As filed with the Securities and Exchange Commission on June 2, 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________
SCHEIN PHARMACEUTICAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-2726505
(State or other jurisdiction
of incorporation or organization) (I.R.S. Employer Identification No.)
100 Campus Drive
Florham Park, New Jersey 07932
(973) 593-5500
(Address of principal executive offices) (Zip code)
---------------------------------
Schein Pharmaceutical, Inc. 1999 Stock Option Plan
---------------------------------
Paul Feuerman, Esq. Copies to:
Schein Pharmaceutical, Inc. Allan R. Williams, Esq.
100 Campus Drive Proskauer Rose LLP
Florham Park, New Jersey 07932 1585 Broadway
(973) 593-5500 New York, New York 10036-8299
(Name, address, including zip code, and (212) 969-3000
telephone number, including area code,
of agent for service)
---------------------------------
CALCULATION OF REGISTRATION FEE
Title of Amount to be Proposed maximum Proposed maximum Amount of
securities registered(1) offering price aggregate offering registration
to be per share price fee
registered
- ----------- -------------- ----------------- ------------------- ------------
Common Stock,
par value
$.01 per
share 3,250,000 shares $ 13.00 (2) $42,250,000 $11,745.50
(1) Represents the maximum number of shares of common stock, par value
$.01 per share ("Common Stock"), issuable upon exercise of options
which may be or have been granted under the Schein Pharmaceutical,
Inc. 1999 Stock Option Plan (the "Plan"). Pursuant to Rule 416, there
are also being registered such additional indeterminate number of
shares of Common Stock as may be required to cover possible
adjustments in the number of shares issuable under the Plan pursuant
to the antidilution provisions thereof.
(2) Calculated solely for purposes of this offering under Rule 457(h) of
the Securities Act of 1933, as amended, on the basis of the average of
the high and low selling prices per share of Common Stock on May 27,
1999 as reported on the New York Stock Exchange.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The Section 10(a) prospectus for the Plan is not being filed with the
Securities and Exchange Commission (the "Commission") as part of this
Registration Statement.
2
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
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The following documents filed with the Securities and Exchange Commission
by Schein Pharmaceutical, Inc., a Delaware corporation (the "Company" or the
"Registrant"), are incorporated herein by reference:
(1) the description of the Company's Common Stock, par value $.01 per
share, contained in the Company's Registration Statement on Form 8-A (File No.
001-14019), filed pursuant to Section 12 of the Securities Exchange Act of 1934;
(2) the Company's Annual Report on Form 10-K, dated March 26, 1999, filed
pursuant to Sections 13 and 15(d) of the Securities Exchange Act of 1934; and
(3) the Company's Quarterly Report on Form 10-Q, dated May 7, 1999, filed
pursuant to Sections 13 and 15(d) of the Securities Exchange Act of 1934.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14, or 15(d) of the Securities Exchange Act of 1934, prior to the filing
of a post-effective amendment which indicates that all securities offered have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be
part hereof from the date of filing such documents. Any statement in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for the purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Registration Statement.
Item 4. Description of Securities.
------- --------------------------
Not applicable.
Item 5. Interests of Named Experts and Counsel.
------- ---------------------------------------
Not applicable.
Item 6. Indemnification of Directors and Officers.
------- ------------------------------------------
Article SEVENTH of the Company's Certificate of Incorporation provides that
the Corporation shall indemnify and hold harmless, to the fullest extent
authorized by the Delaware General Corporation Law, its officers and directors
against all expenses, liability and loss actually and reasonably incurred in
connection with any civil, criminal, administrative or investigative action,
suit or proceeding. The Certificate of Incorporation also extends
indemnification to those serving at the request of the Company as directors,
officers, employees or agents of other enterprises.
In addition Article SEVENTH of the Company's Certificate of Incorporation
provides that no director of the Company shall not be personally liable for any
breach of fiduciary duty. Article SEVENTH does not eliminate a director's
liability (i) for breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts of or omissions of such director not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal benefit.
Section 145 of the General Corporation Law of the State of Delaware permits
a corporation to indemnify its directors and officers against expenses
(including attorney's fees), judgments, fines and amounts paid in settlements
actually and reasonably incurred by them in connection with any action, suit or
proceeding brought by third parties, if such directors or officers acted in good
faith and in a manner they reasonably believed to be in or not opposed to the
best interests of the
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corporation and, with respect to any criminal action or proceeding, had no
reason to believe their conduct was unlawful. In a derivative action, i.e., one
by or in the right of the corporation, indemnification may be made only for
expenses actually and reasonably incurred by directors and officers in
connection with the defense or settlement of an action or suit, and only with
respect to a matter as to which they shall have acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interest of
the corporation, except that no indemnification shall be made if such person
shall have been adjudged liable to the corporation, unless and only to the
extent that the court in which the action or suit was brought shall determine
upon application that the defendant officers or directors are reasonably
entitled to indemnity for such expenses despite such adjudication of liability.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
provides that a corporation may eliminate or limit the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General Corporation Law
of the State of Delaware, or (iv) for any transaction from which the director
derived an improper personal benefit. No such provision shall eliminate or limit
the liability of a director for any act or omission occurring prior to the date
when such provision becomes effective.
Pursuant to Section 145 of the General Corporation Law of the State of
Delaware, the Company maintains directors' and officers' liability insurance
coverage and has entered into indemnification agreements with certain of its
directors and officers.
Item 7. Exemption from Registration Claimed.
------- ------------------------------------
Not applicable.
Item 8. Exhibits.
