UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Schein Pharmaceutical, Inc.
(Name of Issuer)
Common Stock, par value $0.01 per share
(Title of Class of Securities)
806416-10-3
(CUSIP Number)
Paul Feuerman, Esq. Richard L. Goldberg, Esq.
Senior Vice President and General Counsel Proskauer Rose LLP
Schein Pharmaceutical, Inc. 1585 Broadway
100 Campus Drive New York, NY 10036
Florham Park, NJ 07932 (212) 969-3000
(973) 593-5500
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
April 8,1998
(Date of Event
which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box __
SCHEDULE 13D
CUSIP No. 806416-10-3 Page 2 of 11 Pages
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Martin Sperber
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
(b) x
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF 7 SOLE VOTING POWER
SHARES 20,531,565 shares of Common Stock
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 527,975 shares of Common Stock
10 SHARED DISPOSITIVE POWER
621,640 shares of Common Stock
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORT PERSON
20,531,565 shares of Common Stock
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
62.2%
14 TYPE OF REPORTING PERSON*
IN
<PAGE>
Item 1. Security and Issuer.
The class of equity securities to which this statement on Schedule 13D relates
is the common stock, par value $.01
per share ("Common Stock"), of Schein Pharmaceutical, Inc., a Delaware
corporation (the "Company"). The
Company's principal executive offices are located at 100 Campus Drive,
Florham Park, New Jersey 07932.
Item 2. Identity and Background.
(a) This statement on Schedule 13D is filed by Martin Sperber.
(b) Mr. Sperber's business address is c/o the Company, 100 Campus Drive,
Florham Park, New Jersey 07932.
(c) Mr. Sperber is the Chairman of the Board of Directors, Chief Executive
Officer and President of the Company.
(d) Mr. Sperber has not, during the last five years, been convicted in a
criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) Mr. Sperber has not, during the last five years, been a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction in which, as a result of such proceeding, he was or is
subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, Federal or State
securities laws or finding any violation with respect to such laws.
(f) Mr. Sperber is a citizen of the United States.
Item 3. Source and Amount of Funds or Other Consideration.
Not applicable. See Item 4 below.
Item 4. Purpose of Transaction.
Mr. Sperber beneficially owned more than 5% of the Company's outstanding
Common Stock prior to April 8, 1998, the date upon which the Common Stock
was registered on a Form 8A registration statement under the
Securities Exchange Act of 1934, as amended. Since April 8, 1998, Mr. Sperber
has not acquired beneficial ownership of any additional shares of Common Stock
other than shares acquired periodically pursuant to The
Retirement Plan of Schein Pharmaceutical, Inc. & Affiliates and the Company's
1998 Employee Stock Purchase Plan.
Mr. Sperber does not have any plans or proposals which relate to or would
result in (a) the acquisition by any person of additional securities of the
Company, or the disposition of securities of the Company, (b) an
extraordinary corporate transaction, such as a merger, reorganization, or
liquidation, involving the Company or any of its securities, (c) a sale or
transfer of a material amount of the assets of the Company or any of its
subsidiaries, (d) any change in the present Board of Directors or management
of the Company, including any
plans or proposals to change the number or term of directors or to fill any
existing vacancies on the Company's
Board of Directors, (e) any material change in the present capitalization
or dividend policy of the Company, (f)
any other material change in the Company's business or corporate structure,
(g) changes in the Company's
charter, bylaws or instruments corresponding thereto or other actions which
may impede the acquisition of control
of the Company by any person, (h) causing a class of the securities of the
Company to be delisted from a national
securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered
national securities association, (i) a class of equity securities of the
Company becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Securities Exchange Act
of 1934 or (j) any action similar to any of
those enumerated above; except to the extent, if any, such plans or proposals
emanate from his position as
Chairman of the Board of Directors, Chief Executive Officer and President
of the Company.
Item 5. Interest in Securities of the Issuer.
As of the date of this statement on Schedule 13D, Mr. Sperber beneficially
owns 20,531,565 shares of Common Stock, or approximately 62.2% of the Company's
outstanding Common Stock. Of such shares, Mr. Sperber may
be deemed to have sole voting power over 20,531,565 shares of Common Stock,
sole dispositive power over 527,975 shares of Common Stock and shared
dispositive power over 621,640 shares of Common Stock.
The 20,531,565 shares of Common Stock beneficially owned by Mr. Sperber
include:
(a) 621,640 shares for which Mr. Sperber either is the direct or indirect
beneficial owner or holds in trusts for his family members' benefit;
and
(b) 527,975 shares issuable pursuant to the exercise of stock options
that are held by Mr. Sperber and are currently exercisable; and
(c) 19,381,950 shares over which Mr. Sperber has voting control
pursuant to the Voting Trust Agreement (as defined below).
Mr. Sperber, acting as voting trustee, is able to control
substantially all matters requiring stockholder approval, including
the election of directors. See Item 6.
The stockholders whose shares of Common Stock are subject to the Voting Trust
Agreement have the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, such securities.
Such interest of the following stockholders relates to more than 5% of the
outstanding shares of Common Stock as
of the date of this statement on Schedule 13D: Marvin H. Schein,
trusts established by Marvin H. Schein under
trust agreements dated December 31, 1993, September 9, 1994, April 5, 1996,
April 9, 1997, October 8, 1998
and December 28, 1998, the trust established by Pamela Schein under trust
agreement dated October 26, 1994,
the trust established by the Trustees under Article Fourth of the Will of
Jacob M. Schein for the benefit of Pamela
Schein and her issue under trust agreement dated September 29, 1994,
Pamela Joseph and the trust established by
Pamela Joseph under trust agreement dated September 28, 1994.
As of the date of this statement on Schedule 13D, Mr. Sperber holds options
to purchase 197,500 shares of Common Stock which are currently not
exercisable. The vesting schedule for those options is set forth below:
Number of Shares Date Exercisable Exercise Price
24,500 04/09/99 $ 17.00
25,000 06/17/99 13.63
25,000 12/12/99 13.63
24,500 01/23/00 14.29
24,500 04/09/00 17.00
25,000 12/17/00 13.63
24,500 01/23/01 14.29
24,500 04/09/01 17.00
Mr. Sperber has not acquired or disposed of any shares of Common Stock in the
past 60 days other than shares acquired periodically pursuant to The
Retirement Plan of Schein Pharmaceutical, Inc. & Affiliates and the
Company's 1998 Employee Stock Purchase Plan.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Restructuring Agreements
In September 1994, in connection with Bayer Corporation's acquisition of
its interest in the Company, the Company, Bayer Corporation, Mr. Sperber,
and certain other principal stockholders entered into certain
agreements (the "Restructuring Agreements") relating to the governance of the
Company and certain other matters. The Restructuring Agreements are filed
as Exhibits (a), (b) and (c) to this statement on Schedule 13D.
Agreements Relating to Control of the Company
The Restructuring Agreements provide that, until the earlier of March 1,
2000 and the effective date of a merger, consolidation or combination that
results in the Voting Trustee (currently Mr. Sperber) (the "Voting
Trustee") neither holding the position of chairman of the board, president,
chief executive officer or chief operating officer of the resulting entity
nor having the right to designate a majority of the members of the board of
the resulting entity (such earlier date, the "Voting Trust Termination
Date"), the Voting Trustee will have the right
to vote, or direct the vote of, all the shares of Common Stock owned by
Marvin Schein, Pamela Schein, Pamela Joseph and certain trusts established
by them or for their issue (collectively, the "Family Stockholders") (i.e.,
approximately 59.6% of the shares of Common Stock outstanding at January 31,
1999). As a result of the foregoing, the Voting Trustee as a practical
matter will be able to control substantially all matters requiring
stockholder approval, including the election of directors, until March 1,
2000 (without giving effect to any future issuance of Common Stock by the
Company or sales of Common Stock by Continuing Stockholders (as defined
below)). The Restructuring Agreements provide that Mr. Sperber may designate
certain individuals to succeed him as Voting Trustee.
