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EXHIBIT 10.5
ODYSSEY HEALTHCARE, INC.
STOCK OPTION PLAN
1.0 PURPOSE. This Stock Option Plan (the "Plan") is intended as an
incentive and to encourage stock ownership by certain key employees of Odyssey
Healthcare, Inc. (the "Company"). The purposes of the Plan are to: (1) closely
associate the interests of the management and certain other key employees of the
Company with the shareholders by reinforcing the relationship between
participants' rewards and shareholder gains; (2) provide management and certain
other key employees with an equity ownership in the Company commensurate with
Company performance, as reflected in increased shareholder value; (3) maintain
competitive compensation levels; and (4) provide an incentive to management and
certain other key employees for continuous employment with the Company. It is
further intended that, except as noted below, options issued pursuant to this
Plan shall constitute incentive stock options within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (hereinafter "Incentive Stock
Options").
2.0 ADMINISTRATION. The Plan shall be administered by the Compensation
Committee, as named by the Board of Directors from time to time (hereinafter,
the "Committee"). However, the Board of Directors of the Company may, in its
sole discretion, determine that, in lieu of the Compensation Committee, the Plan
shall be administered by a separate committee of disinterested persons appointed
by the Board of Directors of the Company (the "Disinterested Committee"), as
constituted from time to time. The Disinterested Committee shall consist of at
least two (2) members of the Board of Directors. During the period beginning one
(1) year prior to commencement of service on the Disinterested Committee, and
while serving on the Disinterested Committee, no Disinterested Committee member
shall participate in, nor be eligible for selection as a person to whom stock
may be allocated or to whom stock options or stock appreciation rights may be
granted under this Plan or any other discretionary plan of the Company under
which participants are entitled to acquire stock, stock options or stock
appreciation rights of the Company. For purposes of this Plan, the term
"Committee" shall include the Disinterested Committee, if one has been
designated by the Board of Directors. The Board of Directors may from time to
time remove members from, or add members to, the Committee. Vacancies on the
Committee, howsoever caused, shall be filled by the Board of Directors. The
Committee shall select one (1) of its members as Chairman, and shall hold
meetings at such times and places as it may determine. A majority of its members
shall constitute a quorum. All determinations of the Committee shall be made by
a majority of its members. Any decision or determination reduced to writing and
signed by a majority of the members shall be fully as effective as if it had
been made by a majority vote at a meeting duly called and held. The Committee
may appoint a secretary, shall keep minutes of its meetings and shall make such
rules and regulations for the conduct of its business as it shall deem
advisable.
2.1 Subject to the express provisions of the Plan, the Committee shall
have the authority, in its sole discretion and from time to time to:
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(i) designate the employees or classes of employees eligible to
participate in the Plan;
(ii) grant options provided in the Plan in such form and amount as the
Committee shall determine;
(iii) impose such limitations, restrictions, and conditions upon any such
option as the Committee shall deem appropriate, provided any limitation,
restriction, or condition not expressly required by this Plan shall be approved
by the Board of Directors, as provided under Section 10; and
(iv) interpret the Plan, adopt, amend, and rescind rules and regulations
relating to the Plan, and make all other determinations and take all other
action necessary or advisable for the implementation and administration of the
Plan.
2.2 The Board of Directors of the Company shall have the authority, in its
sole discretion, to establish the exercise price of any option granted
hereunder, subject to such restrictions with respect to the exercise price as
are imposed by law.
2.3 The interpretation and construction by the Committee of any provisions
of the Plan, any prior or subsequent versions of the Plan, or of any option
granted thereunder shall be conclusive unless otherwise determined by the Board
of Directors. No member of the Board of Directors or the Committee shall be
liable for any action taken or decision made in good faith with respect to the
Plan or any option granted thereunder.
