Henry Schein 2003 Annual Report Download - page 56

HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data)
Note 12–Stockholders’ Equity
(a) Common Stock Purchase Rights
On November 30, 1998, our Board of Directors adopted a Stockholder Rights Plan (the "Rights Plan"), and declared a dividend under the
Rights Plan of one common stock purchase right (a "Right") on each outstanding share of our common stock. Until the occurrence of
certain events, each share of common stock that is issued will also have attached to it a Right. The Rights provide, in substance, that
should any person or group acquire 15% or more of our outstanding common stock after the date of adoption of the Rights Plan, each
Right, other than Rights held by the acquiring person or group, would entitle its holder to purchase a certain number of shares of common
stock for 50% of the then-current market value of the common stock. Unless a 15% acquisition has occurred, we may redeem the Rights
at any time prior to the termination date of the Rights Plan. This Right to purchase the common stock at a discount will not be triggered
by a person’s or group’s acquisition of 15% or more of the common stock pursuant to a tender or exchange offer which is for all outstanding
shares at a price and on terms that the Board of Directors determines (prior to acquisition) to be adequate and in the stockholders’ best
interests. In addition, the Right will not be triggered by the positions of existing shareholders.
Certain business combinations involving an acquiring person or its affiliates will trigger an additional feature of the Rights. Each Right,
other than Rights held by the acquiring person or group, will entitle its holder to purchase a certain number of shares of common stock of
the acquiring person at a price equal to 50% of the market value of such shares at the time of exercise. Initially, the Rights will be attached
to, and trade with, the certificates representing our outstanding shares of common stock and no separate certificates representing the
Rights will be distributed. The Rights will become exercisable only if a person or group acquires, or commences a tender or exchange
offer for, 15% or more of our common stock.
The Board of Directors may, at its option, redeem all but not less than all of the then outstanding Rights at a redemption price of $0.01 per
Right at any time prior to the earlier of (a) any person or group acquiring 15% or more of our common stock or (b) the final expiration date
of November 30, 2008.
(b) Stock Options
We established the 1994 Stock Option Plan (the "Plan") for the benefit of certain employees. As amended in June 2003, pursuant to this
plan we may issue up to approximately 8,579,635 shares of our common stock. The Plan provides for two classes of options: Class A
options and Class B options. A maximum of 237,897 shares of common stock may be covered by Class A options. Both incentive and
non-qualified stock options may be issued under the Plan.
In 1995, Class A options to acquire 237,897 common shares were issued to certain executive management at an exercise price of $4.21
per share, substantially all of which became exercisable upon the closing of our initial public offering which was on November 3, 1995.
The exercise price of all Class B options issued has been equal to the market price on the date of grant, and accordingly, no compensation
cost has been recognized. Substantially all Class B options vest evenly over three years from the date of grant; however shares exercised
in the second and third year after the date of grant may not be sold until the third anniversary of the date of grant. Class B options expire
on the tenth anniversary of the date of issuance, subject to acceleration upon termination of employment.
On May 8, 1996, our stockholders approved the 1996 Non-Employee Director Stock Option Plan. As amended in June 2003, pursuant to
this plan we may grant options to each director who is not also an officer or employee, for up to 200,000 shares of our common stock.
The exercise price and term, not to exceed 10 years, of each option is determined by the plan committee at the time of the grant. During
2003, 2002 and 2001, 50,000, 40,000 and 12,000 options, were granted to certain non-employee directors at exercise prices equal to the
market price on the date of grant.
Additionally, in 1997 as a result of our acquisition of Sullivan Dental Products, Inc. and Micro Bio-Medics, Inc., we assumed their respective
stock option plans (the "Assumed Plans"). Options granted under the Assumed Plans of 1,218,000 and 1,117,000, which are convertible
into our common stock, are exercisable for up to ten years from the date of grant at prices not less than the fair market value of the
respective acquirees’ common stock at the date of grant.
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