-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VO6M72wOSdvoT1OG+qbypLiUZ0DzEZ0W2Dz807Q4Z7gmV3pcHyxjtW/0DpN7Vs78 yxJnZFXIsG00Tq0/mDB3Iw== 0000755465-01-000004.txt : 20010123 0000755465-01-000004.hdr.sgml : 20010123 ACCESSION NUMBER: 0000755465-01-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20001130 FILED AS OF DATE: 20010116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SANDATA INC CENTRAL INDEX KEY: 0000755465 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 112841799 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-14401 FILM NUMBER: 1508784 BUSINESS ADDRESS: STREET 1: 26 HARBOR PARK DR CITY: PORT WASHINGTON STATE: NY ZIP: 11050 BUSINESS PHONE: 5164844400X215 MAIL ADDRESS: STREET 1: 26 HARBOR PARK DR CITY: PORT WASHINGTON STATE: NY ZIP: 11050 FORMER COMPANY: FORMER CONFORMED NAME: SDS INC DATE OF NAME CHANGE: 19870818 FORMER COMPANY: FORMER CONFORMED NAME: SANDSPORT DATA SERVICES INC DATE OF NAME CHANGE: 19870520 10QSB 1 0001.txt 10QSB U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB (Mark One) [X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended November 30, 2000 [ ] Transition report under Section 13 or 15(d) of the Exchange Act For the transition period from to Commission file number 0-14401 SANDATA, INC. (Exact Name of Small Business Issuer as Specified in Its Charter) Delaware 11-2841799 (State or Other Jurisdiction of (IRS Employer Incorporation or Organization) Identification No.) 26 Harbor Park Drive, Port Washington, NY 11050 (Address of Principal Executive Offices) 516-484-9060 (Issuer's Telephone Number, Including Area Code) (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes No APPLICABLE ONLY TO CORPORATE ISSUERS The number of shares outstanding of the issuer's common stock, as of January 10, 2001 was 2,506,473 shares. Transitional Small Business Disclosure Format (check one): Yes No X INDEX Page PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS: CONSOLIDATED CONDENSED BALANCE SHEETS 3 as of November 30, 2000 (unaudited)and May 31, 2000 UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS 5 for the three and six months ended November 30, 2000 and November 30, 1999 UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS 6 for the six months ended November 30, 2000 and November 30, 1999 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 7 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 13 PART II - OTHER INFORMATION 17 ITEM 1 - LEGAL PROCEEDINGS 17 ITEM 2 - CHANGES IN SECURITIES 17 ITEM 3 - DEFAULTS UPON SENIOR SECURITIES 17 ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 17 ITEM 5 - OTHER INFORMATION 18 ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 18 SANDATA, INC. AND SUBSIDIARIES PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS CONSOLIDATED CONDENSED BALANCE SHEETS UNAUDITED AUDITED November 30 May 31 2000 2000 ---- ---- ASSETS: CURRENT ASSETS Cash and cash equivalents $ 401,791 $ 1,229,718 Accounts receivable, net of allowance for doubtful accounts of $484,000 and $448,000, respectively 1,929,249 2,308,901 Receivables from affiliates 623,207 405,732 Other receivables 548,343 --- Inventories 18,123 17,165 Prepaid expenses and other current assets 307,331 413,119 ------- ------- TOTAL CURRENT ASSETS 3,828,044 4,374,635 FIXED ASSETS, NET 9,071,259 8,911,655 OTHER ASSETS Notes receivable 120,333 126,221 Cash surrender value of officer's life insurance, security deposits and other 836,891 832,988 ------- ------- TOTAL ASSETS $13,856,527 $14,245,499 =========== =========== SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SANDATA, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS UNAUDITED AUDITED November 30, May 31, 2000 2000 ---- ---- LIABILITIES AND SHAREHOLDERS' EQUITY: CURRENT LIABILITIES Accounts payable and accrued expenses $ 2,043,193 $ 2,580,143 Deferred/unearned revenue 42,088 38,848 Deferred income 331,684 322,678 -------- ------- TOTAL CURRENT LIABILITIES 2,416,965 2,941,669 LONG TERM DEBT 2,850,000 2,750,000 DEFERRED INCOME 257,684 315,253 DEFERRED INCOME TAXES 778,361 702,158 ------- ------- TOTAL LIABILITIES 6,303,010 6,709,080 --------- --------- COMMITMENTS & CONTINGENCIES SHAREHOLDERS' EQUITY Common stock 2,506 2,506 Additional paid in capital 5,803,704 5,803,704 Retained earnings 3,266,966 3,249,868 Notes receivable-officers (1,519,659) (1,519,659) --------- --------- TOTAL SHAREHOLDERS' EQUITY 7,553,517 7,536,419 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 13,856,527 $14,245,499 ============== =========== SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS THREE MONTHS ENDED SIX MONTHS ENDED NOVEMBER 30, NOVEMBER 30, 2000 1999 2000 1999 ---- ---- ---- ---- REVENUES: Service fees $ 4,523,115 $4,432,021 $8,952,255 $8,506,145 Other income 90,724 98,604 184,392 186,620 Interest income 46,911 39,929 95,519 80,258 ------------ -------- ---------- ---------- 4,660,750 4,570,554 9,232,166 8,773,023 --------- --------- --------- --------- COSTS AND EXPENSES: Operating 2,732,176 2,876,549 5,349,576 5,470,287 Selling, general and administrative 1,111,536 970,951 2,290,066 1,909,310 Depreciation and amortization 695,262 614,172 1,359,217 1,186,875 Interest expense 77,725 63,932 128,990 112,052 -------- --------- --------- --------- TOTAL COSTS AND EXPENSES 4,616,699 4,525,604 9,127,849 8,678,524 --------- --------- --------- --------- EARNINGS FROM OPERATIONS BEFORE INCOME TAXES 44,051 44,950 104,317 94,499 Income tax expense 36,221 18,230 87,219 38,745 --------- -------- --------- --------- NET EARNINGS $ 7,830 $ 26,720 $ 17,098 $ 55,754 ============ =========== ============ ============ BASIC EARNINGS PER SHARE $ .01 $ .01 $ .01 $ .02 ------------ ----------- ------------ ----------- DILUTED EARNINGS PER SHARE $ .01 $ .01 $ .01 $ .02 ------------ ----------- ------------ -----------
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Sandata, Inc. and Subsidiaries UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED NOVEMBER 30, 2000 1999 ---- ---- Cash flows from operating activities: Net earnings $ 17,098 $ 55,754 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 1,359,217 1,186,875 Gain on disposal of fixed assets (122,956) (219,973) Increase in allowance for doubtful accounts receivable (36,964) (61,831) Increase (decrease) in deferred revenue 3,240 (13,233) (Decrease) increase in deferred income (48,563) 40,060 Decrease in operating assets 523,431 880,705 Decrease in operating liabilities (460,747) (1,187,439) -------- ----------- Net cash provided by operating activities 1,233,756 680,918 --------- --------- Cash flows from investing activities: Purchases of fixed assets (1,944,208) (3,091,039) (Increase)decrease in receivables from affiliates (217,475) 289,065 Proceeds from sale/leaseback transaction 0 1,115,000 ---------- --------- Net cash used in investing activities (2,161,683) (1,686,974) ---------- ---------- Cash flows from financing activities: Proceeds from term loan 100,000 Principal payments on term loan (100,000) --- Proceeds from line of credit 200,000 1,800,000 Principal payments on line of credit (100,000) (1,600,000) -------- ----------- Net cash provided by financing activities 100,000 200,000 -------- ---------- Decrease in cash and cash equivalents (827,927) (806,056) Cash and cash equivalents at beginning of period 1,229,718 1,533,576 ----------- ----------- Cash and cash equivalents at end of period $ 401,791 $ 727,520 =========== ============
Supplemental Disclosure of Non-Cash Transaction On November 22, 2000, the Company entered into a sale/leaseback of certain fixed assets (principally computer hardware and equipment) with Macrolease International Corporation. The fixed assets, which had a net book value of approximately $421,500, were sold for $548,300. The resulting gain of approximately $126,800 was recorded as deferred income and is being recognized over the life of the lease, which is thirty-six (36) months. The sale proceeds, which are shown as other receivables in the financial statements, were received in December 2000. SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS SANDATA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS The Consolidated Condensed Balance Sheet as of November 30, 2000, the Consolidated Condensed Statements of Operations for the three and six month periods ended November 30, 2000 and 1999 and the Consolidated Condensed Statement of Cash Flows for the six month periods ended November 30, 2000 and 1999 have been prepared by Sandata, Inc. and subsidiaries (the "Company") without audit. In the opinion of Management, all adjustments (which include only normal, recurring adjustments) necessary to present fairly the financial position as of November 30, 2000 and for all periods presented have been made. For information concerning the Company's significant accounting policies, reference is made to the Company's Annual Report on Form 10-KSB for the year ended May 31, 2000. Results of Operations for the period ended November 30, 2000 are not necessarily indicative of the operating results expected for the full year. 2. RELATED PARTY TRANSACTIONS The Company entered into