called the
"Unpurchased Options"); the Company shall pay the Optionee or the
Optionee's Representatives, as the case may be, holding Unpurchased
Options the applicable purchase price for such options on the tenth
business day after the Company learns it is no longer precluded from
paying for such options.
(iii) Anything to the contrary contained in Section 4(d)(ii) or
4(d)(iv) hereof notwithstanding, any options which the Optionee or the
Optionee's Representative, as the case may be, has elected to sell to
the Company or which the Company has elected to purchase from the
Optionee or the Optionee's Representative, as the case may be, but
which in accordance with Sections 4(k)(i) and 4(k)(ii) hereof are not
purchased at the applicable time provided in Section 4(d)(ii) or
4(d)(iv) hereof shall be purchased by the Company on the tenth day
after such date or dates that the Company after due inquiry learns
that (after taking into account any purchases of options or Stock, as
the case may be, to be made at such time pursuant to the Stock Option
Plan and the agreements relating thereto, and in the Stock
Subscription Agreements and Stockholders Purchase Agreements) it is no
longer permitted to defer purchasing such options under Sections
4(k)(i) and 4(k)(ii) hereof, and
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<PAGE> 18
the Company shall give seven days prior notice of any such purchase;
PROVIDED, HOWEVER, that the Optionee (or the Optionee's Representative)
shall not be obligated to sell a lesser number of options at any one time
pursuant to this Section 4(k)(iii) had they not been so delayed; and,
PROVIDED, FURTHER, that if the Optionee (or the Optionee's Representative)
exercises its right to have options repurchased pursuant to Section
4(d)(ii) or the Company exercises its repurchase rights pursuant to Section
4(d)(ii), and the purchase of the options cannot be consummated by reason
of Sections 4(k)(i) and 4(k)(ii), the purchase price for such options hall
be calculated pursuant to Section 4(d)(ii) as of the time the repurchase
right is exercised, including interest on the aggregate purchase price for
such options at a rate per annum equal to the yield to maturity on U.S.
Treasury obligations having a maturity equal to a period of three months.
If the Optionee elects pursuant to Section 4(k)(ii) to rescind or defer his
election to sell any or all of the Purchased Options, the Optionee or the
Optionee's Representative, as the case may be, may exercise his right
pursuant to Section 4(d)(ii) to require the Company to purchase his options
for a period of ten days after receiving notice that the Company is no
longer precluded from purchasing such options.
(l) PAYMENT FOR OPTIONS. If at any time the Company elects or is
required to purchase any options pursuant to Sections 4(d)(ii) or 4(d)(iv),
the Company shall pay the purchase price for the options it purchases to
the extent permitted by any loan agreement, indenture or other agreement to
which the Company is a party, by the Company's delivery of a bank cashier's
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<PAGE> 19
check or certified check for the purchase price, if any, and, then, at the
Company's sole discretion, to the extent permitted by any loan agreement,
indenture or other agreement to which the Company or R.P. Scherer is a
party, by the Company's delivery of a junior subordinated promissory note
(which shall be subordinated and subject in right of payment to the prior
payment of all indebtedness of the Company including, without limitation,
any debt outstanding under the Credit Facilities Agreement, Senior
Subordinated Loan Agreement, the Subordinated Debenture Indenture, the
Exchange Debenture Indenture and any modifications, renewals, extensions,
replacements and refunding of all such indebtedness) of the Company (a
"Junior Subordinated Note") equal to the remainder, if any, of the purchase
price payable in five equal annual installments commencing on the first
anniversary of the issuance thereof and bearing interest payable annually
at the publicly announced prime rate of the facility agent under the Credit
Facilities Agreement on the date of issuance, against delivery of the
certificates or other instruments representing the options so purchased.
If, in a purchase pursuant to Section 4(d)(ii), the Company elects to pay
all or any portion of the purchase price for the options with a Junior
Subordinated Note, the Company shall give the Optionee or the Optionee's
Representative, as the case may be, notice of the amount of such note at
least twenty days prior to such purchase, and the Optionee or the
Optionee's Representative, as the case may be, shall have ten days
thereafter to rescind their election to sell the options.
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<PAGE> 20
5. EXERCISE OF OPTIONS. During the term of this Performance Plan, as set
forth in Section 7 hereof, the Committee shall determine the exercisability of
options granted to each Optionee hereunder in accordance with the terms and
conditions of this Section 5.
(A) DEFINITIONS. The following terms shall have the following meanings
when used in this Section:
(i) "Cumulative EDITA" shall mean the aggregate of (a) Total
Corporate Income and (b) Total Subsidiary EBITA.
(ii) "Cumulative EBITA Goal" shall mean for each fiscal year of
the Company set forth below, ending on March 31 of the year, the
amount set forth opposite each such year:
Full Fiscal Years Cumulative EBITA
of the Company Goal ($ millions)
----------------- -----------------
1990 $ 31.78
1991 $ 78.67
1992 $135.93
1993 $198.76
1994 $268.25
(iii) "Exercise Factor" shall mean that number which results from
dividing Cumulative EBITA by the Cumulative EBITA Goal for the last
completed fiscal year prior to the Initial Exercise Date, and, if
necessary, rounding the result up to the nearest one-hundredth.
(iv) "Initial Exercise Date" shall mean, with respect to an
Optionee, the earliest to occur of (1) October 5, 1994, (2) the
Initial Public Offering, (3) the date the Company gives written notice
of the proposed Sale of the Company as provided in
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<PAGE> 21
Section 4(f) hereof, (4) the date the Company gives written notice of
the proposed dissolution or liquidation of the Company as provided in
Section 4(g) hereof, and (5) the termination of employment of an
Optionee as provided in Sections 4(d)(iii) and 4(d)(v) hereof.
(v) "Initial Public Offering" shall mean the sale of shares of
Common Stock pursuant to one or more effective registration statements
under the Securities Act of 1933, as amended (the "Securities Act")
(other than a registration statement relating to shares of Common
Stock issuable upon exercise of employee stock options or in
connection with any employee benefit plan of the Company), relating to
the sale of shares of Common Stock representing, when taken together
with all shares of Common Stock sold pursuant to Rule 144 under the
Securities Act or under previous registration statements (which were
not in connection with employee stock options or employee benefit
plans), more than 33-1/3% of the Common Stock outstanding prior to
such sale (assuming exercise of all options, warrants or rights for
purchase of shares of Common Stock).
(vi) "Subsidiary" shall mean each of the following entities:
(A) R.P. Scherer N.A.;
(B) R.P. Scherer GmbH;
(C) R.P. Scherer Leasing Company;
(D) R.P. Scherer Canada Inc.;
(E) R.P. Scherer SpA;
(F) R.P. Scherer S.A.;
(G) R.P. Scherer Limited and R.P. Scherer
Holdings Limited, on a consolidated basis;
(H) R.P. Scherer Pty. Ltd. and R.P. Scherer
Holdings Pty. Ltd., on a consolidated basis;
(I) R.P. Scherer Korea Limited; and
(J) R.P. Scherer K.K.
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(vii) "Subsidiary EBITA" shall mean for each Subsidiary, (a) for
all full fiscal years of the Company, commencing with the fiscal year
beginning April 1, 1989 and ending with the fiscal year which is last
completed prior to the Initial Exercise Date, the annual results of
operations before interest, taxes and amortization of good will of
such Subsidiary, calculated in the currency of the country in which
such Subsidiary operates, as determined from the annual financial
statements of such Subsidiary prepared, in accordance with generally
accepted accounting principles as applied in the United States, by
management of the Company and R.P. Scherer and reviewed by the
Accountants, excluding certain items set forth on Annex III hereto;
PROVIDED, HOWEVER, that for the fiscal year commencing April 1, 1989,
each Subsidiary's annual results of operations before interest, taxes
and amortization of good will shall be determined on a pro forma basis
after giving effect to the acquisition of R.P. Scherer as if such
acquisition occurred on April 1, 1989; multiplied by (b) the
percentage representing the extent of R.P. Scherer's beneficial
ownership of the Subsidiary as set forth on Annex I hereto. Subsidiary
EBITA shall then be converted into U.S. dollars by multiplying it by
the rate of exchange, applicable to the currency in which such number
was determined, as set forth on Annex II hereto.
(viii) "Total Corporate Income" shall equal (a) for all full
fiscal years of the Company, commencing with the fiscal years of the
Company, commencing with the fiscal year beginning April 1, 1989 and
ending with the fiscal year which is last completed prior to the
Initial Exercise Date, earned royalties received or accrued by R.P.
Scherer (on an unconsolidated basis) from each Subsidiary (which
royalties shall, where necessary, be converted into U.S. dollars at
the appropriate rate of exchange set
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<PAGE> 23
forth on Annex II hereto), net of withholding taxes paid or accrued,
as determined from the annual unconsolidated financial statements of
R.P. Scherer prepared, in accordance with generally accepted
accounting principles as applied in the United States, by the
management of the Company and R.P. Scherer and reviewed by the
Accountants, excluding certain items set forth on Annex III hereto,
MINUS (b) for all full fiscal years of the Company, commencing with
the fiscal year beginning April 1, 1989 and ending with the fiscal
year which is last completed prior to the Initial Exercise Date,
corporate operating expense of the Company and R.P. Scherer each on an
unconsolidated basis as determined from the unconsolidated annual
financial statements of the Company and R.P. Scherer prepared, in
accordance with generally accepted accounting principles as applied in
the United States, by the management of the Company and R.P. Scherer
and reviewed by the Accountants, excluding certain items set forth on
Annex III hereto; and PROVIDED, HOWEVER, that for the fiscal year
commencing April 1, 1989, both (a) and (b) above shall be determined
on a pro forma basis after giving effect to the acquisition of R.P.
Scherer as if such acquisition occurred on April 1, 1989. For purposes
of calculating "corporate operating expense", costs incurred in
connection with the acquisition of R.P. Scherer and the financing
thereof shall not be included.
(ix) "Total Subsidiary EBITA" shall mean the sum of all
Subsidiary EBITA.
(b) EXERCISABLE SHARES. The total number of shares of Stock for which
an Optionee's option shall be exercisable (the "Exercisable Shares") shall
be determined as follows: (i) if the Exercise Factor is equal to or exceeds
1.1, the number of
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<PAGE> 24
Exercisable Shares shall be 100% of an Optionee's Option Shares; (ii) if
the Exercise Factor is equal to or is less than .9, there shall be no
Exercisable Shares; and (iii) if the Exercise Factor exceeds .9, but is
less than 1.1, the number of Exercisable Shares shall be calculated by (A)
subtracting .1 from the Exercise Factor and (B) multiplying the result
produced in (A) by the maximum number of shares of Stock for which an
Optionee's option, granted pursuant to this Performance Plan, can be
exercised. The number of Exercisable Shares which are shares of Common
Stock and the number of Exercisable Shares which are shares of Preferred
Stock shall be in the same proportion to the total number of shares of
Common Stock and Preferred Stock, respectively, issuable upon exercise of
any option granted hereunder.
(c) EXERCISE OF OPTION. Except as otherwise provided in this
Performance Plan, or in the applicable Performance Stock Option Agreement,
no option granted pursuant to this Performance Plan shall be exercisable,
in whole or in any part, until the Initial Exercise Date applicable to such
Optionee. Thereafter, any option granted pursuant to this Performance Plan
shall be exercisable for the number of Exercisable Shares as determined
pursuant to Section 5(b) hereof and (i) in the case of a Sale of the
Company, pursuant to Section 4(f) hereof, (ii) in the case of dissolution
or liquidation of the Company, pursuant to Section 4(g) hereof and (iii) in
the case of termination of employment of an Optionee pursuant to Section
4(d)(iii) and 4(d)(v) hereof. The Committee may accelerate the time at
which an option may be exercised and may delay and/or reduce the periods
during which options may be exercised in order to comply with federal and
state securities laws.
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<PAGE> 25
(d) MANNER OF EXERCISE. Shares of Stock purchased upon exercise of
options shall at the time of purchase be paid for in full in cash or as
otherwise permitted by the Committee. Options may be exercised in whole or
in part from time to time by written notice to the Company stating the full
number of shares of Stock with respect to which the option is being
exercised and the time of delivery thereof, which shall be at least 15 days
after the giving of such notice unless an earlier date shall have been
mutually agreed upon, accompanied by full payment for the shares of Stock
by certified or official bank check or the equivalent thereof acceptable to
the Company; PROVIDED, HOWEVER, that any such exercise must be for both
Common Stock and Preferred Stock in the same proportion to the total number
of shares of Common Stock and Preferred Stock, respectively, issuable to
the Optionee upon exercise of the option granted hereunder. At the time of
delivery, the Company shall, without stock transfer or issue tax to an
Optionee, deliver to such Optionee at the principal executive offices of
R.P. Scherer or such other place as shall be mutually agreed upon, a
certificate or certificates for such shares of Stock; PROVIDED, HOWEVER,
that the time of delivery may be postponed by the Company for such period
as may be required for it with reasonable diligence to comply with any
requirements of law, including making provision for the deduction and
withholding of amounts required to be deducted and withheld under
applicable local, state, and federal income tax laws (which provision may
require additional payment by such Optionee). The Company shall pay any
stock transfer tax or issue tax resulting from the issuance of shares of
Stock upon the exercise of any option. If Stock issuable upon exercise of
any option is not registered under the Securities Act, the Company at the
time of exercise shall require in addition
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<PAGE> 26
that the Optionee or Optionee's Representative deliver an investment
representation in form acceptable to the Company and its counsel, and the
Company shall place a legend on the certificate for such Stock restricting
the transfer of such Stock. At no time shall the Company have any
obligation or duty to register under the Securities Act the Stock issuable
upon exercise of options. The Company shall not be required to issue or
deliver any certificate for shares of Stock purchased upon the exercise of
any option or portion thereof prior to the execution of the Stockholders
Purchase Agreement by the Optionee or the Optionee's Representative;
PROVIDED, HOWEVER, that those Optionees who have executed a Stock
Subscription Agreement shall not be required to execute a Stockholders
Purchase Agreement.
6. ADMINISTRATION.
(a) This Performance Plan shall be administered by the Committee
consisting of not fewer than three directors to be appointed by the Board.
If necessary to secure the exemption pursuant to Rule 16b-3 which has been
adopted by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended (as such Rule or its equivalent is then in
effect) ("Rule 16b-3"), no person shall be eligible to serve on the
Committee unless he is then a "disinterested person" within the meaning of
paragraph (d)(3) of Rule 16b-3. The Board may, from time to time, remove
members from or add members to the Committee. Vacancies in the Committee,
however caused, shall be filled by the Board. The Committee shall select a
chairman from among its members and shall hold meetings at such times and
places as it may determine. The Committee may appoint a secretary and,
subject to the provisions of this Performance Plan and to policies
determined by the Board, may
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26
<PAGE> 27
make such rules and regulations for the conduct of its business as it shall
deem advisable. A majority of the Committee shall constitute a quorum. All
action of the Committee shall be taken by a majority of its members. Any
action may be taken by a written instrument signed by a majority of the
members, and action so taken shall be fully as effective as if it had been
taken by a vote of the majority of the members at a meeting duly called and
held. The Board may act in lieu of the Committee and shall act in lieu of a
Committee at any time such a Committee has not been created.