------- ---------
5.1 Opinion of Proskauer Rose LLP
23.1 Consent of BDO Seidman, LLP
23.2 Consent of Proskauer Rose LLP (included in Exhibit 5.1)
24.1 Power of Attorney (see signature page)
99.1 Schein Pharmaceutical, Inc. 1999 Stock Option Plan
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;
(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 if securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more
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<PAGE>
than 20 percent change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(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 paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8, or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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 the time shall
be deemed to be the initial bona fide offering thereof.
(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 of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 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 of 1933 may be permitted to directors, officers, and controlling persons of
the Registrant pursuant to the foregoing provisions, 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 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 Act and will be governed by the final
adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on May 19, 1999.
SCHEIN PHARMACEUTICAL, INC.
By: Martin Sperber
-----------------------------------------
Martin Sperber
Chairman of the Board,
Chief Executive Officer
and President
SIGNATURES AND POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Martin Sperber, Dariush Ashrafi and Paul
Feuerman, and each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, to act, without the other, for
him and in his name, place, and stead, in any and all capacities, to sign a
Registration Statement on Form S-8 of Schein Pharmaceutical, Inc. (the
"Company") and any or all amendments (including post-effective amendments)
thereto, relating to the registration, under the Securities Act of 1933, as
amended, of shares of Common Stock of the Company to be issued pursuant to the
Company's 1999 Stock Option Plan and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as full to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
Martin Sperber Chairman of the Board, May 19, 1999
- ---------------------- Chief Executive Officer,
Martin Sperber President and Director
(principal executive officer)
Dariush Ashrafi Chief Financial Officer, May 19, 1999
- ---------------------- Executive Vice President
Dariush Ashrafi and Director (principal
financial and accounting officer)
Paul Feuerman Senior Vice President, May 19, 1999
- ---------------------- General Counsel and Director
Paul Feuerman
David R. Ebsworth Director May 19, 1999
- ----------------------
David R. Ebsworth
Richard L. Goldberg Director May 19, 1999
- ----------------------
Richard L. Goldberg
Harvey Rosenthal Director May 19, 1999
- ----------------------
Harvey Rosenthal
<PAGE>
EXHIBIT INDEX
Exhibit Description of Exhibit
------- ----------------------------
5.1 Opinion of Proskauer Rose LLP
23.1 Consent of BDO Seidman, LLP
23.2 Consent of Proskauer Rose LLP
(included in Exhibit 5.1)
24.1 Power of Attorney (included in
page II-4 hereof)
99.1 Schein Pharmaceutical, Inc. 1999 Stock Option Plan
<PAGE>
EXHIBIT 5.1
June 2, 1999
Schein Pharmaceutical, Inc.
100 Campus Drive
Florham Park, New Jersey 07932
Dear Sirs:
We are acting as counsel to Schein Pharmaceutical, Inc., a Delaware
corporation (the "Company"), in connection with the Registration Statement on
Form S-8 (the "Registration Statement") filed by the Company under the
Securities Act of 1933 relating to 3,250,000 shares (the "Shares") of Common
Stock, par value $.01 per share, of the Company. The Shares may be issued by the
Company pursuant to the Company's 1999 Stock Option Plan (the "Plan").
We have participated in the preparation of the Registration Statement
and have reviewed the corporate proceedings in connection with the adoption of
the Plan. We have also examined and relied upon originals or copies, certified
or otherwise authenticated to our satisfaction, of all such public officials and
of representatives of the Company, and have made such investigation of law, and
have discussed with representatives of the Company and such other persons such
questions of fact, as we have deemed proper and necessary as a basis for this
opinion.
Based upon, and subject to, the foregoing, we are of the opinion that
the Shares are duly authorized and, upon issuance of the Shares in accordance
with the Plan, will be validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement. In giving the foregoing consent, we do not admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.
Very truly yours,
Proskauer Rose LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Schein Pharmaceutical, Inc.
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 of our reports dated February 10, 1999, relating to the
consolidated financial statements and schedule of Schein Pharmaceutical, Inc.
appearing in the Company's Annual Report on Form 10-K for the year ended
December 26, 1998.
BDO Seidman, LLP
New York, New York
May 27, 1999
<PAGE>
Exhibit 99.1
- --------------------------------------------------------------------------------
SCHEIN PHARMACEUTICAL, INC.
1999 STOCK OPTION PLAN
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. Purposes of the Plan....................................................1
2. Definitions.............................................................1
3. Effective Date/Expiration of Plan.......................................3
4. Administration..........................................................4
6. Awards and Terms of Options.............................................8
7. Effect of Termination of Employment....................................12
8. Nontransferability of Options..........................................14
9. Rights as a Stockholder................................................14
10. Determinations.........................................................14
12. Non-Exclusivity........................................................15
13. Use of Proceeds........................................................15
14. General Provisions.....................................................15
15. Issuance of Stock Certificates;
Legends; Payment of Expenses. .........................................17
16. Listing of Shares and Related Matters..................................18
17. Withholding Taxes......................................................18
<PAGE>
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: (i) 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
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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.
(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 listed 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.
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(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.
(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 16b-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
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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:
(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,
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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 16b-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 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 determinations 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
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<PAGE>
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 it 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 will be issued or transferred upon
the exercise of any Option. In lieu thereof, SPINC shall pay a cash 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
6
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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 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, if, 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
7
<PAGE>
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 hereinbefore 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 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.
8
<PAGE>
(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 as
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.
(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
9
<PAGE>
Change of Control described in (i), (iii) or (iv) of this Section 6(e) or
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, 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 ownership, 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,
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<PAGE>
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 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.
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<PAGE>
(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.
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 to 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
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<PAGE>
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 Termination 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 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 Following 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
13
<PAGE>
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 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
14
<PAGE>
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,
alter 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 Participant's own
account and not with a view 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
15
<PAGE>
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 party 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.
(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.
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(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) Legends. 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. Listing of Shares and Related Matters.
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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,
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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.
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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.
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