Exhibit 10.5
FIRST AMENDMENT TO THE LEINER HEALTH PRODUCTS
GROUP INC. STOCK OPTION PLAN (formerly known as the PLI
Investors Inc. Stock Option Plan) (the "Plan")
Acting pursuant to Section 3.1(a) of the Plan, Leiner Health Products
Group Inc. (the "Company") hereby amends the Plan, effective as of June 30,
1997, unless otherwise indicated.
1. The Plan is amended by adding a new Section 1.6(d) at the end of
Section 1.6 thereof, reading in its entirety as follows:
(d) Effective as of June 30, 1997, no further Options may be awarded
under this Plan.
2. The Plan is amended by deleting the proviso at the end of the
first sentence of Section 2.4(c) thereof.
3. The Plan is amended by adding a new Section 2.5 to the end of
Article 2 thereof, reading in its entirety as follows:
2.5 RECAPITALIZATION TRANSACTION. Notwithstanding anything to the
contrary in this Plan, as of the effective time of the consummation of the
transactions contemplated by the Stock Purchase Agreement and Agreement and
Plan of Merger, dated as of May 31, 1997 (the "Merger Agreement"; such
time, the "Effective Time"; the consummation of such transactions, the
"Recapitalization"), by and among the Company, North Castle Partners I,
L.L.C. and LHP Acquisition Corp., each then outstanding Option shall be
canceled. In full and complete satisfaction thereof, the Company shall
deliver to each Optionee in respect of each share of Common Stock subject
to a canceled Option, an amount equal to the excess (the "Option Value")
of (I) $265.318 over (II) the exercise price of the Option. Such amount
for any Optionee shall be paid in the form, determined by the Company in
its sole and absolute discretion to be in the Company's best interest and
set forth opposite such Optionee's name on Schedule I hereto, of (W) cash,
(X) shares of voting common stock, par value $0.01 per share, of the
surviving company in the Recapitalization (such stock, "Surviving Company
Voting Common Stock"; such company, the "Surviving Company"), (Y) the right
to receive shares of class A (non-voting) common stock, par value $0.01 per
share, of the Surviving Company ("Surviving Company Non-Voting Common
Stock") at a future date, and on terms and conditions, determined by the
Company ("Delayed Delivery Stock"), or (Z) a combination thereof; PROVIDED
that, each Optionee who is not employed by the Company as of the Effective
Time shall receive, in respect of each share of Common Stock subject to a
canceled Option,
6.0812% of the Option Value in the form of shares of Surviving Company
Voting Common Stock and the remainder of the Option Value in the form of
cash, as set forth on Schedule I hereto. The Company shall also deliver to
each Optionee holding an Option at the Effective Time a warrant to purchase
the number of shares of Surviving Company Non-Voting Common Stock set forth
on Schedule I hereto and determined in accordance with the following
formula: the product of (A) a fraction, the numerator of which is the
Optionee's aggregate Option Value and the denominator of which is
205,000,000, multiplied by (B) 305,556.
4. The Plan is amended by deleting Section 3.13 thereof in its
entirety.
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Attachment A
CANCELLATION OF OPTIONS
IN CONNECTION WITH THE RECAPITALIZATION
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OPTIONEE OPTIONS BEING CASH SHARES OF SURVING SHARES OF DELAYED WARRANT TO PURCHASE NUMBER OF
CANCELLED IN THE COMPANY VOTING DELIVERY STOCK SHARES OF SURVIVING COMPANY
RECAPITALIZATION COMMON STOCK NON-VOTING COMMON STOCK
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Robert M. Kaminski 16,860 $ 16.87 0 24,067 3,587
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Gale K. Bensussen 11,786 $ 41.71 0 18,484 2,755
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Kevin J. Lanigan 7,524 $ 750,055.04 0 4,938 1,854
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William B. Towne 4,000 $ 73.28 0 4,812 717
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Stanley J. Kahn 9,524 $ 991,891.68 0 5,576 2,310
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Giffen H. Ott 4,262 $ 385,986.68 0 3,186 1,050
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Scott C. Rexinger 2,000 $ 36.64 0 2,406 359
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Robert O. Cavenah 3,262 $ 68.36 0 5,392 804
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Norbert F. Guziewicz 6,524 $ 475,636.72 0 6,029 1,608
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Eric P. Schick 1,000 $ 18.32 0 903 135
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Ronald R. Gentry 3,000 $ 54.96 0 3,609 538
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OPTIONEE OPTIONS BEING CASH SHARES OF SURVING SHARES OF DELAYED WARRANT TO PURCHASE NUMBER OF
CANCELLED IN THE COMPANY VOTING DELIVERY STOCK SHARES OF SURVIVING COMPANY
RECAPITALIZATION COMMON STOCK NON-VOTING COMMON STOCK
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William M. Jenkins 2,000 $ 310,536.64 0 201 493
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John R. Altenberg 1,000 $ 63,018.32 0 573 179
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Gregory Zebrowski 448 $ 2.61 0 539 80
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Michael W. Hader 3,750 $ 619,943.70 0 0 924
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Brubaker Trust 8,524 $1,276,573.36 826 0 2,026
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Diane Beardsley 7,524 $1,168,255.04 756 0 1,854
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Leo Schultz 3,262 $ 506,568.36 327 0 804
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Richard Fisher 3,750 $ 582,343.70 376 0 924
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Total 80,715
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