(b) Subject to the express terms and conditions of this Performance
Plan, the Committee shall have full power to grant options under this
Performance Plan, to construe or interpret this Performance Plan, to
prescribe, amend and rescind rules and regulations relating to it and to
make all other determinations necessary or advisable for its
administration.
(c) The Committee may, from time to time, determine which employees of
the Company, R.P. Scherer and any subsidiary thereof shall be granted
options under this Performance Plan, the number of shares of Stock subject
to each option, and the time or times at which options shall be granted,
and the Company may grant such options under this Performance Plan.
(d) No member of the Board or of the Committee shall be liable for any
action or determination made in good faith with respect to this Performance
Plan or to any option.
7. EFFECTIVE DATE AND TERMINATION.
(a) The effective date of this Performance Plan is _________, 1990.
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27
<PAGE> 28
(b) This Performance Plan shall terminate on ________, 2000, but the
Board may terminate this Performance Plan at any time prior to such date.
Termination of this Performance Plan shall not alter or impair, without the
consent of the Optionee, any of the rights or obligations and any option
theretofore granted under this Performance Plan.
8. NOTICES. Whenever it is provided in this Performance Plan that any
notice to be given between the Company and an Optionee, such notice shall be
delivered in person or by registered or certified mail, return receipt
requested, postage prepaid, first class mail, to the following address:
If to the Company:
RPS Corporation
c/o R.P. Scherer Corporation
2075 W. Big Beaver Road
Troy, Michigan 48007-7060
If to an Optionee:
At the address listed beside such Optionee's name on the
signature page of the Performance Stock Option Agreement executed
by such Optionee
Any party hereto may change the address designated for mailing by written
notice to the other party. All such notices shall be deemed to be delivered when
delivered in person, or if placed in the mail, two days thereafter.
9. GOVERNING LAW. THIS PERFORMANCE PLAN SHALL BE CONSTRUED IN ACCORDANCE
WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES THEREOF REGARDING CONFLICTS OF LAWS.
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28
<PAGE> 29
10. AMENDMENTS. The Board may, from time to time, alter, amend, suspend or
discontinue this Performance Plan, or alter or amend any and all option
agreements granted thereunder; PROVIDED, HOWEVER, that no such action of the
Board may alter the provisions of this Performance Plan so as to alter any
outstanding Stock Option Agreement to the detriment of an Optionee without his
consent.
11. STATUS OF OPTIONS. Options granted pursuant to this Performance Plan
are not intended to qualify as Incentive Stock Options within the meaning of
Section 422A of the Internal Revenue Code of 1986 (the "Code"), and the terms of
this Performance Plan and options granted hereunder shall be so construed;
PROVIDED, HOWEVER, that nothing in this Performance Plan shall be interpreted as
an representation, guarantee or other undertaking on the part of the Company
that the options granted pursuant to this Performance Plan are not, or will not
be, determined to be Incentive Stock Options, within the meaning of Section 422A
of the Code.
I hereby certify that the foregoing Performance Plan was duly adopted by
the Board on June __, 1990.
Executed as of this ____ day of _________ 1990.
----------------------------------------
Secretary
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29
<PAGE> 30
FIRST AMENDMENT TO
RPS CORPORATION
1990 NONQUALIFIED STOCK OPTION PLANS
WHEREAS, RPS Corporation, a Delaware corporation, established the RPS
CORPORATION 1990 NONQUALIFIED STOCK OPTION PLAN, the RPS CORPORATION 1990
NONQUALIFIED PERFORMANCE STOCK OPTION PLAN A and the RPS CORPORATION 1990
NONQUALIFIED PERFORMANCE STOCK OPTION PLAN B; and
WHEREAS, RPS CORPORATION changed its name to R.P. Scherer Corporation in
1991 (the "Company"); and
WHEREAS, the Company desires to amend the RPS CORPORATION 1990 NONQUALIFIED
STOCK OPTION PLAN, the RPS CORPORATION 1990 NONQUALIFIED PERFORMANCE STOCK
OPTION PLAN A and the RPS CORPORATION 1990 NONQUALIFIED PERFORMANCE STOCK OPTION
PLAN B.
NOW, THEREFORE, the RPS CORPORATION 1990 NONQUALIFIED STOCK OPTION PLAN,
the RPS CORPORATION 1990 NONQUALIFIED PERFORMANCE STOCK OPTION PLAN A and the
RPS CORPORATION 1990 NONQUALIFIED PERFORMANCE STOCK OPTION PLAN B (each
individually referred to respectively as the "1990 Plan," the "1990 Plan A" and
the "1990 Plan B" and collectively, the "1990 Plans") are amended effective
February __, 1994, with respect to each of the 1990 Plans subject to subsequent
shareholder approval as follows:
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30
<PAGE> 31
1. The last sentence of Section 3 of each of the 1990 Plans is amended
by adding the phrase "to the extent options are not transferred to a
grantor trust pursuant to Section 4(c)."
2. Effective as of February 18, 1994, Section 4(c) of each of the 1990
Plans is amended in its entirety to read as follows:
(c) NON-TRANSFERABILITY OF OPTION RIGHTS. No option shall be
assignable or transferable otherwise than (i) by will, (ii) by the
laws of descent and distribution, or (iii) to one or more grantor
trusts provided that with regard to a transfer to one or more such
grantor trusts the Optionee's Stock Option Agreement expressly so
provides for such transfer, is approved by the Committee, and the
Optionee does not receive any consideration for the transfer. The
option is exercisable only by such Optionee or grantor trust trustee
or, as provided in Section 3, such Optionee's Representative.
3. Effective as of February 18, 1994, a new Section 12 is added to
each of the 1990 plans -- as follows:
12. TRUSTS. For all purposes of the Plan, a grantor trust trustee
that is a transferee pursuant to Section 4(c) is the "Optionee";
provided, however, for purposes of determining the rights and
obligations of the Company and such grantor trust trustee under
Section 4(d), the employee granted the Options shall be deemed the
Optionee whose termination, disability or death will effectuate such
rights or obligations.
IN WITNESS WHEREOF, these Amendments have been adopted by the Company this
18TH day of February, 1994.
ATTEST R.P. SCHERER CORPORATION
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31
<PAGE> 32
/s/ By: /s/ Aleksandar Erdeljan
- ---------------------------------- ------------------------------------
Its: President
- --------------------------------------------------------------------------------
32
<PAGE> 33
SECOND AMENDMENT TO
RPS CORPORATION
1990 NONQUALIFIED STOCK OPTION PLANS
The RPS Corporation 1990 Nonqualified Stock Option Plan, the RPS
Corporation 1990 Nonqualified Performance Stock Option Plan A, and the RPS
Corporation 1990 Nonqualified Performance Stock Option Plan B (each individually
referred to respectively as the "1990 Plan," the "1990 Plan A" and the "1990
Plan B" and collectively referred to as the "1990 Plans") are amended effective
September 1, 1994, as follows:
1. AMENDMENT TO SECTION 1. The first sentence of Section 1 of each of
the 1990 Plans is amended in its entirety to read as follows:
"The purpose of this plan (this "Option Plan") is to provide a
means by which certain employees of R.P. Scherer Corporation (formerly
RPS Corporation), a Delaware corporation (the "Company"), R.P. Scherer
International Corporation (formerly R.P. Scherer Corporation) , a
Delaware corporation and a wholly owned subsidiary of the Company
("R.P. Scherer"), or any subsidiary thereof, may be given an
opportunity to purchase common stock, par value $0.01 per share (the
"Common Stock") , and prior to conversion to Common Stock of Series B
Redeemable Preferred Stock and conversion of the related options by
operation of Section 4(e) to options for Common Stock (the
"Conversion"), Series B Redeemable Preferred Stock, par value $0.01
per share (the "Preferred Stock," and together with the Common Stock,
the "Stock") of the Company."
2. AMENDMENT TO SECTION 2. Section 2 of each of the 1990 Plans is
amended by adding the phrase "prior to the Conversion" immediately
following the phrase "Subject to adjustment as provided in Section 4(e)
hereof," and by adding at the end of the first sentence the phrase, "and
after the Conversion a number of shares of Common Stock pursuant to Section
4(e)."
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33
<PAGE> 34
3. AMENDMENTS TO SECTION 4 OF THE PLANS. Section 4 of the 1990 Plans
is amended as follows:
(i) Subject to shareholder ratification, Section 4(a) of each of
the 1990 Plans is deleted and a new Section 4(a) is included to read as
follows:
"(a) TERMS AND CONDITIONS OF OPTIONS. The Committee may
grant options from time to time pursuant to this Option Plan.
Such options shall be evidenced by written agreements
substantially in the form of the Nonqualified Stock Option
Agreement (the "Stock Option Agreement"), Appendix A to the
Option Plan as originally adopted, but pursuant to and
interpreted in accordance with, and not inconsistent with, this
Option Plan as amended. The shares of Stock subject to each
option shall, (i) upon issuance, but in no event after September
1, 1994, be subject to the terms and conditions, including
restrictions on transferability, contained in an agreement
substantially in the form of the Stockholders Purchase Agreement,
Appendix B to the Option Plan as originally adopted, entered into
by the Company and the Optionees (the "Stockholders Purchase
Agreement"), or, (ii) with respect to certain Optionees, unless
terminated by the Company, the Management Stock Subscription
Agreement between the Company and such Optionees (the "Stock
Subscription Agreement") as amended and restated from time to
time. Notwithstanding anything to the contrary herein, however,
no insider, as defined for purposes of Section 16 of the
Securities Exchange Act of 1934, as amended, may sell shares of
Stock subject to an option granted hereunder after August 31,
1994, and prior to March 2, 1995. Nothing in this Option Plan or
an option granted hereunder shall govern the employment rights
and duties between an Optionee and the Company or R.P. Scherer,
or any subsidiary thereof, nor in any way be deemed to constitute
an employment agreement among such parties. Effective September
1, 1994 any Stockholders Purchase Agreement in the form attached
hereto as Appendix B entered into by the Company and Optionee
shall be terminated."
(ii) Section 4(b) of each of the 1990 Plans is amended by
inserting the phrase "(as effective, pursuant thereto, prior to September
1, 1994)" immediately after the reference to Section 4(d) and adding a new
sentence to the end of Section 4(b) to read "The termination date, which is
not more than 10 years and 1 day from the date the option is granted and
which is set forth in an Optionee's Option Agreement, shall be referred to
as the "Termination Date."
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34
<PAGE> 35
(iii) Subject to shareholder ratification, Section 4(d)(i) of
both the 1990 Plan and the 1990 Plan A are deleted and replaced with a
new Section 4(d)(i)(A) and 4(d)(i)(B) to read as follows:
"(i)(A) Prior to September 1, 1994, subject to the
provisions of Sections 4(d)(ii), 4(d)(iii), 4(d)(iv) and
4(d)(v), in the event that an Optionee's employment by the
Company, R.P. Scherer or any subsidiary thereof shall terminate,
all options granted to such Optionee pursuant to this Option Plan
shall terminate immediately and shall not be exercisable; and
(i)(B) On and after September 1, 1994, Sections 4(d)(ii),
4(d)(iii), 4(d)(iv) and 4(d)(v) shall be inapplicable, and
notwithstanding an Optionee's termination of employment, options
shall not terminate until their Termination Date and shall not be
exercisable thereafter."
(iv) Subject to shareholder ratification, Section 4(d) of the
1990 Plan B is amended by adding the phrase "Prior to September 1,
1994" at the beginning of the first sentence of the Section, and a new
sentence shall be added at the end of Section 4(d) of the 1990 Plan B
to read as follows:
"On and after September 1, 1994, notwithstanding an
Optionee's termination of employment, options shall not terminate
until their Termination Date and shall not be exercisable
thereafter."
(v) Subject to shareholder ratification, Section 4(f) of both the
1990 Plan and the 1990 Plan A are deleted and a new Section 4(f) is
included to read as follows:
"(f) In the event the Company proposes to engage in a Sale
of the Company (as hereunder defined and sometimes referred to as
"Sale"), the Company shall give each Optionee written notice of
such Sale on or before 15 days (or shorter time if, in the sole
discretion of the Company, 15 days notice is impracticable)
before the consummation of such Sale, and unless otherwise agreed
to by the Company and the Optionee, each option shall, after
receipt of such notice and prior to such Sale, automatically
become exercisable for the Exercisable Shares existing on the
date the Company gives written notice of the Sale. The Committee
may, in its sole discretion, provide that the options not
exercised prior to
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35
<PAGE> 36
such Sale shall expire 30 days after the occurrence of such Sale,
provided, however, that the Compensation Committee may not
terminate options pursuant to this Section prior to March 2 1995.
If options are not exercised in connection with such Sale, and
provided the Committee does not provide for the termination of
such options, then following consummation of the Sale, such
Optionee upon exercise of his options, will only be entitled to
receive the kind and amount of stock, securities, or assets that
such Optionee would have received had such Optionee exercised his
or her options immediately prior to such Sale; PROVIDED, HOWEVER,
that if the proposed Sale of the Company is not consummated and
the Board in good faith determines that the proposed Sale of the
Company will not be consummated, the options granted hereunder
shall, upon such determination of the Board, cease to be
exercisable pursuant to this Section 4(f). A "Sale of the
Company" shall mean (i) a merger or consolidation of the Company
with or into another entity (other than a subsidiary or affiliate
of the Company), (ii) a sale or lease of all or substantially all
of the assets of the Company or R.P. Scherer except to a
subsidiary or affiliate of the Company, (iii) 50% or more of the
Company's then outstanding shares of voting stock is acquired by
another corporation, person or entity (other than a subsidiary or
affiliate of the Company), or (iv) the Company recapitalizes or
enters into any similar transaction, and as a result of which the
Common Stock either (A) is no longer a voting equity security of
the Company or (B) is no longer listed on a national securities
exchange or authorized for quotation on an inter-dealer quotation
system of a national securities association."
(vi) Section 4(j) of the 1990 Plan and of the 1990 Plan A and
Section 4(h) of the 1990 Plan B are amended by adding the phrase
"Prior to September 1, 1994", at the beginning thereof.
4. AMENDMENTS TO SECTION 5.
(i) Section 5(c)(iii) of the 1990 Plan A is amended effective
September 1, 1994 to read as follows:
"(iii) in the case of termination of employment of an
Optionee pursuant to Section 4(d)."
(ii) Section 5(a) of the 1990 Plan is amended effective September
1, 1994 to read as follows:
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36
<PAGE> 37
"(iii) in the case of termination of employment of an
Optionee pursuant to Section 4(d)."
(iii) Subject to shareholder ratification, Section 5(a)(vi) of
the 1990 Plan B shall be amended in its entirety to read as follows:
"(vi) "Sale of the Company" shall mean (i) a merger or
consolidation of the Company with or into another entity (except
a subsidiary or Affiliate of the Company), (ii) a sale or lease
of all or substantially all of the assets of the Company or R.P.
