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EXHIBIT 99(b)
MEDICINE SHOPPE INTERNATIONAL, INC.
EMPLOYEE INCENTIVE STOCK OPTION PLAN
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1. PURPOSE. This Stock Option Plan (the "Plan") is intended to
encourage the ownership of stock of Medicine Shoppe International, Inc. (the
"Company") by key employees of the Company and its subsidiaries, to provide
additional incentive for them to promote the success of the business, and to
encourage them to remain in its employ. It is further intended that options
issued pursuant to this Plan shall constitute Incentive Stock Options within
the meaning of Section 422A of the Internal Revenue Code of 1954, as amended,
and the rules and regulations thereunder (the "Code").
2. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company (the
"Committee"). The Committee shall determine the key employees who are to be
granted options hereunder and the amount of stock to be optioned to each.
The interpretation and construction by the Committee of any
provisions of the Plan or any Option, as defined in Paragraph 4 hereof, granted
hereunder shall be final. No member of the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
Option granted under it.
3. PARTICIPANTS. The Committee, in its sole discretion but subject to
the requirements of Section 422A of the Code, shall select from among the key
employees of the Company and
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its subsidiaries, including officers, whether or not they are Directors, and
shall determine which of such persons (the "Participants") shall receive
Options. No Director shall participate in the granting of Options to himself
under the Plan.
4. GRANT OF OPTIONS. The Committee, prior to the expiration of ten
years from the day on which this Plan is adopted by the Committee, in its
discretion, may grant to the Participants the right to purchase Common Stock,
as defined in Paragraph 5 hereof, pursuant to the terms and conditions set
forth in Paragraph 7 hereof (the "Option").
5. STOCK SUBJECT TO THE PLAN. The stock subject to the Option shall
be shares of the Company's authorized but unissued or reacquired $0.01 par
value common stock (the "Common Stock"). The aggregate number of shares which
may be issued under Options hereunder shall not exceed 125,000 shares of Common
Stock. The limitations established in this Plan by the preceding sentences
shall be subject to adjustment as provided in Paragraph 6 hereunder.
In the event that any outstanding Option under the Plan for any
reason expires, is cancelled or is terminated, the shares of Common Stock
allocable to the unexercised portions of such Option may again be subjected to
an Option under the Plan.
6. CHANGES IN CAPITAL STRUCTURE. In the event that the shares of
outstanding Common Stock are hereafter increased or decreased into or exchanged
for a different number or kind of shares or other securities of the Company or
of another
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corporation, by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, combination of shares or
dividend payable in corporate shares, an appropriate adjustment shall be made
in the number and kind of shares as to which Options may be granted under the
Plan, including the maximum number that may be granted to any one Participant.
In addition, an appropriate adjustment shall be made in the number and kind of
shares as to which outstanding Options, or portions thereof then unexercised,
shall be exercisable to the end that each Participant's proportionate interest
in the total shares subject to option shall be maintained as before the
occurrence of such event; such adjustment in the shares subject to option shall
be made without changing the total price applicable to the unexercised portion
of any Option and with a corresponding adjustment in the option price per
share; provided, however, that each such adjustment in the number and kind of
shares subject to outstanding options, including any adjustment in the option
price, shall be made in such manner as not to constitute a "Modification" as
defined in Section 425 of the Code. Any adjustment made by the Committee shall
be conclusive.
7. TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by
Common Stock Option Agreements (the "Option Agreements") in such form not
inconsistent with this Plan as the Committee shall from time to time determine,
provided that the substance of the following be included therein.
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(a) NUMBER OF SHARES. Each Option Agreement shall state the number
of shares of Common Stock to which it pertains. The aggregate fair
market value of Common Stock for which an employee may be granted
Options under this Plan and any other incentive stock option plan of
the Company (fair market value being determined as of the date of grant
in accordance with the provisions of subparagraph 7(b) hereof) in any
one calendar year shall not exceed $100,000 plus any unused limit
carryover determined pursuant to Section 422A(c)(4) of the Code.