an agreement in November, 1996 with an affiliate of the Company's Chairman of the Board (the "Affiliate"), the Nassau County Industrial Development Agency ("NCIDA") and a bank (the "Agreement"). In connection with the Agreement, the Affiliate assumed all of the Company's obligations under a lease with the NCIDA and entered into a sublease with the Company for its facility. The Company conveyed to the Affiliate the right to become owner of the facility upon expiration of the lease. In addition, pursuant to a sublease, the Company has assumed certain obligations owed by the Affiliate to the NCIDA under the lease. The Affiliate has indemnified the Company with respect to certain obligations relative to the lease and the Agreement. The Company made rent payments for its facility amounting to $140,320 and $281,220 for the three and six months ended November 30, 2000 as compared to $170,266 and $340,456 for the three and six month ended November 30, 1999. The reduction is the result of a verbal agreement between the Company and the Affiliate to reduce the rent $150,000 on an annual basis effective June 1, 2000. The Company makes various lease payments to affiliates of the Company's Chairman of the Board. The payments for equipment rental amounted to $105,807 and $204,397 for the three and six months ended November 30, 2000 as compared to $98,407 and $196,723 for the three and six months ended November 30, 1999. The Company derives revenue from National Medical Health Card Systems, Inc. ("Health Card"), a company affiliated with the Company's Chairman of the Board, for providing data base and operating system support, hardware leasing, maintenance and related administrative services. The revenues generated from Health Card amounted to $701,555 and $1,260,579 for the three and six months ended November 30, 2000 as compared to $482,986 and $927,150 for the three and six months ended November 30, 1999. At November 30, 2000, the Company was owed $391,104 by Health Card. At November 30, 2000, the Company owed Health Card $500,000 pursuant to a promissory note, dated May 31, 2000, made payable by the Company to the order of Health Card in the original principal amount of $500,000 plus interest at the rate of 9-1/2%, payable quarterly. The note, which was originally due and payable on June 1, 2001, was subsequently amended to extend such due date to September 1, 2001 and amended by Second Amendment to extend such due date to March 31, 2002. At November 30, 2000 the Company owed interest of $3,956 to Health Card, which was subsequently paid. Medical Arts Office Services, Inc. ("MAOS"), a corporation of which the Company's Chairman of the Board is the sole shareholder, provided the Company with accounting, bookkeeping and paralegal services. The payments made by the Company to MAOS amounted to $84,141 and $143,574 for the three and six months ended November 30, 2000 as compared to $74,097 and $133,131 for the three and six months ended November 30, 1999.At November 30, 2000 the Company owed $22,933 to MAOS, which was subsequently paid. 3. NET EARNINGS PER COMMON SHARE In 1997, the Financial Accounting Standards Board issued Standard No. 128 ("SFAS No. 128"), "Earnings per Share". SFAS No. 128 replaced calculation of primary and fully diluted earnings per share with basic and diluted earnings per share. Basic earnings per share has been computed using the weighted average number of shares of common stock outstanding. Diluted earnings per share has been computed using the basic weighted average shares of common stock issued plus outstanding stock options. Basic earnings per share are based on the weighted-average number of shares of common stock outstanding, which were 2,506,473 and 2,481,476 at November 30, 2000 and 1999, respectively. Diluted earnings per share are based on the weighted-average number of shares of common stock adjusted for the effects of assumed exercise of options and warrants under the treasury stock method, which were 2,707,676 and 2,481,476 at November 30, 2000 and 1999, respectively. Options to purchase 870,500 shares of common stock in the calendar year 2000 were outstanding at November 30, 2000 and were not included in the computation of diluted earnings per share because the exercise price of the options was greater than the average market price of the common stock for the respective period. 