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AMENDED AND RESTATED
HENRY SCHEIN, INC.
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
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1. PURPOSE OF THE PLAN
The purposes of this Henry Schein, Inc. 1996 Non- Employee Director Stock
Option Plan are to enable Henry Schein, Inc. (the "Company") to attract, retain
and motivate directors of the Company who are not employees of the Company or
its subsidiaries ("Non-Employee Directors") and who are important to the success
of the Company and to create a mutuality of interest between the Non-Employee
Directors and the stockholders of the Company by granting such directors options
to purchase Common Stock (as defined herein) of the Company.
2. DEFINITIONS
(a) "Acquisition Event" means a merger or consolidation in which the
Company is not the surviving entity, or any transaction that results in the
acquisition of all or substantially all of the Company's outstanding Common
Stock by a single person or entity or by a group of persons and/or entities in
concert, or the sale or transfer of all or substantially all of the Company's
assets.
(b) "Act" means the Securities Exchange Act of 1934, as amended and the
rules and regulations promulgated thereunder.
(c) "Board" means the board of directors of the Company.
(d) "Cause" has the meaning set forth in Section 7(b).
(e) "Change of Control" has the meaning set for in Section 6(e).
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means such committee, if any, appointed by the Board to
administer the Plan consisting of two or more directors as may be appointed from
time to time by the Board, each of whom shall qualify as a "disinterested
person" within the meaning of Rule 16b-3 promulgated under the Act. If the Board
does not appoint a committee for this purpose, "Committee" means the Board.
(h) "Common Stock" means the voting common stock of the Company, par value
$.01, any common stock into which the common stock may be converted and any
common stock resulting from any reclassification of the common stock.
(i) "Company" means Henry Schein, Inc., a Delaware corporation.
(j) "Corporate Transaction" has the meaning set forth in Section 6(e)(i)
(k) "Disability" means a permanent and total disability, as determined by
the Committee in its sole discretion, provided that in no event shall any
disability that is not permanent
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and total disability within the meaning of Section 22(e)(3) of the Code be
treated as a Disability. A Disability shall be deemed to occur at the time of
the determination by the Committee of the Disability.
(l) "Effective Date" has the meaning set forth in Section 3.
(m) "Fair Market Value" means the value of a Share (as defined herein) on
a particular date, determined as follows:
(i) If the Common Stock is listed or admitted to trading on such date
on a national securities exchange or quoted through the National Association of
Securities Dealers' Automated Quotation ("NASDAQ") National Market System, the
closing sales price of a Share as reported on the relevant composite transaction
tape, if applicable, or on such principal exchange (determined by trading value
in the Common Stock) or through the National Market System, as the case may be,
on such date, or in the absence of reported sales on such day, the mean between
the reported bid and asked prices reported on such composite transaction tape or
exchange or through the National Market System, as the case may be, on such
date; or
(ii) If the Common Stock is not listed or quoted as described in the
preceding clause, but bid and asked prices are quoted through NASDAQ, the mean
between the bid and asked prices as quoted by the National Association of
Securities Dealers through NASDAQ on such date; or
(iii) If the Common Stock is not listed or quoted on a national
securities exchange or through NASDAQ or, if pursuant to (i) and (ii) above the
Fair Market Value is to be determined based upon the mean of the bid and asked
prices and the Committee determines that such mean does not properly reflect the
Fair Market Value, by such other method as the Committee determines to be
reasonable and consistent with applicable law; or
(iv) If the Common Stock is not publicly traded, such amount as is set
by the Committee in good faith.
(n) "HSI Agreement" means the Amended and Restated HSI Agreement dated as
of February 16, 1994 among the Company and certain other parties.
(o) "Incumbent Board" has the meaning set forth in Section 6(e)(ii).
(p) "Non-Employee Directors" means directors of the Company who are not
employees of the Company or its subsidiaries.
(q) "Option" means the right to purchase one Share at a prescribed
purchase price on the terms specified in the Plan.
(r) "Outstanding HSI Voting Securities" has the meaning set forth in
Section 6(e)(i).
(s) "Participant" means a Non-Employee Director who is granted Options
under the Plan.
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(t) "Person" means an individual, entity or group within the meaning of
Section l3d-3 or 14d-1 of the Act.
