<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
MODERN MEDICAL MODALITIES CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as specified in its charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / $125 per Exchange Act Rules 0-11(e)(l)(ii), 14a-6(i)(1) or 14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(A)
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
MODERN MEDICAL MODALITIES CORPORATION
1719 ROUTE 10, SUITE 117
PARSIPPANY, NEW JERSEY 07054
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 6, 1999
TO THE STOCKHOLDERS OF MODERN MEDICAL MODALITIES CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Modern Medical
Modalities Corporation (the "Company") will be held at The Westin Hotel, Two
Whippany Road, Morristown, New Jersey 07960 on July 6, 1999, at 10:00 A.M.,
local time for the following purposes:
1. To elect the Board of Directors of Modern Medical Modalities Corporation
for the ensuing year;
2. To approve an amendment to the Company's Restated and Amended
Certificate of Incorporation to increase the number of authorized shares
of the Company's Common Stock, $.0002 par value per share from 2,500,000
to 15,000,000;
3. To approve the adoption of the Company's 1999 Stock Option Plan;
4. To ratify the appointment of Vincent J. Batyr & Co. as the Company's
independent certified public accountants for the ensuing year; and
5. To transact such other business as may properly come before the meeting
and any continuations and adjournments thereof.
Stockholders of record at the close of business on May 24, 1999 are entitled
to notice of and to vote at the meeting.
In order to ensure a quorum, it is important that Stockholders representing
a majority of the total number of shares issued and outstanding and entitled to
vote, be present in person or represented by their proxies. Therefore, whether
you expect to attend the meeting in person or not, please sign, fill out, date
and return the enclosed proxy in the self-addressed, postage-paid envelope also
enclosed. If you attend the meeting and prefer to vote in person, you can revoke
your proxy.
In addition, please note that abstentions and broker non-votes are each
included in the determination of the number of shares present and voting, for
purposes of determining the presence or absence of a quorum for the transaction
of business. Neither abstentions nor broker non-votes are counted as voted
either for or against a proposal.
May , 1999
By Order of the Board of Directors
Roger Findlay
Chairman of the Board of Directors
<PAGE>
MODERN MEDICAL MODALITIES CORPORATION
1719 ROUTE 10, SUITE 117
PARSIPPANY, NEW JERSEY 07054
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AT 10:00 A.M. JULY 6, 1999
This Proxy Statement is being furnished in connection with the solicitation
by the Board of Directors of Modern Medical Modalities Corporation (herein
called the "Company") for use at the Annual Meeting of Stockholders of the
Company to be held at The Westin Hotel, Two Whippany Road, Morristown, New
Jersey 07960 on July 6, 1999, at 10:00 A.M. local time, and at any continuation
and adjournment thereof. Anyone giving a proxy may revoke it at any time before
it is exercised by giving the Chairman of the Board of Directors of the Company
written notice of the revocation, by submitting a proxy bearing a later date or
by attending the meeting and voting. This statement, the accompanying Notice of
Meeting and form of proxy have been first sent to the Stockholders on or about
June , 1999.
In addition, please note that abstentions and broker non-votes are each
included in the determination of the number of shares present and voting, for
purposes of determining the presence or absence of a quorum for the transaction
of business. Neither abstentions nor broker non- votes are counted as voted
either for or against a proposal.
All properly executed, unrevoked proxies on the enclosed form, which are
received in time will be voted in accordance with the shareholder's directions,
and unless contrary directions are given, will be voted for the election of
directors of the nominees described below.
OWNERSHIP OF SECURITIES
Only Stockholders of record at the close of business on May 24, 1999, the
date fixed by the Board of Directors in accordance with the Company's By-Laws,
are entitled to vote at the meeting. As of May 24, 1999, there were issued and
outstanding 1,895,271 shares of Common Stock.
Each outstanding share is entitled to one vote on all matters properly
coming before the meeting. A majority of the shares of the outstanding Common
Stock is necessary to constitute a quorum for the meeting.
The following table sets forth certain information as of May 24, 1999 with
respect to each beneficial owner of five percent (5%) or more of the outstanding
shares of Common Stock of the Company, each officer and director of the Company
and all officers and directors as a group. The table does not include securities
exercisable into common stock that have not yet vested or are not exercisable
within 60 days of the date hereof. Unless otherwise indicated, the address of
each such person or entity is 1719 Route 10, Suite 117, Parsippany, New Jersey
07054.
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS BENEFICIALLY PERCENTAGE OF
OF BENEFICIAL OWNER OWNED(1) COMMON STOCK
- ---------------------------------------------------------------------------- -------------------- ---------------
<S> <C> <C>
Roger Findlay............................................................... 118,048 6.7%
Jan Goldberg................................................................ 118,046 6.7%
Gregory Maccia.............................................................. 118,046 6.7%
Fred Mancinelli............................................................. -0- 0.0%
Carl Gideon................................................................. -0- 0.0%
All officers and directors as a group (5 persons)........................... 354,140 20.1%
</TABLE>
- ------------------------
(1) Pursuant to the rules and regulations of the Securities and Exchange
Commission, shares of Common Stock that an individual or group has a right
to acquire within 60 days pursuant to the exercise of options or warrants
are deemed to be outstanding for the purposes of computing the percentage
ownership of such individual or group, but are not deemed to be outstanding
for the purposes of computing the percentage ownership of any other person
shown in the table.
THIS PROXY STATEMENT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WHICH INVOLVE
RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE ANTICIPATED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN
FACTORS, INCLUDING THOSE SET FORTH BELOW AND ELSEWHERE IN THIS PROXY STATEMENT.
2
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The By-Laws of the Company provide that the authorized number of directors
shall be as set by the Board of Directors but shall not be less than three. The
directors hold office until the next annual meeting of Stockholders and until
their successors have been elected and qualified.
Five Directors, constituting the entire Board of Directors of the Company,
are to be elected at the meeting to serve until the next Annual Meeting of
Stockholders and until their successors have been elected and qualified. Unless
such authority is withheld, proxies will be voted for election of the five
persons named below, each of whom are now serving as Directors, and each of whom
has been designated as a nominee.
STOCKHOLDER VOTE REQUIRED
The election of the directors will require the affirmative vote of a
plurality of the shares present in person or represented by proxy at the Annual
Meeting of Stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION TO THE BOARD OF
DIRECTORS OF THE COMPANY OF EACH OF THE NOMINEES
The members of the Board of Directors and executive officers of the Company
and their ages and positions with the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------------- --- ------------------------------------------------------------------
<S> <C> <C>
Roger Findlay.......................... 51 Chairman of the Board of Directors and President
Jan Goldberg........................... 48 Vice President, Principal Accounting Officer, Treasurer and
Director
Gregory Maccia......................... 45 Vice President, Secretary and Director
Fred Mancinelli........................ 56 Director
Carl Gedeon............................ 48 Director
</TABLE>
Each of the above officers and directors shall hold office until the next
annual meeting of the Company's shareholders and until a successor is elected
and qualified.
ROGER FINDLAY is a co-founder and has been Chairman of the Board of
Directors of the Company since its inception in June 1990. In March 1999, Mr.
Findlay was appointed President of the Company. Since 1989, Mr. Findlay has also
been co-founder of Technology Services, Inc., a software support company for
medical offices and commercial accounts. Since 1986, he has also been founder
and President of Northern New Jersey Medical Management, a general partner of a
diagnostic imaging center. From 1986 to 1989, Mr. Findlay was President of
Advacare, Inc., a practice management and physician billing company. He was
co-founder and President of Effective Management Services, Inc., from 1984 to
1986, which provided facilities management and custom programming for hospitals,
universities and physician groups. Mr. Findlay, from 1984 to 1986, was also
co-founder and President of Medical Accounts Management Services, a software
development company. From 1984 to 1986, Mr. Findlay was chief operating officer
of NMR of America, Inc., a publicly traded company engaged in operating MRI
sites. Mr. Findlay, from 1972 to 1986, was President and co-owner of Medical
Billing Services, Inc.
JAN GOLDBERG is a co-founder and was Secretary, Treasurer and Director of
the Company until November, 1992. Since November 1992, Mr. Goldberg has been the
Vice President, Treasurer and Director of the Company. From 1989 to 1990, Mr.
Goldberg was founder and President of GPM, Inc., a physician billing
organization with offices in Florida and New York. From 1987 to 1988, Mr.
Goldberg was
3
<PAGE>
operations manager for Advacare, Inc., a practice management and physician
billing company. From 1984 to 1987, Mr. Goldberg was manager of a
multi-specialty radiology practice, BBS Billing, Inc. an east coast diagnostic
physician group which had contracts with hospitals in New York as well as their
own private offices and outpatient facilities. From 1974 to 1984, Mr. Goldberg
held various positions with Blue Cross as well as with hospitals in the New York
area. Mr. Goldberg was involved in setting up fee-for-service reimbursement
systems and was involved in various aspects of hospital administration.
GREGORY MACCIA is a co-founder of the Company and was Vice President and
Director until November, 1992. Since November 1992, Mr. Maccia has been the Vice
President, Secretary and a Director of the Company. Mr. Maccia has also been
President of Technology Services, Inc., a software design and facilities
management company for medical and commercial accounts since 1989. From 1986-
1989, Mr. Maccia was Vice President of Advacare, Inc., a national practice
management and physician billing company. Since 1986, Mr. Maccia has been
co-founder of Northern New Jersey Medical Management, Inc. He was co-founder and
Vice President of Medical Accounts Management Services, Inc. (MAMS) from 1984 to
1986 which developed and sold physician, outpatient and clinical billing
software systems. Mr. Maccia, from 1984 to 1986, was co-founder and Vice
President of Effective Management Services, Inc. (EMS), which provided custom
programming and facilities management with contracts to hospitals and
universities in the tri-state area as well as collection agencies and
non-medical entities. From 1977 to 1984, Mr. Maccia owned and managed his own
consulting company.
FRED J. MANCINELLI was appointed to the Board of Directors of Modern Medical
Modalities on March 3, 1998. Since 1988 Mr. Mancinelli has been President of CBS
Business Forms and Printing, Inc., a privately owned marketing, printing and
forms corporation located in Cedar Knolls, New Jersey. From 1971 to 1988, Mr.
Mancinelli was Vice President of Sales for New Jersey for Computer Business
Supplies, Inc. He purchased the New Jersey Branch office in 1988 and has
concentrated on meeting the total business forms and printing requirements of
over 350 customers. He is responsible for the administrative management,
marketing, cash flow analysis and sales for the Company. From 1962 to 1971, he
was employed by Autographic Business Forms, serving as Communications Manager
from 1962-1964, salesman from 1964-1968 and the New Jersey regional sales
manager from 1968-1971.
CARL GEDEON was appointed to the Board of Directors of Modern Medical
Modalities on March 3, 1998. Mr. Gedeon has over twenty years of experience in
the medical support business, concentrating on sales with an emphasis on unique
design, financing and problem solving for diagnostic imaging centers. Currently
Mr. Gedeon is founder and president of MedSpace, Inc., a company that
specializes in the design and manufacture of state of the art building systems
utilized to house diagnostic imaging equipment. Previously, Mr. Gedeon was vice
president of a major modular office company specializing in medical systems
throughout the United States.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
There were four meetings of the Company's Board of Directors during 1998 at
which all of the Directors were present. There were two unanimous written
consents of the Company's Board of Directors, pursuant to the New Jersey
Corporation Laws, during 1998. The Audit Committee met once during 1998 and the
Compensation Committee did not meet during 1998.
SUMMARY COMPENSATION TABLE
The following table sets forth all cash compensation for services rendered
in all capacities to the Company, for the year ended December 31, 1998 (referred
to as "1998" in this table), the year ended December 31, 1997 (referred to as
"1997" in this table) and the year ended December 31, 1996 (referred to as
"1996" in this table) paid to the Company's Chief Executive Officer. There were
no other executive officer's or other persons whose compensation at the end of
the above 1998, 1997 and 1996 years whose
4
<PAGE>
total compensation exceeded $100,000 per annum. Roger Findlay was appointed
President of the Company in March, 1999. Dominic Gugliemi served as the
Company's President from August 1998 to March 1999.
<TABLE>
<CAPTION>
RESTRICTED
STOCK
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS OPTIONS/SARS
- -------------------------------------------------- --------- ---------- ----------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
Roger Findlay..................................... 1998 $ 118,215 -- -- --
Chairman of the Board of Directors and President 1997 $ 38,462 -- -- --
1996 $ 111,538 -- -- --
Dominic Gugliemi.................................. 1998 $ 20,959 -- -- --
President 1997 $ 48,769 -- -- --
1996
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL POSITION COMPENSATION(1)
- -------------------------------------------------- -----------------
<S> <C>
Roger Findlay..................................... $ 5,550
Chairman of the Board of Directors and President $ 6,480
$ 5,916
Dominic Gugliemi.................................. $ 1,500
President $ 2,700
</TABLE>
- ------------------------
(1) Includes the cost of the use of automobiles leased by the Company, the cost
of benefits, including premiums for life insurance and any other personal
benefits provided by the Company to such persons in connection with the
Company's business and directors fees.
EMPLOYEE PENSION PLAN
The Company does not currently have an employee pension plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On October 15, 1992, the Company initially issued an additional 2,245,000
shares of common stock. Officers of the Company have received shares, for an
aggregate value of $57,500 as follows: Roger Findlay (589,635 shares), Jan
Goldberg (589,630 shares) and Gregory Maccia (589,630 shares). These shares were
issued pursuant to a recapitalization of the Company.
Doctors Imaging Associates, a Joint Venture whose financial statements are
consolidated with those of the Company has received net non-interest bearing
advances from Doctors Imaging Associates, Inc., a joint venture, totaling
$225,717 and 240,751 at December 31, 1995 and December 31, 1994, respectively.
Doctors Imaging Associates, Inc. is obligated to advance up to $250,000 from
time to time for working capital as the Company deems necessary. These advances
are to be repaid prior to any distribution of profits to the joint venturers.
Messrs. Findlay and Maccia who are officers and directors of the Company are
also general partners in a limited partnership which engages in diagnostic
imaging. This limited partnership concerns only one site, which is located at
Union, New Jersey and provides ultrasound, mammography, fluoroscopy and nuclear
medicine only. However, the limited partnership does not lease MRI and CT
equipment. Therefore, it is managements belief that there is no competition
between the Company and the limited partnership. Moreover, no conflict of
interest exists for Messrs. Findlay and Maccia as officers of the Company and
general partners of the limited partnership. There are no leasing transactions
between the Company and the limited partnership. To date there has been no
transactions between the limited partnership and the Company.
Except as disclosed above and pursuant to certain loan transactions with
officers, all previous transactions between the Company and its officers,
directors or 5% stockholders, and their affiliates were made on terms no less
favorable to the Company than those available from unaffiliated parties. All
future transactions between the Company and its officers, directors or 5%
stockholders, and their affiliates, will be on terms no less favorable than
could be obtained from unaffiliated third parties.
5
<PAGE>
SECTION 16(A) REPORTING
Under the securities laws of the United States, the Company's directors, its
executive (and certain other) officers, and any persons holding ten percent or
more of the Company's Common Stock must report on their ownership of the
Company's Common Stock and any changes in that ownership to the Securities and
Exchange Commission and to the National Association of Securities Dealers,
Inc.'s Automated Quotation System. Specific due dates for these reports have
been established. During the year ended December 31, 1998, the Company believes
all reports required to be filed by Section 16(a) were filed on a timely basis.
6
<PAGE>
PROPOSAL NO. 2
AMENDMENT OF RESTATED AND AMENDED CERTIFICATE OF INCORPORATION
TO INCREASE THE AUTHORIZED NUMBER OF SHARES OF
COMMON STOCK
The Board of Directors of the Company has adopted resolutions proposing an
amendment to the Company's Restated Certificate of Incorporation which would
amend the first paragraph of Article Fourth of the Company's Restated and
Amended Certificate of Incorporation to increase the authorized number of shares
of Common Stock, $.0002 par value, to 15,000,000 shares from the 2,500,000
shares currently authorized. There are currently 1,895,271 shares of Common
Stock outstanding.
The Board believes that it is advisable to authorize for issuance a
sufficient number of shares of Common Stock in order to enable the Company to
take advantage of favorable financing opportunities that may arise in the
future. The Board believes that the availability of such shares for issuance in
the future will give the Company greater flexibility (with respect to the
purpose of such issuance and the nature of any consideration that may be
received therefor) and permit such shares to be issued without the expense and
delay of holding a stockholders meeting. The shares would be available for
issuance by the Board without further stockholder authorization, except as may
be required by law or by the rules of Nasdaq (or any other national quotation
system or stock exchange on which the shares of Common Stock may then be
listed). The issuance of any additional shares of Common Stock may result in a
dilution of the voting power of the holders of outstanding shares of Common
Stock and their equity interest in the Company.
Although not intended as an anti-takeover device, issuing additional shares
the Common Stock could impede a non-negotiated acquisition of the Company by
diluting the ownership interests of a substantial stockholder, increasing the
total amount of consideration necessary for a person to obtain control of the
Company, or increasing the voting power of friendly third-parties.
STOCKHOLDER VOTE REQUIRED
Approval of the amendment to the Restated and Amended Certificate of
Incorporation requires the affirmative vote of the holders of a majority of the
shares of Common Stock present in person or represented by proxy at the Annual
Meeting of Stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENT TO THE COMPANY'S RESTATED AND AMENDED CERTIFICATE OF INCORPORATION TO
INCREASE
THE NUMBER OF SHARES OF AUTHORIZED COMMON STOCK.
7
<PAGE>
PROPOSAL NO. 3
ADOPTION OF THE COMPANY'S
1999 STOCK OPTION PLAN
The Company's 1999 Stock Option Plan (the "1999 Option Plan") was adopted by
the Board of Directors in May 1999. The purpose of the 1999 Option Plan is to
grant officers, employees and others who provide significant services to the
Company a favorable opportunity to acquire Common Stock so that they have an
incentive to contribute to its success and remain in its employ. Under the 1999
Option Plan, the Company is authorized to issue options for a total of 500,000
shares of Common Stock.
DESCRIPTION OF 1999 STOCK OPTION PLAN
All officers and other employees of the Company and other persons who
perform significant services for or on behalf of the Company are eligible to
participate in the 1999 Option Plan. The Company currently has approximately 41
full-time employees.
The Company may grant under the 1999 Option Plan both incentive stock
options ("Incentive Stock Options") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and stock options that
do not qualify for incentive treatment under the Code ("Nonstatutory Options").
A copy of the 1999 Option Plan is attached hereto as Appendix A. The
following summary of the 1999 Option Plan does not purport to be complete and is
qualified in its entirety by reference to the complete text of the 1999 Option
Plan.
ADMINISTRATION
The Plan shall be administered by the Board of Directors of the Company (the
"Board"), if each member is a "disinterested person" within the meaning of Rule
16b-3 under the Securities Exchange Act of 1934, as amended ("Rule 16b-3"), or a
committee (the "Committee") of two or more directors, each of whom is a
disinterested person. Appointment of Committee members shall be effective upon
acceptance of appointment. Committee members may resign at any time by
delivering written notice to the Board. Vacancies in the Committee may be filled
by the Board.
Subject to the provisions of the 1999 Option Plan, the Committee has the
authority to construe and interpret the 1999 Option Plan, to prescribe, adopt,
amend and rescind rules and regulations relating to the administration of the
1999 Option Plan and to make all other determinations necessary or advisable for
its administration. Subject to the limitations of the 1999 Option Plan, the
Committee also selects from among the eligible persons those individuals who
will receive options, whether an optionee will receive Incentive Stock Options
or Nonstatutory Options, or both, and the amount, price, restrictions and all
other terms and provisions of such options (which need not be identical).
STOCK SUBJECT TO THE 1999 OPTION PLAN
Subject to adjustment as described below, the stock to be offered under the
1999 Option Plan are shares of authorized but unissued Common Stock, including
any shares repurchased under the terms of the 1999 Option Plan or any stock
option agreement ("Stock Option Agreement") entered into pursuant to the 1999
Option Plan. The cumulative aggregate number of shares of Common Stock to be
issued under the 1999 Option Plan will not exceed 500,000, subject to adjustment
as described below.
EXERCISE PRICE
The exercise price of each Incentive Stock Option granted under the 1999
Option Plan will be determined by the Committee, but will be not less than 100%
of the "Fair Market Value" (as defined in the
8
<PAGE>
1999 Option Plan) of Common Stock on the date of grant (or 110% of Fair Market
Value in the case of an employee who at the time owns more than 10% of the total
combined voting power of all classes of capital stock of the Company). The
exercise price of each Nonstatutory Option will be determined by the Committee,
but will not be less than 85% of the Fair Market Value of Common Stock on the
date of grant. Whether an option granted under the 1999 Option Plan is intended
to be an Incentive Stock Option or a Nonstatutory Stock Option will be
determined by the Committee at the time the Committee acts to grant the option
and set forth in the related Stock Option Agreement.
"Fair Market Value" for purposes of the 1999 Option Plan means: (i) the
closing price of a share of Common Stock on the principal exchange on which
shares of Common Stock are then trading, if any, on the day previous to such
date, or, if shares were not traded on the day previous to such date, then on
the next preceding trading day during which a sale occurred; or (ii) if Common
Stock is not traded on an exchange but is quoted on Nasdaq or a successor
quotation system, (1) the last sales price (if Common Stock is then listed on
the Nasdaq Stock Market) or (2) the mean between the closing representative bid
and asked price (in all other cases) for Common Stock on the day prior to such
date as reported by Nasdaq or such successor quotation system; or (iii) if there
is no listing or trading of Common Stock either on a national exchange or
over-the-counter, that price determined in good faith by the Committee to be the
fair value per share of Common Stock, based upon such evidence as it deems
necessary or advisable. On May 21, 1999, the Fair Market Value was $3.00 per
share based on the closing sale price of the Common Stock as reported on Nasdaq.
In the discretion of the Committee exercised at the time the option is
exercised, the exercise price of any option granted under the 1999 Option Plan
will be payable in full in cash, by check or by the optionee's interest-bearing
promissory note (subject to any limitations of applicable state corporations
law) delivered at the time of exercise. In the discretion of the Committee and
upon receipt of all regulatory approvals, an optionee may be permitted to
deliver as payment in whole or in part of the exercise price certificates for
Common Stock of the Company (valued for this purpose at its Fair Market Value on
the day of exercise) or other property deemed appropriate by the Committee.
So-called cashless exercises as permitted under applicable rules and regulations
of the Securities and Exchange Commission and the Federal Reserve Board also
will be permitted in the discretion of the Committee. The Committee also has
discretion to permit consecutive book entry stock-for-stock exercises of
options.
Irrespective of the manner of payment of the exercise price of an option,
the delivery of shares pursuant to the exercise will be conditioned upon payment
by the optionee to the Company of amounts sufficient to enable the Company to
pay all applicable federal, state and local withholding taxes.
EXERCISE PERIOD
The Committee shall provide, in the terms of each Stock Option Agreement,
when the option subject to such agreement expires and becomes unexercisable, but
in no event will an Incentive Stock Option granted under the Plan be exercisable
after the expiration of ten years from the date it is granted. Without limiting
the generality of the foregoing, the Committee may provide in the Stock Option
Agreement that the option subject thereto expires 30 days following a
Termination of Employment for any reason other than death or disability or six
months following a Termination of Employment for disability or following an
optionee's death; provided, however, that in no event shall any option granted
under the Plan be exercised after the expiration date of such option set forth
in the applicable Stock Option Agreement.
EXERCISE OF OPTIONS
Each option granted under the 1999 Option Plan will become exercisable in a
lump sum or in such installments, which need not be equal, as the Committee
determines, provided, however, that each option will become exercisable as to at
least 10% of the shares of Common Stock covered thereby on each anniversary of
the date such option is granted. If in any given installment period the holder
of an option
9
<PAGE>
does not purchase all of the shares which the holder is entitled to purchase in
that installment period, the holder's right to purchase any shares not purchased
in that period will continue until the expiration or sooner termination of such
holder's option. The Committee may, at any time after grant of the option and
from time to time, increase the number of shares purchasable in any installment,
subject to the total number of shares subject to the option and the limitations
set forth in the 1999 Option Plan as to the number of shares as to which
Incentive Stock Options may first become exercisable in any year.
TRANSFERABILITY OF OPTIONS
An option granted under the 1999 Option Plan will be nontransferable by the
optionee other than by will or the laws of descent and distribution or pursuant
to a qualified domestic relations order (as defined in the Code), and will be
exercisable during the optionee's lifetime only by the optionee or by his or her
guardian or legal representative. More particularly, an option may not be
assigned, transferred (except as provided in the preceding sentence), pledged or
hypothecated (whether by operation of law or otherwise), and will not be subject
to execution, attachment or similar process.
CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES; LEGENDS
In order to enforce any restrictions imposed upon Common Stock issued upon
exercise of any option granted under the 1999 Option Plan or to which such
Common Stock may be subject, the Committee may cause a legend or legends to be
placed on any share certificates representing such Common Stock.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; MERGER AND CONSOLIDATION
If the outstanding shares of Common Stock are changed into, or exchanged for
cash or different number or kind of shares or securities of the Company or of
another corporation through reorganization, merger, recapitalization,
reclassification, stock split-up, reverse stock split, stock dividend, stock
consolidation, stock combination stock reclassification or similar transaction,
an appropriate adjustment will be made by the Committee in the number and kind
of shares as to which options may be granted. In the event of such change or
exchange, other than for shares or securities of another corporation or by
reason of reorganization, the Committee will also make a corresponding
adjustment in the number or kind of shares, and the exercise price per share
allocated to unexercised options or portions thereof, of options which have been
granted prior to such change. Any such adjustment, however, will be made without
change in the total price applicable to the unexercised options or portions
thereof, of options which have been granted prior to such change. Any such
adjustment, however, will be made without change in the total price applicable
to the unexercised portion of the option but with a corresponding adjustment in
the price for each share (except for any change in the aggregate price resulting
from rounding-off of share quantities or prices).
In the event of a "spin-off" or other substantial distribution of assets of
the Company which has a material diminutive effect upon the Fair Market Value of
Common Stock, the Committee will make such an adjustment to the exercise prices
of options then outstanding under the 1999 Option Plan as it determines is
appropriate and equitable to reflect such diminution.
In connection with the dissolution or liquidation of the Company or a
partial liquidation involving 50% or more of the assets of the Company, a
reorganization of the Company in which another entity is the survivor, a merger
or reorganization of the Company under which more than 50% of the Common Stock
outstanding prior to the merger or reorganization is converted into cash or into
another security, a sale of more than 50% of the Company's assets, or a similar
event that the Committee determines would materially alter the structure of the
Company or its ownership, the Committee, upon 30 days prior written notice to
the option holders, may do one or more of the following: (i) shorten the period
during which options are exercisable (provided they remain exercisable for at
least 30 days after the date the notice is given); (ii) accelerate any vesting
schedule to which an option is subject; (iii) arrange to have the surviving or
successor entity grant replacement options with appropriate adjustments in the
number and kind of
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securities and option prices; or (iv) cancel options upon payment to the option
holders in cash, with respect to each option to the extent then exercisable
(including any options as to which the exercise has been accelerated as
contemplated in clause (ii) above), of any amount that is the equivalent of the
Fair Market Value of the Common Stock (at the effective time of the dissolution,
liquidation, merger, reorganization, sale or other event) or the fair market
value of the option.
No fractional shares of Common Stock will be issued on account of any of the
foregoing adjustments.
AMENDMENT AND TERMINATION
The Board or the Committee may at any time suspend, amend or terminate the
1999 Option Plan and may, with the consent of an optionee, make such
modifications of the terms and conditions of such optionee's option as it deems
advisable; provided, however, that without approval of the Company's
stockholders given within twelve months before or after the action by the Board
or the Committee, no action of the Board or the Committee may (A) materially
increase the benefits accruing to participants under the Plan; (B) materially
increase the number of securities which may be issued under the Plan; or (C)
materially modify the requirements as to eligibility for participation in the
Plan. The amendment, suspension or termination of the 1999 Option Plan will not,
however, without the consent of the optionee to be affected, alter or impair any
rights or obligations under any option.
No option may be granted during any period of suspension nor after
termination of the 1999 Option Plan.
PRIVILEGES OF STOCK OWNERSHIP; REPORTS TO OPTION HOLDERS
A participant in the 1999 Option Plan will not be entitled to the privilege
of stock ownership as to any shares of Common Stock unless and until they are
actually issued to the participant.
The Company will furnish to each optionee under the 1999 Option Plan the
Company's annual report and such other periodic reports, if any, as are
disseminated by the Company in the ordinary course to its stockholders.
TERMINATION
Unless earlier terminated by the Board or the Committee, the 1999 Option
Plan will terminate automatically as of the close of business on the day
preceding the tenth anniversary date of its adoption by the Board. The
termination of the 1999 Option Plan will not affect the validity of any Stock
Option Agreement outstanding at the date of such termination.
FEDERAL INCOME TAX TREATMENT
Under the Code, neither the grant nor the exercise of Incentive Stock
Options is a taxable event to the optionee (except to the extent an optionee may
be subject to alternative minimum tax); rather, the optionee is subject to tax
only upon the sale of the common stock acquired upon exercise of the Incentive
Stock Option. Upon such a sale, the entire difference between the amount
realized upon the sale and the exercise price of the option will be taxable to
the optionee. Subject to certain holding period requirements, such difference
will be taxed as a capital gain rather than as ordinary income.
Optionees who receive Nonstatutory Options will be subject to taxation upon
exercise of such options on the spread between the Fair Market Value of the
Common Stock on the date of exercise and the exercise price of such options.
This spread is treated as ordinary income to the optionee, and the Company is
permitted to deduct as an employee expense a corresponding amount. Nonstatutory
Options do not give rise to a tax preference item subject to the alternative
minimum tax.
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STOCKHOLDER VOTE REQUIRED
Approval of the Company's 1999 Stock Option Plan requires the affirmative
vote of the holders of a majority of the shares of Common Stock present in
person or represented by proxy at the Annual Meeting of Stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF
THE COMPANY'S 1999 STOCK OPTION PLAN.
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PROPOSAL 4
RATIFICATION OF VINCENT J. BATYR & CO. AS THE
COMPANY'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.
The Board of Directors has unanimously approved and unanimously recommends
that the Stockholders approve the appointment of Vincent J. Batyr & Co. as the
Company's independent certified public accountants for the ensuing year. Unless
a shareholder signifies otherwise, the persons named in the proxy will so vote.
STOCKHOLDER VOTE REQUIRED
Ratification of the appointment of Vincent J. Batyr & Co. as independent
certified public accountants will require the affirmative vote of the majority
of the shares present in person or represented by proxy at the Annual Meeting of
Stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT
OF
VINCENT J. BATYR & CO. AS THE COMPANY'S INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
referred to in the Notice of Meeting which will be presented for consideration
at the meeting. However, it is possible that certain proposals may be raised at
the meeting by one or more Stockholders. In such case, or if any other matter
should properly come before the meeting, it is the intention of the person named
in the accompanying proxy to vote such proxy in accordance with his or her best
judgment.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company. Solicitations
may be made by mail, personal interview, telephone, and telegram by directors,
officers and employees of the Company. The Company will reimburse banks,
brokerage firms, other custodians, nominees and fiduciaries for reasonable
expenses incurred in sending proxy material to beneficial owners of the
Company's capital stock.
STOCKHOLDER PROPOSALS
In order to be included in the proxy materials for the Company's next Annual
Meeting of Stockholders, stockholder proposals must be received by the Company
on or before March 31, 2000.
ANNUAL AND QUARTERLY REPORTS TO THE SECURITIES AND
EXCHANGE COMMISSION
The Annual Report on Form 10-KSB/A for the year ended December 31, 1998, as
filed with the Securities and Exchange Commission, will be made available to
Stockholders free of charge by writing to Modern Medical Modalities Corporation
1719 Route 10, Suite 1040, Parsippany, New Jersey 07054, Attention: Corporate
Secretary.
By Order of the Board of
Directors of Modern Medical Modalities Corporation
Roger Findlay
Chairman of the Board of Directors
May , 1999
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APPENDIX A
MODERN MEDICAL MODALITIES CORPORATION
1999 STOCK OPTION PLAN
AS ADOPTED , 1999
<PAGE>
1. PURPOSE OF PLAN; ADMINISTRATION
1.1 PURPOSE.
The Modern Medical Modalities Corporation 1999 Stock Option Plan
(hereinafter, the "Plan") is hereby established to grant to officers and other
employees of Modern Medical Modalities Corporation (the "Company") or of its
parents or subsidiaries (as defined in Sections 424(e) and (f), respectively, of
the Internal Revenue Code of 1986, as amended (the "Code")), if any
(individually and collectively, the Company"), and to non-employee directors,
consultants and advisors and other persons who may perform significant services
for or on behalf of the Company, a favorable opportunity to acquire common
stock, $.0002 par value ("Common Stock"), of the Company and, thereby, to create
an incentive for such persons to remain in the employ of or provide services to
the Company and to contribute to its success.
The Company may grant under the Plan both incentive stock options within the
meaning of Section 422 of the Code ("Incentive Stock Options") and stock options
that do not qualify for treatment as Incentive Stock Options ("Nonstatutory
Options"). Unless expressly provided to the contrary herein, all references
herein to "options," shall include both incentive Stock Options and Nonstatutory
Options.
1.2 ADMINISTRATION.
The Plan shall be administered by the Board of Directors of the Company (the
"Board"), if each member is a "Non-Employee Director" within the meaning of Rule
16b-3 under the Securities Exchange Act of 1934, as amended ("Rule 16b-3"), or a
committee (the "Committee") of two or more directors, each of whom is a
Non-Employee Director. Appointment of Committee members shall be effective upon
acceptance of appointment. Committee members may resign at any time by
delivering written notice to the Board. Vacancies in the Committee may be filled
by the Board. Until such time that the Committee is properly appointed, the
Board shall administer the Plan in accordance with the terms of this Section
1.2.
A majority of the members of the Committee shall constitute a quorum for the
purposes of the Plan. Provided a quorum is present, the Committee may take
action by affirmative vote or consent of a majority of its members present at a
meeting. Meetings may be held telephonically as long as all members are able to
hear one another, and a member of the Committee shall be deemed to be present
for this purpose if he or she is in simultaneous communication by telephone with
the other members who are able to hear one another. In lieu of action at a
meeting, the Committee may act by written consent of a majority of its members.
Subject to the express provisions of the Plan, the Committee shall have the
authority to construe and interpret the Plan and all Stock Option Agreements (as
defined in Section 3.4) entered into pursuant hereto and to define the terms
used therein, to prescribe, adopt, amend and rescind rules and regulations
relating to the administration of the Plan and to make all other determinations
necessary or advisable for the administration of the Plan; provided, however,
that the Committee may delegate nondiscretionary administrative duties to such
employees of the Company as it deems proper; and, provided, further, in its
absolute discretion, the Board may at any time and from time to time exercise
any and all rights and duties of the Committee under the Plan. Subject to the
express limitations of the Plan, the Committee shall designate the individuals
from among the class of persons eligible to participate as provided in Section
1.3 who shall receive options, whether an optionee will receive Incentive Stock
Options or Nonstatutory Options, or both, and the amount, price, restrictions
and all other terms and provisions of such options (which need not be
identical).
Members of the Committee shall receive such compensation for their services
as members as may be determined by the Board. All expenses and liabilities which
members of the Committee incur in connection with the administration of this
Plan shall be borne by the Company. The Committee may, with the approval of the
Board, employ attorneys, consultants, accountants, appraisers, brokers or other
persons. The Committee, the Company and the Company's officers and directors
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. No members of the Committee or Board shall
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be personally liable for any action, determination or interpretation made in
good faith with respect to the Plan, and all members of the Committee shall be
fully protected by the Company in respect of any such action, determination or
interpretation.
1.3 PARTICIPATION.
Officers and other employees of the Company, non-employee directors,
consultants and advisors and other persons who may perform significant services
on behalf of the Company shall be eligible for selection to participate in the
Plan upon approval by the Committee; provided, however, that only "employees"
(within the meaning of Section 3401(c) of the Code) of the Company shall be
eligible for the grant of Incentive Stock Options. An individual who has been
granted an option may, if otherwise eligible, be granted additional options if
the Committee shall so determine. No person is eligible to participate in the
Plan by matter of right; only those eligible persons who are selected by the
Committee in its discretion shall participate in the Plan.
1.4 STOCK SUBJECT TO THE PLAN.
Subject to adjustment as provided in Section 3.5, the stock to be offered
under the Plan shall be shares of authorized but unissued Common Stock,
including any shares repurchased under the terms of the Plan or any Stock Option
Agreement entered into pursuant hereto. The cumulative aggregate number of
shares of Common Stock to be issued under the Plan shall not exceed 500,000,
subject to adjustment as set forth in Section 3.5.
If any option granted hereunder shall expire or terminate for any reason
without having been fully exercised, the unpurchased shares subject thereto
shall again be available for the purposes of the Plan. For purposes of this
Section 1.4, where the exercise price of options is paid by means of the
grantee's surrender of previously owned shares of Common Stock, only the net
number of additional shares issued and which remain outstanding in connection
with such exercise shall be deemed "issued" for purposes of the Plan.
2. STOCK OPTIONS
2.1 EXERCISE PRICE; PAYMENT.
(a) The exercise price of each Incentive Stock Option granted under the Plan
shall be determined by the Committee, but shall not be less than 100% of the
"Fair Market Value" (as defined below) of Common Stock on the date of grant. If
an Incentive Stock Option is granted to an employee who at the time such option
is granted owns (within the meaning of section 424(d) of the Code) more than 10%
of the total combined voting power of all classes of capital stock of the
Company, the option exercise price shall be at least 110% of the Fair Market
Value of Common Stock on the date of grant. The exercise price of each
Nonstatutory Option also shall be determined by the Committee, but shall not be
less than 85% of the Fair Market Value of Common Stock on the date of grant. The
status of each option granted under the Plan as either an Incentive Stock Option
or a Nonstatutory Option shall be determined by the Committee at the time the
Committee acts to grant the option, and shall be clearly identified as such in
the Stock Option Agreement relating thereto.
"Fair Market Value" for purposes of the Plan shall mean: (i) the closing
price of a share of Common Stock on the principal exchange on which shares of
Common Stock are then trading, if any, on the day immediately preceding the date
of grant, or, if shares were not traded on the day preceding such date of grant,
then on the next preceding trading day during which a sale occurred; or (ii) if
Common Stock is not traded on an exchange but is quoted on Nasdaq or a successor
quotation system, (1) the last sales price (if Common Stock is then listed on
the Nasdaq Stock Market) or (2) the mean between the closing representative bid
and asked price (in all other cases) for Common Stock on the day prior to the
date of grant as reported by Nasdaq or such successor quotation system; or (iii)
if there is no listing or trading of Common Stock either on a national exchange
or over-the-counter, that price determined in good faith by
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the Committee to be the fair value per share of Common Stock, based upon such
evidence as it deems necessary or advisable.
(b) In the discretion of the Committee at the time the option is exercised,
the exercise price of any option granted under the Plan shall be paid in full in
cash, by check or by the optionee's interest-bearing promissory note (subject to
any limitations of applicable state corporations law) delivered at the time of
exercise; provided, however, that subject to the timing requirements of Section
2.7, in the discretion of the Committee and upon receipt of all regulatory
approvals, the person exercising the option may deliver as payment in whole or
in part of such exercise price certificates for Common Stock of the Company
(duly endorsed or with duly executed stock powers attached), which shall be
valued at its Fair Market Value on the day of exercise of the option, or other
property deemed appropriate by the Committee; and, provided further, that,
subject to Section 422 of the Code, so-called cashless exercises as permitted
under applicable rules and regulations of the Securities and Exchange Commission
and the Federal Reserve Board shall be permitted in the discretion of the
Committee. Without limiting the Committee's discretion in this regard,
consecutive book entry stock-for-stock exercises of options (or "pyramiding")
also are permitted in the Committee's discretion.
Irrespective of the form of payment, the delivery of shares issuable upon
the exercise of an option shall be conditioned upon payment by the optionee to
the Company of amounts sufficient to enable the Company to pay all federal,
state, and local withholding taxes resulting, in the Company's judgment, from
the exercise. In the discretion of the Committee, such payment to the Company
may be effected through (i) the Company's withholding from the number of shares
of Common Stock that would otherwise be delivered to the optionee by the Company
on exercise of the option a number of shares of Common Stock equal in value (as
determined by the Fair Market Value of Common Stock on the date of exercise) to
the aggregate withholding taxes, (ii) payment by the optionee to the Company of
the aggregate withholding taxes in cash, (iii) withholding by the Company from
other amounts contemporaneously owed by the Company to the optionee, or (iv) any
combination of these three methods, as determined by the Committee in its
discretion.
2.2 OPTION PERIOD.
(a) The Committee shall provide, in the terms of each Stock Option
Agreement, when the option subject to such agreement expires and becomes
unexercisable, but in no event will an Incentive Stock Option granted under the
Plan be exercisable after the expiration of ten years from the date it is
granted. Without limiting the generality of the foregoing, the Committee may
provide in the Stock Option Agreement that the option subject thereto expires 30
days following a Termination of Employment (as defined in Section 3.2 hereof)
for any reason other than death or disability, or six months following a
Termination of Employment for disability or following an optionee's death.
(b) Outside Date for Exercise. Notwithstanding any provision of this Section
2.2, in no event shall any option granted under the Plan be exercised after the
expiration date of such option set forth in the applicable Stock Option
Agreement.
2.3 EXERCISE OF OPTIONS.
Each option granted under the Plan shall become exercisable and the total
number of shares subject thereto shall be purchasable, in a lump sum or in such
installments, which need not be equal, as the Committee shall determine;
provided, however, that each option shall become exercisable in full no later
than ten years after such option is granted, and each option shall become
exercisable as to at least 10% of the shares of Common Stock covered thereby on
each anniversary of the date such option is granted; and provided, further, that
if the holder of an option shall not in any given installment period purchase
all of the shares which such holder is entitled to purchase in such installment
period, such holder's right to purchase any shares not purchased in such
installment period shall continue until the expiration or sooner termination of
such holder's option. The Committee may, at any time after grant of the option
and from
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time to time, increase the number of shares purchasable in any installment,
subject to the total number of shares subject to the option and the limitations
set forth in Section 2.5. At any time and from time to time prior to the time
when any exercisable option or exercisable portion thereof becomes unexercisable
under the Plan or the applicable Stock Option Agreement, such option or portion
thereof may be exercised in whole or in part; provided, however, that the
Committee may, by the terms of the option, require any partial exercise to be
with respect to a specified minimum number of shares. No option or installment
thereof shall be exercisable except with respect to whole shares. Fractional
share interests shall be disregarded, except that they may be accumulated as
provided above and except that if such a fractional share interest constitutes
the total shares of Common Stock remaining available for purchase under an
option at the time of exercise, the optionee shall be entitled to receive on
exercise a certified or bank cashier's check in an amount equal to the Fair
Market Value of such fractional share of stock.
2.4 TRANSFERABILITY OF OPTIONS.
Except as the Committee may determine as aforesaid, an option granted under
the Plan shall, by its terms, be nontransferable by the optionee other than by
will or the laws of descent and distribution, or pursuant to a qualified
domestic relations order (as defined by the Code), and shall be exercisable
during the optionee's lifetime only by the optionee or by his or her guardian or
legal representative. More particularly, but without limiting the generality of
the immediately preceding sentence, an option may not be assigned, transferred
(except as provided in the preceding sentence), pledged or hypothecated (whether
by operation of law or otherwise), and shall not be subject to execution,
attachment or similar process. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of any option contrary to the provisions of
the Plan and the applicable Stock Option Agreement, and any levy of any
attachment or similar process upon an option, shall be null and void, and
otherwise without effect, and the Committee may, in its sole discretion, upon
the happening of any such event, terminate such option forthwith.
2.5 LIMITATION ON EXERCISE OF INCENTIVE STOCK OPTIONS.
To the extent that the aggregate Fair Market Value (determined on the date
of grant as provided in Section 2.1 above) of the Common Stock with respect to
which Incentive Stock Options granted hereunder (together with all other
Incentive Stock Option plans of the Company) are exercisable for the first time
by an optionee in any calendar year under the Plan exceeds $100,000, such
options granted hereunder shall be treated as Nonstatutory Options to the extent
required by Section 422 of the Code. The rule set forth in the preceding
sentence shall be applied by taking options into account in the order in which
they were granted.
2.6 DISQUALIFYING DISPOSITIONS OF INCENTIVE STOCK OPTIONS.
If Common Stock acquired upon exercise of any Incentive Stock Option is
disposed of in a disposition that, under Section 422 of the Code, disqualifies
the option holder from the application of Section 421(a) of the Code, the holder
of the Common Stock immediately before the disposition shall comply with any
requirements imposed by the Company in order to enable the Company to secure the
related income tax deduction to which it is entitled in such event.
2.7 CERTAIN TIMING REQUIREMENTS.
At the discretion of the Committee, shares of Common Stock issuable to the
optionee upon exercise of an option may be used to satisfy the option exercise
price or the tax withholding consequences of such exercise, in the case of
persons subject to Section 16 of the Securities Exchange Act of 1934, as
amended, only (i) during the period beginning on the third business day
following the date of release of the quarterly or annual summary statement of
sales and earnings of the Company and ending on the twelfth business day
following such date or (ii) pursuant to an irrevocable written election by the
optionee to use shares of Common Stock issuable to the optionee upon exercise of
the option to pay all or part of the option price or the withholding taxes made
at least six months prior to the payment of such option price or withholding
taxes.
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2.8 NO EFFECT ON EMPLOYMENT.
Nothing in the Plan or in any Stock Option Agreement hereunder shall confer
upon any optionee any right to continue in the employ of the Company, any Parent
Corporation or any Subsidiary or shall interfere with or restrict in any way the
rights of the Company, its Parent Corporation and its Subsidiaries, which are
hereby expressly reserved, to discharge any optionee at any time for any reason
whatsoever, with or without cause.
For purposes of the Plan, "Parent Corporation" shall mean any corporation in
an unbroken chain of corporations ending with the Company if each of the
corporations other than the Company then owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain. For purposes of the Plan, "Subsidiary" shall mean
any corporation in an unbroken chain of corporations beginning with the Company
if each of the corporations other than the last corporation in the unbroken
chain then owns stock possessing 50% or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
3. OTHER PROVISIONS
3.1 SICK LEAVE AND LEAVES OF ABSENCE.
Unless otherwise provided in the Stock Option Agreement, and to the extent
permitted by Section 422 of the Code, an optionee's employment shall not be
deemed to terminate by reason of sick leave, military leave or other leave of
absence approved by the Company if the period of any such leave does not exceed
a period approved by the Company, or, if longer, if the optionee's right to
reemployment by the Company is guaranteed either contractually or by statute. A
Stock Option Agreement may contain such additional or different provisions with
respect to leave of absence as the Committee may approve, either at the time of
grant of an option or at a later time.
3.2 TERMINATION OF EMPLOYMENT.
For purposes of the Plan "Termination of Employment," shall mean the time
when the employee-employer relationship between the optionee and the Company,
any Subsidiary or any Parent Corporation is terminated for any reason,
including, but not by way of limitation, a termination by resignation,
discharge, death, disability or retirement; but excluding (i) terminations where
there is a simultaneous reemployment or continuing employment of an optionee by
the Company, any Subsidiary or any Parent Corporation, (ii) at the discretion of
the Committee, terminations which result in a temporary severance of the
employee-employer relationship, and (iii) at the discretion of the Committee,
terminations which are followed by the simultaneous establishment of a
consulting relationship by the Company, a Subsidiary or any Parent Corporation
with the former employee. Subject to Section 3.1, the Committee, in its absolute
discretion, shall determine the affect of all matters and questions relating to
Termination of Employment; provided, however, that, with respect to Incentive
Stock Options, a leave of absence or other change in the employee-employer
relationship shall constitute a Termination of Employment if, and to the extent
that such leave of absence or other change interrupts employment for the
purposes of Section 422(a)(2) of the Code and the then-applicable regulations
and revenue rulings under said Section.
3.3 ISSUANCE OF STOCK CERTIFICATES.
Upon exercise of an option, the Company shall deliver to the person
exercising such option a stock certificate evidencing the shares of Common Stock
acquired upon exercise. Notwithstanding the foregoing, the Committee in its
discretion may require the Company to retain possession of any certificate
evidencing stock acquired upon exercise of an option which remains subject to
repurchase under the provisions of the Stock Option Agreement or any other
agreement signed by the optionee in order to facilitate such repurchase
provisions.
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3.4 TERMS AND CONDITIONS OF OPTIONS.
Each option granted under the Plan shall be evidenced by a written Stock
Option Agreement ("Stock Option Agreement") between the option holder and the
Company providing that the option is subject to the terms and conditions of the
Plan and to such other terms and conditions not inconsistent therewith as the
Committee may deem appropriate in each case.
3.5 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; MERGER AND CONSOLIDATION.
If the outstanding shares of Common Stock are changed into, or exchanged for
cash or a different number or kind of shares or securities of the Company or of
another corporation through reorganization, merger, recapitalization,
reclassification, stock split-up, reverse stock split, stock dividend, stock
consolidation, stock combination, stock reclassification or similar transaction,
an appropriate adjustment shall be made by the Committee in the number and kind
of shares as to which options may be granted. In the event of such a change or
exchange, other than for shares or securities of another corporation or by
reason of reorganization, the Committee shall also make a corresponding
adjustment changing the number or kind of shares and the exercise price per
share allocated to unexercised options or portions thereof, which shall have
been granted prior to any such change, shall likewise be made. Any such
adjustment, however, shall be made without change in the total price applicable
to the unexercised portion of the option (except for any change in the aggregate
price resulting from rounding-off of share quantities or prices).
In the event of a "spin-off" or other substantial distribution of assets of
the Company which has a material diminutive effect upon the Fair Market Value of
the Common Stock, the Committee in its discretion shall make an appropriate and
equitable adjustment to the exercise prices of options then outstanding under
the Plan.
Where an adjustment under this Section 3.5 of the type described above is
made to an Incentive Stock Option, the adjustment will be made in a manner which
will not be considered a "modification" under the provisions of subsection
424(b)(3) of the Code.
In connection with the dissolution or liquidation of the Company or a
partial liquidation involving 50% or more of the assets of the Company, a
reorganization of the Company in which another entity is the survivor, a merger
or reorganization of the Company under which more than 50% of the Common Stock
outstanding prior to the merger or reorganization is converted into cash or into
a security of another entity, a sale of more than 50% of the Company's assets,
or a similar event that the Committee determines, in its discretion, would
materially alter the structure of the Company or its ownership, the Committee,
upon 30 days prior written notice to the option holders, may, in its discretion,
do one or more of the following: (i) shorten the period during which options are
exercisable (provided they remain exercisable for at least 30 days after the
date the notice is given); (ii) accelerate any vesting schedule to which an
option is subject; (iii) arrange to have the surviving or successor entity grant
replacement options with appropriate adjustments in the number and kind of
securities and option prices, or (iv) cancel options upon payment to the option
holders in cash, with respect to each option to the extent then exercisable
(including any options as to which the exercise has been accelerated as
contemplated in clause (ii) above), of any amount that is the equivalent of the
Fair Market Value of the Common Stock (at the effective time of the dissolution,
liquidation, merger, reorganization, sale or other event) or the fair market
value of the option. In the case of a change in corporate control, the Committee
may, in considering the advisability or the terms and conditions of any
acceleration of the exercisability of any option pursuant to this Section 3.5,
take into account the penalties that may result directly or indirectly from such
acceleration to either the Company or the option holder, or both, under Section
280G of the Code, and may decide to limit such acceleration to the extent
necessary to avoid or mitigate such penalties or their effects.
No fractional share of Common Stock shall be issued under the Plan on
account of any adjustment under this Section 3.5.
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3.6 RIGHTS OF PARTICIPANTS AND BENEFICIARIES.
The Company shall pay all amounts payable hereunder only to the option
holder or beneficiaries entitled thereto pursuant to the Plan. The Company shall
not be liable for the debts, contracts or engagements of any optionee or his or
her beneficiaries, and rights to cash payments under the Plan may not be taken
in execution by attachment or garnishment, or by any other legal or equitable
proceeding while in the hands of the Company.
3.7 GOVERNMENT REGULATIONS.
The Plan, and the grant and exercise of options and the issuance and
delivery of shares of Common Stock under options granted hereunder, shall be
subject to compliance with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal securities law) and
federal margin requirements and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under
the Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements. To the extent
permitted by applicable law, the Plan and options granted hereunder shall be
deemed amended to the extent necessary to conform to such laws, rules and
regulations.
3.8 AMENDMENT AND TERMINATION.
The Board or the Committee may at any time suspend, amend or terminate the
Plan and may, with the consent of the option holder, make such modifications of
the terms and conditions of such option holder's option as it shall deem
advisable, provided, however, that, without approval of the Company's
stockholders given within twelve months before or after the action by the Board
or the Committee, no action of the Board or the Committee may, (A) materially
increase the benefits accruing to participants under the Plan; (B) materially
increase the number of securities which may be issued under the Plan; or (C)
materially modify the requirements as to eligibility for participation in the
Plan. No option may be granted during any suspension of the Plan or after such
termination. The amendment, suspension or termination of the Plan shall not,
without the consent of the option holder affected thereby, alter or impair any
rights or obligations under any option theretofore granted under the Plan. No
option way be granted during any period of suspension nor after termination of
the Plan, and in no event may any option be granted under the Plan after the
expiration of ten years from the date the Plan is adopted by the Board.
3.9 TIME OF GRANT AND EXERCISE OF OPTION.
An option shall be deemed to be exercised when the Secretary of the Company
receives written notice from an option holder of such exercise, payment of the
exercise price determined pursuant to Section 2.1 of the Plan and set forth in
the Stock Option Agreement, and all representations, indemnifications and
documents reasonably requested by the Committee.
3.10 PRIVILEGES OF STOCK OWNERSHIP; NON-DISTRIBUTIVE INTENT; REPORTS TO
OPTION HOLDERS.
A participant in the Plan shall not be entitled to the privilege of stock
ownership as to any shares of Common Stock not actually issued to the optionee.
Upon exercise of an option at a time when there is not in effect under the
Securities Act of 1933, as amended, a Registration Statement relating to the
Common Stock issuable upon exercise or payment therefor and available for
delivery a Prospectus meeting the requirements of Section 10(a)(3) of said Act,
the optionee shall represent and warrant in writing to the Company that the
shares purchased are being acquired for investment and not with a view to the
distribution thereof.
The Company shall furnish to each optionee under the Plan the Company's
annual report and such other periodic reports, if any, as are disseminated by
the Company in the ordinary course to its stockholders.
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<PAGE>
3.11 LEGENDING SHARE CERTIFICATES.
In order to enforce any restrictions imposed upon Common Stock issued upon
exercise of an option granted under the Plan or to which such Common Stock may
be subject, the Committee may cause a legend or legends to be placed on any
share certificates representing such Common Stock, which legend or legends shall
make appropriate reference to such restrictions, including, but not limited to,
a restriction against sale of such Common Stock for any period of time as may be
required by applicable laws or regulations. If any restriction with respect to
which a legend was placed on any certificate ceases to apply to Common Stock
represented by such certificate, the owner of the Common Stock represented by
such certificate may require the Company to cause the issuance of a new
certificate not bearing the legend.
Additionally, and not by way of limitation, the Committee may impose such
restrictions on any Common Stock issued pursuant to the Plan as it may deem
advisable, including, without limitation, restrictions under the requirements of
any stock exchange upon which Common Stock is then traded.
3.12 USE OF PROCEEDS.
Proceeds realized pursuant to the exercise of options under the Plan shall
constitute general funds of the Company.
3.13 CHANGES IN CAPITAL STRUCTURE; NO IMPEDIMENT TO CORPORATE TRANSACTIONS.
The existence of outstanding options under the Plan shall not affect the
Company's right to effect adjustments, recapitalizations, reorganizations or
other changes in its or any other corporation's capital structure or business,
any merger or consolidation, any issuance of bonds, debentures, preferred or
prior preference stock ahead of or affecting Common Stock, the dissolution or
liquidation of the Company's or any other corporation's assets or business, or
any other corporate act, whether similar to the events described above or
otherwise.
3.14 EFFECTIVE DATE OF THE PLAN.
The Plan shall be effective as of the date of its approval by the
stockholders of the Company within twelve months after the date of the Board's
initial adoption of the Plan. Options may be granted but not exercised prior to
stockholder approval of the Plan. If any options are so granted and stockholder
approval shall not have been obtained within twelve months of the date of
adoption of this Plan by the Board of Directors, such options shall terminate
retroactively as of the date they were granted.
3.15 TERMINATION.
The Plan shall terminate automatically as of the close of business on the
day preceding the tenth anniversary date of its adoption by the Board or earlier
as provided in Section 3.8. Unless otherwise provided herein, the termination of
the Plan shall not affect the validity of any option agreement outstanding at
the date of such termination.
3.16 NO EFFECT ON OTHER PLANS.
The adoption of the Plan shall not affect any other compensation or
incentive plans in effect for the Company, any Subsidiary or any Parent
Corporation. Nothing in the Plan shall be construed to limit the right of the
Company (i) to establish any other forms of incentives or compensation for
employees of the Company, any Subsidiary or any Parent Corporation or (ii) to
grant or assume options or other rights otherwise than under the Plan in
connection with any proper corporate purpose including but not by way of
limitation, the grant or assumption of options in connection with the
acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, partnership, firm or association.
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<PAGE>
GENERAL PROXY - ANNUAL MEETING OF STOCKHOLDERS OF MODERN MEDICAL
MODALITIES CORPORATION
The undersigned hereby appoints Roger Findlay, with full power of
substitution, proxy to vote all of the shares of Common Stock of the undersigned
and with all of the powers the undersigned would possess if personally present,
at the Annual Meeting of Stockholders of Modern Medical Modalities Corporation,
to be held at The Westin Hotel, Two Whippany Road, Morristown, New Jersey 07960
on July 6, 1999 at 10:00 a.m. and at all adjournments thereof, upon the matters
specified below, all as more fully described in the Proxy Statement dated May
__, 1999 and with the discretionary powers upon all other matters which come
before the meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF MODERN MEDICAL MODALITIES CORPORATION'S
BOARD OF DIRECTORS.
1. To elect the board of directors for the ensuing year.
__ FOR ALL NOMINEES __ WITHHELD FOR ALL NOMINEES
INSTRUCTION: To withhold authority to vote for any individual, write that
nominee's name in the space provided below:
- --------------------------------------------------------------------------------
2. To approve an amendment to the Company's Restated and Amended Certificate
of Incorporation to increase the number of authorized shares of the Company's
Common Stock, $.0002 par value per share from 2,500,000 to 15,000,000
__ FOR __ AGAINST __ ABSTAIN
3. To approve the adoption of the Company's 1999 Stock Option Plan.
__ FOR __ AGAINST __ ABSTAIN
4. To ratify the appointment of Vincent J. Batyr & Co. as the Company
independent certified public accountants.
__ FOR __ AGAINST __ ABSTAIN
5. In their discretion, upon such other matter or matters that may properly come
before the meeting, or and adjournments thereof.
- --------------------------------------------------------------------------------
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
Every properly signed proxy will be voted in accordance with the specifications
made thereon. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS
1, 2, 3, 4 AND 5.
The undersigned hereby acknowledges receipt of a copy of the accompanying Notice
of Meeting and Proxy Statement and hereby revokes any proxy or proxies
heretofore given.
Please mark, date, sign and mail your proxy promptly in the envelope provided.
Date: ______________, 1999
--------------------------------------------
(Print name of Stockholder)
--------------------------------------------
(Print name of Stockholder)
--------------------------------------------
Signature
--------------------------------------------
Signature
Number of Shares
----------------------------
Note: Please sign exactly as name appears in
the Company's records. Joint owners
should each sign. When signing as
attorney, executor or trustee, please
give title as such.