Scherer except to a subsidiary or Affiliate of the Company, (iii)
50% or more of the Company's then outstanding shares of voting
stock is acquired by another corporation, person or entity (other
than a subsidiary Affiliate of the Company), or (iv) the Company
recapitalizes or enters into any similar transaction, and as a
result of which the Common Stock either (A) is no longer a voting
equity security of the Company or (B) is no longer listed on a
national securities exchange or authorized for quotation on an
inter-dealer quotation system of a national securities
association."
(iv) Subject to shareholder ratification, the fourth sentence of
Section 5(c) of the 1990 Plan B is deleted and replaced with the
following:
"The Committee may, in its sole discretion, provide that the
options not exercised prior to a Sale of the Company shall expire
30 days after the occurrence of such Sale, provided, however,
that the Compensation Committee may not terminate options
pursuant to this Section prior to March 2, 1995. If options are
not exercised in connection with such Sale, and provided the
Committee does not provide for the termination of such options,
then following consummation of the Sale, such Optionee upon
exercise of his option, will only be entitled to receive the kind
and amount of stock, securities, or assets that such Optionee
would have received had such Optionee exercised his or her option
immediately prior to such Sale; PROVIDED, HOWEVER, that if the
proposed Sale of the Company is not consummated and the Board in
good faith determines that the proposed Sale of the Company will
not be consummated, the options granted hereunder shall, upon
such determination of the Board, cease to be exercisable pursuant
to this Section."
5. AMENDMENTS TO SECTION 6. Section 6 of the 1990 Plans is amended as
follows:
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37
<PAGE> 38
(i) The last sentence of Section 6(a) of each of the Plans is
amended to read as follows:
"The Board may act in lieu of the Committee with directors
who are not "disinterested persons" abstaining and shall act in
lieu of a Committee with directors who are not "disinterested
persons" abstaining at any time such a Committee has not been
created."
(ii) Subject to shareholder ratification, a new paragraph is
added to Section 6(b) of the Plans to read as follows:
"Notwithstanding anything to the contrary in the Plan as
amended, other than Section 4(d) and Section 4(c), the Committee
may grant options to eligible employees who are not United States
citizens or residents on such terms and conditions as may, in the
judgment of the Committee, be necessary or desirable to foster
the purposes of the Plan. In furtherance of the purposes of the
Plan, the Committee may adopt such modifications to the terms of
Options and such procedures and guidelines, and may cause the
Company to take such other actions, as may be necessary or
advisable to comply with foreign laws and practices."
IN WITNESS WHEREOF, the Corporation has adopted this Amendment this 29 day
of September, 1994.
ATTEST: R.P. SCHERER CORPORATION
/s/ By: /s/ Aleksandar Erdeljan
- ---------------------------------- ------------------------------------
Secretary
Its: President & CEO
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38
<PAGE> 1
EXHIBIT 99(c)
R.P. SCHERER CORPORATION
(f/k/a RPS CORPORATION)
-----------------------
1990 NONQUALIFIED PERFORMANCE STOCK OPTION PLAN B
1. Purpose. The purpose of this 1990 Nonqualified Performance
Stock Option Plan B (this "Performance Plan") is to provide a means by which
certain employees of RPS Corporation, a Delaware corporation (the "Company"),
R.P. Scherer Corporation, a Delaware corporation and a wholly owned subsidiary
of the Company ("R.P. Scherer"), or any subsidiary thereof, may be given an
opportunity to purchase common stock, par value $.01 per share (the "Common
Stock"), and Series B Redeemable Preferred Stock, par value $.01 per share (the
"Preferred Stock" and together with the Common Stock, the "Stock") of the
Company. This Performance Plan is intended to advance the interests of the
Company be encouraging stock ownership on the part of certain employees, by
enabling the Company and R.P. Scherer to secure and retain the services of
highly qualified persons, and by providing employees with an additional
incentive to advance the success of the Company.
2. Stock Subject to Option. Subject to adjustment as provided
in Section 4(e) hereof, options may be granted by the Company in accordance with
the provisions of Section 4 hereof to purchase up to an aggregate of 45,396
shares of the authorized but unissued Common Stock and up to an aggregate of
90,793 shares of the authorized but unissued Preferred Stock. Shares of Stock
that by reason of the expiration of an option or otherwise are no longer subject
to purchase pursuant to an option granted under this Performance Plan may be the
subject of other options granted under this Performance Plan or any other
option, incentive or compensatory plan adopted by the Company.
3. Participants. All key employees of the Company, R.P.
Scherer or any of its subsidiaries, as determined by the Board of Directors of
the Company (the "Board") or the
<PAGE> 2
Committee (as such term is defined in Section 4 hereof), may be granted options
under this Performance Plan. A person who holds an option granted hereunder that
has not expired is referred to as an "Optionee;" provided, however, that in the
event of such person's death or Disability (as hereinafter defined), such
person's estate, personal representative or beneficiary following the death or
incapacity of such person (an "Optionee's Representative") shall be able to
exercise the rights otherwise available to the Optionee.
4. Terms and Conditions of Options. The Committee may grant
options from time to time pursuant to this Performance Plan. Such options shall
be evidenced by written agreements substantially in the form of the Nonqualified
Performance Stock Option Agreement B (the "Performance Stock Option Agreement"),
which is attached hereto as Appendix A, and shall not be inconsistent with this
Performance Plan. The shares of Stock subject to each option shall, upon
issuance, be subject to the terms and conditions, including restrictions on
transferability, contained in an agreement substantially in the form of the
Stockholders Purchase Agreement attached hereto as Appendix B to be entered into
by the Company and the Optionees (the "Stockholders Purchase Agreement"), or,
with respect to certain Optionees, a Management Stock Subscription Agreement
between the Company and such Optionee (the "Stock Subscription Agreement").
Nothing in this Performance Plan or an option granted hereunder shall govern the
employment rights and duties between an Optionee and the Company or R.P.
Scherer, or any subsidiary thereof, nor in any way be deemed to constitute an
employment agreement among such parties.
(a) Option Price. The price per share of the Common Stock
subject to each option (the "Common Stock Option Price") shall be set
by a Compensation Committee (the "Committee") of the Board; provided,
however, that the Common Stock Option Price per share may be less than
the fair market value of a share of
2
<PAGE> 3
Common Stock on the Date of Grant, as such date is set forth in the
applicable Performance Stock Option Agreement. For purposes of the
foregoing, the fair market value of the Common Stock on the Date of
Grant shall be the fair market value established by the Committee
acting in good faith, and the fair market value may be more or less
than the book value of the Common Stock. The price per share of the
Preferred Stock subject to each option (the "Preferred Stock Option
Price") shall be the liquidation preference of each such underlying
share of Preferred Stock. The Common Stock Option Price and the
Preferred Stock Option Price are collectively referred to as the
"Option Price."
(b) Term of Option. Notwithstanding any other provision of
this Performance Plan, each option granted under this Performance Plan
shall expire not more than ten years and one day from the date the
option is granted, except that under the circumstances described in
Section 4(d), optioned may expire and terminate at an earlier date.
(c) Non-Transferability of Option Rights. No option shall be
assignable or transferable otherwise than by will or by the laws of
descent and distribution. During the lifetime of an Optionee, the
option is exercisable only by such Optionee or, as provided in Section
3, such Optionee's Representative.
(d) Termination of Employment. In the event that an Optionee's
employment by the Company, R.P. Scherer or any subsidiary thereof shall
terminate, all options granted to such Optionee pursuant to this
Performance Plan shall terminate immediately and shall not be
exercisable; provided, however, that in the event of an Optionee's
death or Disability no more than six months prior to the Initial
Exercise Date, such Optionee's options shall be exercisable for
3
<PAGE> 4
Exercisable Shares in accordance with the terms of Section 5 hereof.
The term "Disability" shall mean an Optionee's physical or mental
disability (so that the Optionee is not reasonably able to render his
full service to the company, R.P. Scherer or any subsidiary thereof)
for any consecutive period exceeding three months or as determined by
agreement of a majority of the members of the Board in their reasonable
discretion. The date of such Disability shall be on the last day of
such three-month period of the day selected by the Board, as the case
may be.
(e) Adjustment of Options on Recapitalization. The aggregate
number of shares of Stock for which options may be granted to persons
participating under this Performance Plan, the number of shares of
Stock covered by each outstanding option and the Option Price for the
shares of Stock subject to each such option may be appropriately
adjusted for any increase or decrease in the number of issued shares of
Stock resulting from a recapitalization, the subdivision or
consolidation of shares, or the payment of a stock dividend after the
Date of Grant; provided, however, that any options to purchase
fractional shares of Stock resulting from any such adjustment shall be
canceled.
(f) Rights as a Stockholder. An Optionee shall have no rights
as a stockholder with respect to any shares of Stock held under option
until the date of issuance of the stock certificates to him for such
shares. Except as provided in Section 4(e) hereof, no adjustment to the
option shall be made for dividends, distributions or rights
attributable to shares of Stock the record date for which is prior to
the date of issuance of Stock upon exercise of the option.
(g) Time of Granting Options. The grant of an option shall
occur only when a Performance Stock Option Agreement shall have been
duly executed and
4
<PAGE> 5
delivered by or on behalf of the Company and the employee to whom such
option shall be granted.
(h) Stock Legend. Certificates evidencing shares of Stock
purchased upon the exercise of options issued under this Performance
Plan shall be endorsed with a legend in substantially the form
contained in the Optionee's Stock Subscription Agreement, or
Stockholders Purchase Agreement, as the case may be.
5. Exercise of Options. During the term of this Performance
Plan, as set forth in Section 7 hereof, the Committee shall determine the
exercisability of options granted to each Optionee hereunder in accordance with
the terms and conditions of this Section 5.
(a) Definitions. The following terms shall have the following
meanings when used in this Section:
(i) "Affiliates" shall mean any other person or
entity directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified person or entity.
(ii) "Initial Exercise Date" shall man, with respect
to an Optionee, the earliest to occur of (1) the Public Offering, (2)
the date the Company give written notice of the proposed Sale of the
Company, and (3) the date the Company gives written notice of the
proposed dissolution or liquidation of the Company. In the event the
Company proposes to engage in a Sale of the Company, the Company shall
give each Optionee written notice of such Sale on or before 15 days (or
such shorter time if, in the sole discretion of the Company, 15 days'
notice is impracticable) before the consummation of such Sale of the
Company; provided, however, that if the proposed Sale of the Company is
not consummated and the Board in good faith determines that the
proposed Sale of the Company will not be consummated, the options
granted hereunder shall, upon such determination of the Board, cease to
be exercisable. In the event of the proposed dissolution or liquidation
of the Company, the Company shall give not less than 30 days prior
written notice to each Optionee of the date of such proposed
dissolution or liquidation; provided, however, that if the proposed
dissolution or liquidation of the Company is not
5
<PAGE> 6
consummated and the Board in good faith determines that the proposed
dissolution or liquidation of the Company will not be consummated, the
options granted hereunder shall, upon such determination of the board,
cease to be exercisable.
(iii) "Internal Rate of Return" shall mean the rate
of return of Shearson Lehman on the Investment, expressed as a decimal,
over the period from the making of the Investment to the Initial
Exercise Date, as such rate is determined by the Board in good faith.
For purposes of calculating the Internal Rate of Return, all
consideration received by Shearson Lehman shall represent returns to
Shearson Lehman. If the consideration received includes any property
other than cash, such consideration shall be deemed to be the amount of
any cash plus the fair market value of such other property as
determined by the Board in good faith. The Board shall determine the
Internal Rate of Return using the same method as that used to calculate
the hypothetical examples shown on Annex I to this Performance Plan
(substituting in such determination the actual returns received over
the applicable time period).
(iv) "Investment" shall mean the initial equity
investment of Shearson Lehman in the Company and shall be deemed to
equal $69 million.
6
<PAGE> 7
Notwithstanding the foregoing, if, in the Public Offering, Shearson
Lehman sells less than its entire initial equity investment of $69
million in the Company, the term "Investment" shall be deemed to be a
number equal to (i) the number of shares of Stock and shares of the
Company's Series C Redeemable Preferred Stock, par value $.01 per share
("Series C Preferred Stock"), which have been sold or redeemed since
the making of the Investment, if any, and the number of shares of stock
and Series C Preferred Stock being sold by Shearson Lehman in the
Public Offering multiplied by (ii) $10.
(v) "Public Offering" shall mean the sale of shares
of Common Stock pursuant to one or more effective registration
statements under the Securities Act of 1933, as amended (the "Act")
(other than a registration statement relating to shares of Common Stock
issuable upon exercise of employee stock options or in connection with
any employee benefit plan of the Company), relating to the sale of
shares of Common Stock beneficially owned by Shearson Lehman
representing, when taken together with all shares of Common Stock sold
by Shearson Lehman pursuant to Rule 144 under the Securities Act or
under previous registration statements (which were not in connection
with employee stock options or employee benefit plans), more than
33-1/3% of the Common Stock beneficially owned by Shearson Lehman prior
to such sale.
(vi) "Sale of the Company" shall mean (i) a merger or
consolidation of the Company with or into another entity (except a
subsidiary or Affiliate of the Company) in which the holders of Stock
are required to exchange their Stock for cash, property and/or
securities, or (ii) a sale or lease of all or
7
<PAGE> 8
substantially all of the assets of the Company or R.P. Scherer except
to a subsidiary or Affiliate of the Company.
(vii) "Shearson Lehman" shall mean Shearson Lehman
Brothers Holdings Inc. (formerly known as Shearson Lehman Hutton
Holdings Inc.), a Delaware corporation, and its Affiliates (including,
but not limited to, its Merchant Banking Partnerships which made an
initial equity investment in the Company).
(b) Exercisable Shares. The number of shares of Stock for
which an Optionee's option shall be exercisable (the "Exercisable
Shares") shall be determined as follows: (i) if the Internal Rate of
Return is equal to or exceeds .4, the Exercisable Shares shall be 100%
of the number of shares of Stock for which an Optionee's option can be
exercised; (ii) if the Internal Rate of Return is equal to or is less
than .36, there shall be no Exercisable Shares; and (iii) if the
Internal Rate of Return exceeds .36, but is less than .4, the number of
Exercisable Shares shall be calculated by (A) subtracting .36 from the
Internal Rate of Return, (B) dividing the result produced in (A) above
by .04 and, if necessary, rounding the result up to the nearest one
one-hundredths, and (C) multiplying the result produced in (B) above by
the maximum number of shares of Stock for which an Optionee's option
granted pursuant to this Performance Plan can be exercised.
(c) Exercise of Option. Except as otherwise provided in this
Performance Plan, or in the applicable Performance Stock Option
Agreement, no option granted pursuant to this Performance Plan shall be
exercisable, in whole or in any part, until the Initial Exercise Date
applicable to such Optionee. Thereafter, any option granted pursuant to
this Performance Plan shall be
8
<PAGE> 9
exercisable for the number of Exercisable Shares as determined pursuant
to Section 5(b) hereof. The Committee may accelerate the time at which
an option may be exercised and may delay and/or reduce the periods
during which options may be exercised in order to comply with federal
and state securities laws. Any options (or any part thereof) granted
hereunder, if not exercised prior to a Sale of the Company, shall
expire on the occurrence of such Sale and no payment shall be owed to
any Optionee. Any options (or any part thereof) granted hereunder, if
not exercised prior to a dissolution or liquidation of the Company,
shall expire upon the consummation of a dissolution or liquidation of
the Company and no payment shall be owed to any Optionee.