The Restructuring Agreements provide that, until Bayer Corporation owns
less than 10% of the outstanding Common Stock (the "Governance Termination
Date"), Bayer Corporation shall be entitled to
nominate a number of members of the Board of Directors of the Company equal to
the product of (a) the number of members of the Board of Directors and
(b) its percentage stockholdings of Common Stock at the time of
nomination. The Voting Trustee is entitled, until the Voting Trust Termination
Date, to nominate the balance of the members of the Board of Directors.
Until May 15, 2001, the Voting Trustee and the other Continuing
Stockholders (to the extent their shares of Common Stock are not voted by
the Voting Trustee) must vote for the election of Bayer Corporation's
nominee(s). Until the Voting Trust Termination Date, Bayer Corporation
and the Continuing Stockholders (to the extent their shares of Common Stock
are not voted by the Voting Trustee) must vote for the election of the Voting
Trustee's nominees.
Until the earlier of May 15, 2001 and a sale of shares of Common Stock
by Bayer Corporation other than to a Permitted Assignee (as defined below),
the Company may not, without Bayer Corporation's consent, among
other things, (a) own, manage or operate any business not principally
engaged in a segment of the pharmaceutical or health care industry or any
business ancillary thereto, (b) amend or restate the Company's charter or
by-laws to require more than majority approval to elect a majority of the
Board of Directors or (c) engage in transactions with any affiliate on
terms more favorable to the affiliate than could be obtained in an
arm's-length transaction, other than intercompany transactions and transactions
under the Restructuring Agreements.
The Restructuring Agreements impose certain restrictions on Bayer
Corporation and its affiliates until May 15, 2001 (the "Standstill Period").
Specifically, the Restructuring Agreements provide that Bayer
Corporation may purchase shares of Common Stock to increase its ownership
up to a maximum ownership, in the aggregate, of 30% of the Company's
outstanding Common Stock between May 15, 1997 and May 15, 1999,
33 1/3% between May 16, 1999 and May 15, 2000 and 36 2/3% between May 16,
2000 and May 15, 2001 (the "Standstill"). During the Standstill Period,
Bayer Corporation and its affiliates may not, among other things, (a)
acquire, announce an intention to acquire or offer to acquire any assets of
the Company or its subsidiaries (other than in the ordinary course) or equity
securities of the Company, (b) participate in or encourage the formation of a
group or entity that seeks to acquire equity securities of the Company,
(c) solicit proxies or become a participant in any election contest with
respect to the Company, (d) initiate or otherwise solicit stockholders for
the approval of stockholder proposals or induce any other person to initiate
any stockholder proposal, (e) seek to place designees on, or remove any
member of, the Board or Directors, (f) deposit any equity securities in a
voting trust or like arrangement, (g) seek to control the management of the
Company or negotiate with any person with respect to any form of
extraordinary transaction with the Company or other transaction not in
the ordinary course of business, or be involved in a tender or exchange
offer or other attempt to violate the Standstill or (h) request
the Company or otherwise seek to amend or waive any provision of the Standstill.
After the Standstill Period, Bayer Corporation has the right to acquire
control of the Company through open market purchases, and under certain
circumstances within six months of the end of the Standstill, to acquire
from certain principal stockholders of the Company or from the Company
a number of shares that would enable
Bayer Corporation to own a majority of the outstanding shares of Common
Stock. During the Standstill Period, under the terms of the Restructuring
Agreements, Bayer Corporation has the right to acquire, including under
certain circumstances the right to acquire from the Company and certain of
its principal stockholders at fair market value, unless Bayer Corporation
has sold shares of Common Stock other than to certain permitted
transferees, (i) shares in connection with its exercise of certain
preemptive rights, (ii) before May 15, 2001, shares necessary to acquire
ownership of at least 21% more of the outstanding Common Stock than any
other holder of 10% or more of the Common Stock (other than an employee
benefit plan or a person who was a stockholder as of September 30, 1994)
and (iii) if, on May 15, 2001, the total number of shares issued and
outstanding (less restricted securities, as defined therein) is less
than 133% of the number of shares that, when added to Bayer Corporation's
shares, equals a majority of the shares then outstanding, shares equal
to such amount.
Under the Restructuring Agreements, if Bayer Corporation for any reason
acquires shares of Common Stock in excess of the New Percentage (as defined
below), until May 15, 2001, Bayer Corporation shall vote
those excess shares in accordance with the Voting Trustee's instructions
and those excess shares will not be considered in determining the number of
director nominees to which Bayer Corporation is entitled. The "New
Percentage" means 30% before May 15, 1999, 33 1/3% thereafter and before
May 15, 2000, 36 2/3% thereafter and before May 15, 2001 and 40% thereafter.
Under the Restructuring Agreements, each of Marvin Schein, Pamela
Schein and Pamela Joseph has agreed that such individual, and such individual's
Family Group (as defined below), shall not acquire shares if, as
a consequence of the acquisition, such individual, together with such
individual's Family Group, owns in excess of (a) in the case of Marvin
Schein and his Family Group, 35.85% of the Common Stock, (b) in the case of
Pamela Schein and her Family Group, 27.55% of the Common Stock and
(c) in the case of Pamela Joseph and her Family Group, 12.97% of the Common
Stock.
Restrictions on Transfer
The Restructuring Agreements generally provide that Marvin Schein,
Pamela Schein, Pamela Joseph, Mr. Sperber, Stanley Bergman, certain trusts
established by these individuals (collectively, the "Continuing
Stockholders") and certain of their transferees may not transfer any of their
shares of Common Stock until March 1, 2000, except (a) pursuant to Rule 144
under the Securities Act, but subject to volume limitations intended to
equal the volume limitations applicable to affiliates as set forth in
Rule 144(e)(1) (the "Maximum Rule 144 Sales Amount"), (b) in a wide
distribution in an amount that exceeds the Maximum Rule 144 Sales Amount,
regardless of whether the seller is an affiliate of the Company or Rule
144(k) is applicable, in connection with which the Seller or the underwriter
confirms that no direct or indirect purchaser in that distribution is
intended to acquire more than the Maximum Rule 144 Sales Amount, (c) to
certain family members of the transferor, related trusts or
estates, or other entities owned exclusively by such transferor, family
members, trusts or estates (collectively, a "Family Group"), (d) in
private placements, to persons who own fewer than 1% of the outstanding
shares of Common Stock immediately prior to the transfer and who are not
affiliated with or Family Group members of the transferor, of no more
than (I) 1% of the outstanding shares of Common Stock to any one person,
its affiliates or Family Group members in any three-month period and
(II) 4% of the outstanding shares of Common Stock to all
persons in any twelve-month period, (e) in connection with the exercise
of certain registration rights granted to the
Company's stockholders under the Restructuring Agreements, but only if, to
the extent the number of shares sold exceeds the Maximum Rule 144 Sales
Amount, it is confirmed to the Company that it is intended that no
purchaser will acquire more than the Maximum Rule 144 Sales Amount,
(f) pledges to a financial institution or transfers to a financial
institution in the exercise of its pledge rights, (g) to Bayer Corporation
as provided under the Restructuring Agreements, (h) pursuant to a merger
or a consolidation that has been approved by the Board of
Directors and stockholders of the Company, (i) in a tender offer in which
Mr. Sperber (or any member of his Family Group who acquired shares from
Mr. Sperber) sells shares and (j) in a tender offer for a majority of the
shares of Common Stock by a bidder not affiliated with Bayer Corporation,
if Bayer Corporation and its affiliates have failed to pursue a tender
offer or other acquisition permitted under the Restructuring Agreements. In
addition, Continuing Stockholders have been granted certain registration
rights.