3.0 ELIGIBILITY FOR PARTICIPATION. Subject to the terms and provisions of
the Plan, participants in the Plan shall be selected by the Committee from the
executive officers (whether or not they are directors) and certain other key
employees of the Company (the "Participants"). In making this selection and in
determining the form and amount of options to be granted, the Committee shall
consider any factors deemed relevant, including the individual's functions,
responsibilities, value of services to the Company, and past and potential
contributions to the Company's profitability and sound growth. Participants
selected by the Committee shall be employees of the Company. A Participant may
hold more than one option, but only on the terms and subject to the restrictions
hereafter set forth. No person shall be eligible to receive an option for a
larger number of shares than is recommended for him or her by the Committee.
4.0 SHARES SUBJECT TO THE PLAN. The shares of stock which may be subject
to options under the Plan shall be shares of the Company's common stock, either
authorized and unissued shares or shares issued and held in its treasury. The
stock subject to the options shall be One Million Five Hundred Thousand
(1,500,000) shares of Common Stock, $0.001 par value, hereinafter sometimes
referred to as "Common Stock".
4.1 The aggregate fair market value (determined on the date the option is
granted) of shares of Common Stock, with respect to which Incentive Stock
Options may be granted to any individual under any and all options qualified
under Section 422 of the Internal Revenue Code of 1986, as amended, which are
exercisable for the first time by a Participant during any calendar
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year, shall not exceed One Hundred Thousand Dollars ($100,000.00). The date an
Incentive Stock Option is granted shall mean the date selected by the Committee
as of which the Committee allots a specific number of shares to a Participant
pursuant to the Plan.
4.2 In the event that any outstanding option under the Plan for any reason
expires or is terminated, the shares of Common Stock allocable to the
unexercised portion of such option may again be subjected to an option under the
Plan.
5.0 TERMS AND CONDITIONS OF OPTIONS. The grant of an Incentive Stock
Option pursuant to the Plan shall be authorized by the Committee and shall be
evidenced by a written Stock Option Agreement in such form as the Committee
shall from time to time recommend and the Board of Directors shall from time to
time approve. Each Stock Option Agreement evidencing a grant hereunder shall be
executed by the Company and the holder of an Incentive Stock Option (the
"Optionee") and shall comply with and be subject to the following terms and
conditions:
(A) EFFECTIVE DATE OF OPTION: Each Stock Option Agreement
shall state the date on which the option was granted, which date must
be no later than ten (10) years following the date of adoption of this
Plan or the date on which this Plan is approved by the shareholders,
whichever is earlier.
(B) TERM AND EXERCISE OF OPTION: Each Stock Option Agreement
shall state the length of the time period during which the option is
exercisable. Each Incentive Stock Option shall be exercisable at the
time determined by the Committee and specified in the Stock Option
Agreement, which time shall be no earlier than six (6) months after the
date of its grant. Unless a shorter period is provided by the Committee
or another Section of this Plan, the option may be exercised at any
time during the period commencing at the time determined by the
Committee and specified in the Stock Option Agreement and ending ten
(10) years from the date of grant. No Stock Option shall be exercisable
after the expiration of ten (10) years after the date of its grant.
Notwithstanding the foregoing, the Committee may cancel an option at
any time during the time period in which it is exercisable if, in the
opinion of the Committee, the Participant has been found to engage in
any activity contrary to the interests of the Company.
(C) NUMBER AND CLASS OF SHARES: Each Stock Option Agreement
shall state the number and class of shares to which it pertains, which
number when added to the aggregate number of all option shares
previously granted under this Plan or outstanding on the effective date
hereof shall not exceed the limits set forth in Section 4.0 hereof.
(D) OPTION PRICE: Each Stock Option Agreement shall set forth
the option price, which shall not be less than one hundred percent
(100%) of the fair market value of the shares of stock subject to the
option at the time such option is granted, as such fair market value is
determined by the Board of Directors of the Company. Subject to
restrictions on determining fair market value imposed by law, the Board
of Directors of the Company in fixing the option price shall have full
authority and discretion and shall be fully protected in doing so.
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(E) RESTRICTIONS ON TRANSFER OF OPTION: Each Stock Option
Agreement shall state that the option is not transferrable by the
Optionee except by will or by the laws of descent and distribution.