(d) Manner of Exercise. Shares of Stock purchased upon
exercise of options shall at the time of purchase be paid for in full
in cash or as otherwise permitted by the Committee. Options may be
exercised in whole or in part from time to time by written notice to
the Company stating the full number of shares of Stock with respect to
which the option is being exercised and the time of delivery thereof,
which shall be at least 15 days after the giving of such notice unless
an earlier date shall have been mutually agreed upon, accompanied by
full payment for the shares of Stock by certified or official bank
check or the equivalent thereof acceptable to the Company; provided,
however, that any such exercise must be for both Common Stock and
Preferred Stock in the same proportion to the total number of shares of
Common Stock and Preferred Stock, respectively, issuable to the
Optionee upon exercise of the option granted hereunder. At the time of
delivery, the Company shall, without stock transfer or issue tax to an
Optionee, deliver to such Optionee, at the principal executive offices
of R.P. Scherer, or
9
<PAGE> 10
such other place as shall be mutually agreed upon, a certificate or
certificates for such shares of Stock; provided, however, that the time
of delivery may be postponed by the Company for such period as may be
required for it with reasonable diligence to comply with any
requirements of law, including making provision for the deduction and
withholding of amounts required to be deducted and withheld under
applicable local, state, and federal income tax laws (which provision
may require additional payment by such Optionee). The Company shall pay
any stock transfer tax or issue tax resulting from the issuance of
shares of stock upon the exercise of any option. If Stock issuable upon
exercise of any option is not registered under the Act, the Company at
the time of exercise shall require in addition that the Optionee or
Optionee's Representative deliver an investment representation in form
acceptable to the Company and its counsel, and the Company shall place
a legend on the certificate for such Stock restricting the transfer of
such Stock. At no time shall the Company have any obligation or duty to
register under the Act the Stock issuable upon exercise of options. The
Company shall not be required to issue or deliver any certificate for
shares of Stock purchased upon the exercise of any option or portion
thereof prior to the execution by the Optionee or the Optionee's
Representative of the Stockholders Purchase Agreement; provided,
however, that those Optionees who have executed a Stock Subscription
Agreement shall not be required to execute a Stockholders Purchase
Agreement.
6. Administration.
(a) This Performance Plan shall be administered by the
Committee consisting of not fewer than three directors to be appointed
by the Board. If
10
<PAGE> 11
necessary to secure the exemption pursuant to Rule 16b-3 which has been
adopted by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended (as such Rule or its equivalent is
then in effect)("Rule 16b-3"), no person shall be eligible to serve on
the Committee unless he is then a "disinterested person" within the
meaning of paragraph (d)(3) of Rule 16b-3. The Board may, from time to
time, remove members from or add members to the Committee. Vacancies in
the Committee, however caused, shall be filled by the Board. The
Committee shall select a chairman from among its members and shall hold
meetings at such times and places as it may determine. The Committee
may appoint a secretary and, subject to the provisions of this
Performance Plan and to policies determined by the Board, may make such
rules and regulations for the conduct of its business as it shall deem
advisable. A majority of the Committee shall constitute a quorum. All
action of the Committee shall be taken by a majority of its members.
Any action may be taken by a written instrument signed by a majority of
the members, and action so taken shall be fully as effective as if it
had been taken by a vote of the majority of the members at a meeting
duly called and held. The Board may act in lieu of the Committee and
shall act in lieu of a Committee at any time such a Committee has not
been created.
(b) Subject to the express terms and conditions of this
Performance Plan, the Committee shall have full power to grant options
under this Performance Plan, to construe or interpret this Performance
Plan, to prescribe, amend and rescind rules and regulations relating to
it and to make all other determinations necessary or advisable for its
administration.
11
<PAGE> 12
(c) The Committee may, from time to time, determine which
employees of the Company, R.P. Scherer and any subsidiary thereof shall
be granted options under this Performance Plan, the number of shares of
Stock subject to each option, and the time or times at which options
shall be granted, and the Company may grant such options under this
Performance Plan.
(d) No member of the Board or of the Committee shall be liable
for any action or determination made in good faith with respect to this
Performance Plan or to any option.
12
<PAGE> 13
7. Effective Date and Termination.
(a) The effective date of this Performance Plan is
_____________, 1990.
(b) This Performance Plan shall terminate on _____________,
2000, but the Board may terminate this Performance Plan at any time
prior to such date. Termination of this Performance Plan shall not
alter or impair, without the consent of the Optionee, any of the rights
or obligations and any option theretofore granted under this
Performance Plan.
8. Notices. Whenever it is provided in this Performance Plan
that any notice be given between the Company and an Optionee, such notice shall
be delivered in person or by registered or certified mail, return receipt
requested, postage prepaid, first class mail, to the following address:
If to the Company:
RPS Corporation
c/o R.P. Scherer Corporation
2075 W. Big Beaver Road
Troy, Michigan 48007=7060
Attention: Robert J. Lollini
If to an Optionee:
At the address listed beside
such Optionee's name on the signature
page of the Performance Stock Option
agreement executed by such Optionee
Any party hereto may change the address designated for mailing
by written notice to the other party. All such notices shall be deemed to be
delivered when delivered in person, or if placed in the mail, two days
thereafter.
9. Governing Law. THIS PERFORMANCE PLAN SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE
13
<PAGE> 14
STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICTS
OF LAW.
10. Amendments. The Board may, from time to time, alter,
amend, suspend or discontinue this Performance Plan, or alter or amend any and
all option agreements granted thereunder; provided, however, that no such action
of the Board may alter the provisions of this Performance Plan so as to alter
any outstanding Stock Option Agreement to the detriment of an Optionee without
his consent.
11. Status of Options. Options granted pursuant to this
Performance Plan are not intended to qualify as Incentive Stock Option within
the meaning of section 422A of the Internal Revenue Code of 1986 (the "Code"),
and the terms of this Performance Plan and options granted hereunder shall be so
construed; provided, however, that nothing in this Performance Plan shall be
interpreted as a representation, guarantee or other undertaking on the part of
the Company that the options granted pursuant to this Performance Plan are not,
or will not be, determined to be Incentive Stock Options, within the meaning of
Section 422A of the Code.
I hereby certify that the foregoing Performance Plan was duly
adopted by the Board on June 18, 1990.
Executed as of this 29th day of November, 1990.
-----------------------------------
Secretary
14
<PAGE> 15
FIRST AMENDMENT TO
RPS CORPORATION
1990 NONQUALIFIED STOCK OPTION PLANS
WHEREAS, RPS Corporation, a Delaware corporation, established
the RPS CORPORATION 1990 NONQUALIFIED STOCK OPTION PLAN, the RPS CORPORATION
1990 NONQUALIFIED PERFORMANCE STOCK OPTION PLAN A and the RPS CORPORATION 1990
NONQUALIFIED PERFORMANCE STOCK OPTION PLAN B; and
WHEREAS, RPS CORPORATION changed its name to R.P. Scherer
Corporation in 1991 (the "Company"); and
WHEREAS, the Company desires to amend the RPS CORPORATION 1990
NONQUALIFIED STOCK OPTION PLAN, the RPS CORPORATION 1990 NONQUALIFIED
PERFORMANCE STOCK OPTION PLAN A and the RPS CORPORATION 1990 NONQUALIFIED
PERFORMANCE STOCK OPTION PLAN B.
NOW, THEREFORE, the RPS CORPORATION 1990 NONQUALIFIED STOCK
OPTION PLAN, the RPS CORPORATION 1990 NONQUALIFIED PERFORMANCE STOCK OPTION PLAN
A and the RPS CORPORATION 1990 NONQUALIFIED PERFORMANCE STOCK OPTION PLAN B
(each individually referred to respectively as the "1990 Plan," the "1990 Plan
A" and the "1990 Plan B" and collectively, the "1990 Plans") are amended
effective February __, 1994, with respect to each of the 1990 Plans subject to
subsequent shareholder approval as follows:
1. The last sentence of Section 3 of each of the 1990 Plans is
amended by adding the phrase "to the extent options are not transferred to a
grantor trust pursuant to Section 4(c)."
2. Effective as of February 18, 1994, Section 4(c) of each of
the 1990 Plans is amended in its entirety to read as follows:
15
<PAGE> 16
(c) Non-Transferability of Option Rights. No option
shall be assignable or transferable otherwise than (i) by
will, (ii) by the laws of descent and distribution, or (iii)
to one or more grantor trusts provided that with regard to a
transfer to one or more such grantor trusts the Optionee's
Stock Option Agreement expressly so provides for such
transfer, is approved by the Committee, and the Optionee does
not receive any consideration for the transfer. The option is
exercisable only by such Optionee or grantor trust trustee or,
as provided in Section 3, such Optionee's Representative.
3. Effective as of February 18, 1994, a new Section 12 is
added to each of the 1990 plans -- as follows:
12. Trusts. For all purposes of the Plan, a grantor
trust trustee that is a transferee pursuant to Section 4(c) is
the "Optionee"; provided, however, for purposes of determining
the rights and obligations of the Company and such grantor
trust trustee under Section 4(d), the employee granted the
Options shall be deemed the Optionee whose termination,
disability or death will effectuate such rights or
obligations.
IN WITNESS WHEREOF, these Amendments have been adopted by the
Company this 18th day of February, 1994.
ATTEST R.P. SCHERER CORPORATION
/s/ By: /s/ ALEKSANDAR ERDELJAN
- ----------------------------- ----------------------------
Its: President
------------------------
CERTIFICATION
I certify that the foregoing amendments to the Plans were duly
adopted by the Board of Directors of the Company on February 18, 1994.
16
<PAGE> 17
Executed as of this 18th day of February, 1994
------------------------------
Secretary
17
<PAGE> 18
SECOND AMENDMENT TO
RPS CORPORATION
1990 NONQUALIFIED STOCK OPTION PLANS
The RPS Corporation 1990 Nonqualified Stock Option Plan, the
RPS Corporation 1990 Nonqualified Performance Stock Option Plan A, and the RPS
Corporation 1990 Nonqualified Performance Stock Option Plan B (each individually
referred to respectively as the "1990 Plan," the "1990 Plan A" and the "1990
Plan B" and collectively referred to as the "1990 Plans") are amended effective
September 1, 1994, as follows:
1. Amendment to Section 1. The first sentence of Section 1 of
each of the 1990 Plans is amended in its entirety to read as follows:
"The purpose of this plan (this "Option Plan") is to
provide a means by which certain employees of R.P. Scherer
Corporation (formerly RPS Corporation), a Delaware corporation
(the "Company"), R.P. Scherer International Corporation
(formerly R.P. Scherer Corporation) , a Delaware corporation
and a wholly owned subsidiary of the Company ("R.P. Scherer"),
or any subsidiary thereof, may be given an opportunity to
purchase common stock, par value $0.01 per share (the "Common
Stock") , and prior to conversion to Common Stock of Series B
Redeemable Preferred Stock and conversion of the related
options by operation of Section 4(e) to options for Common
Stock (the "Conversion"), Series B Redeemable Preferred Stock,
par value $0.01 per share (the "Preferred Stock," and together
with the Common Stock, the "Stock") of the Company."
2. Amendment to Section 2. Section 2 of each of the 1990 Plans
is amended by adding the phrase "prior to the Conversion" immediately following
the phrase "Subject to adjustment as provided in Section 4(e) hereof," and by
adding at the end of the first sentence the phrase, "and after the Conversion a
number of shares of Common Stock pursuant to Section 4(e)."
18
<PAGE> 19
3. Amendments to Section 4 of the Plans. Section 4 of the 1990
Plans is amended as follows:
(i) Subject to shareholder ratification, Section 4(a)
of each of the 1990 Plans is deleted and a new Section 4(a) is included to read
as follows:
"(a) Terms and Conditions of Options. The Committee
may grant options from time to time pursuant to this Option
Plan. Such options shall be evidenced by written agreements
substantially in the form of the Nonqualified Stock Option
Agreement (the "Stock Option Agreement"), Appendix A to the
Option Plan as originally adopted, but pursuant to and
interpreted in accordance with, and not inconsistent with,
this Option Plan as amended. The shares of Stock subject to
each option shall, (i) upon issuance, but in no event after
September 1, 1994, be subject to the terms and conditions,
including restrictions on transferability, contained in an
agreement substantially in the form of the Stockholders
Purchase Agreement, Appendix B to the Option Plan as
originally adopted, entered into by the Company and the
Optionees (the "Stockholders Purchase Agreement"), or, (ii)
with respect to certain Optionees, unless terminated by the
Company, the Management Stock Subscription Agreement between
the Company and such Optionees (the "Stock Subscription
Agreement") as amended and restated from time to time.
Notwithstanding anything to the contrary herein, however, no
insider, as defined for purposes of Section 16 of the
Securities Exchange Act of 1934, as amended, may sell shares
of Stock subject to an option granted hereunder after August
31, 1994, and prior to March 2, 1995. Nothing in this Option
Plan or an option granted hereunder shall govern the
employment rights and duties between an Optionee and the
Company or R.P. Scherer, or any subsidiary thereof, nor in any
way be deemed to constitute an employment agreement among such
parties. Effective September 1, 1994 any Stockholders Purchase
Agreement in the form attached hereto as Appendix B entered
into by the Company and Optionee shall be terminated."
(ii) Section 4(b) of each of the 1990 Plans is
amended by inserting the phrase "(as effective, pursuant thereto, prior to
September 1, 1994)" immediately after the reference to Section 4(d) and adding a
new sentence to the end of Section 4(b) to read "The termination date, which is
not more than 10 years and 1 day from the date the option is granted and which
is set forth in an Optionee's Option Agreement, shall be referred to as the
"Termination Date."
19
<PAGE> 20
(iii) Subject to shareholder ratification, Section
4(d)(i) of both the 1990 Plan and the 1990 Plan A are deleted and replaced with
a new Section 4(d)(i)(A) and 4(d)(i)(B) to read as follows:
"(i)(A) Prior to September 1, 1994, subject to the
provisions of Sections 4(d)(ii), 4(d)(iii) , 4(d)(iv) and
4(d)(v), in the event that an Optionee's employment by the
Company, R.P. Scherer or any subsidiary thereof shall
terminate, all options granted to such Optionee pursuant to
this Option Plan shall terminate immediately and shall not be
exercisable; and
(i)(B) On and after September 1, 1994, Sections
4(d)(ii), 4(d)(iii), 4(d)(iv) and 4(d)(v) shall be
inapplicable, and notwithstanding an Optionee's termination of
employment, options shall not terminate until their
Termination Date and shall not be exercisable thereafter."
(iv) Subject to shareholder ratification, Section
4(d) of the 1990 Plan B is amended by adding the phrase "Prior to September 1,
1994" at the beginning of the first sentence of the Section, and a new sentence
shall be added at the end of Section 4(d) of the 1990 Plan B to read as follows:
"On and after September 1, 1994, notwithstanding an
Optionee's termination of employment, options shall not
terminate until their Termination Date and shall not be
exercisable thereafter."