In addition to the above restrictions, the Restructuring Agreements
generally provide that Bayer Corporation may not transfer any of its shares
until May 15, 1999. However, Bayer Corporation may transfer its
shares of Common Stock in connection with certain registration rights granted
to Bayer Corporation under the Restructuring Agreements or to a Permitted
Assignee. A "Permitted Assignee" is (a) a successor to all or
substantially all the business and assets of Bayer Corporation or a
majority-owned subsidiary of Bayer Corporation
who agrees to be bound by the Restructuring Agreements, (b) with respect
to certain preemptive rights, rights of
first refusal and rights of first offer, a single purchaser who,
immediately after the purchase and for 60 days
thereafter, owns at least 10% of the shares then owned by Bayer Corporation
and who agrees to be bound by the Standstill and (c) with respect to
certain registration rights, any person referred to in (a) above and
up to three non-affiliated purchasers who, immediately after the respective
purchases and for 60 days thereafter, own in the aggregate at least 20%
of the shares then owned by Bayer Corporation and who agree to be bound
by the Standstill.
If Bayer Corporation sells any of its shares of Common Stock to any
unaffiliated third party, then the following of Bayer Corporation's rights
under the Restructuring Agreements terminate: the right to consent to
certain transactions of the Company; the right to purchase additional
shares on Company issuances of equity securities; the right to acquire
shares to maintain an ownership percentage of more than 21% of outstanding
shares over certain 10% holders; the right to acquire from the Company or
the Family Stockholders (as defined above) under certain circumstances
after the Standstill Period, shares for a controlling interest in the
Company; and rights of first refusal with regard to share transfers by
Continuing Stockholders. However, certain of those rights (i.e.,
rights to purchase additional shares on Company issuances of equity
securities and rights of first refusal) may be
transferred to a single purchaser who owns at least 10% of the shares
of Common Stock then owned by Bayer Corporation and who agrees to be
bound by the Standstill obligations.
Mr. Sperber and Mr. Bergman may not transfer any of their shares of
Common Stock to Bayer Corporation except in certain open market transactions
and except to the extent that Bayer Corporation first
offered to purchase such shares from the Family Stockholders and the Family
Stockholders did not sell such shares.
The Company may not transfer any of its shares of Common Stock to Bayer
Corporation, except to the extent that Bayer Corporation is entitled to
purchase shares under the Restructuring Agreements and those shares
are not purchased in the open market or from Family Stockholders.
Rights of Inclusion and First Refusal
The Restructuring Agreements provide that if, at any time prior to the
Voting Trust Termination Date, any Family Stockholder or Family Group member
(an "Offeree") receives an offer from a third party to purchase
some or all of the Offeree's shares of Common Stock, the Offeree wishes to
sell the shares (other than in a transaction described in clauses
(a) through (i) of the first paragraph of " Restrictions on Transfer" above)
and Mr. Sperber, as Voting Trustee, consents to the transaction, the Company
or its designee shall have the right of first refusal to purchase those
shares on the same terms as in the third party offer.
Under the Restructuring Agreements, if the Company fails to exercise
its right of first refusal and Bayer Corporation has not sold shares other
than to a Permitted Assignee, such right will be deemed assigned to Bayer
Corporation, provided that (a) the stockholdings of Bayer Corporation may not
as a result of its exercising such right exceed the New Percentage and
(b) if as a result of its exercising such right, Bayer Corporation would own
a majority of the shares of Common Stock. Bayer Corporation will exercise
such right at a price per share equal to the greater of (I) the price
contained in the third party offer and (II) the price determined by an
investment banking firm, who will take into consideration, among other
things, that control of the Company will pass at that time to Bayer
Corporation.
In addition, if, prior to the end of the Standstill Period or the time
that Bayer Corporation sells shares other than to a Permitted Assignee,
the Company is not entitled to exercise the right of first refusal described
above and a Continuing Stockholder is permitted under the Restructuring
Agreements, and in good faith wishes, to sell shares of Common Stock to a
third party (other than sales under Rule 144 under the Securities Act and
sales under clauses (b), (i) and (j) of the first paragraph of
"Restrictions on Transfer" above), Bayer Corporation shall
have the right of first offer to purchase those shares of Common Stock on
the same terms as the Continuing Stockholder wishes to sell the shares
of Common Stock.
The Restructuring Agreements provide that if, at any time prior to
June 15, 2000, Bayer Corporation is permitted under the Restructuring
Agreements, and in good faith wishes, to sell shares of Common Stock to a
third party, the Company and the Continuing Stockholders shall have the
right of first offer to purchase those shares of Common Stock on the same
terms as Bayer Corporation wishes to sell the shares of Common Stock.
<PAGE>
Item 7. Material to Be Filed as Exhibits.
(a) Voting Trust Agreement, dated September 30, 1994, by and among the
Company, Marvin H. Schein, the trust established by Marvin H.
Schein under trust agreement dated December 31,
1993, the trust established by Marvin H. Schein under trust agreement
dated September 9, 1994, Pamela Schein, the trust established by
the Trustees under Article Fourth of the Will of Jacob
M. Schein for the benefit of Pamela Schein and her issue under
trust agreement dated September 29, 1994, Pamela Joseph, and the
trust established by Pamela Joseph under trust agreement
dated September 28, 1994, and Martin Sperber, as voting trustee.
(b) General Shareholders Agreement, dated September 30, 1994, by and
among the Company, Bayer Corporation (formerly Miles Inc.),
each of the family shareholders listed as such on schedule A
thereto, each of the other shareholders listed as such on schedule
A thereto and Martin Sperber, as trustee under the Voting Trust
Agreement.*
(c) Continuing Shareholders Agreement, dated September 30, 1994, by
and among the Company and each of the shareholders listed on
schedule A thereto.*
(d) Option Agreement Pursuant to the 1993 Stock Option Plan, dated
September 30, 1994, by and between the Company and Martin Sperber.*
(e) Option Agreement Pursuant to the 1997 Stock Option Plan, dated
January 23, 1998, by and between the Company and Martin Sperber.
(f) Option Agreement Pursuant to the 1997 Stock Option Plan, dated
April 9, 1998, by and between the Company and Martin Sperber.
(g) Option Agreement Pursuant to the 1997 Stock Option Plan, dated
December 17, 1998, by and between the Company and Martin Sperber.
<PAGE>
Signature
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true,
complete and correct.
February 11, 1999
Date<PAGE>
/s/ Martin Sperber
Martin Sperber<PAGE>
<PAGE>
EXHIBIT INDEX
1. Voting Trust Agreement, dated September 30, 1994, by and among the
Company, Marvin H. Schein, the trust established by Marvin H. Schein
under trust agreement dated December 31, 1993, the trust
established by Marvin H. Schein under trust agreement dated September 9,
1994, Pamela Schein, the trust established by the Trustees under
Article Fourth of the Will of Jacob M. Schein for the benefit of
Pamela Schein and her issue under trust agreement dated September 29,
1994, Pamela Joseph, and the trust established by Pamela Joseph under
trust agreement dated September 28, 1994, and Martin Sperber,
as voting trustee.