(u) "Plan" means the Henry Schein, Inc. 1996 Non-Employee Director Stock
Option Plan.
(v) "Purchase Price" means purchase price per Share.
(w) "Securities Act" means the Securities Act of 1933, as amended.
(x) "Share" means a share of Common Stock.
(y) "Substantial Stockholder" means any Participant who at the time of
grant owns directly or is deemed to own by reason of the attribution rules set
forth in Section 424(d) of the Code, Shares possessing more than 10% of the
total combined voting power of all classes of stock of the Company.
(z) "Termination of Services" means termination of the relationship with
the Company so that an individual is no longer a director of the Company.
3. EFFECTIVE DATE/EXPIRATION OF PLAN
This Plan shall become effective as of March 22, 1996 (the "Effective
Date"), and was amended on March 4, 2002, subject to its approval not later than
the date of the Company's 2002 Annual Meeting of Stockholders by the holders of
a majority of the outstanding shares of Common Stock entitled to vote thereon.
Grants of Options under the Plan may be made on and after the Effective Date,
provided that, if this Plan is not approved in accordance with the preceding
sentence on or before such annual meeting, all Options granted pursuant to the
Plan shall be null and void. Options may not be exercised prior to such
approval.
4. ADMINISTRATION
(a) DUTIES OF THE COMMITTEE. The Plan shall be administered by the
Committee. The Committee shall have full authority to interpret the Plan and to
decide any questions and settle all controversies and disputes that may arise in
connection with the Plan; to establish, amend, and rescind rules for carrying
out the Plan, to administer the Plan, subject to its provisions; to select
Participants in, and grant Options under, the Plan; to determine the terms,
exercise price and form of exercise payment for each Option granted under the
Plan; to prescribe the form or forms of instruments evidencing Options and any
other instruments required under the Plan (which need not be uniform) and to
change such forms from time to time; and to make all other determinations and to
take all such steps in connection with the Plan and the Options as the
Committee, in its sole discretion, deems necessary or desirable; provided, that
all such determinations shall be in accordance with the express provisions, if
any, contained in the HSI Agreement or the Plan. The Committee shall not be
bound to any standards of uniformity or similarity of action, interpretation or
conduct in the discharge of its duties hereunder, regardless of the apparent
similarity of the matters coming before it. The determination, action or
conclusion of the Committee in connection with the foregoing shall be final,
binding and conclusive.
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(b) ADVISORS. The Committee may designate the Secretary of the Company,
other employees of the Company or competent professional advisors to assist the
Committee in the administration of the Plan, and may grant authority to such
persons to execute option agreements or other documents on behalf of the
Committee. The Committee may employ such legal counsel, consultants and agents
as it may deem desirable for the administration of the Plan, and may rely upon
any opinion received from any such counsel or consultant and any computation
received from any such consultant or agent. Expenses incurred by the Committee
in the engagement of such counsel, consultant or agent shall be paid by the
Company.
(c) INDEMNIFICATION. To the maximum extent permitted by law, no officer,
member or former officer or member of the Committee or the Board shall be liable
for any action or determination made in good faith with respect to the Plan or
any Option granted under it. To the maximum extent permitted by applicable law
or the Certificate of Incorporation or By-Laws of the Company and to the extent
not covered by insurance, each officer, member or former officer or member of
the Committee or of the Board shall be indemnified and held harmless by the
Company against any cost or expense (including reasonable fees of counsel
reasonably acceptable to the Company) or liability (including any sum paid in
settlement of a claim with the approval of the Company), and advanced amounts
necessary to pay the foregoing at the earliest time and to the fullest extent
permitted, arising out of any act or omission to act in connection with the
Plan, except to the extent arising out of such officer's, member's or former
officer's or member's own fraud or bad faith. Such indemnification shall be in
addition to any rights of indemnification the officers, members or former
officers or members may have as directors under applicable law or under the
Certificate of Incorporation or By-Laws of the Company or otherwise.
(d) MEETINGS OF THE COMMITTEE. The Committee shall select one of its
members as a Chairman and shall adopt such rules and regulations as it shall
deem appropriate concerning the holding of its meetings and the transaction of
its business. Any member of the Committee may be removed at any time either with
or without cause by resolution adopted by the Board, and any vacancy on the
Committee may at any time be filled by resolution adopted by the Board. All
determinations by the Committee shall be made by the affirmative vote of a
majority of its members. Any such determination may be made at a meeting duly
called and held at which a majority of the members of the Committee were in
attendance in person or through telephonic communication. Any determination set
forth in writing and signed by all of the members of the Committee shall be as
fully effective as if it had been made by a vote of such members at a meeting
duly called and held.