(v) Subject to shareholder ratification, Section 4(f)
of both the 1990 Plan and the 1990 Plan A are deleted and a new Section 4(f) is
included to read as follows:
"(f) In the event the Company proposes to engage in a
Sale of the Company (as hereunder defined and sometimes
referred to as "Sale"), the Company shall give each Optionee
written notice of such Sale on or before 15 days (or shorter
time if, in the sole discretion of the Company, 15 days notice
is impracticable) before the consummation of such Sale, and
unless otherwise agreed to by the Company and the Optionee,
each option shall, after receipt of such notice and prior to
such Sale, automatically become exercisable for the
Exercisable Shares existing on the date the Company gives
written notice of the Sale. The Committee may, in its sole
discretion, provide that the options not exercised prior to
such Sale shall expire 30 days after the occurrence of such
Sale, provided, however, that the Compensation Committee may
not terminate options pursuant to this Section prior to March
2 1995. If options are not exercised in connection with such
Sale, and provided the Committee does not provide for the
20
<PAGE> 21
termination of such options, then following consummation of
the Sale, such Optionee upon exercise of his options, will
only be entitled to receive the kind and amount of stock,
securities, or assets that such Optionee would have received
had such Optionee exercised his or her options immediately
prior to such Sale; provided, however, that if the proposed
Sale of the Company is not consummated and the Board in good
faith determines that the proposed Sale of the Company will
not be consummated, the options granted hereunder shall, upon
such determination of the Board, cease to be exercisable
pursuant to this Section 4(f). A "Sale of the Company" shall
mean (i) a merger or consolidation of the Company with or into
another entity (other than a subsidiary or affiliate of the
Company), (ii) a sale or lease of all or substantially all of
the assets of the Company or R.P. Scherer except to a
subsidiary or affiliate of the Company, (iii) 50% or more of
the Company's then outstanding shares of voting stock is
acquired by another corporation, person or entity (other than
a subsidiary or affiliate of the Company), or (iv) the Company
recapitalizes or enters into any similar transaction, and as a
result of which the Common Stock either (A) is no longer a
voting equity security of the Company or (B) is no longer
listed on a national securities exchange or authorized for
quotation on an inter-dealer quotation system of a national
securities association."
(vi) Section 4(j) of the 1990 Plan and of the 1990
Plan A and Section 4(h) of the 1990 Plan B are amended by adding the phrase
"Prior to September 1, 1994", at the beginning thereof.
4. Amendments to Section 5.
(i) Section 5(c)(iii) of the 1990 Plan A is amended
effective September 1, 1994 to read as follows:
"(iii) in the case of termination of employment of an
Optionee pursuant to Section 4(d)."
(ii) Section 5(a) of the 1990 Plan is amended
effective September 1, 1994 to read as follows:
"(iii) in the case of termination of employment of an
Optionee pursuant to Section 4(d)."
(iii) Subject to shareholder ratification, Section
5(a)(vi) of the 1990 Plan B shall be amended in its entirety to read as follows:
21
<PAGE> 22
"(vi) "Sale of the Company" shall mean (i) a merger
or consolidation of the Company with or into another entity
(except a subsidiary or Affiliate of the Company), (ii) a sale
or lease of all or substantially all of the assets of the
Company or R.P. Scherer except to a subsidiary or Affiliate of
the Company, (iii) 50% or more of the Company's then
outstanding shares of voting stock is acquired by another
corporation, person or entity (other than a subsidiary
Affiliate of the Company), or (iv) the Company recapitalizes
or enters into any similar transaction, and as a result of
which the Common Stock either (A) is no longer a voting equity
security of the Company or (B) is no longer listed on a
national securities exchange or authorized for quotation on an
inter-dealer quotation system of a national securities
association."
(iv) Subject to shareholder ratification, the fourth
sentence of Section 5(c) of the 1990 Plan B is deleted and replaced with the
following:
"The Committee may, in its sole discretion, provide
that the options not exercised prior to a Sale of the Company
shall expire 30 days after the occurrence of such Sale,
provided, however, that the Compensation Committee may not
terminate options pursuant to this Section prior to March 2,
1995. If options are not exercised in connection with such
Sale, and provided the Committee does not provide for the
termination of such options, then following consummation of
the Sale, such Optionee upon exercise of his option, will only
be entitled to receive the kind and amount of stock,
securities, or assets that such Optionee would have received
had such Optionee exercised his or her option immediately
prior to such Sale; provided, however, that if the proposed
Sale of the Company is not consummated and the Board in good
faith determines that the proposed Sale of the Company will
not be consummated, the options granted hereunder shall, upon
such determination of the Board, cease to be exercisable
pursuant to this Section."
5. Amendments to Section 6. Section 6 of the 1990 Plans is
amended as follows:
(i) The last sentence of Section 6(a) of each of the
Plans is amended to read as follows:
"The Board may act in lieu of the Committee with
directors who are not "disinterested persons" abstaining and
shall act in lieu of a Committee with directors who are not
"disinterested persons" abstaining at any time such a
Committee has not been created."
(ii) Subject to shareholder ratification, a new
paragraph is added to Section 6(b) of the Plans to read as follows:
22
<PAGE> 23
"Notwithstanding anything to the contrary in the Plan
as amended, other than Section 4(d) and Section 4(c), the
Committee may grant options to eligible employees who are not
United States citizens or residents on such terms and
conditions as may, in the judgment of the Committee, be
necessary or desirable to foster the purposes of the Plan. In
furtherance of the purposes of the Plan, the Committee may
adopt such modifications to the terms of Options and such
procedures and guidelines, and may cause the Company to take
such other actions, as may be necessary or advisable to comply
with foreign laws and practices."
IN WITNESS WHEREOF, the Corporation has adopted this Amendment
this 29 day of September, 1994.
---- ----------
ATTEST R.P. SCHERER CORPORATION
/s/ By: /s/ ALEKSANDAR ERDELJAN
- ----------------------------- ----------------------------
Its: President & CEO
------------------------
23
<PAGE> 1
Exhibit 99(d)
STOCK OPTION PLAN
OF
R.P. SCHERER CORPORATION AND SUBSIDIARIES
AMENDED JULY, 1995
R. P. Scherer Corporation, a Delaware corporation, hereby adopts this Stock
Option Plan of R. P. Scherer Corporation (the "Company") and Subsidiaries ( the
"Plan"). The purposes of the Plan are as follows:
(1) To further the growth, development and financial success of the Company by
providing additional incentives to certain of its management employees who have
been or will be given responsibility for the management or administration of the
Company's business affairs by assisting them to become owners of capital stock
of the Company and thus to benefit directly from its growth, development and
financial success.
(2) To enable the Company to obtain and retain the services of the type of
professional, technical and managerial employees considered essential in the
long range success of the Company by providing and offering them an opportunity
to become owners of capital stock of the Company under options.
Each option granted to a management employee under the Plan represents the right
to purchase a number of shares of common stock of the Company and each such
option will consist of two portion: a purchase portion and a granted portion.
The purchase portion of a particular option for an applicable management
employee will be determined by applying 25% for such other portion set by the
Compensation Committee) of such management employee's Bonus (as hereinafter
defined) to purchase, at a predetermined price, the right to acquire shares of
the Company's common stock upon payment of the appropriate exercise price. The
exercise price for each share which is part of the purchase portion of an option
will be fixed on the date of grant and equal the amount determined by increasing
the remainder of such designated stock price by 10% per year for five years. The
granted portion of such option will be the right to purchase an additional
number of shares equal to the number of shares which make up the purchase
portion of such option at an exercise price per share equal to the designated
stock price. Options may be exercised in whole or in part, but may only be
exercised for an equal number of purchase portion shares and granted portion
shares.
ARTICLE 1
DEFINITIONS
Section 1.1 GENERAL
1
<PAGE> 2
Whenever the following terms are used in the Plan they shall have
the meaning specified below unless the context clearly indicates to the
contrary.
Section 1.2 "Applicable Amount" means, (i) the value equaling to $1.80 increased
by a factor of 5% compounded annually beginning with Fiscal Year 1993 or (ii)
such other value as may be determined from time to time by the Committee (as
hereinafter defined).
Section 1.3 "Applicable Fiscal Year" means the fiscal Year for which an Option
is being granted.
Section 1.4 "Average Fair Market Value" means with respect to any share of
stock, the average of the Fair Market Value of a share of such stock on each of
the trading days during the period from March 1 of the Fiscal Year preceding the
Applicable Fiscal Year to April 30 of the Applicable Fiscal Year. If such stock
is not listed or quoted, the Average Fair Market Value will be established by
the Committee and will be binding upon all Optionees, the Company and all other
interested persons. The Average Fair Market Value may be more or less than the
book value of such stock.
Section 1.5 "Board" means the Board of Directors of the Company.
Section 1.6 "Bonus" means the Economic Value Added Bonus granted under the Bonus
Plan, as from time to time amended, to any selected management Employee.
Section 1.7 "Bonus Plan" means the R. P. Scherer Corporation Management
Incentive Compensation Plan (Based upon Economic Value Added), as from time to
time amended.
Section 1.8 "Cause" means (i) any act or acts of an Optionee constituting a
felony (or its equivalent) under the laws of the United States, any state
thereof or any foreign jurisdiction; (ii) any material breach by an Optionee of
any employment agreement with the Company or any of its Subsidiaries or the
policies of the Company or any of its Subsidiaries or the willful and persistent
failure or refusal of an Optionee (after written notice to such Optionee) to
perform his duties of employment or comply with any lawful directives of the
Board or of the Board of Directors of the Subsidiary of the Company which employ
the Optionee, (iii) a course of conduct amounting to gross, willful misconduct
or dishonesty; or (iv) any misappropriation of material property of the Company
or any of its Subsidiaries by an Optionee or any misappropriation of a corporate
or business opportunity of the Company or any of its Subsidiaries by an
Optionee.
Section 1.9 "Code" means the Internal Revenue Code of 1986, as amended.
Section 1.10 "Committee" means the Compensation Committee of the Board,
appointed as provided in Section 6.1.
Section 1.11 "Common Stock" means the Common Stock, par value $.01 per share, of
the Company.
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<PAGE> 3
Section 1.12 "Company" means R. P. Scherer Corporation.
Section 1.13 "Date of Grant" means the date upon which the Committee approves
the options to be granted for the Applicable Fiscal year which will be within
six weeks of the end of the applicable Fiscal Year.
Section 1.14 "Discounted Initial Value" is the excess of (i) $18.00 for Fiscal
year 1992 or the Average Fair Market Value of a share of Common Stock for each
fiscal year thereafter, over (ii) the corresponding Applicable Amount.
Section 1.15 "Employee" means any employee of the Company, or of any corporation
which is then a Subsidiary of the Company, whether such employee is so employed
at the time the Plan is adopted or becomes so employed subsequent to the
adoption of the Plan.
Section 1.16 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
Section 1.17 "Fair Market Value" means the last sales price for a share of stock
on a particular day on the principal exchange on which such stock may at the
time be listed or, if there shall have been no sales on such exchange on any
such trading day, the average of the closing bid and asked prices on such
exchange on such trading day or if there is no such bid and asked price on such
trading day on the next preceding date when such bid and asked price occurred
or, if such stock shall not be so listed, the average of the closing sales
prices as reported by NASDAQ at the end of each trading day in the
over-the-counter market, or if such stock is not so listed or quoted, the price
will be established by the Committee and will be binding upon all Optionees, the
Company and all other interested persons. The Fair Market Value may be more or
less than the book value of such stock.
Section 1.18 "Fiscal Year" means the fiscal year of the Company which runs from
April 1 through March 31.
Section 1.19 "Good Reason" shall mean: (i) any material reduction by the Company
of such Participant's duties, responsibilities or titles, (ii) any involuntary
removal of such Participant from any position previously held (except in
connection with a promotion or a termination for Cause, death or disability, or
the voluntary termination by the Participant other than for Good Reason), or
(iii) such other reasons (including non-employment related reasons) as may be
approved by the Committee, in its sole discretion, from time to time.
Section 1.20 "Granted Portion Exercise Price" has the meaning given in Section
4.1(b).
Section 1.21 "Granted Portion Shares" has the meaning given in Section
3.3(a)(i).
Section 1.22 "Option" means any option granted under the Plan to purchase Common
Stock. An Option will entitle the holder to purchase a multiple number of shares
of
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<PAGE> 4
Common Stock determined in accordance with Section 3.3. Each Option will be
partially exercisable in accordance with Section 5.2. Options include only
options which are not intended to be "incentive stock options" under Section 422
of the Code.
Section 1.23 "Optionee" means an Employee to whom an Option is granted under the
Plan.
Section 1.24 "Permanent Incapacitation Disability" means the inability of an
Employee to perform the principal duties of his job at the Company due to
physical or mental condition, as determined by a physician, for a period of at
least one year.
Section 1.25 "Permitted Transferee" means (i) the guardian, executors,
administrators, testamentary trustee, legalees or beneficiaries of an Optionee
or of any Permitted Transferee, or (ii) a transferee pursuant to a qualified
domestic relations order as defined by the Code, provided that such transfer is
made expressly subject to the Plan and that the transferee agrees in writing to
be bound by the terms and conditions hereof as if such transferee were the
Optionee.
Section 1.26 "Plan" means this Stock Option Plan of R. P. Scherer Corporation
and its Subsidiaries, as from time to time amended.
Section 1.27 "Purchased Portion Exercise Price" has the meaning given in Section
4.1(a).
Section 1.28 "Purchased Portion Shares" has the meaning given in Section
3.3(a)(ii).
Section 1.29 "Secretary" means the Secretary or any Assistant Secretary of the
Company.
Section 1.30 "Securities Act" means the Securities Act of 1993, as amended.
Section 1.31 "Subsidiary" means, as to the Company, a corporation, partnership
or other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by the Company. Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries
of the Company.
Section 1.32 "Termination of Employment" means the time when the
employee-employer relationship between the Optionee and the Company and its
Subsidiaries is terminated for any reason whatsoever. The Committee, in its
absolute discretion, will determine the effect of all other matters and
questions relating to Termination of Employment, including, but not by way of
limitation, all questions of whether particular
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<PAGE> 5
leaves of absence constitute. Terminations of Employment and the question of
whether any reemployment by the Company is simultaneous with termination.
Notwithstanding any other provision of the Plan, the Company or any of its
Subsidiaries have an absolute and unrestricted right to terminate any Employee's
employment at any time for any reason whatsoever with or without cause.
Section 1.33 "Total Available Shares" means the total number of shares of Common
Stock set forth in Section 2.1 issuable upon the exercise of Options less the
aggregate number of shares of Common Stock issued, or reserved for issuance,
upon the exercise of Options granted hereunder prior to the date of such
determination.
Section 1.34 Pronouns: The masculine pronoun includes the feminine and neuter
and the singular includes the plural, where the context so indicates.
ARTICLE 2
SHARES SUBJECT TO PLAN
----------------------
Section 2.1 SHARES SUBJECT TO PLAN
The shares of stock subject to Options shall be shares of Common
Stock. The maximum aggregate number of shares of Common Stock which may be
issued upon exercise of Options granted under the Plan is 1,800,000. If the
outstanding shares of Common Stock subject to Options are, from time to time,
changed into or exchanged for a different number of shares of Common Stock by
reason of a reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend, combination of shares, or
otherwise, the maximum aggregate number of shares of Common Stock which may be
issued upon exercise of Options granted under the Plan will be increased or
decreased in proportion to the change in Common Stock.