2. General Shareholders Agreement, dated September 30, 1994, by and among
the Company, Bayer Corporation (formerly Miles Inc.), each of the
family shareholders listed as such on schedule A thereto,
each of the other shareholders listed as such on schedule A thereto
and Martin Sperber, as trustee under the Voting Trust Agreement.**
3. Continuing Shareholders Agreement, dated September 30, 1994, by and
among the Company and each of the shareholders listed on schedule A
thereto.**
4. Option Agreement Pursuant to the 1993 Stock Option Plan, dated
September 30, 1994, by and between the Company and Martin Sperber.**
5. Option Agreement Pursuant to the 1997 Stock Option Plan, dated January 23,
1998, by and between the Company and Martin Sperber.
6. Option Agreement Pursuant to the 1997 Stock Option Plan, dated April 9,
1998, by and between the Company and Martin Sperber.
7. Option Agreement Pursuant to the 1997 Stock Option Plan, dated
December 17, 1998, by and between the Company and Martin Sperber.
SCHEIN PHARMACEUTICAL, INC.
OPTION AGREEMENT
PURSUANT TO THE
1997 STOCK OPTION PLAN
AGREEMENT, dated January 23, 1998 between Schein Pharmaceutical,
Inc. ("SPINC") and Martin Sperber (the "Participant").
Preliminary Statement
The Stock Option Committee of the Board of Directors of SPINC,
pursuant to SPINC's 1997 Stock Option Plan, annexed hereto as Exhibit A (the
"Plan"), has authorized the granting to the Participant, as an employee, of a
nonqualified stock option (the "Option") to purchase the number of shares of
SPINC's common stock, par value $.01 per share (the "Common Stock"), set forth
below. The parties hereto desire to enter into this Agreement in order to set
forth the terms of the Option.
Accordingly, the parties hereto agree as follows:
1. Tax Matters. No part of the Option granted hereby is
intended to qualify as an "incentive stock option" under Section 422 of the
Internal Revenue Code of 1986, as amended.
2. Grant of Option. Subject in all respects to the Plan and
the terms and conditions set forth herein, the Participant is hereby granted
the Option to purchase from SPINC up to 700 Shares (as defined in the Plan),
at a price per Share of $1,500 (the "Option Price").
3. Vesting. Provided that the Participant has not incurred a
Termination of Employment (as defined in the Plan), the Option shall become
exercisable in three equal annual installments, with the first installment
becoming exercisable on the first anniversary of this Agreement. Subject to
Section 4 hereof, to the extent that the Option has become exercisable with
respect to a number of Shares, the Option may thereafter be exercised by the
Participant with respect to such Shares, in whole or in part, at any time or
from time to time prior to the expiration of the Option as provided herein.
4. Effect of Termination of Employment.
(a) Upon Termination of Employment of the Participant, 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 (as defined in the Plan) 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 5 and Section 7):
(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 (as
defined in the Plan), or the Participant's retirement at or after age 65 (or,
with the consent of the Committee or under an early retirement policy of the
Company (as defined in the Plan), before age 65), or if the Participant's
employment is terminated by the Company without Cause (as defined below), 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 Termination of Employment.
(b) 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 Subsidiaries (as defined in the Plan), 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" for purposes of this Section 4(b) means (i) the
Participant's willful and continued failure substantially to perform his or
her duties with the Company, (ii) fraud, misappropriation or intentional
material damage to the property or business of the Company or (iii) commission
of a felony.
(c) In the event of Termination of Employment for any reason
other than as provided in Section 4(a) or 4(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.
5. Acceleration of Exercisability.
(a) Upon a Termination of Employment of the Participant due to
the death or Disability of the Participant, or the retirement of the
Participant prior to age 65 with the consent of the Committee or under an
early retirement policy of the Company, all Options granted and not previously
exercisable shall immediately become fully exercisable.
(b) All Options granted and not previously exercisable shall
become fully exercisable immediately upon a Change of Control (as defined
herein), if a Change of Control occurs subsequent to an initial public
offering of the Common Stock (an "IPO"), or immediately upon a Termination of
Employment of the Participant by the Company without Cause, if the Termination
of Employment occurs subsequent to a Change of Control (without regard to
whether an IPO has theretofore occurred). 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 (the "Outstanding SPINC Voting Securities");
excluding, however, the following: (x) any acquisition by the Company,
(y) any acquisition by an employee benefit plan (or related trust)
sponsored or maintained by the Company 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 5(b) are
satisfied; or
(ii) a change in the composition of the Board (as defined
in the Plan) such that the individuals who, as of the Effective Date (as
defined in the Plan), 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 Subsection, any individual
who becomes a member of the Board subsequent to the Effective Date and
whose election, or nomination for election by SPINC stockholders, was
approved by 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 5(b)
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 (as defined in the
Plan)) 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
the Company, any employee benefit plan (or related trust) of the Company
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 dm the Company and any employee benefit
plan (or related trust) of the Company 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.
6. Exercise of Option.
(a) The Option may be exercised by the Participant by delivering
notice to the Committee of the election to exercise the Option and of the
number of Shares with respect to which the Option is being exercised, which
notice shall be accompanied by payment in full for the Shares. Payment for
such Shares may be made as follows:
(i) in cash or by certified check, bank draft or money
order payable to the order of SPINC;
(ii) if so permitted by the Committee: (A) through the
delivery of unencumbered Shares (including Shares acquired under the Option
then being exercised), provided such Shares (or such Option) have been owned
by the Participant for at least six months, or such longer period as required
by applicable accounting standards to avoid a charge to earnings, (B) through
a combination of Shares and cash as provided above, (C) by delivery of a
promissory note of the Participant to SPINC, or (D) 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 exercise price as represents the
par value of such Shares shall be paid in cash or by a combination of cash and
Shares;
(iii) through the delivery of irrevocable instructions to a
broker to deliver promptly to SPINC an amount equal to the aggregate Purchase
Price (as defined in the Plan); or
(iv) on such terms and conditions as may be acceptable to
the Committee and in accordance with applicable law.
(b) Upon receipt of payment and satisfaction of the
requirements, if any, as to withholding of taxes set forth in the Plan, SPINC
shall deliver to the Participant as soon as practicable a certificate or
certificates for the Shares then purchased.
7. Termination. Unless terminated as provided below or
otherwise pursuant to the Plan, the Option shall expire on the tenth
anniversary of this Agreement, or earlier as provided in the Plan upon a
Termination of Employment of the Participant.
8. Restriction on Transfer of Option. The Option granted
hereby is not transferable otherwise than by will or under the applicable laws
of descent and distribution and during the lifetime of the Participant may be
exercised only by the Participant or the Participant's guardian or legal
representative. In addition, the Option shall not be assigned, negotiated,
pledged or hypothecated in any way (whether by operation of law or otherwise),
and the Option shall not be subject to execution, attachment or similar
process. Upon any attempt to transfer, assign, negotiate, pledge or
hypothecate the Option, or in the event of any levy upon the Option by reason
of any execution, attachment or similar process contrary to the provisions
hereof, the Option shall immediately become null and void.
9. Restriction on Transfer of Shares.
(a) Except as provided below, the Participant agrees that the
Participant will not, prior to an IPO, sell, transfer, give, pledge, exchange,
bequest, devise, encumber or otherwise dispose of, whether voluntarily or by
operation of law, all or any part of the Shares issued to the Participant upon
the exercise of this Option.
(b) If the Participant receives a bona fide offer (an "Outside
Offer") for the Participant to sell all or any part of the Shares issued to
the Participant upon the exercise of this Option, and the Participant desires
to accept such Outside Offer, the Participant may not sell such Shares prior
to an IPO, unless the Participant first offers in writing (the "Participant's
Offer") the Shares desired to be so transferred for sale to SPINC at the
Formula Price (as defined herein) and otherwise on substantially the same
terms and conditions contained in the Outside Offer. The Participant's Offer
shall state the price and all other material terms contained in the Outside
Offer.