4. SALE/LEASEBACK TRANSACTION On November 22, 2000, the Company entered into a sale/leaseback of certain fixed assets (principally computer hardware and equipment) with Macrolease International Corporation. The fixed assets, which had a net book value of approximately $421,500, were sold for $548,300. The resulting gain of approximately $126,800 was recorded as deferred income and is being recognized over the life of the lease, which is thirty-six (36) months. The sale proceeds, which are shown as other receivables in the financial statements, were received in December 2000. 5. COMMITMENTS AND CONTINGENCIES On October 19, 1999, the Company and Pro-Health Systems, Inc. ("Pro-Health") brought an action against Provider Solutions Corporation ("Provider"), Michael Milvain and Charlotte Fritchie, in Supreme Court, New York County, Index No. 99-26033, based on breach of contract, fraudulent misrepresentation and other causes of action, demanding damages of approximately $10,000,000 (the "State Action"). On October 22, 1999, Provider brought a federal action in the United States District Court, Eastern District (the "Federal Action"), seeking to enjoin the Company and Pro-Health from (i) hiring certain named employees; (ii) soliciting any present or former employees of Provider; and (iii) using, without Provider's permission, any trade secret or other proprietary information belonging to Provider. The Federal Action also sought to enjoin employees from (i) divulging to the Company, Pro-Health or any other third party, any trade secret or other proprietary information; and (ii) accepting employment from the Company, Pro-Health or any other customer or competitor of Provider. The amended complaint ultimately served on the Company and Pro-Health on March 31, 2000 demanded relief in the form of a permanent injunction and damages against the Company and Pro-Health for total amounts ranging from $10,000,000 to $15,000,000. The Complaint alleges claims of declaratory judgment, copyright infringement, breach of fiduciary duty, breach of contract, and misappropriation of trade secrets, among others. The State Action was removed and consolidated with the Federal Action. The Company and Pro-Health asserted various counterclaims in the Federal Action, demanding damages of $10,000,000, seeking an injunction and declaratory judgment, and asserting claims based on, among other things, Imposition of Constructive Trust, Breach of Contract, and Unfair Competition. To date, substantial discovery has taken place and is continuing. The Company has asserted claims and defenses against Provider and intends to continue its prosecution of its claims and to vigorously defend all claims against it. Notwithstanding the foregoing, because of the uncertainties of litigation, no assurances can be given as to the outcome of this litigation. If the Company were not to prevail in this litigation, the Company could be required to pay significant damages to Provider and could be enjoined from taking those certain actions specified above. In addition, a negative outcome in the Provider litigation could have a material adverse affect on the Company, including, but not limited to, its business, operations and financial condition. The Company entered into an employment agreement with Stephen Davies effective October 17, 2000. Pursuant to this agreement, Mr. Davies has agreed to serve as President and Chief Operating Officer at an annual salary of $175,000, increasing to $200,000 on January 31, 2001. The agreement also provides for certain termination benefits, which, depending upon the reason for termination, can equal up to six months salary. In connection with his employment, the Company granted to Mr. Davies incentive stock options to purchase an aggregate of 250,000 shares of common stock at an exercise price of $3.00 per share, with vesting periods ranging from December, 2000 to seven years. 6. SHAREHOLDERS' EQUITY The Company has stock options outstanding under four stock option plans as follows: Employees' Incentive Stock Option Plan (the "1984 Plan") At November 30, 2000, there were 2,536 options outstanding under the 1984 Plan. Options granted under the 1984 Plan were granted at exercise prices not less than fair market value on the date of grant. Options outstanding expire in 2001 and no additional options may be granted under the 1984 Plan. 1995 Stock Option Plan (the "1995 Plan") At November 30, 2000, there were 590,500 incentive options outstanding under the 1995 Plan, which provides for both incentive and nonqualified stock options and reserves 1,000,000 shares of common stock for grant. Options granted under the 1995 Plan were granted at exercise prices not less than the fair market value at the date of grant. All options outstanding under the 1995 Plan are currently exercisable at prices ranging from $1.41 to $2.61 per share over a period of five years from date of grant. 