EXHIBIT 99.1
1999 STOCK OPTION PLAN
OF
NATIONAL HOME HEALTH CARE CORP.
1. PURPOSES OF THE PLAN. This stock option plan (the "Plan") is
designed to provide an incentive to key employees (including directors and
officers who are key employees) and to directors who are not employees of
National Home Health Care Corp., a Delaware corporation (the "Company"), and its
present and future subsidiary corporations, as defined in Paragraph 19
("Subsidiaries"), and to offer an additional inducement in obtaining the
services of such individuals. The Plan provides for the grant of "incentive
stock options" ("ISOs") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), and nonqualified stock options
("NQSOs"), but the Company makes no warranty as to the qualification of any
option as an "incentive stock option" under the Code.
2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Paragraph
12, the aggregate number of shares of Common Stock, $.001 par value per share,
of the Company ("Common Stock") for which options may be granted under the Plan
shall not exceed 500,000. Such shares of Common Stock may, in the discretion of
the Board of Directors of the Company (the "Board of Directors"), consist either
in whole or in part of authorized but unissued shares of Common Stock or shares
of Common Stock held in the treasury of the Company. The Company shall at all
times during the term of the Plan reserve and keep available such number of
shares of Common Stock as will be sufficient to satisfy the requirements of the
Plan. Subject to the provisions of Paragraph 13, any shares of Common Stock
subject to an option which for any reason expires, is cancelled or is terminated
unexercised or which ceases for any reason to be exercisable shall again become
available for the granting of options under the Plan.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Board of Directors which, to the extent it shall determine, may delegate its
powers with respect to the administration of the Plan to a committee of the
Board of Directors (the "Committee") consisting of not less than two directors
(or such greater number as required by law), each of whom shall be a
"non-employee director" within the meaning of Rule 16b-3 (or any successor rule
or regulation) promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). References in the Plan to determinations or actions by the
Committee shall be deemed to include determinations and actions by the Board of
Directors. Unless otherwise provided in the By-laws of the Company or
resolutions of the Board of Directors, a majority of the members of the
Committee shall constitute a quorum, and the acts of
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a majority of the members present at any meeting at which a quorum is present,
and any acts approved in writing by all members without a meeting, shall be the
acts of the Committee.
Subject to the express provisions of the Plan, the Committee shall have
the authority, in its sole discretion, with respect to Employee Options (as
defined in Paragraph 19): to determine the key employees who shall receive
options; the times when they shall receive options; whether an option shall be
an ISO or a NQSO; the number of shares of Common Stock to be subject to each
option; the term of each option; the date each option shall become exercisable;
whether an option shall be exercisable in whole, in part or in installments,
and, if in installments, the number of shares of Common Stock to be subject to
each installment; whether the installments shall be cumulative; the date each
installment shall become exercisable and the term of each installment; whether
to accelerate the date of exercise of any installment; whether shares of Common
Stock may be issued on exercise of an option as partly paid, and, if so, the
dates when future installments of the exercise price shall become due and the
amounts of such installments; the exercise price of each option; the form of
payment of the exercise price; the amount, if any, necessary to satisfy the
Company's obligation to withhold taxes; whether to restrict the sale or other
disposition of the shares of Common Stock acquired upon the exercise of an
option and to waive any such restriction; whether to subject the exercise of all
or any portion of an option to the fulfillment of contingencies as specified in
the Contract (as described in Paragraph 11) including, without limitation,
contingencies relating to entering into a covenant not to compete with the
Company and its Parent and Subsidiaries, to financial objectives for the
Company, a Subsidiary, a division, a product line or other category, and/or the
period of continued employment of the optionee with the Company or its
Subsidiaries, and to determine whether such contingencies have been met; and
with respect to Employee Options and Outside Director Options (as defined in
Paragraph 19): to construe the respective Contracts and the Plan; with the
consent of the optionee, to cancel or modify an option, provided such option as
modified would be permitted to be granted on such date under the terms of the
Plan; to prescribe, amend and rescind rules and regulations relating to the
Plan; and to make all other determinations necessary or advisable for
administering the Plan. The determinations of the Committee on the matters
referred to in this Paragraph 3 shall be conclusive.
