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EXHIBIT 99.2
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SCHEIN PHARMACEUTICAL, INC.
1999 STOCK OPTION PLAN
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TABLE OF CONTENTS
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PAGE
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1. Purposes of the Plan..................................................1
2. Definitions...........................................................1
3. Effective Date/Expiration of Plan.....................................3
4. Administration........................................................3
5. Shares; Adjustment Upon Certain Events................................5
6. Awards and Terms of Options...........................................8
7. Effect of Termination of Employment..................................11
8. Nontransferability of Options........................................13
9. Rights as a Stockholder..............................................13
10. Determinations.......................................................13
11. Termination, Amendment and Modification..............................13
12. Non-Exclusivity......................................................14
13. Use of Proceeds......................................................14
14. General Provisions...................................................14
15. Issuance of Stock Certificates; Legends; Payment of Expenses.........16
16. Listing of Shares and Related Matters................................16
17. Withholding Taxes....................................................17
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SCHEIN PHARMACEUTICAL, INC.
1999 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN.
The purposes of this Schein Pharmaceutical Inc. 1999 Stock Option Plan
(the "Plan") are to enable Schein Pharmaceutical, Inc. ("SPINC") and its
Affiliates (as defined herein) to attract, retain and motivate the employees who
are important to the success and growth of the business of SPINC and to create a
long-term mutuality of interest between those employees and the stockholders of
SPINC by granting those employees options (which may be either Incentive Stock
Options (as defined herein) or Non-Qualified Stock Options (as defined herein))
to purchase the Common Stock (as defined herein) of SPINC.
2. DEFINITIONS.
(a) "ACT" means the Securities Exchange Act of 1934, as amended. Any
reference to any section of the Act shall also be a reference to any successor
provision.
(b) "AFFILIATE" means each of the following: (1) any Subsidiary; (ii)
any Parent; (iii) any corporation, trade or business (including, without
Limitation, a partnership or limited liability company) which is directly or
indirectly controlled 50% or more (whether by ownership of stock, assets or an
equivalent ownership interest or voting interest) by SPINC or one of its
Affiliates, (iv) any corporation, trade or business (including, without
Limitation, a partnership or Limited Liability company) which directly or
indirectly controls 50% or more (whether by ownership of stock, assets or an
equivalent ownership interest or voting interest) of SPINC or one of its
Affiliates; and (v) any other entity in which SPINC or any of its Affiliates has
a material equity interest and which is designated as an "Affiliate" by
resolution of the Committee.
(c) "BOARD" means the Board of Directors of SPINC.
(d) "CODE" means the Internal Revenue Code of 1986, as amended. Any
reference to any section of the Code shall also be a reference to any successor
provision.
(e) "COMMITTEE" means such committee, if any, appointed by the Board to
administer the Plan, consisting of two (2) or more non-employee directors, each
of whom is intended to be a "non-employee director" as defined in Rule 16b-3 and
an "outside director" as defined under Section 162(m) of the Code, If the Board
does not appoint a committee for this purpose, "Committee" means the Board. If
for any reason the appointed Committee does not meet the requirements of Rule
16b-3 or Section 162(m) of the Code, such noncompliance with the requirements of
Rule 16b-3 and Section 162(m) of the Code shall not affect the validity of
Option grants, interpretations or other actions of the Committee.
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(f) "COMMON STOCK" means the common stock of SPINC, par value $.01 per
share, any Common Stock into which the Common Stock may be converted and any
Common Stock resulting from any reclassification of the Common Stock.
(g) "DISABILITY" means a permanent and total disability, as determined
by the Committee in its sole discretion. A Disability shall be deemed to occur
at the time of the determination by the Committee of the Disability.
(h) "FAIR MARKET VALUE" means, for purposes of this Plan, unless
otherwise required by any applicable provision of the Code or any regulations
thereunder, the value of a Share (as defined herein) on a particular date,
determined as follows:
(i) If the Common Stock is fisted or admitted to trading on such
date on a national securities exchange or quoted through the Nasdaq Stock
Market, Inc. ("NASDAQ"), the closing sale price of a Share as reported on the
relevant composite transaction tape, if applicable, or on the principal such
exchange (determined by trading value in the Common Stock) or, if not traded on
any such national securities exchange or the NASDAQ, as quoted on an automated
quotation system sponsored by the National Association of Securities Dealers,
Inc., on such date, or in the absence of reported sales on such date, the last
reported sales price prior to such date; or
(ii) If the Common Stock is not listed or quoted as described in
the preceding clause, but bid and asked prices are quoted through NASDAQ, the
mean between the highest reported bid and lowest reported asked prices as quoted
through NASDAQ on such date; or
(iii) If the Common Stock is not Listed or quoted on a national
securities exchange or through NASDAQ or, if pursuant to (i) and (ii) above the
Fair Market Value is to be determined based upon the mean of the highest
reported bid and lowest reported asked prices and the Committee determines that
such mean does not properly reflect the Fair Market Value, by such other method
as the Committee determines to be reasonable and consistent with applicable law;
or
(iv) If the Common Stock is not publicly traded such amount as is
set by the Committee in good faith.
(i) "INCENTIVE STOCK OPTION" means any Option which is intended to
qualify as an "incentive stock option," as defined in Section 422 of the Code.
(j) "NON-QUALIFIED STOCK OPTION" means any option awarded under this
Plan that is not an Incentive Stock Option.
(k) "OPTION" means the right to purchase one Share at a prescribed
Purchase Price (as defined in Section 6(b)) on the terms specified in the Plan.
An Option may be an Incentive Stock Option or a Non-Qualified Stock Option.
(l) "PARTICIPANT" means an employee of SPINC or an Affiliate who is
granted an Option under the Plan.