1998 Stock Option Plan (the "1998 Plan") At November 30, 2000, there were 965,958 incentive options outstanding under the 1998 Plan, which provides for both incentive and nonqualified stock options and reserves 1,000,000 shares of common stock for grant. All options outstanding under the 1998 Plan vest over three to six year periods and are exercisable at prices ranging from $1.31 to $3.00 per share over periods of five and ten years from date of grant. At November 30, 2000 there were 354,125 options currently exercisable. On July 14, 1998, the Company's Chairman of the Board, certain officers, directors and a former director and the spouse of an officer and an employee of Sandsport Data Services, Inc. ("Sandsport'), the Company's wholly owned subsidiary, exercised their respective options and warrants to purchase an aggregate of 921,334 shares of Common Stock under the 1998 Plan at exercise prices ranging from $1.38 to $2.61 per share for an aggregate cost of $1,608,861. Payment for such shares was made to the Company in the amount of $921 representing the par value of the shares, and a portion in the form of non-recourse promissory notes due in July 2001, with interest at eight and one-half percent (8-1/2%) per annum, payable annually, and secured by the number of shares exercised. The Company has received interest payments on such notes in the amount of $160,600. At November 30, 2000, the outstanding balance on such notes, including principal and accrued but unpaid interest, was $1,653,493. 2000 Stock Option Plan (the "2000 Plan") On October 17, 2000 the Board of Directors approved the adoption of the 2000 Plan. The 2000 Plan was subsequently adopted by Shareholders at the Company's Annual Meeting on November 20, 2000. At November 30, 2000, there were 150,000 incentive options outstanding under the 2000 Plan, which provides for both incentive and nonqualified stock options and reserves 1,500,000 shares of common stock for issuance in connection with option grants. Options outstanding under the 2000 Plan vest over a seven-year period commencing December 31, 2000 and ending December 31, 2007 and are exercisable at $3.00 per share over a period of ten years from the date of grant. At November 30, 2000 there were no options currently exercisable. 2000 Restricted Stock Grant Plan On September 1, 2000 the Board of Directors approved the adoption of the Company's 2000 Restricted Stock Grant Plan (the "Stock Grant Plan"). The Stock Grant Plan was subsequently adopted by the Shareholders at the Company's Annual Meeting on November 20, 2000. The Stock Grant Plan provides for the issuance of shares that are subject to both standard restrictions on the sale or transfer of such shares (e.g., the standard seven year vesting schedule set forth in the Stock Grant Plan) and/or restrictions that the Board may impose, such as restrictions relating to length of service, corporate performance, or other restrictions. As of November 30, 2000 no grants had been made under the Stock Grant Plan and, therefore, no shares had vested under it. There are 700,000 shares of Common Stock reserved for issuance in connection with grants made under the Stock Grant Plan. 7. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In December 1999, the Securities and Exchange Commission staff issued Staff Accounting Bulletin ("SAB") No. 101, Revenue Recognition, which provides guidance on the recognition and disclosure of revenues. Adoption of SAB No. 101 is required by the fourth quarter of fiscal 2001. The Company is in the process of evaluating the effect adoption of SAB No. 101 will have on the Company's consolidated financial position and results of operations. In March 2000, the FASB issued Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation." Among other issues, this Interpretation clarifies (a) the definition of employee for purposes of applying Opinion 25, (b) the criteria for determining whether a plan qualifies as a noncompensatory plan, (c) the accounting consequence of various modifications to the terms of a previously fixed stock option or award, and (d) the accounting for an exchange of stock compensation awards in a business combination. The Company has adopted this pronouncement. SANDATA, INC. AND SUBSIDIARIES ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS ---------------------------------------------------------- RESULTS OF OPERATIONS