Section 2.2 UNEXERCISED OPTIONS
If any Option expires or is canceled without having been fully
exercised, the number of shares subject to such Option but as to which such
Option was not exercised prior to its expiration or cancellation may again be
optioned hereunder, subject to the limitations of Section 2.1.
ARTICLE 3
GRANTING OF OPTIONS
-------------------
Section 3.1 ELIGIBILITY
Any management Employee of the Company or of any Subsidiary who
is (a) eligible to receive a Bonus or (b) such other management Employee
designated by the Committee to receive an Option under the Plan, will be
eligible to be granted an Option under the Plan.
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<PAGE> 6
Section 3.2 GRANTING OF OPTIONS
The Committee, within six weeks after the close of each Fiscal
Year, will (i) determine the number of shares of Common Stock subject to each
Option to be granted to selected management Employee in accordance with Section
3.3; (ii) determine the terms and conditions of each Option, consistent with the
Plan; and (iii) establish such conditions to the exercise of each Option as it
may deem necessary, including but not limited to requiring Optionees to enter
into agreements regarding transferability and other restrictions with respect to
shares issuable upon exercise of any Options.
Section 3.3 Determination of Number of Shares Subject to Each Option
(a) Upon the determination of the dollar amount of the Bonus
awarded each selected management Employee or the dollar amount such other
compensation designated by the Committee to be used to purchase an Option under
the Plan ("Designated Compensation"), the number of shares of Common Stock to be
subject to each Option will equal: (i) (A) 25% (or such other fixed percentage
as the Committee may determine will be applicable with respect to any particular
selected management Employee) of the Bonus or the Designated Compensation paid
to each selected management Employee, divided by (B) the Applicable Amount (The
"Purchased Portion Shares"); plus (ii) an additional number of shares of Common
Stock equal to the number resulting from the calculation in clause (i) (the
"granted Portion Shares").
(b) Notwithstanding Section 3.3(a), if, as of any Date of Grant,
the aggregate number of shares of Common Stock issuable upon the exercise of all
Options to be purchased by or granted to management Employees as of such date
pursuant to Section 3.2 exceeds the Total Available Shares, then the number of
shares subject to any Option to be issued as of such Date of Grant (a "Current
Option") will be reduced. In such case, the number of shares subject to any
Current Option will equal (i) (A) the number of shares of Common Stock subject
to such Current Option determined in accordance with Section 3.3(a), divided by
(B) the aggregate number of shares of Common Stock subject to all Current
Options determined in accordance with Section 3.3(a) multiplied by (ii) the
Total Available Shares.
ARTICLE 4
TERMS OF OPTION
---------------
Section 4.1 EXERCISE PRICE
(a) With respect to the Purchased Portion Shares, the Purchased
Portion Exercise price is (i) the Discounted Initial Value multiplied in 1.61051
(which represents five 10% increases in the Discounted Initial Value on a
compounded basis).
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<PAGE> 7
(b) With respect to the Granted Portion Shares, the Granted
Portion Exercise Price is (i) the Average Fair Market Value of a share of Common
Stock for the Applicable Fiscal Year.
Section 4.2 COMMENCEMENT OF EXERCISABILITY
(a) Subject to the provisions of Section 4.2(b), 4.3 and 7.2 each
Option shall become exercisable three years after it is granted; provided,
however, that by a resolution adopted after an Option is granted the Committee
may, on such terms and conditions as it may determine to be appropriate and
subject to Section 7.2, accelerate the time at which any Option may be
exercised.
(b) Upon the death of an Optionee or a Permanent Incapacitating
Disability suffered by an Optionee while in the employ of the Company, any
unexercisable Options held by such Optionee or by such Optionee's Permitted
Transferees will immediately become exercisable.
Section 4.3 EXPIRATION OF OPTIONS
(a) Subject to the provision of Sections 4.3(c) and 7.2 each
Option shall expire seven years and one day from the date it was granted;
provided, however, subject to the provisions of Section 4.3(c), that by
resolution adopted after an Option is granted the Committee may, on such terms
and conditions as it may determine to be appropriate and subject to Section
4.2(b), 4.3(c) and 7.2, extend the time in which such Option may be exercised.
(b) Upon the involuntary termination for Cause, or the voluntary
termination without Good Reason before retirement (which for purposes of the
Plan shall be determined at or over the age of 55 or at any earlier date
approved by the Committee), of a Optionee's employment with the Company or any
of its Subsidiaries, all outstanding unexercisable Options held by such Optionee
or such Optionee's Permitted Transferees will immediately expire.
(c) Upon the involuntary termination without Cause, or the
voluntary termination with Good Reason before retirement (which for purposes of
the Plan shall be determined at or over the age of 55 or at any earlier date
approved by the Committee), of an Optionee's employment with the Company or any
of its subsidiaries, a pro rata portion of the outstanding unexercisable Options
held by such Optionee or such Optionee's Permitted Transferees shall become
immediately exercisable as determined by the formula set forth below, while the
remaining portion of such outstanding unexercisable Options will immediately
expire. For each outstanding Option held, the number of shares immediately
exercisable pursuant to that Option will equal (i) the number of shares of
Common Stock subject to such Option, multiplied by (ii) the quotient of (A) the
number of full years such Option had been held, divided by (B) three (provided,
that such quotient shall be greater than one (the "Quotient")). In addition, the
Company will pay to such Optionee an amount in cash equal to the amount paid by
or on behalf of such
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<PAGE> 8
Optionee to purchase each outstanding Option multiplied by (ii)(A) one, minus
(B) the Quotient. However, as provided in Section 4.2 (a), the Committee may
expressly choose to depart from the default rule expressed in Section 4.3(c)
herein in order to adopt other rules concerning the expiration and/or
acceleration of such outstanding unexercisable Options.
EXAMPLE
An Optionee voluntarily terminates with Good Reason effective July 18, 1995. The
Optionee held a total of 7,600 Options at such date, consisting of the
following:
<TABLE>
<CAPTION>
Purchased Portion Granted
----------------- -------
Fiscal Year Grant *Shares Cost/sh. Paid Portion Shares
- ------------------------- -------- ---- --------------
<S> <C> <C> <C> <C> <C>
1992 1,000 $1.80 $ 1,800 1,000
1993 900 2.74 2,466 900
1994 1,500 3.00 4,500 1,500
1995 400 3.50 1,400 400
------ ------- ------
3,800 $10,166 3,800
====== ======= ======
</TABLE>
*Assume all grants were made in the month of June, immediately following each
fiscal year end.
The Optionee would be entitled to exercise the following upon the July 18, 1995
date of termination:
<TABLE>
<CAPTION>
Shares
------
Fiscal Year Grant % Vested Purchased Granted
- ----------------- -------- --------- -------
<S> <C> <C> <C> <C>
1992 100% 1,000 1,000
1993 66 2/3 600 600
1994 33 1/3 500 500
1995 0
------ ------
2,100 2,100
</TABLE>
All remaining shares (Purchased and Granted) would immediately expire upon
termination. No options would be granted for fiscal 1996 as the termination took
place in the first fiscal quarter.
The Optionee would be repaid the following sums for Purchased Portion shares
which would become unexercisable and expire:
Amount
Fiscal Year Grant % Repaid Shares Cost/sh. Repaid
- ----------------- -------- ------ ------- ------
1992 0% $1.80 $ ------
1993 33 1/3 300 2.74 822
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<PAGE> 9
<TABLE>
<S> <C> <C> <C> <C> <C>
1994 66 2/3 1,000 3.00 3,000
1995 100 400 3.50 1,400
-----
$5,222
</TABLE>
(d) No Option may be exercised to any extent by anyone after, and
every Option will expire no later than, the expiration of seven years from the
date the Option was granted.
Section 4.4 NO RIGHT TO CONTINUE IN EMPLOYMENT OR OFFICE
Nothing in the Plan (i) will confer upon any Optionee who is an
Employee any right to continue in the employ of the Company or any of its
Subsidiaries or (ii) will interfere with or restrict in any way the rights of
the Company and its Subsidiaries, which are hereby expressly reserved, to
terminate the employment of any Optionee at any time for any reason whatsoever,
with or without good cause.
Section 4.5 ADJUSTMENTS IN OUTSTANDING OPTIONS
Subject to Section 4.6, if the outstanding shares of Common Stock
subject to Options are, from time to time, changed into or exchanged for a
different number or kind of shares of the Company or other securities of the
Company or of another corporation, by reason of a reorganization, merger,
consolidation, recapitalization, reclassification, stock split-up, stock
dividend, combination of shares, or otherwise, the number of shares of Common
Stock subject to all outstanding Options, or portions thereof then unexercised,
will be increased or decreased in proportion to the change in Common Stock and
the Committee will make any other appropriate and equitable adjustment in the
kind of shares, the exercise price or other consideration as to which all
outstanding Options, or portions thereof then unexercised, will be exercisable.
Any such adjustment made by the Committee will be final and binding upon all
Optionees, the Company and all other interested persons.
Section 4.6 MERGER, CONSOLIDATION, EXCHANGE, ACQUISITION, LIQUIDATION OR
DISSOLUTION
(a) All outstanding Options issued under the Plan will
immediately become exercisable as to all shares of Common Stock covered thereby
in the event that (i) Company merges with or into, or consolidates with, another
entity; (ii) the Company sells, exchanges or otherwise disposes of all or
substantially all of the assets of the Company; (iii) 50% or more of the
Company's then outstanding shares of voting stock is acquired by another
corporation, person or entity; (iv) the Company liquidates or dissolves; or (v)
the Company recapitalizes or enters into any similar transaction, and as a
result of which the Common Stock either (A) is no longer a voting equity
security of the Company or (B) is no longer listed on a national securities
exchange or authorized for quotation on an inter-dealer quotation system of a
national securities association. In connection with any such transaction the
Committee may, but shall not be required to, provide that all outstanding
Options shall automatically be converted into the right to receive from the
Company or its successor, not later than 30 days after the transaction,
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<PAGE> 10
cash in an amount equal to the number of shares of Common Stock covered by the
Options immediately prior to the transaction times (i) the fair market value of
the consideration receivable by the holder of one share of Common stock
immediately following transaction less (ii) the exercise price per share of
Common stock covered by the Option immediately prior to the transaction. In
addition, the Committee may, in its sole discretion, provide that the Options
will terminate 30 days following the consummation of a transaction described
above. For purposes of this paragraph (a), the term "Company" shall not include
any Subsidiary.
(b) Upon the occurrence of any event described in paragraph (a)
and if an Optionee does not elect to exercise his or her Options in connection
with such event as therein provided and the Committee does not provide for the
termination of such Options, thru following consummation of such event, such
Optionee, upon exercise of his or her Options, will only be entitled to receive
the kind and amount of stock, securities or assets that such Optionee would have
received had such Optionee exercised his or her Options immediately prior to
such transaction.
(c) The Company shall promptly notify each holder of an Option of
any event which shall cause the acceleration of all outstanding Options and of
any conversion of Options into the right to receive cash or the termination of
Options each as described in paragraph (a).
Section 4.7 EXPIRATION OF OPTIONS UPON CERTAIN BREACHES
Notwithstanding any other provision of the Plan or any other
agreement, if an Optionee breaches any non-competition agreement with the
Company or any of its Subsidiaries or breaches any agreement or duty imposed by
law with respect to the pre-termination or post-termination conduct of such
Optionee (including, without limitation, any confidentiality agreement), then
all outstanding unexercisable Options held by such Optionee or such Optionee's
Permitted Transferees will immediately expire.
ARTICLE 5
EXERCISE OF OPTIONS
-------------------
Section 5.1 PERSONS ELIGIBLE TO EXERCISE
During the lifetime of the Optionee, only he or a Permitted
Transferee may exercise an Option granted to him, or any portion thereof. After
the death of the Optionee, any exercisable portion of an Option may, prior to
the time when such Option portion becomes unexercisable under Section 4.3 or
Section 4.6, be exercised by a Permitted Transferee.
Section 5.2 PARTIAL EXERCISE
At any time and from time to time following the date on which an
Option becomes exercisable under Section 4.2 and prior to the time when any
exercisable Option
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<PAGE> 11
or exercisable person thereof expires or becomes unexercisable under Section 4.3
or Section 4.6 such Option or portion thereof may be exercised, subject to
Section 5.3, in whole or in part; provided, however, that the Company will not
be required to issue fractional shares. Each Option granted to an Optionee in
any Fiscal Year may only be exercised for an even number of shares of Common
Stock representing an equal number of Shares subject to the Purchased Portion
Exercise Price as shares subject to the Granted Portion Exercise Price; provided
further that the Company is only required to issue the lesser of (i) 100 shares
of Common Stock, and (ii) the total number of shares of Common Stock subject to
any one Option.
Section 5.3 MANNER OF EXERCISE
All exercisable Option, or any exercisable portion thereof, may
be exercised such that one share of Common Stock subject to the Purchased
Portion Exercise Price is purchased for each Share of Common Stock subject to
the Granted Portion Exercise Price that is purchased. Such Option or portion
thereof is exercisable solely by delivering to the Secretary of his office all
of the following prior to the time when such Option or such portion becomes
unexercisable under Section 4.3 or Section 4.6: (i) notice in writing signed by
the Optionee or other person then entitled to exercise such Option or portion
thereof, stating that such Option or portion thereof is exercised; (ii) full
payment of the Purchased Portion Exercise Price and the Granted Portion Exercise
Price (in cash, by check or by the presentation of shares of Common Stock valued
at the Fair Market Value of such shares of Common Stock on the trading day
immediately preceding the date such Option is exercised) for the shares with
respect to which such Option or portion thereof is thereby exercised, together
with payment or arrangement for payment of any federal income or other tax
required to be withheld by the Company with respect to such shares; (iii) such
representations and documents as the Committee reasonably deems necessary of
advisable to effect compliance with all applicable provisions of the Securities
Act, and any other federal, state or foreign securities, laws or regulations.
The Committee may, in its absolute discretion, also take whatever additional
actions it deems appropriate to effect such compliance, including, without
limitation, placing legends on share certificates and issuing stop-transfer
orders to transfer agents and registrars; and (iv) in the event that the Option
or portion thereof shall be exercised pursuant to Section 5.1 by any person or
persons other then the Optionee, appropriate proof of the right of such person
or persons to exercise the Option or portion thereof.
Section 5.4 RIGHTS OF STOCKHOLDERS
The holders of Options shall not be, nor have any of the rights
or privileges of, stockholders of the Company in respect of any shares
purchasable upon the exercise of any part of an Option unless and until
certificates representing such shares have been issued by the Company to such
holders.
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<PAGE> 12
ARTICLE 6
ADMINISTRATION
--------------
Section 6.1 COMPENSATION COMMITTEE
The Committee shall consist of at least two directors of the
Company. It shall be appointed by and shall serve at the pleasure of the Board.