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 or computation received from any such counsel, consultant or agent.
Expenses incurred by the Committee in the engagement of such counsel, consultant
or agent shall be paid by the Company. No member or former 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 hereunder.
4. ELIGIBILITY; GRANTS. The Committee may, consistent with the purposes
of the Plan, grant Employee Options from time to time, to key employees
(including officers and directors who are key employees) of the Company or any
of its Subsidiaries. Options granted shall cover such number of shares of Common
Stock as the Committee may
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determine; provided, however, that the maximum number of shares subject to
options that may be granted to any employee in any fiscal year of the Company
under the Plan (the "162(m) Maximum") may not exceed 100,000; and further,
provided, that the aggregate market value (determined at the time the option is
granted) of the shares of Common Stock for which any eligible person may be
granted ISOs under the Plan or any other plan of the Company, or of a Parent or
a Subsidiary of the Company, which are exercisable for the first time by such
optionee during any calendar year shall not exceed $100,000. The $100,000 ISO
limitation shall be applied by taking ISOs into account in the order in which
they were granted. Any option (or the portion thereof) granted in excess of such
amount shall be treated as a NQSO.
On the date the Plan is adopted by the Board of Directors, every
Director of the Company who is not on such date an employee of the Company or
any of its Subsidiaries (an "Outside Director") shall be granted an Outside
Director Option to purchase 5,000 shares of Common Stock. In addition, at the
end of the first fiscal year of the Company in which its Net Income (as defined
below) exceeds each of $4,000,000, $5,000,000, $6,000,000, $7,000,000, etc.,
each person who is an Outside Director of the Company on the last day of such
fiscal year shall be granted an Outside Director Option to purchase 2,500 shares
of Common Stock. For purposes of this paragraph, Net Income means the net
after-tax income of the Company and its consolidated Subsidiaries, as determined
from the Company's audited financial statements. The Outside Director Options
described in this paragraph with respect to a given fiscal year shall be granted
as soon as the Company's audited financial statements for such fiscal year
become available. In the event the remaining shares available for grant under
the Plan are not sufficient to grant the Outside Director Options to each such
Outside Director in any year, the number of shares subject to the Outside
Director Options for such year shall be reduced proportionately. Neither the
Board of Directors nor the Committee shall have any discretion with respect to
the selection of Directors to receive Outside Director Options or the amount,
the price or the timing with respect thereto.
5. EXERCISE PRICE. The exercise price of the shares of Common Stock
under each Employee Option shall be determined by the Committee; provided,
however, that the exercise price shall not be less than 100% of the fair market
value of the Common Stock subject to such option on the date of grant; and
further provided, that if, at the time an ISO is granted, the optionee owns (or
is deemed to own under Section 424(d) of the Code) stock possessing more than
10% of the total combined voting power of all classes of stock of the Company,
of any of its Subsidiaries or of a Parent, the exercise price of such ISO shall
not be less than 110% of the fair market value of the Common Stock subject to
such ISO on the date of grant. The exercise price of the shares of Common Stock
under each Outside Director Option shall be equal to the fair market value of
the Common Stock subject to such option on the date of grant.