5. SHARES; ADJUSTMENT UPON CERTAIN EVENTS
(a) SHARES TO BE DELIVERED; FRACTIONAL SHARES. Shares to be issued under
the Plan shall be made available at the discretion of the Board, either from
authorized but unissued Shares or from issued Shares reacquired by the Company
and held in treasury. No fractional Shares will be issued or transferred upon
the exercise of any Option. In lieu thereof, the Company shall pay a cash
adjustment equal to the same fraction of the Fair Market Value of one Share on
the date of exercise.
(b) NUMBER OF SHARES. Subject to adjustment as provided in this Section 5,
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the maximum aggregate number of Shares that may be issued under the Plan shall
be 100,000 shares of Common Stock. If Options are for any reason canceled, or
expire or terminate unexercised, the Shares covered by such Options shall again
be available for the grant of Options, subject to the foregoing limit.
(c) Adjustments; Recapitalization, etc. The existence of the Plan and the
Options granted hereunder shall not affect in any way the right or power of the
Board or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of bonds, debentures, preferred or prior preference stocks ahead of or affecting
Common Stock, the dissolution or liquidation of the Company or any sale or
transfer of all or part of its assets or business or any other corporate act or
proceeding. If and whenever the Company takes any such action, however, the
following provisions, to the extent applicable, shall govern:
(i) If and whenever the Company shall effect a stock split, stock
dividend, subdivision, recapitalization or combination of Shares or other
changes in the Company's Common Stock,(x) the Purchase Price (as defined herein)
per Share and the number and class of Shares and/or other securities with
respect to which outstanding Options thereafter may be exercised, and (y) the
total number and class of Shares and/or other securities that may be issued
under this Plan, shall be proportionately adjusted by the Committee. The
Committee may also make such other adjustments as it deems necessary to take
into consideration any other event (including, without limitation, accounting
changes) if the Committee determines that such adjustment is appropriate to
avoid distortion in the operation of the Plan.
(ii) Subject to Section 5 (c)(iii), if the Company merges or
consolidates with one or more corporations, then from and after the effective
date of such merger or consolidation, upon exercise of Options theretofore
granted, the Participant shall be entitled to purchase under such Options, in
lieu of the number of Shares as to which such Options shall then be exercisable
but on the same terms and conditions of exercise set forth in such Options, the
number and class of Shares and/or other securities or property (including cash)
to which the Participant would have been entitled pursuant to the terms of the
agreement of merger or consolidation if, immediately prior to such merger or
consolidation, the Participant had been the holder of record of the total number
of Shares receivable upon exercise of such Options (whether or not then
exercisable).
(iii)In the event of an Acquisition Event, the Committee may, in its
discretion, and without any liability to any Participant, terminate all
outstanding Options as of the consummation of the Acquisition Event by
delivering notice of termination to each Participant at least 20 days prior to
the date of consummation of the Acquisition Event; provided that, during the
period from the date on which such notice of termination is delivered to the
consummation of the Acquisition Event, each Participant shall have the right to
exercise in full all of the Options that are then outstanding (without regard to
limitations on exercise otherwise contained in the Options). If an Acquisition
Event occurs and the Committee does not terminate the outstanding Options
pursuant to the preceding sentence, then the provisions of Section 5(c)(ii)
shall apply.
(iv) If, as a result of any adjustment made pursuant to the preceding
paragraphs of this Section 5, any Participant shall become entitled upon
exercise of an Option to
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receive any securities other than Common Stock, then the number and class of
securities so receivable thereafter shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock set forth in this Section 5, as
determined by the Committee in its discretion.
(v) Except as hereinbefore expressly provided, the issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, for cash, property, labor or services, upon direct sale,
upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or other securities, and in any case whether or not for
fair value, shall not affect, and no adjustment by reason thereof shall be made
with respect to the number and class of Shares and/or other securities or
property subject to Options theretofore granted of the Purchase Price per Share.
6. AWARDS AND TERMS OF OPTIONS;
(a) GRANT. The Committee may grant Options to Non-Employee Directors.