To the extent required to avoid liability under Section 16 of the Exchange Act,
no person shall be eligible to serve on the Committee unless he is then a
"disinterested person" as such term is used in Rule 16b-3(c)(2)(i) of the rules
of the Securities and Exchange Commission under the Exchange Act, as such rule
or its equivalent is then in effect. Appointment of Committee members shall be
effective upon acceptance of appointment. Committee members may resign at any
time by delivering written notice to the Board. Vacancies in the Committee shall
be filled by the Board.
Section 6.2 DUTIES AND POWERS OF COMMITTEE
It shall be the duty of the committee to conduct the general
administration of the Plan in accordance with its provisions. The Committee
shall have the power to interpret the Plan and the Options and to adopt such
rules for the administration, interpretation, and application of the Plan as are
consistent therewith and to interpret, amend or revoke any such rules. Any such
interpretations and rules shall be consistent with the basic purpose of the Plan
to grant Options. In its absolute discretion, the Board may at any time and from
time to time exercise any and all rights and duties of the Committee under the
Plan provided that the Board will exercise any rights and duties of the
Committee if such action would cause the Plan or any grant thereunder to fail to
comply with the exemption provided in Rule 16b-3 (or any comparable rule then in
effect) under Section 16 of the Exchange Act.
Section 6.3 MAJORITY RULE
The Committee will act by a majority of its members in office and
the Committee may act either by vote at a telephonic or other meeting or by a
memorandum or other written instrument signed by a majority of the Committee.
Section 6.4 PROFESSIONAL ASSISTANCE; GOOD FAITH ACTIONS; INDEMNIFICATION
The Committee may employ attorneys, consultants, accountants,
appraisers, brokers or other persons, and all expenses and liabilities the
Committee incurs in connection therewith or otherwise in connection with the
administration of the Plan will be borne by the Company. The Committee, the
Company and the officers and Directors of the Company will be entitled to rely
upon the advice, opinions or valuations of any such persons so employed. All
actions taken and all interpretations and determinations made by the Committee
in good faith will be final and binding upon all Optionees, the Company and all
other interested persons. No member of the Committee
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<PAGE> 13
will be personally liable for any action, determination or interpretation made
in good faith with respect to the Plan or the Options, and all members of the
Committee will be fully protected and indemnified by the Company with respect to
any such action, determination or interpretation.
ARTICLE 7
MISCELLANEOUS PROVISIONS
------------------------
Section 7.1 OPTIONS NOT TRANSFERABLE
No Option or interest or right therein will be subject to
disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means, whether such disposition by voluntary or
involuntary or by operation of law or by judgment, levy, attachment, garnishment
or any other legal or equitable proceeding (including bankruptcy), and any
attempted disposition thereof will be null and void and of no effect provided,
however, that nothing in this section 7.1 will prevent transfers to Permitted
Transferees.
Section 7.2 AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
The Board may amend or terminate the Plan, but may not (i)
without the consent of the Optionees, alter or impair any rights or obligations
under any Option theretofore granted, or (ii) make any alteration in the Plan
that would cause the Plan to fail to comply with (A) Section 16 of the Exchange
Act (or Rule 16b-3 of the rules of the Securities and Exchange Commission under
the Exchange Act), or (B) any other requirement of applicable law or regulation,
if such revision or amendment were not approved by the holders of the Common
Stock of the Company, unless and until the approval of the holders of such
Common stock is obtained.
Section 7.3 EFFECT OF PLAN UPON OTHER OPTION AND COMPENSATION PLANS
Nothing in the Plan will be construed to limit the right of the
Company or any of its Subsidiaries (i) to establish any other forms of
incentives or compensation for employees of the Company or any of its
Subsidiaries or (ii) to grant or assume options otherwise than under the Plan in
connection with any proper corporate purpose, including, but not by way of
limitation, the grant or assumption of option in connection with the acquisition
by purchase, lease, merger, consolidation or otherwise, of the business, stock
or assets of any corporation, firm or association.
Section 7.4 TITLES
Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of the Plan.
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<PAGE> 14
Section 7.5 FOREIGN EMPLOYEES
Notwithstanding anything to the contrary in Articles III, IV and
V (other than Section 4.3(d) and Section 5.1), the Committee may grant options
to eligible Employees who are not United States citizens or residents on such
terms and conditions as may, in the judgment of the committee, be necessary or
desirable to foster the purposes of the Plan. In furtherance of the purposes of
the Plan, the Committee may adopt such modifications to the terms of Options and
such procedures and guidelines, and may cause the Company to take such other
actions, as may be necessary or advisable to comply with foreign laws and
practices.
Section 7.6 CERTAIN POWERS OF THE COMMITTEE
Notwithstanding anything to the contrary, the committee may on
such terms and conditions as it may determine to be appropriate and subject to
Section 7.2, waive certain provisions of this Plan from time to time as it sees
fit, provided however that under no circumstances may Section 4.3(b) or 4.3(d)
be waived.
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<PAGE> 15
I hereby certify that the foregoing Plan was duly adopted by the Board of
Directors of R.P. Scherer Corporation on June 15, 1992.
The First Amendment to the Plan was adopted by the Board of Directors on
________, 1993.
Executed as of this ____ day of __________, 1993.
/s/ Nicole S. Williams
Nicole S. Williams
Secretary
[Corporate Seal]
I hereby certify that the foregoing Plan was duly adopted by the stockholders of
R.P. Scherer Corporation on September 11, 1992.
The First Amendment to the Plan was adopted by the stockholders of R.P. Scherer
Corporation on ________, 1993.
/s/ Nicole S. Williams
Nicole S. Williams
Secretary
[Corporate Seal]
15
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Exhibit 99(e)
R. P. SCHERER CORPORATION
1997 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN
The purpose of the Plan is to attract, retain and motivate
selected employees and directors who are in a position to have an impact on the
results of the operations of the business of the Company or one or more of its
Subsidiaries. The Company expects that it will benefit from the additional
incentive which such employees will have to increase the value of the Company's
Shares as a result of the Plan.
2. DEFINITIONS
The following capitalized terms used in the Plan have the
respective meanings set forth in this Section:
(a) Act: The Securities Exchange Act of 1934, as amended, or
any successor thereto.
(b) Award: An Option or LSAR granted pursuant to the Plan.
(c) Board: The Board of Directors of the Company.
(d) Cause: The occurrence of any of the following events:
(i) any act or acts of a Participant constituting a
felony (or its equivalent) under the laws of the United
States, any state thereof or any foreign jurisdiction;
(ii) any material breach by a Participant of any
employment agreement with the Company or any Subsidiary
or the policies of the Company or any Subsidiary or the
willful and persistent failure or refusal of a
Participant (after written notice to such Participant)
to perform his or her duties of employment or comply
with any lawful directives of the Board or the board of
directors of any Subsidiary that employ the Participant;
(iii) a course of conduct amounting to gross, willful
misconduct or dishonesty; or
(iv) any misappropriation of material property of the
Company or any Subsidiary by a Participant or any
misappropriation of a corporate or business opportunity
of the Company or any Subsidiary by a Participant.
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(e) Change in Control: The occurrence of any of the
following events;
(i) the Company merges with or into, or consolidates
with, another corporation, person or entity;
(ii) the Company sells, exchanges or otherwise disposes
of all or substantially all of the assets of the
Company;
(iii) 50% or more of the Company's then-outstanding
shares of voting stock is acquired by another
corporation, person or entity;
(iv) the Company liquidates or dissolves, or
(v) the Company recapitalizes or enters into any similar
transaction, and as a result of which the Shares either
(A) are no longer equity voting securities of the
Company or (B) are no longer listed on a national
securities exchange or authorized for quotation on an
inter-dealer quotation system of a national securities
association.
(f) Code: The Internal Revenue Code of 1986, as amended, or
any successor thereto.
(g) Committee: The Compensation Committee of the Board.
(h) Company: R. P. Scherer Corporation, a Delaware
corporation.
(i) Disability: Inability to engage in any substantial
gainful activity by reason of a medically determinable
physical or mental impairment which constitutes a
permanent and total disability, as defined in Section
22(e)(3) of the Code (or any successor section thereto).
The determination whether a Participant has suffered a
Disability shall be made by the Committee based upon
such evidence as it deems necessary and appropriate. A
Participant shall not be considered disabled unless he
or she furnishes such medical or other evidence of the
existence of the Disability as a Committee, in its sole
discretion, may require.
(j) Effective Date: The date on which the stockholders of
the Company approve the Plan.
(k) Fair Market Value: On a given date, the arithmetic mean
of the high and low prices of the Shares as reported on
such date on the Composite Tape of the principal
national securities exchange on which such Shares are
listed or admitted to trading, or, if no
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Composite Tape exists for such national securities
exchange on such date, then on the principal national
securities exchange on which such Shares are listed or
admitted to trading, or, if the Shares are not listed or
admitted on a national securities exchange, the
arithmetic mean of the per Share closing bid price and
per Share closing asked price on such date as quoted on
the National Association of Securities Dealers Automated
Quotation System (or such market in which such prices
are regularly quoted), or, if there is no market on
which the Shares are regularly quoted, the Fair Market
Value shall be the value established by the Committee in
good faith. If no sale of Shares shall have been
reported on such Composite Tape or such national
securities exchange on such date or quoted on the
National Association of Securities Dealers Automated
Quotation System on such date, then the immediately
proceeding date on which sales of the Shares have been
so reported or quoted shall be used.
(l) Good Reason: The occurrence of any of the following
events:
(i) any material reduction by the Company of a
Participant's duties responsibilities or titles;
(ii) any involuntary removal of a Participant from any
position previously held (except in connection with a
promotion or a termination for Cause, death or
disability, or the voluntary termination by the
Participant other than for Good Reason);or
(iii) such other reasons (including non-employment
related reasons) as may be approved by the Committee, in
its sole discretion, from time to time.
(m) ISO: An Option that is also an incentive stock option
granted pursuant to Section 6(d) of the Plan.
(n) LSAR: A limited stock appreciation right granted
pursuant to Section 7 of the Plan.
(o) Option: A stock option granted pursuant to Section 6 of
the Plan.
(p) Option Price: The purchase price per Share of an Option,
as determined pursuant to Section 6(a) of the Plan.
(q) Participant: An individual who is selected by the
Committee to participate in the Plan pursuant to Section
5 of the Plan.
(r) Plan: The R.P. Scherer Corporation 1997 Stock Option
Plan.
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(s) Retirement: A Participant's termination for employment
with the Company or any Subsidiary at or over the age of
55 (or at any earlier date approved by the Committee).
(t) Shares: Shares of common stock, par value $0.01 per
Share, of the Company.
(u) Subsidiary: A subsidiary corporation of the Corporation,
as defined in Section 424(f) of the Code (or any
successor section thereto).
3. SHARES SUBJECT TO THE PLAN
The total number of Shares that may be issued under the Plan is
5% of the aggregate number of Shares outstanding as of the date of the Plan is
adopted by the Board. The maximum number of Shares for which Awards may be
granted during a calendar year to any Participant shall be 100,000. The Shares
may consist, in whole or in part, of unissued Shares or treasury Shares. The
issuance of Shares of the payment of cash upon the exercise of an Award shall
reduce the total number of Shares available under the Plan, as applicable.
Shares which are subject to Awards which terminate or lapse may be granted again
under the Plan.
4. ADMINISTRATION
The Plan shall be administered by the Committee, which may
delegate its duties and powers in whole or in part to any subcommittee thereof
consisting solely of at least two individuals who are each (a) "non-employee
directors" within the meaning of Rule 16b-3 under the Act (or any successor rule
thereto) and (b) "outside directors" within the meaning of Section 162 (m) of
the Code (or any successor section thereto). The Committee shall have the
authority to select the Participants to be granted Awards under the Plan, to
determine the size and terms of an Award and to determine the time when grants
of Awards will be made. The Committee is authorized to interpret the Plan, to
establish, amend and rescind any rules and regulations relating to the Plan, and
to make any other determinations that it deems necessary or desirable for the
administration of the Plan. Any decision of the Committee shall lie within its
sole and absolute discretion and shall be final, conclusive and binding on all
parties concerned.
5. ELIGIBILITY
The Committee may, in its sole discretion, designate those
person(s) who shall be Participant(s) in the Plan. Participants shall be
selected from among the employees and directors of the Company and any of its
Subsidiaries who are in the position to have an impact on the results of the
operations of the Company or one or more of its Subsidiaries; provided that ISOs
may only be granted to employees of the Company or its Subsidiaries.
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6. TERMS AND CONDITIONS OF OPTIONS
Options granted under the Plan shall be, as determined by the
Committee, non-qualified, incentive or other stock options for federal income
tax purposes, as evidenced by the related Option agreements. The Committee may,
in its sole discretion, set forth terms in an Option agreement relating to a
Participant's termination from employment due to Retirement, Cause or Good
Reason. Options granted under the Plan shall be subject to the following terms
and conditions:
(a) Option Price. The Option Price per Share shall be determined
by the Committee, but shall not be less than 100% of the Fair Market Value of
the Shares on the date an Option is granted.
(b) Exercisability of Options. Options granted under the Plan
shall be exercisable at such time and upon such terms and conditions as may be
determined by the Committee, but in no event shall an Option be exercisable more
than ten years after the date it is granted.
(c) Method of Exercise. Except as otherwise provided in the Plan
or in an Award agreement, an Option may be exercised for all, or from time to
time any part, of the Shares for which it is then exercisable. For purposes of
this Section 6 of the Plan, the exercise date of an Option shall be the later of
the date a notice of exercise is received by the Company and, if applicable, the
date payment is received by the Company pursuant to clauses (i), (ii), or (iii)
in the following sentence. The purchase price for the Shares as to which an
Option is exercised shall be paid to the Company in full at the time of exercise
at the election of the Participant (i) in cash, (ii) in Shares having a Fair
Market Value equal to the aggregate Option Price for the Shares being purchase
and satisfying such other requirements as may be imposed by the Committee, (iii)
partly in cash and partly in such Shares, (iv) through the withholding of Shares
(which would otherwise be delivered to the Participant) with an aggregate Fair
Market Value on the exercise date equal to the aggregate Option Price or (v)
through the delivery of irrevocable instructions to a broker to deliver promptly
to the Company an amount equal to the aggregate Option price for the Shares
being purchased. No Participant shall have any rights to dividends or other
rights of a stockholder with respect to Shares subject to an Option until the
Shares have been issued to the Participant. A Participant may, if and to the
extent permitted by the Committee, elect to defer payment of an Award.
(d) ISOs. The Committee may grant Options under the Plan that are
intended to be ISOs. Such ISOs shall comply with the requirements of Section 422
of the Code (or any successor section thereto). No ISO may be granted to any
Participant who, at the time of such grant, owns more than ten percent of the
total combined voting power of all classes of stock of the Company or of any
Subsidiary, unless (i) the Option Price for such ISO is at lease 110% of the
Fair Market Value of a Share on the date the ISO is granted and (ii) the date on
which such ISO terminates is a date not later than the day
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preceding the fifth anniversary of the date on which the ISO is granted. Any
Participant who disposes of Shares acquired upon the exercise of an ISO either
(i) within two years after the date of grant of such ISO or (ii) within one year
after the transfer of such Shares to the Participant, shall notify the Company
of such disposition and the amount realized upon such disposition.