Options may be exercised during the lifetime of the Optionee only by
the Optionee, and after the death of the Optionee, only as provided in
Section 7.0.
(F) RESTRICTIONS ON EXERCISE OF OPTION: Except as provided in
Sections 6.0 and 7.0, each Stock Option Agreement shall state that in
order for such option to be valid and exercisable:
(1) The Optionee must be an employee of the Company
at all times during the period beginning on the date of the
granting of such option and ending three (3) months before the
date of exercise of such option; provided, however, that if
the Optionee is employed at the time of his or her disability
(within the meaning of Section 22(e)(3) of the Internal
Revenue Code of 1986, as amended) then the aforementioned
period shall be extended to one (1) year before the date of
exercise of such option; and
(2) So long as the Optionee remains an employee of
the Company, such option may be exercised in whole or in part;
provided that the Optionee shall not exercise part of an
option for fewer than twenty-five (25) shares at one time
unless the total number of shares subject to the option is
fewer than twenty-five (25), in which case the Optionee shall
not exercise the option for fewer than all such shares.
(G) RESTRICTIONS ON DISPOSITION OF STOCK: In addition to any
other restrictions on the disposition of stock acquired by an option
granted hereunder, each Stock Option Agreement shall state that the
transfer of the Common Stock subject to the option shall have Qualified
Incentive Stock Option tax treatment under the Internal Revenue Code of
1986, as amended, only if the Common Stock subject to such option shall
be disposed of by the Optionee after two (2) years from the date such
option is granted or after one (1) year from the date that the shares
of such Common Stock were transferred to the Optionee upon exercise,
whichever is later.
The Stock Option Agreement may provide for such other terms and
conditions as the Committee and Board of Directors may determine, which need not
be the same for all options.
6.0 RETIREMENT OR DISABILITY. Notwithstanding anything contained herein to
the contrary, upon the termination of the Optionee's employment by reason of
permanent disability (as defined in Section 22(e)(3) of the Internal Revenue
Code of 1986, as amended) or retirement (as determined by the Committee), the
Optionee may, within 36 months from the date of such termination of employment,
exercise any Incentive Stock Options to the extent such Incentive Stock Options
were exercisable at the date of such termination of employment; provided that no
option may be exercised more than ten (10) years from the date of the grant
thereof. The tax treatment available pursuant to Section 422 of the Internal
Revenue Code of 1986, as amended, upon the exercise of an Incentive Stock Option
will not be available to an Optionee who exercises any Incentive Stock Option
more than (i) one (1) year after the date of
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termination of employment due to permanent disability, or (ii) three (3) months
after the date of termination of employment due to retirement.
7.0 DEATH OF OPTIONEE. Notwithstanding anything contained herein to the
contrary, upon the death of the Optionee, any Incentive Stock Option exercisable
on the date of death may be exercised by the executors or administrators of the
Optionee or by any person or persons who shall have acquired the right to
exercise such Incentive Stock Option by bequest, inheritance, or by reason of
the death of the Optionee, provided that such exercise occurs not after ten (10)
years from the date of the granting thereof or after one (1) year of the
Optionee's death. The provisions of this Section shall apply notwithstanding
that the Optionee's employment with the Company may have terminated prior to
death, but only to the extent of any Incentive Stock Options exercisable on the
date of death, and provided that any such termination of employment occurred not
more than three (3) months prior to death.
8.0 RESTRICTIONS ON MAJOR SHAREHOLDERS. Notwithstanding anything set forth
herein to the contrary, no individual shall be granted an option hereunder so
long as he owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company unless at the time
that the option hereunder is granted the option price is at least one hundred
ten percent (110%) of the fair market value of the Common Stock subject to the
option and such option is not exercisable after the expiration of five (5) years
from the date such option is granted. The option price and the restricted term
of the option as set forth herein shall be set forth in the Stock Option
Agreement.