(b) EXERCISE PRICE. The Purchase Price deliverable upon the exercise of an
Option shall be determined by the Committee, in its sole discretion, but shall
not be less than the par value of a Share.
(c) NUMBER OF SHARES. The option agreement shall specify the number of
Options granted to the Participant, as determined by the Committee in its sole
discretion.
(d) EXERCISABILITY. At the time of grant, the Committee shall specify when
and on what terms the Options granted shall be exercisable. In the case of
Options not immediately exercisable in full, the Committee may at any time
accelerate the time at which all or any part of the Options may be exercised and
may waive any other conditions to exercise, subject to the terms of the option
agreement and the Plan. No Option shall be exercisable after the expiration of
ten (10) year from the date of grant. Each Option shall be subject to earlier
termination as provided in Section 7 below.
(e) ACCELERATION OF EXERCISABILITY ON CHANGE OF CONTROL. All Options
granted and not previously exercisable shall become exercisable immediately upon
the later of a Change of Control (as defined herein) or approval of this Plan in
accordance with Section 3. For this purpose, a "Change of Control" shall be
deemed to have occurred upon:
(i) an acquisition by any Person of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Act) of 20% or more of either
(A) the then outstanding Shares or (B) the combined voting power of the
then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding HSI Voting
Securities"); excluding, however, the following: (w) any acquisition
directly from the Company, other than an acquisition by virtue of the
exercise of a conversion privilege unless the security being so converted
was itself acquired directly from the Company, (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
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such Corporate Transaction, the conditions described in clauses (A), (B)
and (C) of paragraph (iii) of this Section 6 are satisfied; or
(ii) a change in the composition of the Board such that the
individuals who, as of the Effective Date hereof, constitute the Board (the
Board as of the date hereof 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 date hereof whose
election, or nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of those individuals who are
members of the Board and who are also members of the Incumbent Board (or
deemed to be pursuant to this proviso) shall be considered as though such
individual were a member of the Incumbent Board; but, provided further,
that any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Act) or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board shall not be so considered as a
member of the Incumbent Board; or
(iii) the approval by the stockholders of the Company 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
Corporate Transaction pursuant to which (A) all or substantially all of the
individuals and entities who are the beneficial owners, respectively, of
the outstanding Shares and Outstanding HSI 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 HSI
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 HSI 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, notwithstanding the
foregoing, no Change of Control will occur if the Incumbent Board approves
the Corporate Transaction; or
(iv) the approval of the stockholders of the Company of (A) a complete
liquidation or dissolution of the Company or (B) the sale or other
disposition of all or substantially all of the assets of the Company;
excluding, however, such sale or other
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disposition to a corporation with respect to which, following such sale or
other disposition, (x) more than 60% 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 will be then beneficially owned,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the outstanding
Shares and Outstanding HSI 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 HSI 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 HSI Voting Securities, as the case may be) will beneficially
own, directly or indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors and (z) individuals
who were members of the Incumbent Board will constitute at least a majority
of the members of the board of directors of such corporation.
(f) EXERCISE OF OPTIONS.
(i) A Participant may elect to exercise one or more Options by giving
written notice to the Committee of such election and of the number of Options
such Participant has elected to exercise, accompanied by payment in full of the
aggregate Purchase Price for the number of shares for which the Options are
being exercised.
(ii) Shares purchased pursuant to the exercise of Options shall be
paid for at the time of exercise as follows:
(A) in cash or by check, bank draft or money order payable to the
order of the Company;
(B) if so permitted by the Committee: (x) through the delivery of
unencumbered Shares (including Shares being acquired pursuant to the
Options then being exercised), provided such Shares (or such Options)
have been owned by the Participant for such period as may be required
by applicable accounting standards to avoid a charge to earnings, (y)
through a combination of Shares and cash as provided above, (z) by
delivery of a promissory note of the Participant to the Company, such
promissory note to be payable on such terms as are specified in the
option agreement (except that, in lieu of a stated rate of interest,
the option agreement may provide that the rate of interest on the
promissory note will be such rate as is sufficient, at the time the
note is given, to avoid the imputation of interest under the
applicable provisions of the Code), or 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
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Shares shall be paid in cash or by a combination of cash and Shares;
or
(C) on such other terms and conditions as may be acceptable to
the Committee and in accordance with applicable law. Upon receipt of
payment, the Company shall deliver to the Participant as soon as
practicable a certificate or certificates for the Shares then
purchased.