(e) Deferral. The Committee may develop procedures for a
Participant to defer receipt of Shares otherwise subject to Options granted
hereunder.
7. TERMS AND CONDITIONS OF LSARS
LSARs granted under the Plan shall be exercisable upon the
occurrence of specified contingent events, and such LSARs may be exercised by a
Participant whether or not such Participant is employed by the Company at the
time of exercise. Unless otherwise specified by the Committee, each LSAR shall
entitle a Participant to receive, upon exercise, an amount in cash equal to the
excess of (a) a price per Share determined in connection with specified
contingent events, both as specified in the LSAR grant document, over (b) the
exercise price of such LSAR (which shall be no less than the Fair Market Value
of one Share on the date of grant of such LSAR).
8. TAX WITHHOLDING
The Committee shall have the right to require payment of any
federal, state, local or foreign income or other taxes required to be withheld
with respect to the exercise of an Award. Unless the Committee specifies
otherwise, the Participant may elect to pay a portion or all of such withholding
taxes by (a) delivery in Shares or (b) having Shares withheld by the Company
from any Shares that would have otherwise been received by the Participant. The
number of Shares so delivered or withheld shall have an aggregate Fair Market
Value sufficient to satisfy the applicable withholding taxes.
9. AMENDMENTS OR TERMINATION
The Board may amend, alter or discontinue the Plan, but no
amendment, alteration or discontinuation shall be made which (a) without the
approval of the stockholders of the Company, would (except as is provided in
Section 13 of the Plan), (i) increase the total number of Share reserved for the
purposes of the Plan, (ii) change in the maximum number of Shares for which
Awards may be granted to any Participant, (iii) materially increase the benefits
accruing to Participants under the Plan or (iv) materially modify the
eligibility requirements for participation in the Plan, or (b) without the
consent of a Participant, would impair any of the rights or obligations under
any Award theretofore granted to such Participant under the Plan; provided,
however, that the Committee may amend the Plan in such manner as it deems
necessary to permit the granting of Awards meeting the requirements of the Code
or other applicable (United States or foreign) laws.
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10. NO RIGHT TO EMPLOYMENT
The granting of an Award under the Plan shall impose no
obligation on the Company or any Subsidiary to continue the employment of a
Participant or to make any additional Awards to the Participant and shall not
lessen or affect the Company's or Subsidiary's right to terminate the employment
of such Participant.
11. SUCCESSORS AND ASSIGNS
The Plan shall be binding on all successors and assigns of the
Company any a Participant, including, without limitation, the estate of such
Participant and the executor, administrator or trustee of such estate, or any
receiver or trustee in bankruptcy or representative of the Participant's
creditors.
12. NONTRANSFERABILITY OF AWARDS
Unless otherwise so provided by the Committee, an Award shall not
be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect.
13. ADJUSTMENTS UPON CERTAIN EVENTS
Notwithstanding any provision in the Plan to the contrary, the
following provisions shall apply to all Awards granted under the Plan:
(a) Generally. In the event of any change in the outstanding
Shares by reason of any Share dividend or split, reorganization,
recapitalization, merger, consolidation, spin-off, combination or exchange of
Shares or other corporate exchange, or any distribution to stockholders of
Shares other than regular cash dividends, the Committee in its sole discretion
and without liability to any person may make such substitution or adjustment, if
any, as it deems to be equitable, as to (i) the number or kind of Shares or
other securities issued or reserved for issuance pursuant to the Plan or
pursuant to outstanding Awards, (ii) the Option Price and/or (iii) any other
affected terms of such Awards.
(b) Change in Control. Except as otherwise provided in an Award
agreement, in the event of a Change in Control, the Committee in its sole
discretion and without liability to any person may take such actions, if any, as
it deems necessary or desirable with respect to any Award (including, without
limitation, (i) the acceleration of an Award, (ii) the payment of a cash amount
in exchange for the cancellation of an Award and/or (iii) the requiring of the
issuance of substitute Awards that will
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substantially preserve the value, rights and benefits of any affected Awards
previously granted hereunder) as of the date of the consummation of the Change
in Control.
14. CHOICE OF LAW
The Plan shall be governed by and construed in accordance with
the laws of the State of Michigan, without regard to the choice of law
provisions thereof.
15. TERM OF THE PLAN
The Plan shall be effective as of the Effective Date. No Award
may be granted under the Plan after the tenth anniversary of the date of the
Plan is adopted by the Board, but Awards theretofore granted may extend beyond
that date.
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Exhibit 99(f)
STOCK OPTION AGREEMENT
----------------------
STOCK OPTION AGREEMENT (this "Agreement"), between R.P. Scherer
Corporation, a Delaware corporation (the "Company"), and ______________ (the
"Optionee").
WHEREAS, the Company believes that it is in the best interests of
the Company to encourage stock ownership by those members of its Board of
Directors (the "Board of Directors"), such as the Optionee, who are not
officers, employees or employees of affiliates of the Company, and in
consideration for the continuing service of the Optionee as a member of the
Board of Directors, the Company and the Optionee agree as follows:
1. OPTION TO PURCHASE SHARES.
1.1 GRANT OF OPTION. Subject to the terms and conditions of this
Agreement, the Company hereby irrevocably grants to the Optionee an option (such
option and all options issued in exchange or substitution for all or part of
this option are collectively referred to herein as the "Option") to purchase
from the Company up to ______ shares (the "Shares") of the Company's Common
stock, $0.01 par value (the "Common Stock"), for a price of $_____ per Share
(the "Exercise Price"). The Option is intended to be a nonqualified option, and
is not subject to the provisions of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"). The date of grant of this Option is
_______________.
1.2 EXERCISE OF OPTION.
(a) The Option shall be exercisable at any time on or after
________________, in whole or in part, until the Option Termination Date (as
hereinafter defined); PROVIDED, HOWEVER, that this Option may not be exercised
at any time to purchase fewer than 100 Shares.
(b) If the Optionee wishes to exercise the Option in whole or in
part, the Optionee shall send a written notice in the form of Exhibit A hereto
(the "Notice of Exercise") to the Company, stating that the Option or a portion
thereof is thereby exercised.
(c) Subject to Section 6.1, the Company shall deliver to the
Optionee a certificate or certificates evidencing the Shares to be purchased
upon exercise of the Option, or any portion thereof, as soon as practicable
after receipt of the Notice of Exercise, the Purchase price (as hereinafter
defined) and Withholding Taxes (as hereinafter defined).
(d) The Option shall terminate on _______________ (the "Option
Termination Date") unless it terminates earlier as provided herein.
<PAGE> 2
1.3 PAYMENTS.
(a) PURCHASE PRICE. Any Notice of Exercise shall be accompanied
by payment of an amount equal to the Exercise Price multiplied by the number of
Shares being purchased (the "Purchase Price"), the payment of which shall take
one of the following forms: (i) full payment in cash or by check payable to the
order of the Company; (ii) through the delivery of shares issuable upon exercise
of the Option having an aggregate "Fair Market Value" (as defined below) on the
date of exercise equal to the Purchase Price; or (iii) a combination of the
consideration provided in the foregoing clauses (i) and (ii). "Fair Market
Value" of a share of Common Stock as of a given date shall be: (A) the closing
price of a share of Common Stock on the principal exchange on which shares of
Common Stock are then trading, if any, on the previous day, or, if shares were
not traded on such previous day, then on the next preceding trading day during
which a sale occurred; (B) if the Common Stock is not traded on an exchange but
is quoted on National Association of Securities Dealers, Inc. ("NASD") Automated
Quotation System ("NASDAQ") or a successor quotation system, (x) the last sale
price (if the Common Stock is then listed as a National Market Issue under the
NASD National Market System) or (y) the mean between the closing representative
bid and asked prices (in all other cases) for the Common Stock on the previous
day as reported by NASDAQ or such successor quotation system; (C) if the Common
Stock is not publicly traded on an exchange and not quoted on NASDAQ or a
successor quotation system, the mean between the closing bid and asked prices
for the Common Stock, on the previous day, as determined in good faith by the
Board of Directors; or (D) if the Common Stock is not publicly traded, the fair
market value established by the Board of Directors acting in good faith.
(b) WITHHOLDING TAXES. Any Notice of Exercise shall also be
accompanied by full payment to the Company of all amounts which, under federal,
sate or local tax law, it is required to withhold upon exercise of the Option
("Withholding Taxes"), the payment of which shall take one of the following
forms: (i) full payment in cash or by check payable to the order of the Company
or (ii) through the delivery of Shares issuable upon exercise f the Option
having an aggregate Fair Market Value on the date of exercise equal to the
Withholding Taxes; or (iii) a combination of the consideration provided in the
foregoing clauses (i) and (ii).
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Optionee that:
(a) DUE AUTHORIZATION. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
(including the exercise of the Option) have been duly and validly authorized by
the Board of Directors, and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms.
2
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(b) SHARES. All Shares, upon issuance pursuant hereto, shall be
duly authorized, validly issued, fully paid and nonassessable, with no personal
liability attached to the ownership thereof, shall be delivered free and clear
of all claims, liens, encumbrances, security interests and charges of any nature
whatsoever and shall not be subject to any preemptive right of any stockholder
of the Company.
(c) GOOD STANDING. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to execute and deliver this
Agreement.
3. TERMINATION OF SERVICE OR DEATH OR DISABILITY.
3.1 TERMINATION OF OPTION. Except to the extent provided in
Section 3.3, the Option, if not exercisable at the time the Optionee ceases to
be a member of the Board of Directors for any reason, shall terminate at such
time.
3.2 EXERCISE OF OPTION. If the Optionee ceases to be a member of
the Board of Directors for any reason other than death or "permanent disability"
(as such term is defined in Section 22(e)(3) of the Code), the Option, if
exercisable at that time, must be exercised (to the extent not previously
exercised) within the one hundred and twenty (120) day period following
termination of such directorship and prior to the Option Termination Date.
Following the end of such one hundred and twenty (120) day period, the Option
shall terminate.
3.3 ACCELERATION UPON DEATH OR PERMANENT DISABILITY. If the
Optionee ceases to be a member of the Board of Directors by reason of the death
or permanent disability of the Optionee (each an "Acceleration Event"), the
Option may be exercised in full (to the extent not previously exercised) within
180 days of the Acceleration Event and prior to the Option Termination Date, (i)
after the Optionee's death by the administrators or executors of the Optionee's
estate or by the person or persons to whom the Optionee's rights under the
Option shall have passed by will or by the applicable laws of descent or
distribution; or (ii) after the Optionee's permanent disability by such Optionee
or by the Optionee's guardian or legal representative.
4. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event that
the outstanding shares of Common Stock are hereafter changed into or exchanged
for a different number or kind of shares of capital stock or other securities of
the Company, or of another corporation, by reason of reorganization, merger,
consolidation, recapitalization, reclassification, stock split-up, stock
dividend, combination of shares or otherwise, then in relation to the Common
Stock that is affected by one or more of the above events, the numbers, rights
and privileges of the shares of Common Stock then included in the Option shall
be increased, decreased or changed in like manner as if they had been issued and
outstanding, fully paid and nonassessable at the time of such occurrence;
provided, however, the Company shall not be required to issue a fractional share
of Common Stock and any adjustment made pursuant to this Section 4 shall be
limited by deleting any fractional share.
3
<PAGE> 4
5. NONASSIGNABILITY. No right granted to the Optionee under this
Agreement shall be assignable or transferable, except by will or by the
applicable laws of descent and distribution. Any person or persons to whom the
Optionee's rights under the Option have passed in accordance with the preceding
sentence shall be subject to all terms and conditions of this Agreement. During
the life of the Optionee, all rights granted to the Optionee under this
Agreement shall be exercisable only by the Optionee or by the Optionee's
guardian or legal representative.
6. MISCELLANEOUS.
6.1 RESTRICTIONS. If a Registration Statement under the
Securities Act of 1933, as amended, is not in effect with respect to the Shares
issuable upon the exercise of the Option, or any part thereof, then the
certificates representing such Shares shall bear the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") and,
accordingly, may not be offered, sold or otherwise pledged, hypothecated
or transferred unless (A) pursuant to an effective registration
statement under the Act or (B) an applicable exemption from the
registration requirements of the Act is available."
6.2 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, written and oral,
between the parties with respect to the subject matter hereof.
6.3 AMENDMENTS. This Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written
agreement executed by the parties hereto.
6.4 NOTICES. All Notices to Exercise or other notices, requests,
claims, demands and other communications hereunder shall be in writing and shall
be given (and shall be deemed to have been duly received if so given) by hand
delivery, telegram, telex or telecopy, or by mail (registered or certified mail,
postage prepaid, return receipt requested) or by any courier service, such as
Federal Express, providing proof of delivery. All communications hereunder shall
be delivered to the respective parties at the following addresses:
If to the Company: R.P. Scherer Corporation
2075 W. Big Beaver Road
Troy, Michigan 48007
Attention: Secretary
If to the Optionee: At the address give below the Optionee's
signature on the signature page hereof,
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<PAGE> 5
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
6.5 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
6.6 NO RIGHTS AS A STOCKHOLDER. Neither the Optionee nor any
other person exercising this Option pursuant to Section 5 shall have any of the
rights of a stockholder of the Company with respect to the Shares subject to the
Option until the issuance of a stock certificate to him or her for such Shares.
Except as provided in Section 4, no adjustment shall be made for dividends,
distributions or other rights (whether ordinary or extraordinary, and whether in
cash, securities or other property) for which the record date is prior to the
date such stock certificate is issued.
6.7 DEFINITION. The term "Shares," as used herein, shall also
mean, to the extent applicable, any other securities or properties receivable
upon exercise of the Option.
6.8 STOCKHOLDER APPROVAL. Notwithstanding anything in this
Agreement to the contrary, this Option shall not be exercisable until such time
as the stockholders of the Company shall have ratified and approved this
Agreement in accordance with the Company's Restated Certificate of
Incorporation, as amended, the Company's By-Laws and the Securities Exchange Act
of 1934, as amended, and the rules and regulation promulgated hereunder and the
rules and regulations of any national securities exchange on which the Common
Stock is listed or if the Common stock is not listed on an exchange but is
quoted on NASDAQ, the rules and regulations of NASDAQ.
IN WITNESS WHEREOF, the Company and the Optionee have caused this
Agreement to be duly executed as of the day and year first above written.
R.P. SCHERER CORPORATION
By: ______________________________
Name: ____________________
Title: ____________________
[OPTIONEE]
__________________________________
Address of the Optionee:
___________________________
___________________________
5
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Schedule to Exhibit 99(f)
Director Stock Option Agreements
<TABLE>
<CAPTION>
DIRECTOR NUMBER OF CARDINAL EXERCISABLE EXERCISE TERMINATION
EXCHANGE OPTIONS AS OF PRICE DATE
<S> <C> <C> <C> <C>
John Avery 11,400 January 1, 1998 $47.77 December 5, 1998
Frederick Frank 11,400 January 1, 1998 $47.77 December 5, 1998
Lori Koffman 11,400 January 1, 1998 $47.77 December 5, 1998
James Stern 11,400 January 1, 1998 $47.77 December 5, 1998
Kenneth Way 11,400 January 1, 2000 $52.89 January 1, 2007
</TABLE>