The fair market value of the Common Stock on any day shall be (a) if
the principal market for the Common Stock is a national securities exchange, the
average between the high and low sales prices of the Common Stock on such day as
reported by such exchange or
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on a consolidated tape reflecting transactions on such exchange, (b) if the
principal market for the Common Stock is not a national securities exchange and
the Common Stock is quoted on the National Association of Securities Dealers
Automated Quotations System ("NASDAQ"), and (i) if actual sales price
information is available with respect to the Common Stock, the average between
the high and low sales prices of the Common Stock on such day on NASDAQ, or (ii)
if such information is not available, the average between the highest bid and
the lowest asked prices for the Common Stock on such day on NASDAQ, or (c) if
the principal market for the Common Stock is not a national securities exchange
and the Common Stock is not quoted on NASDAQ, the average between the highest
bid and lowest asked prices for the Common Stock on such day as reported on the
NASDAQ OTC Bulletin Board Service or by National Quotation Bureau, Incorporated
or a comparable service; provided that if clauses (a), (b) and (c) of this
Paragraph are all inapplicable, or if no trades have been made or no quotes are
available for such day, the fair market value of the Common Stock shall be
determined by the Committee by any method consistent with applicable regulations
adopted by the Treasury Department relating to stock options. The determination
of the Committee shall be conclusive in determining the fair market value of the
stock.
6. TERM. The term of each Employee Option granted pursuant to the Plan
shall be such term as is established by the Committee, in its sole discretion,
at or before the time such option is granted; provided, however, that the term
of each ISO granted pursuant to the Plan shall be for a period not exceeding 10
years from the date of grant thereof; and further provided, that if, at the time
an ISO is granted, the optionee owns (or is deemed to own under Section 424(d)
of the Code) stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company, of any of its Subsidiaries or of a
Parent, the term of the ISO shall be for a period not exceeding five years from
the date of grant. Employee Options shall be subject to earlier termination as
hereinafter provided. Each Outside Director Option shall be exercisable for a
term of five years commencing on the date of grant.
7. EXERCISE. An option (or any part or installment thereof), to the
extent then exercisable, shall be exercised by giving written notice to the
Company at its principal office (at present 700 White Plains Road, Scarsdale,
New York 10583, Attn: Chairman of the Board), stating which ISO or NQSO is being
exercised, specifying the number of shares of Common Stock as to which such
option is being exercised and accompanied by payment in full of the aggregate
exercise price therefor (or the amount due on exercise if the Employee Option
Contract permits installment payments) (a) in cash or by certified check or (b)
in the case of an Employee Option, if the Contract at the time of grant so
permits, with the authorization the Committee, with previously acquired shares
of Common Stock having an aggregate fair market value, on the date of exercise,
equal to the aggregate exercise price of all options being exercised, or (c)
with any combination of cash, certified check or shares of Common Stock.
A person entitled to receive Common Stock upon the exercise of an
option shall not have the rights of a stockholder with respect to such shares of
Common Stock until the date
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of issuance of a stock certificate to him for such shares; provided, however,
that until such stock certificate is issued, any option holder using previously
acquired shares of Common Stock in payment of an option exercise price shall
continue to have the rights of a stockholder with respect to such previously
acquired shares.
In no case may a fraction of a share of Common Stock be purchased or
issued under the Plan.
8. TERMINATION OF EMPLOYMENT. Any holder of an Employee Option whose
employment with the Company (and its Parent and Subsidiaries) has terminated for
any reason other than his death or Disability (as defined in Paragraph 19) may
exercise such option, to the extent exercisable on the date of such termination,
at any time within three months after the date of termination, but not
thereafter and in no event after the expiration of the term of the option;
provided, however, that if his employment shall be terminated either (a) for
cause or (b) without the consent of the Company, said option shall terminate
immediately. Employee Options granted under the Plan shall not be affected by
any change in the status of the holder so long as he continues to be a full-time
employee of the Company, its Parent or any of the Subsidiaries (regardless of
having been transferred from one corporation to another).
For the purposes of the Plan, an employment relationship shall be
deemed to exist between an individual and a corporation if, at the time of the
determination, the individual was an employee of such corporation for purposes
of Section 422(a) of the Code. As a result, an individual on military, sick
leave or other bona fide leave of absence shall continue to be considered an
employee for purposes of the Plan during such leave if the period of the leave
does not exceed 90 days or, if longer, so long as the individual's right to
reemployment with the Company (or a related corporation) is guaranteed either by
statute or by contract. If the period of leave exceeds 90 days and the
individual's right to reemployment is not guaranteed by statute or by contract,
the employment relationship shall be deemed to have terminated on the 91st day
of such leave.