9.0 GENERAL RESTRICTIONS. Each Incentive Stock Option granted under the
Plan shall be subject to the requirement that, if at any time the Committee
shall determine that (i) the listing, registration or qualification of the
shares of Common Stock subject or related thereto upon any securities exchange
or under any state or Federal law, or (ii) the consent or approval of any
government regulatory body, or (iii) an agreement by the Optionee of an option
with respect to the disposition of shares of Common Stock, is necessary or
desirable as a condition of, or in connection with, the granting of such option
or the issue or purchase of shares of Common Stock thereunder, such option may
not be exercised in whole or in part unless such listing, registration,
qualification, consent, approval, or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee.
10.0 DISCRETION OF THE COMMITTEE. The Committee may, subject to approval
of the Board of Directors, make the following additional provisions with regard
to any option granted hereunder:
(A) The Optionee may pay for the Common Stock subject to such
option with previously owned shares of Common Stock of the Company, or
a combination of previously owned shares of Common Stock and United
States dollars.
(B) The option is subject to any conditions not inconsistent
with the other provisions of this Plan. Any such discretionary
conditions shall be set forth in the Stock Option Agreement.
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11.0 MANNER OF PAYMENT. Subject to the provisions of Section 10.0(A)
hereof, the option price shall be payable in United States dollars upon the
exercise of the option and may be paid in cash or by certified check.
12.0 RECAPITALIZATION. Subject to any required action by the shareholders,
the number of shares of Common Stock covered by each outstanding option, and the
price per share thereof in each such option, shall be adjusted proportionately
for any increase or decrease in the number of issued shares of Common Stock of
the Company resulting from a subdivision or consolidation of shares or the
payment of a stock dividend (but only on the Common Stock) or any other increase
or decrease in the number of such shares effected without receipt of
consideration by the Company.
12.1 Subject to any required action by the shareholders, if the Company
shall consummate any merger or consolidation, whether or not the Company shall
be the surviving corporation, each outstanding option shall pertain to and apply
to the securities to which a holder of the number of shares of Common Stock
subject to the option would have been entitled.
12.2 In the event of a change in the Common Stock of the Company as
presently constituted, the shares resulting from any such change shall be deemed
to be the Common Stock within the meaning of the Plan.
12.3 To the extent that the foregoing adjustments relate to shares of
stock or securities of the Company, such adjustments shall be made by the
Committee, whose determination in that respect shall be final, subject to review
by the Board of Directors, provided that each Incentive Stock Option granted
pursuant to this Plan shall not be adjusted in a manner that causes the option
to fail to continue to qualify as an Incentive Stock Option within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended.
12.4 Except as hereinbefore expressly provided in this Section 12, the
Optionee shall have no rights by reason of any subdivision or consolidation of
shares of stock of any class or the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class or by reason
of any dissolution, liquidation, merger, or consolidation or spin-off of assets
or stock of another corporation, and any issue by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class, shall
not affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to the option.
12.5 The grant of an option pursuant to the Plan shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets.
13.0 RIGHTS AS A SHAREHOLDER. An Optionee or a transferee of an option
shall have no rights as a shareholder with respect to any shares covered by his
option until the date shares purchased pursuant to the exercise of an option are
transferred to him on the books of the Company. No adjustments shall be made for
dividends (ordinary or extraordinary, whether in
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cash, securities, or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued, except as
provided in Section 12 hereof. Thereafter the Optionee's rights as a shareholder
shall be subject to the restrictions set forth in Section 5.0(G).
14.0 MODIFICATION, EXTENSION, AND RENEWAL OF OPTIONS. Subject to the terms
and conditions and within the limitations of the Plan, the Committee may modify,
extend, or renew outstanding options granted under the Plan, or accept the
surrender of outstanding options (to the extent not theretofore exercised), and
authorize the granting of new options in substitution therefore (to the extent
not theretofore exercised). The Committee shall not, however, modify any
outstanding options so as to specify a lower price or accept the surrender of
outstanding options and authorize the granting of new options and the
substitution therefore specifying a lower price. Notwithstanding the foregoing,
however, no modification of an option shall, without the consent of the
Optionee, alter or impair any rights or obligations under any option theretofore
granted under the Plan, except as otherwise expressly provided herein.