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(m) "PARENT" shall mean any parent corporation of SPINC within the
meaning of Section 424(e) of the Code.
(n) "RULE 16B-3" means Rule l6b-3 under Section 16(b) of the Act as then
in effect or any successor provisions.
(o) "SECURITIES ACT" means the Securities Act of 1933, as amended. Any
reference to any section of the Securities Act shall also be a reference to any
successor provision.
(p) "SHARE" means a share of Common Stock.
(q) "SUBSIDIARY" means any subsidiary corporation of SPINC within the
meaning of Section 424(f) of the Code. An entity shall be deemed a Subsidiary of
SPINC only for such periods as the requisite ownership relationship is
maintained.
(r) "SUBSTANTIAL STOCKHOLDER" means any Participant who at the time of
grant owns directly (or is deemed to own by reason of the attribution rules set
forth in Section 424(d) of the Code) Shares possessing more than 10% of the
total combined voting power of all classes of stock of SPINC or a Parent or
Subsidiary as determined under Section 422 of the Code.
(s) "TERMINATION OF EMPLOYMENT" with respect to an individual means that
individual is no longer an employee of SPINC or any of its Affiliates. In the
event an entity shall cease to be an Affiliate of SPINC, there shall be deemed a
Termination of Employment of any individual who is not otherwise an employee of
SPINC or another Affiliate at the time the entity ceases to be an Affiliate. A
Termination of Employment shall not include a leave of absence approved for
purposes of the Plan by the Committee.
(t) "TRANSFER" or "TRANSFERRED" or "TRANSFERABLE" means anticipate,
alienate, attach, sell, assign, pledge, encumber, charge, hypothecate or
otherwise transfer and "Transferred" has a correlative meaning.
3. EFFECTIVE DATE/EXPIRATION OF PLAN.
The Plan shall be effective upon its adoption by the Board, subject to
stockholder approval of this Plan by the stockholders of SPINC in accordance
with the requirements of the laws of the State of Delaware and any applicable
exchange requirements. Grants of Options under the Plan may be made after
adoption of the Plan by the Board, subject to stockholder approval to the extent
required by law, provided that, in the absence of such approval, such Options
shall be null and void. No Option shall be granted under the Plan on or after
the tenth anniversary of the Effective Date (the "Termination Date"), but
Options granted prior to the Termination Date may be exercised after the
Termination Date.
4. ADMINISTRATION.
(a) DUTIES OF THE COMMITTEE. The Plan shall be administered by the
Committee. The Committee shall have full authority to:
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(i) interpret the Plan and, to decide any questions and settle
all controversies and disputes that may arise in connection with the Plan,
(ii) to establish, amend and rescind rules for carrying out the
Plan;
(iii) to administer the Plan, subject to its provisions;
(iv) to select the employees to whom Options may from time to
time be granted hereunder;
(v) to determine the terms, Purchase Price (as defined in Section
6(b)), any restriction or limitation, any vesting schedule or acceleration
thereof, or any forfeiture restrictions or waiver thereof and the form of
exercise payment for each Option granted under the Plan, including, without
limitation, whether and under what circumstances an Option may be settled in
cash and/or Common Stock under Section 6(f) and whether, to what extent and
under what circumstances to provide loans (which shall be on a recourse basis
and shall bear a reasonable rate of interest) to employees in order to exercise
Options under the Plan;
(vi) to determine which Options granted under the Plan shall be
Incentive Stock Options;
(vii) to prescribe the form or forms of instruments evidencing
Options and any other instruments required under the Plan (which need not be
uniform) and to change such forms from time to time;
(viii) and to make all other determinations; and
(ix) to take all such steps in connection with the Plan and the
Options as the Committee, in its sole discretion, deems necessary or desirable.
The Committee shall not be bound to any standards of uniformity or similarity of
action, interpretation or conduct in the discharge of its duties hereunder,
regardless of the apparent similarity of the matters coming before it. Any
determination, interpretation or other action made or taken by SPINC, the Board
or the Committee arising out of or in connection with the Plan shall be final,
conclusive and binding on all parties. Other than with respect to an Option
which was granted at a below-market Purchase Price and not intended to satisfy
Section 162(m) of the Code, the Committee may correct any defect, supply any
omission or reconcile any inconsistency in this Plan or in any agreement
relating thereto in the manner and to the extent it shall deem necessary to
carry this Plan into effect, but only to the extent any such action would be
permitted under the applicable provisions of Rule 16b-3 (if any) and the
applicable provisions of Section 162(m) of the Code (if any). If and to the
extent applicable, this Plan is intended to comply with Section 162(m) of the
Code and the applicable requirements of Rule l6b-3 and shall be limited,
construed and interpreted in a manner so as to comply therewith. The Committee
may adopt special guidelines and provisions for persons who are residing in, or
subject to, the taxes of, countries other than the United States to comply with
applicable tax and securities laws.
(b) ADVISORS. The Committee may designate the Secretary of SPINC, other
employees of SPINC or competent professional advisors to assist the Committee in
the
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administration of the Plan, and may grant authority to such persons to execute
Option Agreements (as defined herein) or other documents on behalf of the
Committee. The Committee may employ such legal counsel, consultants and agents
as it may deem desirable for the administration of the Plan, and may rely upon
any advice received from any such counsel or consultant and any computation
received from any such consultant or agent and shall not be liable with respect
to any action taken or omitted by it in good faith pursuant to the advice of
counsel. Expenses incurred by the Committee in the engagement of such counsel,
consultant or agent shall be paid by SPINC.