7. EFFECT OF TERMINATION OF SERVICES
(a) Death, Disability, Retirement, etc. Except as otherwise provided in the
Participant's option agreement or in this Plan, upon Termination of Services,
all outstanding Options then exercisable and not exercised by the Participant
prior to such Termination of Services (and any Options not previously
exercisable but made exercisable by the Committee at or after the Termination of
Services) shall remain exercisable by the Participant to the extent not
theretofore exercised for the following time periods (subject to Section 6(d)):
(i) In the event of the Participant's death, such Options shall remain
exercisable (by 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 (1) 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 (3) years from the date of the Participant's
death.
(ii) In the event the Participant retires at or after age 65 (or, with
the consent of the Committee, before age 65), or if the Participant's
services terminate due to Disability, such Options shall remain exercisable
for one (1) year from the date of the Participant's Termination of
Services, provided that the Committee, in its discretion, may at any time
extend such time period to up to three (3) years from the date of the
Participant's Termination of Services.
(b) CAUSE OR VOLUNTARY TERMINATION. Upon the Termination of Services of a
Participant for cause (as defined herein) or if it is discovered after such
Termination of Services that such Participant had engaged in conduct that would
have justified a Termination of Services for Cause, all outstanding Options
shall immediately be canceled. Termination of Services shall be deemed to be for
"Cause" for purposes of this Section 7(b) if the Participant shall have
committed fraud or any felony in connection with the Participant's duties as a
director of the Company or willful misconduct or any act of disloyalty,
dishonesty, fraud or breach of trust, confidentiality or fiduciary duties as to
the Company or the commission of any other act which causes or may reasonably be
expected to cause economic or reputational injury to the Company.
(c) OTHER TERMINATION. In the event of Termination of Services for any
reason other than as provided in Section 7(a) and 7(b), all outstanding Options
then exercisable and not exercised by the Participant prior to such Termination
of Services shall remain exercisable (to the extent exercisable by such
Participant immediately before such termination) for a period of three (3)
months after such termination, provided that the Committee in its discretion may
extend such time period to up to one (1) year from the date of the Participant's
Termination of Services.
8. NONTRANSFERABILITY OF OPTIONS
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No Option shall be transferable by the Participant otherwise than by will
or under applicable laws of descent and distribution, and during the lifetime of
the holder may be exercised only by the holder or his or her guardian or legal
representative. In addition, no Option shall be assigned, negotiated, pledged or
hypothecated in any way (whether by operation of law or otherwise), and no
Option shall be subject to execution, attachment or similar process. Upon any
attempt to transfer, assign, negotiate, pledge or hypothecate any Option, or in
the event of any levy upon any Option by reason of any execution, attachment or
similar process contrary to the provisions hereof, such Option shall immediately
be cancelled.
9. RIGHTS AS A STOCKHOLDER
A holder of an Option shall have no rights as a stockholder with respect to
any Shares covered by such holder's Option until such holder shall have become
the holder of record of such Shares, and no adjustments shall be made for
dividends in cash or other property or distributions or other rights in respect
to any such Shares, except as otherwise specifically provided for in this Plan.
10. DETERMINATIONS
Each determination, interpretation or other action made or taken pursuant
to the provisions of this Plan by the Committee shall be final, conclusive and
binding for all purposes and upon all persons, including, without limitation,
the holders of any Options and Non-Employee Directors and their respective
heirs, executors, administrators, personal representatives and other successors
in interest.
11. TERMINATION, AMENDMENT AND MODIFICATION
The Plan shall terminate at the close of business on the tenth anniversary
of the Effective Date, unless terminated sooner as hereinafter provided, and no
Option shall be granted under the Plan on or after that date. The termination of
the Plan shall not terminate any outstanding Options which by their terms
continue beyond the termination date of the Plan. At any time prior to the tenth
anniversary of the Effective Date, the Board or the Committee may amend or
terminate the Plan or suspend the Plan in whole or in part. Notwithstanding the
foregoing, however, no such amendment may, without the approval of the
stockholders of the Company, (i) increase the total number of Shares which may
be acquired upon exercise of Options granted under the Plan; (ii) change the
requirements for eligibility for participation in the Plan; or (iii) effect any
change that would require stockholder approval under Rule 16b-3 (or any
successor provision) promulgated under the Act.