(c) SPINC shall have the right (but not the obligation) to
accept the Participant's Offer as to all or any part of the Shares offered
within 15 days of receipt of the Participant's Offer.
(d) At the closing of a purchase hereunder, SPINC shall deliver,
at SPINC's option, (i) a five-year note in a principal amount equal to the
purchase price of the Shares, such note to bear interest at the rate of
interest charged by banks to its prime commercial customers, (ii) cash in an
amount equal to the purchase price of the Shares or (iii) any combination of
(i) and (ii) above, against receipt from the Participant of certificates for
the Shares, free and clear of all liens, claims, pledges, equities and
encumbrances of any nature whatsoever, duly endorsed in blank or with duly
executed stock powers attached, in proper form for transfer and with such
supporting instruments, if any, as reasonably may be required to effect
transfer of registration.
(e) If SPINC (through no fault of the Participant) fails to
purchase (on a date and at a time and place designated by SPINC) all the
Shares as to which SPINC has accepted the Participant's Offer within 90 days
of SPINC's receipt of the Participant's Offer, then, unless the Participant
sells the Shares in accordance with the Outside Offer within 30 days of such
failure, the Participant shall again be required to comply with the provisions
of this Section 9 as to any subsequent proposed sale.
10. Repurchase of Shares. If, prior to an IPO, the Participant
is no longer employed by SPINC or its Subsidiaries, SPINC shall have the
option, exercisable at any time prior to an IPO, to purchase from the
Participant or the Participant's estate, as the case may be, all or any part
of the Shares issued to the Participant upon the exercise of this Option
(other than Shares that have been sold by the Participant pursuant to Section
9 hereof), at a price equal to the Formula Price (as defined below) as of the
date such option is exercised. "Formula Price" means the price determined by
multiplying (a) the Product (as defined below) divided by the aggregate number
of shares of common stock of SPINC (whether voting or non-voting) outstanding
on the Quarter End Valuation Date (as defined below) and (b) the number of
Shares as to which SPINC's option is exercised. "Product" means the amount
determined by multiplying (x) 48 and (y) the average quarterly After-Tax
Earnings (as defined below) of SPINC for the 12 full fiscal quarters ending as
of the last day of the fiscal quarter end coincident with or immediately
preceding the exercise by SPINC of such option. "After-Tax Earnings" shall
mean net income as derived from SPINC's applicable statements of income after
deduction for all taxes and dividends declared in respect of SPINC's preferred
stock and shall be determined, for the purposes of this Agreement, without
taking into account any extraordinary items and any expense recognized as
acquired in process research and development, net of applicable tax benefit.
Except as otherwise expressly provided herein, After-Tax Earnings of SPINC
shall be determined by SPINC on a basis consistent with the preceding practice
of SPINC. "Quarter End Valuation Date" means the last date of the fiscal
quarter coincident with or immediately preceding the exercise by SPINC of such
option.
11. Come-Along; Bring-Along, Right to Receive Cash; Right to
Put.
(a) Prior to an IPO, in the event of an offer for the sale of a
majority of the outstanding shares of common stock of SPINC (including, for
this purpose, an offer for a sale of a number of Shares that, when added to
other Shares previously acquired by the offeror or its affiliates, constitutes
such a majority) that the offeree or offerees of such offer desire to accept,
SPINC shall use its reasonable best efforts to have the Shares included, to
the extent the Participant desires to have them included, in such sale (or, at
SPINC's election, to have SPINC purchase the Shares) at the same price per
Share, and on the same terms and conditions, as the other Shares included in
such sale and, to the extent practicable, on a pro rata basis with the other
Shares in accordance with the respective sellers' ownership of Shares.
(b) Prior to an IPO, in the event of an offer for the sale of a
majority of the outstanding shares of common stock of SPINC (including, for
this purpose, an offer for a sale of a number of Shares that, when added to
other Shares previously acquired by the offeror or its affiliates, constitutes
such a majority) that the offeree or offerees of such offer desire to accept,
the Participant agrees to have his or her Shares included, to the extent the
offeree or offerees desire to have such Shares included, in such sale (or, at
SPINC's election, to have SPINC purchase the Shares) at the same price per
Share, and on the same terms and conditions, as the other Shares included in
such sale and, to the extent practicable, on a pro rata basis with the other
Shares in accordance with the respective sellers' ownership of Shares.
(c) Notwithstanding anything to the contrary herein (but subject
to Section 17 of the Plan and Subsection (e) below), if a Change of Control
occurs prior to an IPO, on each date thereafter on which any portion of the
Option not previously exercisable becomes exercisable, the Participant shall
be entitled to receive from SPINC, in lieu of any Shares and in full
satisfaction of all obligations of SPINC herein and in the Plan with respect
to such portion of the Option, an amount in cash equal to (i) the product of
(A) the number of Shares as to which such portion of the Option then becomes
exercisable and (B) the price per Share paid in connection with the
transaction giving rise to the Change of Control (the "Change of Control
Price"), reduced by (ii) the total exercise price payable for the number of
Shares referred to in (i)(A) above.
(d) Notwithstanding anything to the contrary herein (but subject
to Section 17 of the Plan and Subsection (e) below), if a Change of Control
occurs prior to an EPO, the Participant may, but shall not be required to,
elect, by written notice given to SPINC within 30 days after SPINC gives the
Participant written notice of the Change of Control and by delivery of
such documents and instruments of transfer as SPINC may reasonably request, to
sell, and, upon such election, SPINC shall purchase, all, but not fewer than
all, the Shares previously purchased upon exercise of the Option and all
rights with respect to the portion of the Option that is then exercisable for
an amount in cash equal to (i) the product of (A) the sum of (I) the number of
such Shares previously purchased plus (II) the number of Shares as to which
such portion of the Option is then exercisable and (B) the Change of Control
Price, reduced by (ii) the total exercise price payable for the number of
Shares referred to in (i)(A)(II) above.
(e) If the Committee determines that the Change of Control Price
is substantially different from the price per Share paid in connection with
other transactions proximately relating to the Change of Control and the
Change of Control Price does not fairly reflect the average price per Share
paid in connection with all the transactions proximately relating to the
Change of Control, the Committee may, but shall not be required to, adjust the
Change of Control Price to one that does fairly reflect that average price per
Share. The Committee's determinations under this Subsection (e) shall be
final, conclusive and binding on the parties.
12. Rights as a Stockholder. The Participant shall have no
rights as a stockholder with respect to any Shares covered by the Option until
the Participant shall have become the holder of record of the Shares, and no
adjustments shall be made for dividends in cash or other property,
distributions or other rights in respect of any such Shares, except as
otherwise specifically provided for in the Plan.
13. Provisions of Plan Control. This Agreement is subject to
all the terms, conditions and provisions of the Plan and to such rules,
regulations and interpretations relating to the Plan as may be adopted by the
Committee and as may be in effect from time to time. The annexed copy of the
Plan is incorporated herein by reference. If and to the extent that this
Agreement conflicts or is inconsistent with the terms, conditions and
provisions of the Plan, the Plan shall control, and this Agreement shall be
deemed to be modified accordingly.
14. Notices. Any notice or communication given hereunder shall
be in writing and shall be deemed to have been duly given when delivered in
person, or by United States mail, to the appropriate party at the address set
forth below (or such other address as the party shall from time to time
specify):
<PAGE>
If to SPINC or the Committee, to:
Schein Pharmaceutical, Inc.
100 Campus Drive
Florham Park, New Jersey 07932
Attention: Corporate Secretary
If to the Participant, to:
the address indicated on the signature page at the end of
this Agreement.