An Outside Director Option may be exercised at any time during its five
year term; provided, however, that if the holder of an Outside Director Option
ceases to be a Director of the Company (other than as a result of death or
Disability), unless the holder becomes a director emeritus or an employee of the
Company or any of its Subsidiaries, the holder may exercise such option, to the
extent exercisable on the date of such cessation, at any time within three
months after the date of such cessation, but not thereafter, and in no event
after the expiration of the term of the option.
Nothing in the Plan or in any option granted under the Plan shall
confer on any individual any right to continue in the employ of the Company, its
Parent or any of its Subsidiaries, or as a Director of the Company, or interfere
in any way with the right of the Company, its Parent or any of its Subsidiaries
to terminate the employee's employment at any
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time for any reason whatsoever without liability to the Company, its Parent or
any of its Subsidiaries.
9. DEATH OR DISABILITY OF AN OPTIONEE. If an optionee dies (a) while he
is employed by the Company, its Parent or any of its Subsidiaries, (b) within
three months after the termination of his employment (unless such termination
was for cause or without the consent of the Company) or (c) within one year
following the termination of his employment by reason of Disability, an Employee
Option may be exercised, to the extent exercisable on the date of his death, by
his executor, administrator or other person at the time entitled by law to his
rights under such option, at any time within one year after death, but not
thereafter and in no event after the expiration of the term of the option.
Any optionee whose employment has terminated by reason of Disability
may exercise his Employee Option, to the extent exercisable upon the effective
date of such termination, at any time within one year after such date, but not
thereafter and in no event after the expiration of the term of the option.
The term of an Outside Director Option shall not be affected by the
death or Disability of the optionee. If an optionee holding an Outside Director
Option dies during the term of such option, the option may be exercised at any
time during its term by his executor, administrator or other person at the time
entitled by law to his rights under such option.
10. COMPLIANCE WITH SECURITIES LAW. It is a condition to the exercise
of any option that either (a) a Registration Statement under the Securities Act
of 1933, as amended (the "Securities Act"), with respect to the shares of Common
Stock to be issued upon such exercise shall be effective and current at the time
of exercise, or (b) there is an exemption from registration under the Securities
Act for the issuance of shares of Common Stock upon such exercise. In connection
therewith, the Committee may require the optionee to execute and deliver to the
Company his representation and warranty, in form and substance satisfactory to
the Committee, that the shares of Common Stock to be issued upon the exercise of
the option are being acquired by the optionee for his own account, for
investment only and not with a view to the resale or distribution thereof. In
addition, the Committee may require the optionee to represent and warrant in
writing that any subsequent resale or distribution of shares of Common Stock by
such optionee will be made only pursuant to (i) a Registration Statement under
the Securities Act which is effective and current with respect to the Shares of
Common Stock being sold, or (ii) a specific exemption from the registration
requirements of the Securities Act, but in claiming such exemption, the optionee
shall prior to any offer of sale or sale of such shares of Common Stock provide
the Company with a favorable written opinion of counsel satisfactory to the
Company, in form and substance satisfactory to the Company, as to the
applicability of such exemption to the proposed sale or distribution. The
foregoing restriction, however, shall not apply with respect to (x) issuances by
the Company so long as the shares of Common Stock being issued are registered
under the Securities Act and a prospectus in respect thereof is current, (y)
reofferings of shares of Common Stock by persons who are not affiliates (as
defined in Rule 405 or any successor rule or regulation promulgated under the
Securities Act) of the Company if the shares of Common Stock were so registered
or (z) reofferings of shares by Common Stock by affiliates (as defined in Rule
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405 or any successor rule or regulation promulgated under the Securities Act) of
the Company if the shares being reoffered are registered for reoffer under the
Securities Act and a prospectus in respect thereof is current.
Nothing herein shall be construed as requiring the Company to register
shares subject to any option under the Securities Act. In addition, if at any
time the Committee shall determine in its discretion that the listing or
qualification of the shares of Common Stock subject to such option on any
securities exchange or under any applicable law, or the consent or approval of
any governmental regulatory body, is necessary or desirable as a condition of,
or in connection with, the granting of an option, or the issue of shares of
Common Stock thereunder, such option may not be exercised in whole or in part
unless such listing, qualification, consent or approval shall have been effected
or obtained free of any conditions not acceptable to the Committee.
11. STOCK OPTION CONTRACTS. Each option shall be evidenced by an
appropriate Contract which shall be duly executed by the Company and the
optionee, and shall contain such terms and conditions not inconsistent herewith
as may be determined by the Committee.
12. ADJUSTMENTS UPON CHANGES IN COMMON STOCK. Notwithstanding any other
provisions of the Plan, in the event of any change in the outstanding Common
Stock by reason of a stock dividend, recapitalization, merger or consolidation
in which the Company is the surviving corporation, split-up, combination or
exchange of shares or the like, the aggregate number and kind of shares subject
to the Plan, the aggregate number and kind of shares subject to each outstanding
option and the exercise price thereof shall be appropriately adjusted by the
Board of Directors, whose determination shall be conclusive.
In the event of (a) the liquidation or dissolution of the Company, (b)
a merger or consolidation in which the Company is not the surviving corporation
or (c) any other capital reorganization in which more than 50% of the shares of
Common Stock of the Company entitled to vote are exchanged, any outstanding
options shall terminate, unless other provision is made therefor in the
transaction.
13. AMENDMENTS AND TERMINATION OF THE PLAN. The Plan was adopted by the
Board of Directors on October 7, 1999. No option may be granted under the Plan
after October 6, 2009. The Board of Directors, without further approval of the
Company's stockholders, may at any time suspend or terminate the Plan, in whole
or in part, or amend it from time to time in such respects as it may deem
advisable, including, without limitation, in order that ISOs granted hereunder
meet the requirements for "incentive stock options" under the Code, to comply
with the provisions of Rule 16b-3 promulgated under the Exchange Act and
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Section 162(m) of the Code, and to conform to any change in applicable law or to
regulations or rulings of administrative agencies; provided, however, that no
amendment shall be effective without the requisite prior or subsequent
stockholder approval which would (a) except as contemplated in Paragraph 12,
increase the maximum number of shares of Common Stock for which options may be
granted under the Plan or the 162(m) Maximum, (b) materially increase the
benefits to participants under the Plan or (c) change the eligibility
requirements for individuals entitled to receive options hereunder.
Notwithstanding the foregoing, the provisions regarding the selection of
Directors for participation in, and the amount, the price or the timing of,
Outside Director Options shall not be amended more than once every six months,
other than to comport with changes in the Code, the Employee Retirement Income
Security Act or the rules thereunder. No termination, suspension or amendment of
the Plan shall, without the consent of the holder of an existing option affected
thereby, adversely affect his rights under such option. The power of the
Committee to construe and administer any options granted under the Plan prior to
the termination or suspension of the Plan nevertheless shall continue after such
termination or during such suspension.
14. NON-TRANSFERABILITY OF OPTIONS. No option granted under the Plan
shall be transferable otherwise than by will or the laws of descent and
distribution, and options may be exercised, during the lifetime of the holder
thereof, only by him or his legal representatives. Except to the extent provided
above, options may not be assigned, transferred, pledged, hypothecated or
disposed of in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar process.
15. WITHHOLDING TAXES. The Company may withhold cash and/or, with the
authorization of the Committee, shares of Common Stock to be issued with respect
thereto having an aggregate fair market value equal to the amount which it
determines is necessary to satisfy its obligation to withhold federal, state and
local income taxes or other taxes incurred by reason of the grant or exercise of
an option, its disposition, or the disposition of the underlying shares of
Common Stock. Alternatively, the Company may require the holder to pay to the
Company such amount, in cash, promptly upon demand. The Company shall not be
required to issue any shares of Common Stock pursuant to any such option until
all required payments have been made. Fair market value of the shares of Common
Stock shall be determined in accordance with Paragraph 5.
16. LEGENDS; PAYMENT OF EXPENSES. The Company may endorse such legend
or legends upon the certificates for shares of Common Stock issued upon exercise
of an option under the Plan and may issue such "stop transfer" instructions to
its transfer agent in respect of such shares as it determines, in its
discretion, to be necessary or appropriate to (a) prevent a violation of, or to
perfect an exemption from, the registration requirements of the Securities Act,
(b) implement the provisions of the Plan or any agreement between the Company
and the optionee with respect to such shares of Common Stock or (c) permit the
Company to determine the occurrence of a "disqualifying disposition," as
described in Section 421(b) of the
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Code, of the shares of Common Stock transferred upon the exercise of an ISO
granted under the Plan.
The Company shall pay all issuance taxes with respect to the issuance
of shares of Common Stock upon the exercise of an option granted under the Plan,
as well as all fees and expenses incurred by the Company in connection with such
issuance.
17. USE OF PROCEEDS. The cash proceeds from the sale of shares of
Common Stock pursuant to the exercise of options under the Plan shall be added
to the general funds of the Company and used for its general corporate purposes
as the Board of Directors may determine.
18. SUBSTITUTIONS AND ASSUMPTIONS OF OPTIONS OF CERTAIN CONSTITUENT
CORPORATIONS. Anything in this Plan to the contrary notwithstanding, the Board
of Directors may, without further approval by the stockholders, substitute new
options for prior options of a Constituent Corporation (as defined in Paragraph
19) or assume the prior options of such Constituent Corporation.
19. DEFINITIONS.
20. Subsidiary. The term "Subsidiary" shall have the same definition as
"subsidiary corporation" in Section 424(f) of the Code.
21. Parent. The term "Parent" shall have the same definition as "parent
corporation" in Section 424(e) of the Code.
22. Constituent Corporation. The term "Constituent Corporation" shall
mean any corporation which engages with the Company, its Parent or any
Subsidiary in a transaction to which Section 424(a) of the Code applies (or
would apply if the option assumed or substituted were an ISO), or any Parent or
any Subsidiary of such corporation.
23. Disability. The term "Disability" shall mean a permanent and total
disability within the meaning of Section 22(e)(3) of the Code.
24. Employee Option. The term "Employee Option" shall mean an option
granted pursuant to the Plan to a key employee of the Company or a Subsidiary of
the Company.
25. Outside Director Option. The term "Outside Director Option" shall
mean a NQSO granted pursuant to the Plan to a director of the Company who, at
the time of the grant, is not an employee of the Company or any of its
Subsidiaries.
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26. GOVERNING LAW. The Plan, such options as may be granted hereunder
and all related matters shall be governed by, and construed in accordance with,
the laws of the State of Delaware without regard to conflict of laws provisions.
27. PARTIAL INVALIDITY. The invalidity or illegality of any provision
herein shall not affect the validity of any other provision.
28. STOCKHOLDER APPROVAL. The Plan shall be subject to approval by a
majority of the votes present in person or by proxy and entitled to vote hereon
at the next duly held meeting of the Company's stockholders at which a quorum is
present. No options granted hereunder may be exercised prior to such approval;
provided, however, that the date of grant of any option shall be determined as
if the Plan had not been subject to such approval. Notwithstanding the
foregoing, if the Plan is not approved by a vote of the stockholders of the
Company on or before October 7, 2000, then the Plan and any options granted
hereunder shall terminate.
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