(c) INDEMNIFICATION. No officer or former officer of SPINC, member or
former member of the Board or the Committee, or person designated pursuant to
paragraph (b) shall be liable for any action or determination made in good faith
with respect to the Plan or any Option granted under it. To the maximum extent
permitted by applicable law or the Certificate of Incorporation or By-Laws of
SPINC and to the extent not covered by insurance, each officer or former officer
and member or former member of the Committee or of the Board shall be
indemnified and held harmless by SPINC against any cost or expense (including
reasonable fees of counsel reasonably acceptable to SPINC) or liability
(including any sum paid in settlement of a claim with the approval of SPINC),
and advanced amounts necessary to pay the foregoing at the earliest time and to
the fullest extent permitted, arising out of any act or omission to act in
connection with the Plan, except to the extent arising out of such officer's,
former officer's, member's or former member's own fraud or bad faith. Such
indemnification shall be in addition to any rights of indemnification the
officers, former officers, directors or members or former officers, directors or
members may have under applicable law or under the Certificate of Incorporation
or By-Laws of SPINC or any Affiliate. Notwithstanding anything else herein, this
indemnification will not apply to the actions or determination made by an
individual with regard to Options granted to him or her under this Plan.
(d) MEETINGS OF THE COMMITTEE. The Committee shall select one of its
members as a Chairman and shall adopt such rules and regulations, subject to the
By-Laws of SPINC, as it shall deem appropriate concerning the holding of its
meetings and the transaction of its business. Any member of the Committee may be
removed at any time either with or without cause by resolution adopted by the
Board, and any vacancy on the Committee may at any time be filled by resolution
adopted by the Board. A majority of the Committee members shall constitute a
quorum. All determinations by the Committee shall be made by the affirmative
vote of a majority of its members. Any such determination may be made at a
meeting duly called and held at which a majority of the members of the Committee
are in attendance in person or through telephonic communication. Any
determination set forth in writing and signed by all the members of the
Committee shall be as fully effective as if ii: had been made by a majority vote
of the members at a meeting duly called and held.
5. SHARES; ADJUSTMENT UPON CERTAIN EVENTS.
(a) SHARES TO BE DELIVERED, FRACTIONAL SHARES. Shares to be issued under
the Plan shall be made available, at the discretion of the Board, either from
authorized but unissued Shares or from issued Shares reacquired by SPINC and
held in treasury. No fractional Shares be issued or transferred upon the
exercise of any Option. In lieu thereof, SPINC shall pay a cash
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adjustment equal to the same fraction of the Fair Market Value of one Share on
the date of exercise.
(b) NUMBER OF SHARES.
(i) AGGREGATE SHARE LIMITATION. The maximum aggregate number of
Shares that may be issued under the Plan shall be 3,250,000 (as adjusted to
reflect any increase or decrease pursuant to Section 5(c)). If Options are for
any reason canceled, or expire or terminate unexercised, the Shares covered by
such Options shall again be available for the grant of Options, subject to the
foregoing Limit. If any Option granted under this Plan expires, terminates or is
canceled for any reason without having been exercised in full or SPINC
repurchases any Option pursuant to Section 6(i), the number of Shares and/or the
number of Shares underlying any unexercised Option shall again be available for
the purposes of awards under the Plan, in determining the number of Shares
available for Options, other than awards of Incentive Stock Options, if Shares
have been delivered or exchanged by a Participant as full or partial payment to
SPINC for the Purchase Price or for withholding taxes in connection with the
exercise of an Option, or the number of shares of Common Stock otherwise
deliverable has been reduced for full, or partial payment for the Purchase Price
or for withholding taxes, the number of Shares delivered, exchanged or reduced
shall again be available for purposes of awards under this Plan.
(ii) INDIVIDUAL PARTICIPANT LIMITATIONS. The maximum number of
Shares subject to any option which may be granted under this Plan to a
Participant shall not exceed 750,000 (as adjusted to reflect any increase or
decrease pursuant to Section 5(c)) during each fiscal year of SPINC. To the
extent that Shares for which Options are permitted to be granted to a
Participant during a fiscal year are not covered by a grant of an Option to an
employee issued in such fiscal year, such Shares shall automatically increase
the number of Shares available for grant of Options to such employee in the
subsequent fiscal year during the term of the Plan.
(c) ADJUSTMENTS; RECAPITALIZATION, ETC. The existence of the Plan and
the Options granted hereunder shall not affect in any way the right or power of
the Board or the stockholders of SPINC to make or authorize any adjustment,
recapitalization, reorganization or other change in SPINC's capital structure or
its business, any merger or consolidation of SPINC, any issue of bonds,
debentures, preferred or prior preference stocks ahead of or affecting Common
Stock, the dissolution or liquidation of SPINC or any of its Subsidiaries, any
sale or transfer of all or part of its assets or business or any other corporate
act or proceeding. If and whenever SPINC takes any such action, however, the
following provisions, to the extent applicable, shall govern:
(i) If and whenever SPINC shall effect a stock split, stock
dividend, subdivision, recapitalization or combination of Shares or other
changes in SPINC's capital stock, (x) the Purchase Price per Share and the
number and class of Shares and/or other securities with respect to which
outstanding Options thereafter may be exercised, and (y) the total number and
class of Shares and/or other securities that may be issued under this Plan shall
be proportionately adjusted by the Committee. The Committee may also make such
other adjustments as it deems necessary to take into consideration any other
event (including, without limitation, accounting changes), if the Committee
determines that such adjustment is appropriate to avoid distortion in
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the operation of the Plan, to prevent substantial dilution or enlargement of the
rights granted to, or available for, Participants under this Plan.