15. No Obligation to Continue Employment. This Agreement does
not guarantee that SPINC or any Subsidiary will employ the Participant for any
specific time period, nor does it modify in any respect SPINC's or any
Subsidiary's right to terminate or modify the Participant's employment or
compensation.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the date and year first above written.
SCHEIN PHARMACEUTICAL, INC.
By: /s/ Oliver N. Esman
Authorized Officer
/s/ Martin Sperber
Stock Option Participant
Address:
SCHEIN PHARMACEUTICAL, INC.
OPTION AGREEMENT
PURSUANT TO THE
1997 STOCK OPTION PLAN
AGREEMENT, dated April 9, 1998 between Schein Pharmaceutical, Inc.
("SPINC") and Martin Sperber (the "Participant").
Preliminary Statement
The Stock Option Committee of the Board of Directors of SPINC,
pursuant to SPINC's 1997 Stock Option Plan, annexed hereto as Exhibit A (the
"Plan"), has authorized the granting to the Participant, as an employee, of a
nonqualified stock option (the "Option") to purchase the number of shares of
SPINC's common stock, par value $.01 per share (the "Common Stock"), set forth
below. The parties hereto desire to enter into this Agreement in order to set
forth the terms of the Option.
Accordingly, the parties hereto agree as follows:
1. Tax Matters. No part of the Option granted hereby is
intended to qualify as an "incentive stock option" under Section 422 of the
Internal Revenue Code of 1986, as amended.
2. Grant of Option. Subject in all respects to the Plan and
the terms and conditions set forth herein, the Participant is hereby granted
the Option to purchase from SPINC up to 73,500 Shares (as defined in the
Plan), at a price per Share of $17.00 (the "Option Price").
3. Vesting. Provided that the Participant has not incurred a
Termination of Employment (as defined in the Plan), the Option shall become
exercisable in three equal annual installments, with the first installment
becoming exercisable on the first anniversary of this Agreement. Subject to
Section 4 hereof, to the extent that the Option has become exercisable with
respect to a number of Shares, the Option may thereafter be exercised by the
Participant with respect to such Shares, in whole or in part, at any time or
from time to time prior to the expiration of the Option as provided herein.
4. Effect of Termination of Employment
(a) Upon Termination of Employment of the Participant, 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 (as defined in the Plan) 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 5 and Section 7):
(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 (as defined in
the Plan), or the Participant's retirement at or after age 65 (or, with the
consent of the Committee or under an early retirement policy of the Company
(as defined in the Plan), before age 65), or if the Participant's employment
is terminated by the Company without Cause (as defined below), 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 Termination of Employment.
(b) 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 Subsidiaries (as defined in the Plan), 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" for purposes of this Section 4(b) means (i) the
Participant's willful and continued failure substantially to perform his or
her duties with the Company, (ii) fraud, misappropriation or intentional
material damage to the property or business of the Company or (iii) commission
of a felony.
(c) In the event of Termination of Employment for any reason
other than as provided in Section 4(a) or 4(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.
5. Acceleration of Exercisability.
(a) Upon a Termination of Employment of the Participant due to
the death or Disability of the Participant, or the retirement of the
Participant prior to age 65 with the consent of the Committee or under an
early retirement policy of the Company, all Options granted and not previously
exercisable shall immediately become fully exercisable.
(b) All Options granted and not previously exercisable shall
become fully exercisable immediately upon a Change of Control (as defined
herein), if a Change of Control occurs subsequent to an initial public
offering of the Common Stock (an "IPO"), or immediately upon a Termination of
Employment of the Participant by the Company without Cause, if the Termination
of Employment occurs subsequent to a Change of Control (without regard to
whether an IPO has theretofore occurred). 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 (the "Outstanding SPINC Voting Securities"); excluding, however, the
following: (x) any acquisition by the Company, (y) any acquisition by an
employee benefit plan (or related trust) sponsored or maintained by the
Company 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 5(b) are satisfied; or
(ii) a change in the composition of the Board (as defined
in the Plan) such that the individuals who, as of the Effective Date (as
defined in the Plan), 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 Subsection, any individual who becomes a member of the Board
subsequent to the Effective Date and whose election, or nomination for
election by SPINC stockholders, was approved by 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 5(b) 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 (as defined in the
Plan)) 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 the Company, any employee benefit plan (or related trust)
of the Company 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 the Company and any employee benefit plan
(or related trust) of the Company 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.
6. Exercise of Option.
(a) The Option may be exercised by the Participant by delivering
notice to the Committee of the election to exercise the Option and of the
number of Shares with respect to which the Option is being exercised, which
notice shall be accompanied by payment in full for the Shares. Payment for
such Shares may be made as follows:
(i) in cash or by certified check, bank draft or money
order payable to the order of SPINC;
(ii) if so permitted by the Committee: (A) through the
delivery of unencumbered Shares (including Shares acquired under the Option
then being exercised), provided such Shares (or such Option) have been owned
by the Participant for at least six months, or such longer period as required
by applicable accounting standards to avoid a charge to earnings, (B) through
a combination of Shares and cash as provided above, (C) by delivery of a
promissory note of the Participant to SPINC, or (D) 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 exercise price as represents the
par value of such Shares shall be paid in cash or by a combination of cash and
Shares;
(iii) through the delivery of irrevocable instructions to a
broker to deliver promptly to SPINC an amount equal to the aggregate Purchase
Price (as defined in the Plan); or
(iv) on such terms and conditions as may be acceptable to
the Committee and in accordance with applicable law.
(b) Upon receipt of payment and satisfaction of the
requirements, if any, as to withholding of taxes set forth in the Plan, SPINC
shall deliver to the Participant as soon as practicable a certificate or
certificates for the Shares then purchased.
7. Termination. Unless terminated as provided below or
otherwise pursuant to the Plan, the Option shall expire on the tenth
anniversary of this Agreement, or earlier as provided in the Plan upon a
Termination of Employment of the Participant.
8. Restriction on Transfer of Option. The Option granted
hereby is not transferable otherwise than by will or under the applicable laws
of descent and distribution and during the lifetime of the Participant may be
exercised only by the Participant or the Participant's guardian or legal
representative. In addition, the Option shall not be assigned, negotiated,
pledged or hypothecated in any way (whether by operation of law or otherwise),
and the Option shall not be subject to execution, attachment or similar
process. Upon any attempt to transfer, assign, negotiate, pledge or
hypothecate the Option, or in the event of any levy upon the Option by reason
of any execution, attachment or similar process contrary to the provisions
hereof, the Option shall immediately become null and void.
9. Restriction on Transfer of Shares.
(a) Except as provided below, the Participant agrees that the
Participant will not, prior to an IPO, sell, transfer, give, pledge, exchange,
bequest, devise, encumber or otherwise dispose of, whether voluntarily or by
operation of law, all or any part of the Shares issued to the Participant upon
the exercise of this Option.
(b) If the Participant receives a bona fide offer (an "Outside
Offer") for the Participant to sell all or any part of the Shares issued to
the Participant upon the exercise of this Option, and the Participant desires
to accept such Outside Offer, the Participant may not sell such Shares prior
to an IPO, unless the Participant first offers in writing (the "Participant's
Offer") the Shares desired to be so transferred for sale to SPINC at the
Formula Price (as defined herein) and otherwise on substantially the same
terms and conditions contained in the Outside Offer. The Participant's Offer
shall state the price and all other material terms contained in the Outside
Offer.
(c) SPINC shall have the right (but not the obligation) to
accept the Participant's Offer as to all or any part of the Shares offered
within 15 days of receipt of the Participant's Offer.