Subject to the provisions of this Section 11, nothing contained in this
Section 11 shall be deemed to prevent the Board or the Committee from
authorizing amendments of outstanding Options of Participants, including,
without limitation, the reduction of the Purchase Price specified therein (or
the granting or issuance of new Options at a lower Purchase Price upon
cancellation of outstanding Options), so long as (i) all Options outstanding at
any one time shall not call for issuance of more Shares than the remaining
number provided for under the Plan, (ii) the provisions of any amended Options
would have been permissible under the Plan if such Option had been originally
granted or issued as of the date of such amendment with such amended terms and
(iii) the provisions regarding shareholder approval set forth below in this
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Section 11 are complied with.
Notwithstanding anything to the contrary contained in this Section 11,
without the approval of the shareholders of the Company, no outstanding Option
may be modified to reduce the exercise price thereof nor may a new Option at a
lower price be substituted for a simultaneously surrendered Option, provided
that the foregoing shall not apply to adjustments or substitutions in accordance
with Section 5.
Notwithstanding anything to the contrary contained in this Section 11, (i)
no termination, amendment or modification of the Plan may, without the consent
of the Participant or the transferee of such Participant's Option, alter or
impair the rights and obligations arising under any then outstanding Option, and
(ii) neither the Board nor the Committee may make any determination or
interpretation or take any other action which would cause any member of the
Committee to cease to be a "disinterested person" with regard to the Plan for
purposes of Rule l6b-3 under the Act.
12. NON-EXCLUSIVITY
Subject to the express provisions contained in the HSI Agreement, neither
the adoption of the Plan by the Board nor the submission of the Plan to the
stockholders of the Company for approval shall be construed as creating any
limitations on the power of the Board to adopt such other incentive arrangements
as it may deem desirable, including, without limitation, the granting or
issuance of stock options, Shares and/or other incentives otherwise than under
the Plan, and such arrangements may be either generally applicable or limited in
application.
13. USE OF PROCEEDS
The proceeds of the sale of Shares subject to Options under the Plan are to
be added to the general funds of the Company and used for its general corporate
purposes as the Board shall determine.
14. GENERAL PROVISIONS
(a) RIGHT TO TERMINATE SERVICES. Neither the adoption of the Plan nor the
grant of Options shall impose any obligations on the Company to retain any
Participant as a director nor shall it impose any obligation on the part of any
Participant to remain a director.
(b) PURCHASE FOR INVESTMENT. If the Board determines that the law so
requires, the holder of an Option granted hereunder shall, upon any exercise or
conversion thereof, execute and deliver to the Company a written statement, in
form satisfactory to the Company, representing and warranting that such
Participant is purchasing or accepting the Shares then acquired for such
Participant's own account and not with a view to the resale or distribution
thereof, that any subsequent offer for sale or sale of any such Shares shall be
made either pursuant to (i) a registration statement in appropriate form under
the Securities Act, which registration statement shall have become effective and
shall be current with respect to the Shares being offered and sold, or (ii) a
specific exemption from the registration requirements of the Securities Act, and
that in claiming such exemption the holder will, prior to any offer for sale or
sale of such Shares, obtain a favorable written opinion, satisfactory in form
and substance to the Company, from counsel approved by the Company as to the
availability of such exception.
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(c) TRUSTS,ETC. Nothing contained in the Plan and no action taken pursuant
to the Plan (including, without limitation, the grant of any Option thereunder)
shall create or be construed to create a trust of any kind, or a fiduciary
relationship, between the Company and any Participant or the executor,
administrator or other personal representative or designated beneficiary of such
Participant, or any other persons. Any reserves that may be established by the
Company in connection with the Plan shall continue to be part of the general
funds of the Company, and no individual or entity other than the Company shall
have any interest in such funds until paid to a Participant. If and to the
extent that any Participant or such Participant's executor, administrator, or
other personal representative, as the case may be, acquires a right to receive
any payment from the Company pursuant to the Plan, such right shall be no
greater than the right of an unsecured general creditor of the Company.