(b) OPTION PRICE. Each Option Agreement shall state the option
price, which shall not be less than 100% of the fair market value of a
share of Common Stock on the date of the granting of the Option. Such
fair market value shall be deemed to be the closing price of Common
Stock on the stock exchange upon which the Common Stock is traded, or
average closing price if there be more than one such exchange, on the
day the Option is granted. If no sale of the Common Stock shall be made
on any stock exchange on that day, the fair market value shall be
determined by taking the mean between the last available bona fide bid
and asked prices (or average thereof if there be more than one) on the
valuation date as the same may be available, in the order indicated,
from the following sources:
(i) the stock exchange(s) on which the Common Stock is traded;
(ii) NASDAQ (the National Association of Securities Dealers, Inc.
Automated Quotation System); or
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(iii) three primary over-the-counter market in the Common
Stock (or such lesser number as shall then be making a
primary market in such shares).
If there are not sales or bid and asked prices on the valuation
date, the value may be determined by taking the mean between the bona
fide sales or bid and asked prices on the nearest date before and the
nearest date after the valuation date. Subject to the foregoing, the
Committee in fixing the option price shall have full authority and
discretion and be fully protected in doing so.
(c) METHOD OF PAYMENT. Each Option Agreement shall state that
Common Stock purchased under Options shall at the time of purchase be
paid in full. To the extent that the right to purchase shares is
accrued thereunder, Options may be exercised from time to time by the
delivery of written notice to the Company stating the number of shares
of Common Stock with respect to which the Option is being exercised and
the time and date of purchase thereof, which shall be during the normal
business hours of the Company on a regular business day not less than
fifteen (15) days after the giving of such notice unless an earlier
date shall have been mutually agreed upon. At the time specified in
such notice, the Company shall, without transfer or issue tax, transfer
and set aside for the benefit of the Participant (including, for all
purposes hereof, such other person as shall be entitled to exercise the
Option hereunder) a certificate or certificates for
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such shares out of its theretofore authorized but unissued or
reacquired Common Stock, against payment of the option price in full by
cash (including certified or bank cashier's check or the equivalent
thereof). If the Participant fails to pay for any part of the number of
shares specified in such notice in accordance with the terms of the
Plan and such notice, the Participant's right to exercise the Option
with respect to such shares may, by subsequent action of the
Committee, be terminated.
(d) OPTION TERM. Each Option Agreement shall specify the period
for which the Option thereunder is granted. In no event shall an Option
be exercisable after the expiration of five years from the date the
Option is granted. At the end of such specified period the Option
shall expire.
(e) EXERCISE OF OPTIONS. During the first year an Option is
outstanding, it may not be exercised; during the second year an Option
is outstanding, the Option may be exercised as to not more than 25% of
the total number of shares covered thereby; in each additional year the
Option may be exercised as to an additional 25% of the total number of
shares covered, such that in the fifth and final year, the Option shall
be exercisable as to the entire option amount. To the extent not
exercised, Options shall accumulate and be exercisable, in whole or in
part, in any subsequent period but not later than five years from the
date the Option is granted. Not less than ten shares may
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be purchased at any one time unless the number purchases is the total
number at the time purchasable under the Option. During the lifetime of
the Participant, the Option shall be exercised only by him and shall
not be assignable or transferable by him and no other person shall
acquire any rights therein.
(f) PRIOR OUTSTANDING OPTIONS. Subject to the provisions of this
subparagraph 7(f), no Option (for purpose of this subparagraph called
"New Option") shall be exercisable while there is outstanding, within
the meaning of the Code, any Incentive Stock Option (as defined in
Section 422A of the Code) granted before the granting of the New Option
to the person to whom the New Option is granted to purchase stock in
the Company or in a corporation which, at the time the New Option is
granted is a parent or subsidiary corporation (as those terms are
defined in Section 425 of the Code) of the Company, or is a predecessor
corporation of the Company or such parent or subsidiary corporation.
(g) EFFECT OF TERMINATION OF EMPLOYMENT, DEATH OR DISABILITY.