(d) At the closing of a purchase hereunder, SPINC shall deliver,
at SPINC's option, (i) a five-year note in a principal amount equal to the
purchase price of the Shares, such note to bear interest at the rate of
interest charged by banks to its prime commercial customers, (ii) cash in an
amount equal to the purchase price of the Shares or (iii) any combination of
(i) and (ii) above, against receipt from the Participant of certificates for
the Shares, free and clear of all liens, claims, pledges, equities and
encumbrances of any nature whatsoever, duly endorsed in blank or with duly
executed stock powers attached, in proper form for transfer and with such
supporting instruments, if any, as reasonably may be required to effect
transfer of registration.
(e) If SPINC (through no fault of the Participant) fails to
purchase (on a date and at a time and place designated by SPINC) all the
Shares as to which SPINC has accepted the Participant's Offer within 90 days
of SPlNC's receipt of the Participant's Offer, then, unless the Participant
sells the Shares in accordance with the Outside Offer within 30 days of such
failure, the Participant shall again be required to comply with the provisions
of this Section 9 as to any subsequent proposed sale.
10. Repurchase of Shares. If, prior to an IPO, the Participant
is no longer employed by SPINC or its Subsidiaries, SPINC shall have the
option, exercisable at any time prior to an IPO, to purchase from the
Participant or the Participant's estate, as the case may be, all or any part
of the Shares issued to the Participant upon the exercise of this Option
(other than Shares that have been sold by the Participant pursuant to Section
9 hereof), at a price equal to the Formula Price (as defined below) as of the
date such option is exercised. "Formula Price" means the price determined by
multiplying (a) the Product (as defined below) divided by the aggregate number
of shares of common stock of SPINC (whether voting or non-voting) outstanding
on the Quarter End Valuation Date (as defined below) and (b) the number of
Shares as to which SPINC's option is exercised. "Product" means the amount
determined by multiplying (x) 48 and (y) the average quarterly After-Tax
Earnings (as defined below) of SPINC for the 12 full fiscal quarters ending as
of the last day of the fiscal quarter end coincident with or immediately
preceding the exercise by SPlNC of such option. "After-Tax Earnings" shall
mean net income as derived from SPINC's applicable statements of income after
deduction for all taxes and dividends declared in respect of SPINC's preferred
stock and shall be determined, for the purposes of this Agreement, without
taking into account any extraordinary items and any expense recognized as
acquired in process research and development, net of applicable tax benefit.
Except as otherwise expressly provided herein, After-Tax Earnings of SPINC
shall be determined by SPINC on a basis consistent with the preceding practice
of SPlNC. "Quarter End Valuation Date" means the last date of the fiscal
quarter coincident with or immediately preceding the exercise by SPlNC of such
option.
11. Come-Along; Bring-Along; Right to Receive Cash; Right to
Put.
(a) Prior to an IPO, in the event of an offer for the sale of a
majority of the outstanding shares of common stock of SPINC (including, for
this purpose, an offer for a sale of a number of Shares that, when added to
other Shares previously acquired by the offeror or its affiliates, constitutes
such a majority) that the offeree or offerees of such offer desire to accept,
SPINC shall use its reasonable best efforts to have the Shares included, to
the extent the Participant desires to have them included, in such sale (or, at
SPINC's election, to have SPINC purchase the Shares) at the same price per
Share, and on the same terms and conditions, as the other Shares included in
such sale and, to the extent practicable, on a pro rata basis with the other
Shares in accordance with the respective sellers' ownership of Shares.
(b) Prior to an IPO, in the event of an offer for the sale of a
majority of the outstanding shares of common stock of SPINC (including, for
this purpose, an offer for a sale of a number of Shares that, when added to
other Shares previously acquired by the offeror or its affiliates, constitutes
such a majority) that the offeree or offerees of such offer desire to accept,
the Participant agrees to have his or her Shares included, to the extent the
offeree or offerees desire to have such Shares included, in such sale (or, at
SPINC's election, to have SPINC purchase the Shares) at the same price per
Share, and on the same terms and conditions, as the other Shares included in
such sale and, to the extent practicable, on a pro rata basis with the other
Shares in accordance with the respective sellers' ownership of Shares.
(c) Notwithstanding anything to the contrary herein (but subject
to Section 17 of the Plan and Subsection (e) below), if a Change of Control
occurs prior to an IPO, on each date thereafter on which any portion of the
Option not previously exercisable becomes exercisable, the Participant shall
be entitled to receive from SPINC, in lieu of any Shares and in full
satisfaction of all obligations of SPlNC herein and in the Plan with respect
to such portion of the Option, an amount in cash equal to (i) the product of
(A) the number of Shares as to which such portion of the Option then becomes
exercisable and (B) the price per Share paid in connection with the
transaction giving rise to the Change of Control (the "Change of Control
Price"), reduced by (ii) the total exercise price payable for the number of
Shares referred to in (i)(A) above.
(d) Notwithstanding anything to the contrary herein (but subject
to Section 17 of the Plan and Subsection (e) below), if a Change of Control
occurs prior to an IPO, the Participant may, but shall not be required to,
elect, by written notice given to SPINC within 30 days after SPINC gives the
Participant written notice of the Change of Control and by delivery of such
documents and instruments of transfer as SPlNC may reasonably request, to
sell, and, upon such election, SPINC shall purchase, all, but not fewer than
all, the Shares previously purchased upon exercise of the Option and all
rights with respect to the portion of the Option that is then exercisable for
an amount in cash equal to (i) the product of (A) the sum of (I) the number of
such Shares previously purchased plus (II) the number of Shares as to which
such portion of the Option is then exercisable and (B) the Change of Control
Price, reduced by (ii) the total exercise price payable for the number of
Shares referred to in (i)(A)(II) above.
(e) If the Committee determines that the Change of Control Price
is substantially different from the price per Share paid in connection with
other transactions proximately relating to the Change of Control and the
Change of Control Price does not fairly reflect the average price per Share
paid in connection with all the transactions proximately relating to the
Change of Control, the Committee may, but shall not be required to, adjust the
Change of Control Price to one that does fairly reflect that average price per
Share. The Committee's determinations under this Subsection (e) shall be
final, conclusive and binding on the parties.
12. Rights as a Stockholder. The Participant shall have no
rights as a stockholder with respect to any Shares covered by the Option until
the Participant shall have become the holder of record of the Shares, and no
adjustments shall be made for dividends in cash or other property,
distributions or other rights in respect of any such Shares, except as
otherwise specifically provided for in the Plan.
13. Provisions of Plan Control. This Agreement is subject to
all the terms, conditions and provisions of the Plan and to such rules,
regulations and interpretations relating to the Plan as may be adopted by the
Committee and as may be in effect from time to time. The annexed copy of the
Plan is incorporated herein by reference. If and to the extent that this
Agreement conflicts or is inconsistent with the terms, conditions and
provisions of the Plan, the Plan shall control, and this Agreement shall be
deemed to be modified accordingly.
14. Notices. Any notice or communication given hereunder shall
be in writing and shall be deemed to have been duly given when delivered in
person, or by United States mail, to the appropriate party at the address set
forth below (or such other address as the party shall from time to time
specify):
If to SPINC or the Committee, to:
Schein Pharmaceutical, Inc.
100 Campus Drive
Florham Park, New Jersey 07932
Attention: Corporate Secretary
If to the Participant, to:
the address indicated on the signature page at the end of
this Agreement.
<PAGE>
15. No Obligation to Continue Employment. This Agreement does
not guarantee that SPINC or any Subsidiary will employ the Participant for any
specific time period, nor does it modify in any respect SPINC's or any
Subsidiary's right to terminate or modify the Participant's employment or
compensation.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the date and year first above written.
SCHEIN PHARMACEUTICAL, INC.