(ii) Subject to Section 5(c)(iii), if SPINC merges or
consolidates with one or more corporations, then from and after the effective
date of such merger or consolidation, upon exercise of Options theretofore
granted, the Participant shall be entitled to purchase under such Options, in
lieu of the number of Shares as to which such Options shall then be exercisable
but on the same terms and conditions of exercise set forth in such options, the
number and class of Shares and/or other securities or property (including cash)
to which the Participant would have been entitled pursuant to the terms of the
agreement of merger or consolidation, immediately prior to such merger or
consolidation, the Participant had been the holder of record of the total number
of Shares receivable upon exercise of such Options (whether or not then
exercisable).
(iii) In the event of a merger or consolidation in which SPINC is
not the surviving entity or in the event of any transaction that results in the
acquisition of all or substantially all of SPINC's outstanding Common Stock by a
single person or entity or by a group of persons and/or entities acting in
concert, or in the event of the sale or transfer of all or substantially all of
SPINC's assets (the foregoing being referred to as "Acquisition Events"), then
the Committee may in its sole discretion terminate all outstanding Options
effective as of the consummation of the Acquisition Event by delivering notice
of termination to each Participant at least 20 days prior to the date of
consummation of the Acquisition Event; provided that, during the period from the
date on which such notice of termination is delivered to the consummation of the
Acquisition Event, each Participant shall have the right to exercise in full all
the Options that are then outstanding (without regard to limitations on exercise
otherwise contained in the Option Agreement), but contingent on occurrence of
the Acquisition Event, and provided that, if the Acquisition Event does not take
place within a specified period after giving such notice for any reason
whatsoever, the notice and exercise shall be null and void. If an Acquisition
Event occurs and the Committee does not terminate the outstanding Options
pursuant to the preceding sentence, then the provisions of Section 5(c)(ii)
shall apply.
(iv) Subject to Section 5(b), the Committee may grant Options
under the Plan in substitution for options held by employees of another
corporation who concurrently become employees of SPINC as the result of a merger
or consolidation of the employing entity with SPINC or an Affiliate, or as the
result of the acquisition by SPINC of property or stock of the employing
corporation. SPINC may direct that substitute awards be granted on such terms
and conditions as the Committee considers appropriate in the circumstances.
(v) If, as a result of any adjustment made pursuant to the
preceding paragraphs of this Section 5, any Participant shall become entitled
upon exercise of an Option to receive any securities other than Common Stock,
then the number and class of securities so receivable thereafter shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Stock set
forth in this Section 5, as determined by the Committee in its discretion.
(vi) Except as herein before expressly provided, the issuance by
SPINC of shares of stock of any class, or securities convertible into shares of
stock of any class, for cash, property, labor or services, upon direct sale,
upon the exercise of rights or warrants to subscribe
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therefor or upon conversion of shares or other securities, and in any case
whether or not for fair value, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number and class of shares and/or
other securities or property subject to Options theretofore granted or the
Purchase Price.
6. AWARDS AND TERMS OF OPTIONS.
(a) GRANT. The Committee may grant Options, including Options intended
to be Incentive Stock Options, to employees of SPINC or an Affiliate. Each
Option shall be evidenced by an Option agreement (the "Option Agreement") in
such form as the Committee shall approve from time to time. To the extent that
any Option does not qualify as an Incentive Stock Option (whether because of its
provisions or the time or manner of its exercise or otherwise), such Option or
the portion thereof which does not qualify shall constitute a separate
Non-Qualified Stock Option. Notwithstanding any other provision of this Plan to
the contrary or any provision in an agreement evidencing the grant of an Option
to the contrary, any Option granted to an employee of an Affiliate (other than
an Affiliate which is a Parent or a Subsidiary) shall be a Non-Qualified Stock
Option.
(b) PURCHASE PRICE. The purchase price per Share (the "Purchase Price")
deliverable upon the exercise of an Option shall be determined by the Committee,
subject to the following: (i) the Purchase Price shall not be less than the par
value of a Share and (ii) in the case of Incentive Stock Options, the Purchase
Price shall not be less than 100% (110% for an Incentive Stock Option granted to
a Substantial Stockholder) of the Fair Market Value per Share on the date the
Incentive Stock Option is granted. Notwithstanding the foregoing, the Purchase
Price of any Option that is intended to satisfy Section 162(m) of the Code shall
not be less than 100% of the Fair Market Value per Share on the date the Option
is granted.
(c) EXERCISABILITY. At the time of grant, the Committee shall specify
when and on what terms the Options granted shall be exercisable. In the case of
Options not immediately exercisable in full, the Committee may at any time
accelerate the time at which all or any part of the options may be exercised and
may waive any other conditions to exercise, subject to the terms of the Option
Agreement and the Plan. No Option shall be exercisable after the expiration of
ten years from the date of grant (five years, in the case of an Incentive Stock
option granted to a Substantial Stockholder). Each Option shall be subject to
earlier termination as provided in Section 7 below.
(d) SPECIAL RULE FOR INCENTIVE OPTIONS. If required by Section 422 of
the Code, to the extent the aggregate Fair Market Value of the Shares with
respect to which Incentive Stock Options are exercisable for the first time by
the Participant during any calendar year (under all plans of his or her employer
corporation and its parent and subsidiary corporations) exceeds $100,000, such
Options shall not be treated as Incentive Stock Options. Nothing in this special
rule shall be construed as limiting the exercisability of any Option, unless the
Committee expressly provides for such a limitation at time of grant. Should the
foregoing provision not be necessary in order for the Options to qualify is
Incentive Stock Options, or should any additional provisions be required, the
Committee may amend the Plan accordingly, without the necessity of obtaining the
approval of the stockholders of SPINC.