(d) NOTICES. Each Participant shall be responsible for furnishing the
Committee with the current and proper address for the mailing to such
Participant of notices and the delivery to such Participant of agreements,
Shares and payments. Any notices required or permitted to be given shall be
deemed given if directed to the person to whom addressed at such address and
mailed by regular United States mail, first class and prepaid. If any item
mailed to such address is returned as undeliverable to the addressee, mailing
will be suspended until the Participant furnishes the proper address.
(e) SEVERABILITY OF PROVISIONS. If any provisions of the Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions of the Plan, and the Plan shall be construed and
enforced as if such provisions had not been included.
(f) PAYMENT TO MINORS, ETC. Any benefit payable to or for the benefit of a
minor, an incompetent person or other person incapable of receipting therefor
shall be deemed paid when paid to such person's guardian or to the party
providing or reasonably appearing to provide for the care of such person, and
such payment shall fully discharge the Committee, the Company and their
employees, agents and representatives with respect thereto.
(g) READINGS AND CAPTIONS. The headings and captions herein are provided
for reference and convenience only. They shall not be considered part of the
Plan and shall not be employed in the construction of the Plan.
15. ISSUANCE OF STOCK CERTIFICATES; LEGENDS AND PAYMENT OF EXPENSES
(a) STOCK CERTIFICATES. Upon any exercise of an Option and payment of the
exercise price as provided in such Option, a certificate or certificates for the
Shares as to which such Option has been exercised shall be issued by the Company
in the name of the person or persons exercising such Option and shall be
delivered to or upon the order of such person or persons.
(b) LEGENDS. Certificates for Shares issued upon exercise of an Option
shall bear such legend or legends as the Committee, in its discretion,
determines to be necessary or appropriate to prevent a violation of, or to
perfect an exemption from, the registration requirements of the Securities Act,
or to implement the provisions of any agreements between the Company and the
Participant with respect to such Shares.
(c) PAYMENT OF EXPENSES. The Company shall pay all issue or transfer taxes
with
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respect to the issuance or transfer of Shares, as well as all fees and expenses
necessarily incurred by the Company in connection with such issuance or transfer
and with the administration of the Plan.
16. LISTING OF SHARES AND RELATED MATTERS
If at any time the Board shall determine in its sole discretion that
the listing, registration or qualification of the Shares covered by the Plan
upon any national securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the award or sale of Shares
under the Plan, no Shares will be delivered unless and until such listing,
registration, qualification, consent or approval shall have been effected or
obtained, or otherwise provided for, free of any conditions not acceptable to
the Board.
17. WITHHOLDING TAXES
Where a Participant or other person is entitled to receive Shares pursuant
to the exercise of an Option, the Company shall have the right to require the
Participant or such other person to pay to the Company the amount of any taxes
which the Company may be required to withhold before delivery to such
Participant or other person of cash or a certificate or certificates
representing such Shares.
Unless otherwise prohibited by the Committee or by applicable law, a
Participant may satisfy any such withholding tax obligation by any of the
following methods, or by a combination of such methods: (a) securing payment in
cash or property in lieu of withholding, (b) authorizing the Company to withhold
from the Shares otherwise payable to such Participant (1) one or more of such
Shares having an aggregate Fair Market Value, determined as of the date the
withholding tax obligation arises, less than or equal to the amount of the total
withholding tax obligation or (2) cash in an amount less than or equal to the
amount of the total withholding tax obligation; or (c) delivering to the Company
previously acquired Shares (none of which Shares may be subject to any claim,
lien, security interest, community property right or other right of spouses or
present or former family members, pledge, option, voting agreement or other
restriction or encumbrance of any nature whatsoever) having an aggregate Fair
Market Value, determined as of the date the withholding obligation arises, less
than or equal to the amount of the total withholding tax obligation. A
Participant's election to pay his or her withholding tax obligation (in whole or
in part) by the method described in (b)(1) above is irrevocable once it is made,
may be disapproved by the Committee and, if made by any director, officer or
other person who is subject to Section 16(b) of the Act, must be made (x) only
during the period beginning on the third business day following the date of
release of the Company's quarterly or annual summary statement of sales and
earnings and ending on the twelfth business day following the date of such
release; (y) not less than six months prior to the date such Participant's
withholding tax obligation arises or (z) during any other period in which a
withholding election may be made under the provisions of Rule 16b-3.
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