Except as otherwise provided in this subparagraph, upon termination of
a Participant's employment with the Company and its subsidiaries for
any reason, any outstanding Option or unexercised portion thereof
granted to the Participant shall terminate. If the employment of a
Participant is terminated by reason of retirement (under normal
Company policies), death or
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disability, any outstanding Option or unexercised portion thereof
granted to him may be fully exercised by the Participant, his personal
representative, executor, administrator, heirs or devisees, as
applicable, at any time, within three months of the date of the
Participant's retirement or within one year after his death or after
the date of termination by reason of disability, but in no event after
the termination of the term of the Option in accordance with its
terms. Any transfer of employment from the Company to any parent or
subsidiary thereof, or vice versa, shall not be deemed a termination
of employment.
(h) INVESTMENT PURPOSE. Each Option issued under this Plan may
be issued on the condition that any purchase of stock thereunder which
shall not be the subject of a registration statement permitting the
sale or other distribution thereof shall be for investment purposes
and not with a view to resale or distribution (the "Restricted
Stock"). If requested by the Company, each Participant must agree, at
the time of the purchase of any Restricted Stock, to execute an
"investment letter" setting forth such investment intent in the form
acceptable to the Company and must consent to any stock certificate
issued to him thereunder bearing a restrictive legend setting forth
the restrictions applicable to the further resale, transfer or other
conveyance thereof without registration under the Securities Act of
1933, as amended, and under the applicable securities or blue sky laws
of any other
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jurisdiction (together, the "Securities Laws"), or the availability
of exemptions from registration thereunder and to the placing of
transfer restrictions on the records of the transfer agent for such
stock. No Restricted Stock may thereafter be resold, transferred or
otherwise conveyed unless:
(1) an opinion of the Participant's counsel is
received, in form and substance satisfactory to counsel for
the Company, that registration under the applicable Securities Laws
is not required; or
(2) such stock is registered under the applicable
Securities Laws; or
(3) "no action" letters are received from the staff of
the Securities and Exchange Commission and from the administrative
agencies administering all other applicable securities or blue sky
laws, based on an opinion of counsel for Participant in form and
substance reasonably satisfactory to counsel for the Company,
advising that registrations under the Securities Laws are not
required.
(i) RIGHTS AS A STOCKHOLDER. Each Participant shall have all
rights attributable to stockholders of the Company with respect to any
shares issued to him or for his benefit pursuant to the terms of his
Option but shall have no shareholder rights prior thereto. Except as
provided in Paragraph 6 hereof, no adjustment shall be made for
dividends or other rights appurtenant to the ownership of
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shares in the Company for which the record date is prior to the date of
purchase of shares in accordance with subparagraph 7(e) hereof.
(j) STOCK OWNERSHIP. In the event an Option shall be granted to
any person who, at any time such Option is granted, owns stock in
excess of the limitations imposed by Section 422A(b)(6) or
other comparable restriction under the Code (i.e., owns more than 10%
of the total combined voting power of all classes of stock of the
Company or of its Parent or Subsidiary Corporation), the Option Price
(as defined in subparagraph 7(b) hereof) shall be increased to not less
than 110% of the fair market value of the stock as of the date of grant.
(k) WAIVER OF RESTRICTIONS. The Committee, in its discretion or
pursuant to contract, may waive the restrictions imposed by paragraph
7(e) hereof (relating to time of exercise) on any Participant with
respect to Options granted under the Plan; provided, however, no
restriction which is required by Section 422A of the Code may be waived.
8. EFFECTIVE DATE AND AMENDMENT AND TERMINATION OF THE PLAN. This Plan
will become effective upon adoption by the Board of Directors of the Comapny
("Adoption Date"). Within twelve months after the Adoption Date, this Plan
shall be submitted to the Shareholders of the Comapny for their approval in
accordance with Section 422A(b)(1) of the Code. The Board of Ditrectors of the
Comapny may amend or terminate this Plan at
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any time. The amendment or termination of this Plan shall not affect rights and
obligations theretofor granted and then in effect.
9. USE OF PROCEEDS. The proceeds from the sale of stock pursuant to
Options granted under the Plan shall constitute general funds of the Company.
10. CONSTRUCTION. When used herein the male, female and neuter gender
shall include the other and the singular shall include the plural as the
context or facts so require.
By order of the Board of Directors
on October 24, 1993.
MEDICINE SHOPPE INTERNATIONAL, INC.
By _______________________________
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