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(e) ACCELERATION OF EXERCISABILITY UPON CHANGE OF CONTROL. Unless
otherwise provided in an Option Agreement, Options granted and not previously
exercisable shall become fully exercisable immediately upon a Change of Control
(as defined herein). For this purpose, a "Change of Control" shall be deemed to
have occurred upon:
(i) an acquisition by any individual, entity or group (within the
meaning of Section 13d-3 or 14d-1 of the Act) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Act) of more
than 50% of the combined voting power of the then outstanding voting securities
of SPINC entitled to vote generally in the election of directors to the Board
(the "Outstanding SPINC Voting Securities"); excluding, however, the following:
(x) any acquisition by SPINC, (y) any acquisition by an employee benefit plan
(or related trust) sponsored or maintained by SPINC or (z) any acquisition by
any corporation pursuant to a reorganization, merger, consolidation or similar
corporate transaction (in each case, a "Corporate Transaction"), if, pursuant to
such Corporate Transaction, the conditions described in clauses (A), (B) and (C)
of paragraph (iii) of this Section 6(e) are satisfied; or
(ii) a change in the composition of the Board such that the
individuals who, as of the Effective Date, constitute the Board (the Board as of
the Effective Date shall be hereinafter referred to as the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board; provided
that, for purposes of this Section 6(e)(ii), any individual who becomes a member
of the Board subsequent to the Effective Date and whose election, or nomination
for election by SPINC's stockholders, was approved by a majority of the members
of the Board who also are members of the Incumbent Board (or so deemed to be
pursuant to this proviso) shall be deemed a member of the Incumbent Board; but,
provided further, that any such individual whose initial assumption of office is
in connection with a Change of Control described in (i), (iii) or (iv) of this
Section 6(e) of whose initial assumption of office occurs as a result of either
an actual or threatened election contest (as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board shall not be so deemed a member of the Incumbent Board: or
(iii) the approval by the stockholders of SPINC of a Corporate
Transaction or, if consummation of such Corporate Transaction is subject, at the
time of such approval by stockholders, to the consent of any government or
governmental agency, the obtaining of such consent (either explicitly or
implicitly by consummation); excluding, however, such a Corporate Transaction
pursuant to which (A) the beneficial owners (or beneficiaries of the beneficial
owners) of the outstanding Shares and Outstanding SPINC Voting Securities
immediately prior to such Corporate Transaction will beneficially own, directly
or indirectly, more than 60% of, respectively, the outstanding shares of common
stock of the corporation resulting from such Corporate Transaction and the
combined voting power of the outstanding voting securities of such corporation
entitled to vote generally in the election of directors, in substantially the
same proportions as their ownership, immediately prior to such Corporate
Transaction, of the outstanding Shares and Outstanding SPINC Voting Securities,
as the case may be, (B) no Person (other than SPINC, any employee benefit plan
(or related trust) of SPINC or the corporation resulting from such Corporate
Transaction and any Person beneficially owning, immediately prior to such
Corporate Transaction, directly or indirectly, 20% or more of the outstanding
Shares or Outstanding SPINC Voting Securities, as the case may be) will
beneficially own,
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directly or indirectly, 20% or more of, respectively, the outstanding shares of
common stock of the corporation resulting from such Corporate Transaction or the
combined voting power of the then outstanding securities of such corporation
entitled to vote generally in the election of directors and (C) individuals who
were members of the Incumbent Board will constitute at least a majority of the
members of the board of directors of the corporation resulting from such
Corporate Transaction; or
(iv) the approval of the stockholders of SPINC of (A) a complete
Liquidation or dissolution of SPINC or (B) the sale or other disposition of all
or substantially all the assets of SPINC; excluding, however, such a sale or
other disposition to a corporation with respect to which, following such sale or
other disposition, (x) more than 60% of the then outstanding shares of common
stock of such corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the election
of directors will be then beneficially owned, directly or indirectly, by the
individuals and entities who were the beneficial owners (or beneficiaries of the
beneficial owners), respectively, of the outstanding Shares and Outstanding
SPINC Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their owners, immediately prior to such
sale or other disposition, of the outstanding Shares and Outstanding SPINC
Voting Securities, as the case may be, (y) no Person (other than SPINC and any
employee benefit plan (or related trust) of SPINC or such corporation and any
Person beneficially owning, immediately prior to such sale or other disposition,
directly or indirectly, 20% or more of the outstanding Shares or Outstanding
SPINC Voting Securities, as the case may be) will beneficially own, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the election
of directors and (z) individuals who were members of the Incumbent Board will
constitute at least a majority of the members of the board of directors of such
corporation.
(f) EXERCISE OF OPTIONS.
(i) A Participant may elect to exercise one or more Options by
giving written notice to the Committee of such election and of the number of
Shares with respect to which the Options are being exercised, accompanied by
payment in full of the aggregate Purchase Price for such Shares.
(ii) Shares purchased pursuant to the exercise of Options shall
be paid for at the time of exercise as follows:
(A) in cash or by check, bank draft or money order payable
to the order of SPINC;
(B) if so permitted by the Committee: (I) through the
delivery of unencumbered Shares (including Shares being acquired pursuant to the
Options then being exercised), provided such Shares (or such Options) have been
owned by the Participant for such period as may be required by applicable
accounting standards to avoid a charge to earnings, (II) through a combination
of Shares and cash as provided above, (III) by delivery of a promissory note of
the Participant to SPINC, such promissory note to be payable, in the case of an
Incentive
10.