By: /s/ Oliver N. Esman
Authorized Officer
/s/ Martin Sperber
Stock Option Participant
Address:
6 Casper Ct.
Florham Park, NJ 07932
SCHEIN PHARMACEUTICAL, INC.
OPTION AGREEMENT
PURSUANT TO THE
1997 STOCK OPTION PLAN
AGREEMENT, dated as of December 17, 1998, between Schein
Pharmaceutical, Inc. ("SPINC") and Marty Sperber (the "Participant").
Preliminary Statement
The Stock Option Committee of the Board of Directors of SPINC, pursuant to
SPINC's 1997 Stock Option Plan, annexed hereto as Exhibit A (the "Plan"), has
authorized the granting to the Participant, as an employee, of a nonqualified
stock option (the "Option") to purchase the number of shares of SP INC's
common stock, par value $.01 per share (the "Common Stock"), set forth below.
The parties hereto desire to enter into this Agreement in order to set forth
the terms of the Option.
Accordingly, the parties hereto agree as follows:
1. Tax Matters. No part of the Option granted hereby is
intended to qualify as an "incentive stock option" under Section 422 of the
Internal Revenue Code of 1986, as amended.
Grant of Option. Subject in all respects to the Plan and the terms and
conditions set forth herein, the Participant is hereby granted the Option to
purchase from SPINC up to 75,000 Shares (as defined in the Plan), at a price
per Share of $13.625 (the "Option Price").
Vesting. Provided that the Participant has not incurred a Termination of
Employment (as defined in the Plan), the Option shall become exercisable in
three installments, with the first installment becoming exercisable six months
after the date of this agreement and the remaining installments on the First
and Second anniversary of this agreement. Subject to Section 4 hereof, to the
extent that the Option has become exercisable with respect to a number of
Shares, the Option may thereafter be exercised by the Participant with respect
to such Shares, in whole or in part, at any time or from time to time prior to
the expiration of the Option as provided herein.
2. Effect of Termination of Employment
(a) Upon Termination of Employment of the Participant, 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 (as defined in the Plan) 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 5 and Section 7):
(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 (as
defined in the Plan), or the Participant's retirement at or after age 65 (or,
with the consent of the Committee or under an early retirement policy of the
Company (as defined in the Plan), before age 65), or if the Participant's
employment is terminated by the Company without Cause (as defined below), 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 Termination of Employment.
(b) 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 Subsidiaries (as defined in the Plan), 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" for purposes of this Section 4(b) means (i) the
Participant's willful and continued failure substantially to perform his or
her duties with the Company, (ii) fraud, misappropriation or intentional
material damage to the property or business of the Company or (iii) commission
of a felony.
(c) In the event of Termination of Employment for any reason
other than as provided in Section 4(a) or 4(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.
3. Acceleration of Exercisability.
(a) Upon a Termination of Employment of the Participant due to
the death or Disability of the Participant, or the retirement of the
Participant prior to age 65 with the consent of the Committee or under an
early retirement policy of the Company, all Options granted and not previously
exercisable shall immediately become fully exercisable.
(b) All Options granted and not previously exercisable shall
become fully exercisable immediately upon a Termination of Employment of the
Participant by the Company without Cause, if the Termination of Employment
occurs subsequent to 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 (the "Outstanding SPINC Voting
Securities"); excluding, however, the following: (x) any acquisition by
the Company, (y) any acquisition by an employee benefit plan (or related
trust) sponsored or maintained by the Company 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 5(b) are
satisfied; or
(ii) a change in the composition of the Board (as
defined in the Plan) such that the individuals who, as of the Effective
Date (as defined in the Plan), 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 Subsection, any individual
who becomes a member of the Board subsequent to the Effective Date and
whose election, or nomination for election by SPINC stockholders, was
approved by 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 5(b)
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 (as defined in the
Plan)) 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
the Company, any employee benefit plan (or related trust) of the Company
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 the Company and any employee benefit
plan (or related trust) of the Company 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.
4. Exercise of Option.
(a) The Option may be exercised by the Participant by delivering
notice to the Committee of the election to exercise the Option and of the
number of Shares with respect to which the Option is being exercised, which
notice shall be accompanied by payment in full for the Shares. Payment for
such Shares may be made as follows:
(i) in cash or by certified check, bank draft or money
order payable to the order of SPINC;
(ii) if so permitted by the Committee: (A) through the
delivery of unencumbered Shares (including Shares acquired under the Option
then being exercised), provided such Shares (or such Option) have been owned
by the Participant for at least six months, or such longer period as required
by applicable accounting standards to avoid a charge to earnings, (B) through
a combination of Shares and cash as provided above, (C) by delivery of a
promissory note of the Participant to SPINC, or (D) 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 exercise price as represents the
par value of such Shares shall be paid in cash or by a combination of cash and
Shares;
(iii) through the delivery of irrevocable instructions to a
broker to deliver promptly to SPINC an amount equal to the aggregate Purchase
Price (as defined in the Plan); or
(iv) on such terms and conditions as may be acceptable to
the Committee and in accordance with applicable law.
(b) Upon receipt of payment and satisfaction of the
requirements, if any, as to withholding of taxes set forth in the Plan, SPINC
shall deliver to the Participant as soon as practicable a certificate or
certificates for the Shares then purchased.
5. Termination. Unless terminated as provided below or
otherwise pursuant to the Plan, the Option shall expire on the tenth
anniversary of this Agreement, or earlier as provided in the Plan upon a
Termination of Employment of the Participant.
6. Restriction on Transfer of Option. The Option granted
hereby is not transferable otherwise than by will or under the applicable laws
of descent and distribution and during the lifetime of me Participant may be
exercised only by the Participant or the Participant's guardian or legal
representative. In addition, the Option shall not be assigned, negotiated,
pledged or hypothecated in any way (whether by operation of law or otherwise),
and the Option shall not be subject to execution, attachment or similar
process. Upon any attempt to transfer, assign, negotiate, pledge or
hypothecate the Option, or in the event of any levy upon the Option by reason
of any execution, attachment or similar process contrary to the provisions
hereof, the Option shall immediately become null and void.
7. Rights as a Stockholder. The Participant shall have no
rights as a stockholder with respect to any Shares covered by the Option until
the Participant shall have become the holder of record of the Shares, and no
adjustments shall be made for dividends in cash or other property,
distributions or other rights in respect of any such Shares, except as
otherwise specifically provided for in the Plan.
8. Provisions of Plan Control. This Agreement is subject to all
the terms, conditions and provisions of the Plan and to such rules,
regulations and interpretations relating to the Plan as may be adopted by the
Committee and as may be in effect from time to time. The annexed copy of the
Plan is incorporated herein by reference. If and to the extent that this
Agreement conflicts or is inconsistent with the terms, conditions and
provisions of the Plan, the Plan shall control, and this Agreement shall be
deemed to be modified accordingly.
9. Notices. Any notice or communication given hereunder shall
be in writing and shall be deemed to have been duly given when delivered in
person, or by United States mail, to the appropriate party at the address set
forth below (or such other address as the party shall from time to time
specify):
If to SPINC or the Committee, to:
Schein Pharmaceutical, Inc.
100 Campus Drive
Florham Park, New Jersey 07932
Attention: Corporate Secretary
If to the Participant, to:
the address indicated on the signature page at the end of
this Agreement.
10. No Obligation to Continue Employment. This Agreement does
not guarantee that SPINC or any Subsidiary will employ the Participant for any
specific time period, nor does it modify in any respect SPINC's or any
Subsidiary's right to terminate or modify the Participant's employment or
compensation.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the date and year first above written.
SCHEIN PHARMACEUTICAL, INC.
By: /s/ Oliver N. Esman
Authorized Officer
/s/ Martin Sperber
Stock Option Participant
Address:
