GENESIS HEALTH VENTURES, INC.
1998 NONQUALIFIED EMPLOYEE STOCK OPTION PLAN
1. Purpose of Plan
The purpose of this 1998 Nonqualified Employee Stock Option
Plan (the "Plan") is to provide additional incentive to non-officer employees of
Genesis Health Ventures, Inc. (the "Company") and each present or future parent
or subsidiary corporation by encouraging them to invest in shares of the
Company's common stock, par value $.02 per share ("Common Stock"), and thereby
acquire a proprietary interest in the Company and an increased personal interest
in the Company's continued success and progress, to the mutual benefit of
directors, officers, employees and stockholders.
2. Aggregate Number of Shares
1,500,000 shares of the Company's Common Stock, shall be the
aggregate number of shares which may be issued under this Plan. Notwithstanding
the foregoing, in the event of any change in the outstanding shares of the
Common Stock of the Company by reason of a stock dividend, stock split,
combination of shares, recapitalization, merger, consolidation, transfer of
assets, reorganization, conversion or what the Compensation Committee,
hereinafter referred to, deems in its sole discretion to be similar
circumstances, the aggregate number and kind of shares which may be issued under
this Plan shall be appropriately adjusted in a manner determined in the sole
discretion of the Compensation Committee. Reacquired shares of the Company's
Common Stock, as well as unissued shares, may be used for the purpose of this
Plan. Common Stock of the Company subject to options which have terminated
unexercised, either in whole or in part, shall be available for future options
granted under this Plan.
3. Class of Persons Eligible to Receive Options
All non-officer employees and consultants and advisors of the
Company and any present or future Company parent or subsidiary corporation are
eligible to receive an option or options under this Plan. The individuals who
shall, in fact, receive an option or options shall be selected by the
Compensation Committee, in its sole discretion, except as otherwise specified in
Section 4 hereof; provided, however, no "officer", as such term is defined under
Regulation 240.3b-2 of the Securities and Exchange Act of 1934 shall be
eligible to receive options.
4. Administration of Plan
(a) This Plan shall be administered by the Compensation
Committee (the "Committee"). The Committee shall consist of the Chairman of the
Board or such person(s) designated by the Chairman of the Board. The Committee
shall, in addition to its other authority and subject to the provisions of this
Plan, determine which individuals are eligible to receive options under this
Plan, which individuals shall in fact be granted an option or options, the
number of shares to be subject to each of the options, the time or times at
which the options shall be granted, the rate of option exercisability, and, the
price at which each of the options is exercisable and the duration of the
option.
(b) The Committee shall adopt such rules for the conduct of
its business and administration of this Plan as it considers desirable. If
composed of more than one member, a majority of the members of the Committee
shall constitute a quorum for all purposes. The vote or written consent of a
majority of the members of the Committee on a particular matter shall constitute
the act of the Committee on such matter. The Committee shall have the right to
construe the Plan and the options issued pursuant to it, to correct defects and
omissions and to reconcile inconsistencies to the extent necessary to effectuate
the Plan and the options issued pursuant to it, and such action shall be final,
binding and conclusive upon all parties concerned. No member of the Committee or
the Board of Directors shall be liable for any act or omission (whether or not
negligent) taken or omitted in good faith, or for the exercise of an authority
or discretion granted in connection with the Plan to the Committee or the Board
of Directors, or for the acts or omissions of any other members of the Committee
or the Board of Directors.
5. Nonqualified Stock Options
(a) Options issued pursuant to this Plan are Nonqualified
Stock Options granted pursuant to Section 5(b) hereof. The option price for
Nonqualified Stock Options issued under this Plan shall be at least equal to the
fair market value of the Common Stock on the date of the grant of the option
except that the minimum option price may be equal to or greater than 85% of the
fair market value of the Company's Common Stock as of the date of the grant of
the option if the discount is expressly granted in lieu of a reasonable amount
of salary or cash bonus. The fair market value of the Company's Common Stock on
any particular date shall mean the last reported sale price of a share of the
Company's Common Stock on any stock exchange on which such stock is then listed
or admitted to trading, or on the NASDAQ National Market System, on such date,
or if no sale took place on such day, the last such date on which a sale took
place, or if the Common Stock is not then quoted on the NASDAQ National Market
System, or listed or admitted to trading on any stock exchange, the average of
the bid and asked prices in the over-the-counter market on such date, or if none
of the foregoing, a price determined by the Committee.
(b) Subject to the authority of the Committee set forth in
Section 4(a) hereof, Non-Qualified Stock Options issued pursuant to this Plan
shall be issued substantially in the form set forth in Appendix I hereof, which
form is hereby incorporated by reference and made a part hereof, and shall
contain substantially the terms and conditions set forth therein. Non-Qualified
Stock Options shall expire ten years after the date they are granted, unless
terminated earlier under the option terms. At the time of granting a
Non-Qualified Stock Option hereunder, the Committee may, in its discretion,
modify or amend any of the option terms contained in Appendix I for any
particular optionee.
6. Modification, Amendment, Suspension and Termination
The Board of Directors reserves the right at any time, and
from time to time, to modify or amend this Plan in any way, or to suspend or
terminate it, effective as of such date, which date may be either before or
after the taking of such action, as may be specified by the Board of Directors;
provided, however, that such action shall not affect options granted under the
Plan prior to the actual date on which such action occurred. If the Board of
Directors voluntarily submits a proposed modification, amendment, suspension or
termination for stockholder approval, such submission shall not require any
future modifications, amendments (whether or not relating to the same provision
or subject matter), suspensions or terminations to be similarly submitted for
stockholder approval.
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7. Effectiveness of Plan
This Plan shall become effective on the date of its adoption
by the Company's Board of Directors.
8. General Conditions
(a) Nothing contained in this Plan or any option granted
pursuant to this Plan shall confer upon any employee the right to continue in
the employ of the Company or any affiliated or subsidiary corporation or
interfere in any way with the rights of the Company or any affiliated or
subsidiary corporation to terminate his employment in any way.
(b) Corporate action constituting an offer of stock for sale
to any employee under the terms of the options to be granted hereunder shall be
deemed complete as of the date when the Committee authorizes the grant of the
option to the employee, regardless of when the option is actually delivered to
the employee or acknowledged or agreed to by him.
(c) The terms "parent corporation" and "subsidiary
corporation" as used throughout this Plan, and the options granted pursuant to
this Plan, shall (except as otherwise provided in the option form) have the
meaning that is ascribed to that term when contained in Section 422(b) of the
Internal Revenue Code of 1986, as amended ("Code") and the regulations
thereunder, and the Company shall be deemed to be the grantor corporation for
purposes of applying such meaning.
(d) References in this Plan to the Code shall be deemed to
also refer to the corresponding provisions of any future United States revenue
law.
(e) The use of the masculine pronoun shall include the
feminine gender whenever appropriate, and wherever any words are used herein in
the singular form they shall be construed as though they were also used in the
plural form in all cases where they would so apply.
(f) Nothing contained in this Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required, and such arrangements may be
either generally applicable or applicable only in specific cases.
(g) The Company shall have the right to deduct from any
payment to be made to an employee, or to otherwise require, prior to the
issuance or delivery of any shares of Common Stock or the payment of any cash
hereunder, payment by the employee of, any Federal, state or local taxes
required by law to be withheld.
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(h) This Plan shall be governed and construed in accordance
with the laws of the Commonwealth of Pennsylvania (regardless of the law that
might otherwise govern under applicable Pennsylvania principles of conflict of
laws).
(i) No option payment under this Plan shall be deemed
compensation for purposes of computing benefits under any retirement plan of the
Company or its subsidiaries no affect any benefits under any other benefit plan
now or subsequently in effect under which the availability or amount of benefits
is related to the level of compensation.
(j) The Company shall bear all expenses included in
administering this Plan, including expenses of issuing Common Stock pursuant to
any options hereunder.
(k) The provisions of options need not be the same with
respect to each optionee, and such options granted to an optionee need not be
the same in subsequent years.
(l) If any provision of this Plan shall be held invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provisions hereof, and the Plan shall be construed and enforced as if such
provisions had not been included.
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APPENDIX I
NONQUALIFIED STOCK OPTION
To: _______________________________________________________________________
Name
_______________________________________________________________________
Address
Date of Grant:_______________
You are hereby granted an option, effective as of the date hereof, to
purchase _________ shares of common stock, par value $.02 per share ("Common
Stock"), of Genesis Health Ventures, Inc. (the "Company") at a price of $ per
share pursuant to the Company's 1998 Nonqualified Employee Stock Option Plan
(the "Plan").
Your option may first be exercised on and after _______________, but not before
that time. [On and after _______________ and prior to _______________, your
option may be exercised for up to ____ % of the total number of shares subject
to the option minus the number of shares previously purchased by exercise of the
option (as adjusted for any change in the outstanding shares of the Common Stock
of the Company by reason of a stock dividend, stock split, combination of
shares, recapitalization, merger, consolidation, transfer of assets,
reorganization, conversion or what the Compensation Committee deems in its sole
discretion to be similar circumstances). Each succeeding year thereafter, your
option may be exercised for up to an additional ___% of the total number of
shares subject to the option minus the number of shares previously purchased by
exercise of the option (as adjusted for any change in the outstanding shares of
the Common Stock of the Company by reason of a stock dividend, stock split,
combination of shares, recapitalization, merger, consolidation, transfer of
assets, reorganization, conversion or what the Compensation Committee deems in
its sole discretion to be similar circumstances).](1) No fractional shares shall
be issued or delivered.
This option shall terminate and is not exercisable after ten years from
the date of its grant (the "Scheduled Termination Date"), except if terminated
earlier as hereafter provided.
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(1) The bracketed portion of this paragraph should be included if the
number of shares which may be acquired upon exercise of the option will increase
over time.
You may exercise your option by giving written notice to the Secretary
of the Company on forms supplied by the Company at its then principal executive
office, accompanied by payment of the option price for the total number of
shares you specify that you wish to purchase. The payment may be in any of the
following forms: (a) cash, which may be evidenced by a check; (b) certificates
representing Common Stock of the Company which will be valued by the Secretary
of the Company at the fair market value per share of the Company's Common Stock
(as determined in accordance with the Plan) on the last trading day immediately
preceding the delivery of such certificates to the Company, accompanied by an
assignment of the stock to the Company; or (c) any combination of cash and
Common Stock of the Company valued as provided in clause (b). Any assignment of
stock shall be in a form and substance satisfactory to the Secretary of the
Company, including guarantees of signature(s) and payment of all transfer taxes
if the Secretary deems such guarantees necessary or desirable.
Your option will, to the extent not previously exercised by you,
terminate three months after the date on which your employment by the Company or
a Company subsidiary corporation is terminated other than by reason of (i)
disability as defined in Section 22(e)(3) of the Internal Revenue Code of 1986,
as amended (the "Code"), and the regulations thereunder, or (ii) death (but in
no event later than the Scheduled Termination Date), whether such termination be
voluntary or not. After the date your employment is terminated, as aforesaid,
you may exercise this option only for the number of shares which you had a right
to purchase and did not purchase on the date your employment terminated. If you
are employed by a Company subsidiary corporation, your employment shall be
deemed to have terminated on the date your employer ceases to be a Company
subsidiary corporation, unless you are on that date transferred to the Company
or another Company subsidiary corporation. Your employment shall not be deemed
to have terminated if you are transferred from the Company to a Company
subsidiary corporation, or vice versa, or from one Company subsidiary
corporation to another Company subsidiary corporation.
If you die while employed by the Company or a Company subsidiary
corporation, your legatee(s), distributee(s), executor or administrator, as the
case may be, may, at any time within one year after the date of your death (but
in no event later than the Scheduled Termination Date), exercise the option as
to any shares which you had a right to purchase and did not purchase during your
lifetime. If your service with the Company or a Company parent or subsidiary
corporation is terminated by reason of your becoming disabled (within the
meaning of Section 22(e)(3) of the Code and the regulations thereunder), you or
your legal guardian or custodian may at any time within one year after the date
of such termination (but in no event later than the Scheduled Termination Date),
exercise the option as to any shares which you had a right to purchase and did
not purchase prior to such termination. Your executor, administrator, guardian
or custodian must present proof of his authority satisfactory to the Company
prior to being allowed to exercise this option.
In the event of any change in the outstanding shares of the Common
Stock of the Company by reason of a stock dividend, stock split, combination of
shares, recapitalization, merger, consolidation, transfer of assets,
reorganization, conversion or what the Compensation Committee deems in its sole
discretion to be similar circumstances, the number and kind of shares subject to
this option and the option price for such shares shall be appropriately adjusted
in a manner to be determined in the sole discretion of the Compensation
Committee.
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This option is not transferable otherwise than by will or the laws of
descent and distribution, and is exercisable during your lifetime only by you,
including, for this purpose, your legal guardian or custodian in the event of
disability. Until the option price has been paid in full pursuant to due
exercise of this option and the purchased shares are delivered to you, you do
not have any rights as a stockholder of the Company. The Company reserves the
right not to deliver to you the shares purchased by virtue of exercise of this
option during any period of time in which the Company deems, in its sole
discretion, that such delivery may not be consummated without violating a
federal, state, local or securities exchange rule, regulation or law.
Notwithstanding anything to the contrary contained herein, this option
is not exercisable until all the following events occur and during the following
periods of time:
(a) Until this option and the optioned shares are approved
and/or registered with such federal, state and local regulatory bodies or
agencies and securities exchanges as the Company may deem necessary or
desirable; or
(b) During any period of time in which the Company deems that
the exercisability of this option, the offer to sell the shares optioned
hereunder, or the sale thereof, may violate a federal, state, local or
securities exchange rule, regulation or law, or may cause the Company to be
legally obligated to issue or sell more shares than the Company is legally
entitled to issue or sell.
The following two paragraphs shall be applicable if, on the date of
exercise of this option, the Common Stock to be purchased pursuant to such
exercise has not been registered under the Securities Act of 1933, as amended,
and under applicable state securities laws, and shall continue to be applicable
for so long as such registration has not occurred:
(a) The optionee hereby agrees, warrants and represents that
he will acquire the Common Stock to be issued hereunder for his own account for
investment purposes only, and not with a view to, or in connection with, any
resale or other distribution of any of such shares, except as hereafter
permitted. The optionee further agrees that he will not at any time make any
offer, sale, transfer, pledge or other disposition of such Common Stock to be
issued hereunder without an effective registration statement under the
Securities Act of 1933, as amended, and under any applicable state securities
laws or an opinion of counsel acceptable to the Company to the effect that the
proposed transaction will be exempt from such registration. The optionee shall
execute such instruments, representations, acknowledgments and agreements as the
Company may, in its sole discretion, deem advisable to avoid any violation of
federal, state, local or securities exchange rule, regulation or law.
(b) The certificates for Common Stock to be issued to the
optionee hereunder shall bear the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or under
applicable state securities laws. The shares have been acquired for
investment and may not be offered, sold, transferred, pledged or
otherwise disposed of without an effective registration statement under
the Securities Act of 1933, as amended, and under any applicable state
securities laws or an opinion of counsel acceptable to the Company that
the proposed transaction will be exempt from such registration."
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The foregoing legend shall be removed upon registration of the legended shares
under the Securities Act of 1933, as amended, and under any applicable state
laws or upon receipt of an opinion of counsel acceptable to the Company that
said registration is no longer required.
The sole purpose of the agreements, warranties, representations and
legend set forth in the two immediately preceding paragraphs is to prevent
violations of the Securities Act of 1933, as amended, and any applicable state
securities laws.
It is the intention of the Company and you that this option shall not
be an "incentive stock option" as that term is used in Section 422 of the Code
and the regulations thereunder.
This option shall be subject to the terms of the Plan in effect on the
date this option is granted, which terms are hereby incorporated herein by
reference and made a part hereof. In the event of any conflict between the terms
of this option and the terms of the Plan in effect on the date of this option,
the terms of the Plan shall govern. This option constitutes the entire
understanding between the Company and you with respect to the subject matter
hereof and no amendment, modification or waiver of this option, in whole or in
part, shall be binding upon the Company unless in writing and signed by the
President of the Company. This option and the performances of the parties
hereunder shall be construed in accordance with and governed by the laws of the
Commonwealth of Pennsylvania.
Please sign the copy of this option and return it to the Company's
Secretary, thereby indicating your understanding of and agreement with its terms
and conditions.
GENESIS HEALTH VENTURES, INC.
By:_________________________________________
I hereby acknowledge receipt of a copy of the foregoing stock option and, having
read it hereby signify my understanding of, and my agreement with, its terms and
conditions.
____________________________________________ ___________________________
(Signature) (Date)
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