<PAGE> 13
Stock Option, on such terms as are specified in the Option Agreement (except
that, in lieu of a stated rate of interest, the Option Agreement may provide
that the rate of interest on the promissory note will be such rate as is
sufficient, at the time the note is given, to avoid the imputation of interest
under the applicable provisions of the Code), or (IV) by a combination of cash
(or cash and Shares) and the Participant's promissory note; provided, that, if
the Shares delivered upon exercise of the Option is an original issue of
authorized Shares, at least so much of the Purchase Price as represents the par
value of such Shares shall be paid in cash or by a combination of cash and
Shares;
(C) through the delivery of irrevocable instructions to a
broker to deliver promptly to SPINC an amount equal to the aggregate Purchase
Price; or
(D) on such other terms and conditions as may be
acceptable to the Committee and in accordance with applicable law.
(iii) Upon receipt of payment and satisfaction of the
requirements, if any, as to withholding of taxes as set forth herein, SPINC
shall deliver to the Participant as soon as practicable a certificate or
certificates for the Shares then purchased. No Shares shall be issued until
payment therefor, as provided herein, has been made or provided for.
(g) BUY OUT AND SETTLEMENT PROVISIONS. The Committee may at any time on
behalf of SPINC offer to buy out an option previously granted, based on such
terms and conditions as the Committee shall establish and communicate to the
Participant at the time that such offer is made, and the Participant shall be
entitled to accept or reject such offer in his or her sole discretion.
(h) DEFERRED DELIVERY OF COMMON SHARES. The Committee may in its
discretion permit Participants to defer delivery of Shares acquired pursuant to
a Participant's exercise of an Option in accordance with the terms and
conditions established by the Committee.
(i) MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to the terms
and conditions and within the Limitations of the Plan, the, Committee may
modify, extend or renew outstanding Options granted under the Plan (provided
that the rights of a Participant are not reduced without his or her consent), or
accept the surrender of outstanding Options (up to the extent not theretofore
exercised) and authorize the granting of new Options in substitution therefor
(to the extent not theretofore exercised).
(j) OTHER TERMS AND CONDITIONS. Options may contain such other
provisions, which shall not be inconsistent with any of the foregoing terms of
the Plan, as the Committee shall deem appropriate including, without Limitation,
permitting "reloads" such that the same number of Options are granted as the
number of (i) Options exercised, (ii) Shares used to pay for the purchase Price
of Options or (iii) shares used to pay withholding taxes ("Reloads"). With
respect to Reloads, the Purchase Price of the new Option shall be the Fair
Market Value on the date of the Reload and the term of the Option shall be the
same as the remaining term of the Options that are exercised, if applicable, or
such other Purchase Price and term as determined by the Committee.
11.
<PAGE> 14
7. EFFECT OF TERMINATION OF EMPLOYMENT.
(a) DEATH, DISABILITY, RETIREMENT, ETC. Except as otherwise provided in
the Participant's Option Agreement, upon Termination of Employment, all
outstanding options then exercisable and not exercised by the Participant prior
to such Termination of Employment (and any Options not previously exercisable
but made exercisable by the Committee at or after the Termination of Employment)
shall remain exercisable by the Participant to the extent not exercised for the
following time periods (subject to Section 6(e)):
(i) In the event of the Participant's death, such Options shall
remain exercisable (by the legal representative of the Participant's estate or
by the person given authority o exercise such Options by the Participant's will
or by operation of law) for a period of one year from the date of the
Participant's death, provided that the Committee, in its discretion, may at any
time extend such time period to up to three years from the date of the
Participant's death.
(ii) In the event of the Participant's Disability, or the
Participant retires at or after age 65 (or, with the consent of the Committee or
under an early retirement policy of SPINC, before age 65), or if the
Participant's employment is terminated by SPINC without Cause, such Options
shall remain exercisable for one year from the date of the Participant's
Termination of Employment, provided that the Committee, in its discretion, may
at any time extend such time period to up to three years from the date of the
Participant's Term of Employment.
(b) CAUSE. Upon the Termination of Employment of a Participant for Cause
or by the Participant in violation of an agreement between the Participant and
SPINC or any of its Affiliates, or if it is discovered after such Termination of
Employment that such Participant had engaged in conduct that would have
justified a Termination of Employment for Cause, all outstanding Options shall
immediately be canceled. Termination of Employment for "Cause" means, with
respect to a Participant's Termination of Employment: (i) in the case where
there is no employment agreement, change in control agreement or any other
similar agreement in effect between SPINC or an Affiliate and the Participant at
the time of the grant of the Option (or where there is such an agreement that
does not define "cause" (or words of like import)), termination due to a
Participant's fraud, dishonesty, negligence or engaging in competition or
solicitations in competition with SPINC or any Affiliate; or (ii) in the case
where there is an employment agreement, change in control agreement or any other
similar agreement in effect between SPINC or an Affiliate and the Participant at
the time of the grant of the Option that defines "cause" (or words of like
import), as defined under such agreement; provided, however, that with regard to
any agreement that conditions "cause" on occurrence of a change in control, such
definition of "cause" shall not apply until a change in control actually takes
place and then only with regard to a termination thereafter.
(c) OTHER TERMINATION. In the event of Termination of Employment for any
reason other than as provided in Section 7(a) or 7(b), all outstanding Options
not exercised by the Participant prior to such Termination of Employment shall
remain exercisable (to the extent exercisable by such Participant immediately
before such termination) for a period of three months after such termination,
provided that the Committee in its discretion may extend such
12.
<PAGE> 15
time period to up to one year from the date of the Participant's Termination of
Employment, and provided further that no Options that were not exercisable
during the period of employment shall thereafter become exercisable, unless the
Committee determines that such Options shall be exercisable.
(d) EXERCISE CERTAIN TERMINATIONS OF EMPLOYMENT. If an employee does not
remain employed by SPINC, a Parent or any Subsidiary at all times from the time
the Incentive Stock Option is granted until three (3) months prior to the date
of exercise (or such other period as required by applicable law, including,
without limitation, in the event of death or Disability), such Option shall be
treated as a Non-Qualified Stock Option. Any Option held by an employee who is
transferred from SPINC, a Subsidiary or a Parent to an Affiliate that is not
SPINC, a Subsidiary or a Parent shall be treated as a Non-Qualified Stock Option
after the end of the three (3) month period following such transfer.
8. NONTRANSFERABILITY OF OPTIONS.
No Option shall be Transferable by the Participant otherwise than by
will or under applicable laws of descent and distribution, and during the
lifetime of the Participant may be exercised only by the Participant or his or
her guardian or legal representative. In addition, no Option shall, except as
otherwise provided herein, be Transferable in any way (whether by operation of
law or otherwise), and any attempt to Transfer shall be void, and no such Option
shall in any manner be subject to the debts, contracts, liabilities, engagements
or torts of any person who shall be entitled to such Option, nor shall it be
subject to attachment or legal process for or against such person.
Notwithstanding the foregoing, the Committee may determine at the time of grant
or thereafter, that a Non-Qualified Stock Option, that is otherwise not
Transferable pursuant to this Section is Transferable in whole or part and in
such circumstances, and under such conditions, as specified by the Committee.
9. RIGHTS AS A STOCKHOLDER.
A Participant (or a permitted transferee of an Option) shall have no
rights as a stockholder with respect to any Shares covered by such Participant's
Option until such Participant (or permitted transferee) shall have become the
holder of record of such Shares, and no adjustments shall be made for dividends
in cash or other property or distributions or other rights in respect to any
such Shares, except as otherwise specifically provided in this Plan.
10. DETERMINATIONS.
Each determination, interpretation or other action made or taken
pursuant to the provisions of this Plan by SPINC, the Board or the Committee
shall be final, conclusive and binding for all purposes and upon all persons,
including, without Limitation, the Participants, SPINC and its Subsidiaries,
directors, officers and other employees of SPINC and its Subsidiaries, and the
respective heirs, executors, administrators, personal representatives and other
successors in interest of each of the foregoing.
11. TERMINATION, AMENDMENT AND MODIFICATION.
The Plan shall terminate at the close of business on the tenth
anniversary of the Effective
13.
<PAGE> 16
Date, unless terminated sooner as hereinafter provided, and no Option shall be
granted under the Plan on or after that date. The termination of the Plan shall
not terminate any outstanding options that by their terms continue beyond the
termination date of the Plan. At any time prior to the tenth anniversary of the
Effective Date, the Board or the Committee may amend or terminate the Plan or
suspend the Plan in whole or in part. Notwithstanding the foregoing, however, no
such amendment may, without the approval of the stockholders of SPINC, effect
any change that would require stockholder approval under applicable law.
Nothing contained in this Section 11 shall be deemed to prevent the
Board or the Committee from authorizing amendments of Outstanding Options of
Participants, including, without Limitation, the reduction of the Purchase Price
specified therein (or the granting or issuance of new Options at a lower
Purchase Price upon cancellation of outstanding Options), as long as all Options
outstanding at any one time shall not call for issuance of more Shares than the
remaining number provided for under the Plan and as long as the provisions of
any amended Options would have been permissible under the Plan if such option
had been originally granted or issued as of the date of such amendment with such
amended terms.
Notwithstanding anything to the contrary contained in this Section 11,
no termination, amendment or modification of the Plan may, without the consent
of the Participant or the permitted transferee of such Participant's Option,
after or impair the rights and obligations arising under any then outstanding
Option.
12. NON-EXCLUSIVITY.
Neither the adoption of the Plan by the Board nor the submission of the
Plan to the stockholders of SPINC for approval shall be construed as creating
any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without Limitation, the
granting or issuance of stock options, Shares and/or other incentives otherwise
than under the Plan, and such arrangements may be either generally applicable or
limited in application.
13. USE OF PROCEEDS.
The proceeds of the sale of Shares subject to Options under the Plan are
to be added to the general funds of SPINC and used for its general corporate
purposes as the Board shall determine.
14. GENERAL PROVISIONS.
(a) RIGHT TO TERMINATE EMPLOYMENT. Neither the adoption of the Plan nor
the grant of Options shall impose any obligation on SPINC to continue the
employment of any Participant, nor shall it impose any obligation on the part of
any Participant to remain in the employ of SPINC, subject however to the
provisions of any agreement between SPINC and the Participant.
(b) PURCHASE FOR INVESTMENT. If the Board determines that the law so
requires, the holder of an Option granted hereunder shall, upon any exercise or
conversion thereof, execute and deliver to SPINC a written statement, in form
satisfactory to SPINC, representing and warranting that such Participant is
purchasing or accepting the Shares then acquired for such
14.
<PAGE> 17
Participant's own account and not with a few to the resale or distribution
thereof, that any subsequent offer for sale or sale of any such Shares shall be
made either pursuant to (i) a Registration Statement on an appropriate form
under the Securities Act, which Registration Statement shall have become
effective and shall be current with respect to the Shares being offered and
sold, or (ii) a specific exemption from the registration requirements of the
Securities Act, and that in claiming such exemption the holder will, prior to
any offer for sale or sale of such Shares, obtain a favorable written opinion,
satisfactory in form and substance to SPINC, from counsel approved by SPINC as
to the availability of such exception. In addition to any legend required by
this Plan, the certificates for such shares may include any legend which the
Committee deems appropriate to reflect any restriction on Transfer.
(c) UNFUNDED STATUS OF PLAN. This Plan is intended to constitute an
"unfunded" plan for incentive compensation. Nothing contained in the Plan and no
action taken pursuant to the Plan (including, without limitation, the grant of
any Option thereunder) shall create or be construed to create a trust of any
kind, or a fiduciary relationship, between SPINC and any Participant or the
executor, administrator or other personal representative or designated
beneficiary of such Participant, or any other persons. Any reserves that may be
established by SPINC in connection with the Plan shall continue to be part of
the general funds of SPINC, and no individual or entity other than SPINC shall
have any interest in such funds until paid to a Participant. If and to the
extent that any Participant or such Participant's executor, administrator or
other personal representative, as the case may be, acquires a right to receive
any payment from SPINC pursuant to the Plan, such right shall be no greater than
the right of an unsecured general creditor of SPINC.
(d) NOTICES. Each Participant shall be responsible for furnishing the
Committee with the current and proper address for the mailing to such
Participant of notices and the delivery to such Participant of agreements,
Shares and payments. Any notices required or permitted to be given shall be
deemed given if directed to the person to whom addressed at such address and
mailed by regular United States mail, first class and prepaid. If any item
mailed to such address is returned as undeliverable to the addressee, mailing
will be suspended until the Participant furnishes the proper address.
(e) SEVERABILITY OF PROVISIONS. If any provisions of the Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions of the Plan, and the Plan shall be construed and
enforced as if such provisions had not been included.
(f) PAYMENT TO MINORS, ETC. Any benefit payable to or for the benefit of
a minor, an incompetent person or other person incapable of receipting therefor
shall be deemed paid when paid to such person's guardian or to the parry
providing or reasonably appearing to provide for the care of such person, and
such payment shall fully discharge the Committee, SPINC and their employees,
agents and representatives with respect thereto.
(g) HEADINGS AND CAPTIONS. The headings and captions herein are provided
for reference and convenience only. They shall not be considered part of the
Plan and shall not be employed in the construction of the Plan.
15.
<PAGE> 18
(h) CONTROLLING LAW. The Plan shall be construed and enforced according
to the laws of the State of Delaware (regardless of the laws that might
otherwise govern, under applicable principles of conflict of laws).
15. ISSUANCE OF STOCK CERTIFICATES; LEGENDS; PAYMENT OF EXPENSES.
(a) STOCK CERTIFICATES. Upon any exercise of an Option and payment of
the Purchase Price as provided in such Option Agreement, a certificate or
certificates for the Shares as to which such Option has been exercised shall be
issued by SPINC in the name of the person or persons exercising such Option and
shall be delivered to or upon the order of such person or persons.
(b) LEGEND. Certificates for Shares issued upon exercise of an Option
shall bear such legend or legends as the Committee, in its discretion,
determines to be necessary or appropriate to prevent a violation of, or to
perfect an exemption from, the registration requirements of the Securities Act,
or to implement the provisions of any agreements between SPINC and the
Participant with respect to such Shares, including, without Limitation, any
right of SPINC to purchase Shares issued to the Participant upon the exercise of
Options as contained in the Option Agreement.
(c) PAYMENT OF EXPENSES. SPINC shall pay all issue or transfer taxes
with respect to the issuance or transfer of Shares, as well as all fees and
expenses necessarily incurred by SPINC in connection with such issuance or
transfer and with the administration of the Plan.
(d) OTHER BENEFITS. No Option granted under this Plan shall be deemed
compensation for purposes of computing benefits under any retirement plan of
SPINC or any Affiliate nor affect any benefits under any other benefit plan now
or subsequently in effect under which the availability or amount of benefits is
related to the level of compensation.
(e) NO RIGHT TO SAME BENEFITS. The provisions of Options need not be the
same with respect to each Participant, and such Options to individual
Participants need not be the same under subsequent grants.
(f) DEATH/DISABILITY. The Committee may in its discretion require the
transferee of a Participant to supply it with written notice of the
Participant's death or Disability and to supply it with a copy of the will (in
the case of the Participant's death) or such other evidence as the Committee
deems necessary to establish the validity of the transfer of an Option. The
Committee may also require the agreement of the transferee to be bound by all of
the terms and conditions of the Plan.
(g) SECTION 16(b) OF THE ACT. All elections and transactions under the
Plan by persons subject to Section 16 of the Act involving Shares are intended
to comply with any applicable exemptive condition under Rule 16b-3. To the
extent applicable, the Committee may establish and adopt written administrative
guidelines, designed to facilitate compliance with Section 16(b) of the Act, as
it may deem necessary or proper for the administration and operation of this
Plan and the transaction of business thereunder.
16.
<PAGE> 19
16. LISTING OF SHARES AND RELATED MATTERS.
If at any time the Board shall determine in its sole discretion that the
listing, registration or qualification of the Shares covered by the Plan upon
any national securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the award or sale of Shares
under the Plan, no Shares will be delivered unless and until such listing,
registration, qualification, consent or approval shall have been effected or
obtained, or otherwise provided for, free of any conditions not acceptable to
the Board.
17. WITHHOLDING TAXES.
SPINC shall be entitled to withhold (or secure payment from the
Participant in cash or other property, including Shares already owned by the
Participant (valued at the Fair Market Value thereof on the date of delivery) in
lieu of withholding) the amount of any Federal, state or local taxes required by
law to be withheld by SPINC for any Shares or cash payments deliverable under
this Plan, and SPINC may defer such delivery unless such withholding requirement
is satisfied.
At the discretion of the Committee, any such withholding obligation with
regard to any Participant may be satisfied by reducing the number of Shares
otherwise deliverable or by delivering shares of Common Stock already owned. Any
fraction of a Share required to satisfy such tax obligations shall be
disregarded and the amount due shall be paid instead in cash by the Participant.
17.