15.0 INVESTMENT PURPOSE. Each option under the Plan shall be granted on
the condition that the purchases of shares of stock thereunder shall be for
investment purposes, and not with a view to resale or distribution except that
in the event the shares subject to such option are registered under the
Securities Act of 1933, as amended, or in the event a resale of such shares
without such registration would otherwise be permissible, such conditions shall
be inoperative if, in the opinion of counsel for the Company, such condition is
not required under the Securities Act of 1933 or any other applicable law,
regulation, or rule of any governmental agency.
16.0 RIGHT TO TERMINATE EMPLOYMENT. Nothing in the Plan or in any
agreement entered into pursuant to the Plan shall confer upon any Participant
the right to continue in the employment of the Company or affect any right which
the Company may have to terminate the employment of such Participant. Except as
provided in Sections 5.0(F)(1), 6.0, and 7.0 or except as otherwise determined
by the Committee, all Incentive Stock Options shall terminate upon the
termination of the Participant's employment.
17.0 LEAVES OF ABSENCE. The Committee shall be entitled to make such
rules, regulations, and determinations as it deems appropriate under the Plan in
respect of any leave of absence taken by any Participant. Without limiting the
generality of the foregoing, the Committee shall be entitled to determine (i)
whether or not such leave of absence shall constitute a termination of
employment within the meaning of the Plan and (ii) the impact, if any, of any
such leave of absence on the options under the Plan theretofore made to any
Participant who takes such leave of absence.
18.0 INDEMNIFICATION OF COMMITTEE. In addition to such other rights of
indemnification as they may have as directors or as members of the Committee,
the members of the Committee shall be indemnified by the Company against the
reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any action, suit, or proceeding, or
in connection with any appeal therein, to which they or any of them may
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be a party by reason of any action taken or failure to act under or in
connection with the Plan or any option granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such Committee member is liable for negligence or misconduct in
the performance of his duties; provided that within sixty (60) days after
institution of any such action, suit, or proceeding a Committee member shall in
writing offer the Company the opportunity, at its own expense, to handle and
defend the same.
19.0 AMENDMENT OF THE PLAN. The Board of Directors of the Company may,
insofar as permitted by law, from time to time, with respect to any shares at
the time not subject to options, suspend or discontinue the Plan or revise or
amend it in any respect whatsoever except that, without approval of the
shareholders, no such revision or amendment shall change the number of shares
subject to the Plan, change the designation of the class of employees eligible
to receive options, decrease the price at which options may be granted, remove
the administration of the Plan from the Committee, or render any member of the
Committee eligible to receive an option under the Plan while serving thereon.
Furthermore, the Plan may not, without the approval of the shareholders, be
amended in any manner that will cause Incentive Stock Options issued under it to
fail to meet the requirements of Incentive Stock Options as defined in Section
422 of the Internal Revenue Code of 1986, as amended.
20.0 APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of shares of Common Stock pursuant to options granted under this Plan will
be used for general corporate purposes.
21.0 NO OBLIGATION TO EXERCISE OPTION. The granting of an option hereunder
shall impose no obligation upon the Optionee to exercise such option.
22.0 WITHHOLDING TAXES. Whenever the Company proposes or is required to
issue or transfer shares of Common Stock under the Plan, the Company shall have
the right to require the grantee to remit to the Company an amount sufficient to
satisfy any Federal, state, and/or local withholding tax requirements prior to
the delivery of any certificate or certificates for such shares. Alternatively,
the Company may issue or transfer such shares of Common Stock net of the number
of shares sufficient to satisfy any such withholding tax requirements. For
withholding tax purposes, the shares of Common Stock shall be valued on the date
the withholding obligation is incurred.
23.0 NON-UNIFORM DETERMINATIONS. The Committee's determinations under the
Plan (including without limitation determinations of the persons to receive
options, the form, amount, and timing of any option, the terms and provisions of
any option, and the agreements evidencing same) need not be uniform and may be
made by it selectively among persons who have received, or are eligible to
receive options under the Plan, whether or not such persons are similarly
situated.
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24.0 APPROVAL OF SHAREHOLDERS. The Plan shall not take effect until
approved by the holders of a majority of the outstanding shares of stock of the
Company entitled by law to vote with respect to this matter, which approval must
occur within the period beginning twelve (12) months before and ending twelve
(12) months after the date the Plan is adopted by the Board of Directors.
25.0 NONQUALIFIED STOCK OPTIONS. The Committee may, in its sole
discretion, grant options under this Plan which are not intended to be qualified
under Section 422 of the Internal Revenue Code of 1986, as amended (hereinafter
"Nonqualified Incentive Stock Options"). Any Nonqualified Incentive Stock
Options granted under the Plan shall be designated as such in the Stock Option
Agreement between the Company and the Optionee. Except as otherwise set forth
below, Nonqualified Incentive Stock Options shall be subject to all of the terms
and conditions of this Plan as if such option was an Incentive Stock Option.
25.1 The exercise price of any Nonqualified Incentive Stock Option granted
under this Plan shall be determined by the Board of Directors, in its sole
discretion, and need not be the fair market value of the shares which are the
subject of such option. The exercise price shall be specified in the Stock
Option Agreement with the Optionee.
25.2 The provisions of Section 4.1 of this Plan shall not apply to
Nonqualified Incentive Stock Options and there shall be no restriction on the
aggregate fair market value of Nonqualified Incentive Stock Options granted to
any individual under this Plan.
25.3 The provisions of Section 5.0(G) of this Plan regarding certain
restrictions on the disposition of shares acquired pursuant to the exercise of
an option shall not apply to Nonqualified Incentive Stock Options.
25.4 The provisions of Section 8.0 shall not apply to Nonqualified
Incentive Stock Options granted under this Plan and there shall be no
restrictions on Nonqualified Incentive Stock Options granted to shareholders
owning stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company.
25.5 Notwithstanding anything contained in this Plan to the contrary, the
Committee, in its sole discretion, may grant Nonqualified Incentive Stock
Options to persons who are non-employee officers of the Company or non-employee
members of the Board of Directors of Company. Nothing contained in this Section
25.5 shall be construed to permit the Committee to grant Qualified Incentive
Stock Options to such persons. Except as otherwise provided in Sections 25.1
through 25.4 inclusive, all of the terms and conditions of this Plan shall apply
to Options granted pursuant to this Section 25.5. The foregoing notwithstanding,
a member of the Board of Directors to whom a Nonqualified Incentive Stock Option
is granted shall be deemed to have "terminated employment" within the meaning of
this Plan of the later of (i) the date such person ceases to be a member of the
Board of Directors or, (ii) if such person was an employee of the Company on the
date when he or she ceases to be a member of the Board of Directors, the date
such person terminates employment with the Company. Further, a non-employee
officer to whom a Nonqualified Incentive Stock Option is granted shall be deemed
to have "terminated employment" within the meaning of this Plan as of the later
of (i) the date such person ceases to
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be an officer of the Company or, (ii) if such person was an employee of the
Company on the date when he or she ceases to be an officer of the Company, the
date such person terminates employment with the Company.
26.0 GOVERNING LAW. This Plan shall be governed by and construed in
accordance with the internal laws of the State of Missouri.
27.0 EFFECTIVE DATE. The Plan shall become effective on February 22, 1996
and all options issued pursuant to this Plan shall be issued on or before
February 21, 2006; provided, however, that the Plan and all options made under
the Plan prior to such date remain in effect until such options have been
satisfied or terminated in accordance with the Plan and the terms of such
options.
The foregoing Plan was approved and adopted by the Board of Directors of
the Company on February 22, 1996.
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