Revenue Revenues were $4,660,750 and $9,232,166 for the three and six months ended November 30, 2000 as compared to $4,570,554 and $8,773,023 for the three and six months ended November 30, 1999, increasing $90,196 and $459,143, respectively. Service fee revenues were $4,523,115 and $8,952,255 for the three and six months ended November 30, 2000 as compared to $4,432,021 and $8,506,145 for the three and six months ended November 30, 1999, increasing $91,094 and $446,110 respectively. The increases are primarily attributable to a change in the pricing structure in the SHARP and SanTrax(R) products offset by some decreases in sales this quarter in SandataNET(R). Other income was $90,724 and $184,392 for the three and six months ended November 30, 2000 as compared to $98,604 and $186,620 for the three and six months ended November 30, 1999, decreasing $7,880 and $2,228 respectively. The decrease is attributable to a reduction in income recognized on sale/leaseback transactions. Expenses Related to Services Operating expenses were $2,732,176 and $5,349,576 for the three and six months ended November 30, 2000 as compared to $2,876,549 and $5,470,287 for the three and six months ended November 30, 1999, decreasing $144,373 and $120,711 respectively. The primary factors for the decreases in operating expenses were reductions in staff, which resulted in reductions in payroll and related expenses, and the expiration of certain equipment leases, which resulted in reduced equipment rental payments. Selling, general and administrative expenses were $1,111,536 and $2,290,066 for the three and six months ended November 30, 2000, as compared to $970,951 and $1,909,310 for the three and six months ended November 30, 1999, an increase of $140,585 and $380,756 respectively. The increases were primarily due to increases in consulting, payroll and commission expenses relative to expanded efforts to increase sales in the SanTrax(R) and SandataNET(R) product lines, and certain royalties payable to MCI Communications Corporation. Depreciation and amortization expenses were $695,262 and $1,359,216 for the three and six months ended November 30, 2000 as compared to $614,172 and $1,186,875 for the three and six months ended November 30, 1999, an increase of $81,090 and $172,341 respectively. The increases were primarily attributable to fixed asset additions, including computer hardware and software capitalization costs in connection with ongoing computer system upgrades. Interest expenses were $77,725 and $128,990 for the three and six months ended November 30, 2000 as compared to $63,932 and $112,052 for the three and six months ended November 30, 1999 an increase of $13,793 and $16,938 respectively. This increase was a result of incurring indebtedness under the promissory note with Health Card and increased borrowings on the Company's revolving credit agreement. Income Tax Expenses Income tax expenses were $36,221 and $87,219 for the three and six months ended November 30, 2000 as compared to $18,230 and $38,745 for the three and six months ended November 30, 1999, an increase of $17,991 and $48,474 respectively. The increase is due to tax treatment of software development costs, depreciation and amortization, and revenues from sale/leaseback transactions, offset by net operating loss carry forwards. LIQUIDITY AND CAPITAL RESOURCES The Company's cash decreased at November 30, 2000 to $401,791 as compared to $1,229,718 at May 31, 2000. The primary factors that contributed to this decrease were the acquisition of fixed assets and an increase in other receivables relating to the sale/leaseback transaction described in Note 4 to the financial statements included herein. Had the proceeds from such transaction been received prior to November 30, the decrease in cash would have been only approximately $279,000. The increases in fixed assets and other receivables were partially offset by decreases in both accounts receivable and accounts payable. The Company's working capital decreased as of November 30, 2000 to $1,411,079, as compared with $1,432,966 at May 31, 2000. Although working capital has remained relatively stable, there was a slight decrease, due primarily to decreases in cash, described above. For the six months ended November 30, 2000, the Company has spent approximately $1,944,000 in fixed asset additions, including (i) computer hardware and software for upgrades and new installations and (ii) software capitalization costs in connection with new product development. The Company expects the current levels of capital expenditures to continue. On July 14, 1998, the Company's Chairman of the Board, certain officers, directors and, a former director and the spouse of an officer and an employee of Sandsport Data Services, Inc. ("Sandsport"), a wholly owned subsidiary of the Company, exercised their respective options and warrants to purchase an aggregate of 921,334 shares of Common Stock under the 1998 Plan at exercise prices ranging from $1.38 to $2.61 per share for an aggregate cost of $1,608,861. Payment for such shares was made to the Company in the amount of $921 representing the par value of the shares, and a portion in the form of non-recourse promissory notes due in July 2001, with interest at eight and one-half percent (8-1/2%) per annum, payable annually, and secured by the number of shares exercised. The Company has received interest payments on such notes in the amount of $160,600. At November 30, 2000, the outstanding balance on such notes, including principal and accrued but unpaid interest, was $1,653,493. On April 18, 1997, Sandsport entered into a revolving credit agreement (the "Credit Agreement") with a bank (the "Bank") which allowed Sandsport to borrow amounts up to $3,000,000. Interest accrued on amounts outstanding under the Credit Agreement at a rate equal to the London Interbank Offered Rate plus 2% and will be paid quarterly in arrears or, at Sandsport's option, at the Bank's prime rate. The Credit Agreement required Sandsport to pay a commitment fee in the amount of $30,000 and a fee equal to 1/4% per annum payable on the unused average daily balance of amounts under the Credit Agreement. In addition, there are other fees and charges imposed based upon Sandsport's failure to maintain certain minimum balances. The Credit Agreement has been amended by the Bank to permit Sandsport to borrow amounts up to $4,500,000 and to extend the termination date to February 14, 2003. Interest accrues at the same rate as the original Credit Agreement. The indebtedness under the Credit Agreement is guaranteed by the Company and Sandsport's sister subsidiaries (the "Group"). All of the Group's assets are pledged to the Bank as collateral for the amounts due under the Credit Agreement, which pledge is secured by a first lien on all equipment owned by members of the Group, as well as a collateral assignment of $2,000,000 of life insurance payable on the life of the Company's Chairman of the Board. The Group's guaranty to the Bank was modified to include all indebtedness incurred by the Company under the amended Credit Agreement. In addition, pursuant to the Credit Agreement, the Group is required to maintain certain levels of net worth and meet certain financial ratios in addition to various other affirmative and negative covenants. At May 31, 2000 the Group failed to meet these net worth and financial ratios, and the Bank has granted the Group a waiver. There can be no assurance that the Bank will continue to grant waivers if the Group fails to meet the net worth and financial ratios in the future. If such waivers are not granted any loans outstanding under the Credit Agreement become immediately due and payble, which may have an adverse effect on the Company's business, operations or financial condition. At November 30, 2000, the outstanding balance on the Credit Agreement with the Bank was $2,350,000. At November 30, 2000, the Company owed Health Card $500,000 pursuant to a promissory note, dated May 31, 2000, made payable by the Company to the order of Health Card in the original principal amount of $500,000 plus interest at the rate of 9-1/2%, payable quarterly. The note, which was originally due and payable on June 1, 2001, was subsequently amended to extend such due date to September 1, 2001 and amended by Second Amendment to extend such due date to March 31, 2002. At November 30, 2000 the Company owed interest of $3,956 to Health Card, which was subsequently paid. The Company believes the results of its continued operations, together with the available credit line, should be adequate to fund presently foreseeable working capital requirements. SANDATA, INC. AND SUBSIDIARIES PART II - OTHER INFORMATION ITEM 1 - LEGAL PROCEEDINGS: Reference is made to the information previously reported in "Part I - Item 3 - Legal Proceedings" of the Company's Form 10-KSB for the fiscal year ended May 31, 2000 ; reference is also made to Note 5 of the Notes to Consolidated Condensed Financial Statements in Part I hereof. ITEM 2 - CHANGES IN SECURITIES: During the fiscal quarter ended November 30, 2000, the Company granted incentive stock options under the 1998 Stock Option Plan (the "Plan") to purchase up to 62,878 shares of common stock for $3.00 per share. Such options vest over a three year period commencing upon the completion of one year of employment with the Company and terminate after five years. At November 30, 2000 an aggregate of 965,958 options had been granted under the Plan. During the fiscal quarter ended November 30, 2000, the Company granted incentive stock options under the 2000 Stock Option Plan (the "2000 Plan") to purchase up to 150,000 shares of common stock for $3.00 per share. Such options vest over a seven year period commencing December 31, 2000 and ending December 31, 2007, and are exercisable over a period of ten years from the date of grant. At November 30, 2000 an aggregate of 150,000 options had been granted under the 2000 Plan. ITEM 3 - DEFAULTS UPON SENIOR SECURITIES: None ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS: A. The Registrant held its Annual Meeting of Shareholders on November 20, 2000. B. Five (5) directors were elected at the Annual Meeting to serve until the next Annual Meeting of Shareholders and until their respective successors are duly elected and qualified, or until their earlier resignation or removal. The names of these directors and votes cast in favor of their election and votes withheld are as follows: Name Votes For Votes Withheld Bert E. Brodsky 1,472,269 5,145 Hugh Freund 1,472,271 5,143 Gary Stoller 1,472,326 5,088 Paul J. Konigsberg 1,472,326 5,088 Ronald L. Fish 1,472,326 5,088 C. The adoption of the 2000 Stock Option Plan, reserving 1,500,000 shares for issuance under such plan, was approved as set forth below: Votes For Votes Against 1,465,277 12,137 D. The adoption of the 2000 Restricted Stock Grant Plan, reserving 700,000 shares for issuance under such plan, was approved as set forth below: Votes For Votes Against 1,465,288 12,093 ITEM 5 - OTHER INFORMATION: None ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K: (a) Exhibits 3(A)(i) Certificate of Incorporation and Amendments thereto including Certificate of Ownership and Merger (DE) and Agreement and Plan of Merger (1) 3(A)(ii) Certificate of Amendment to Certificate of Incorporation filed July 27, 1993 (1) 3(A)(iii) Certificate of Amendment to Certificate of Incorporation filed May 26, 1995 (1) 3(B) By-Laws (1) 4.1 Nassau County Industrial Development Agency Industrial Development Revenue Bonds (1994 Brodsky Sibling Realty Inc. Project) dated June 1, 1994 (1) 4.2 Revolving Credit Agreement dated as of April 20, 1995 by and among Sandsport Data Services, Inc. and Marine Midland Bank (1) 4.3 Nassau County Industrial Development Agency Industrial Development Revenue Bonds (1994 Brodsky Sibling Realty Inc. Project) Assumption and Amendment of Certain Agreements dated July 1, 1995 (1) 4.4 Loan Agreement dated August 11, 1995 between Sandata, Inc. and Long Island Development Corporation (1) 4.5 "504" Note dated August 11, 1995 from the Long Island Development Corporation to Sandata, Inc. (1) 4.6 Nassau County Industrial Development Agency Industrial Development Revenue Bonds (1994 Brodsky Sibling Realty Inc. Project) Assumption and Amendment of Certain Agreements dated November 1, 1996 (3) 4.7 Revolving Credit Agreement dated as of April 18, 1997 by and among Sandsport Data Services, Inc. and Marine Midland Bank (3) 4.8 Second Amendment dated as of February 14, 2000 to Revolving Credit Agreement by and among Sandsport Data Services, Inc. and HSBC Bank USA (6) 4.9 Letter, dated October 13, 2000, from HSBC Bank USA to Sandsport Data Services, Inc. (7) 10.1 Software License Agreement and Distribution Agreement between Sandata Home Health Systems, Inc. and Fastrack Healthcare Systems, Inc. dated as of June 15, 1995 (1) 10.2 Employees' Incentive Stock Option Plan (1) 10.3 First Amendment to Incentive Stock Option Plan dated April 4, 1989 (1) 10.4 Second Amendment to Incentive Stock Option Plan dated December 18, 1990 (1) 10.5 1986 Non-statutory Stock Option Plan (1) 10.6 Amendment to 1986 Non-statutory Stock Option Plan dated April 4, 1989 (1) 10.7 1995 Stock Option Plan (1) 10.8 1998 Stock Option Plan (5) 10.9 2000 Stock Option Plan 10.10 2000 Restricted Stock Grant Plan 10.11 Common Stock Purchase Warrants as issued to Bert E. Brodsky (1) 10.12 Deferred Compensation Plan dated May 1, 1992 between the Registrant and Bert E. Brodsky (1) 10.13 Form of agreement between Sandsport Data Services, Inc. and vendor agency (2) 10.14 Form of agreement between Sandsport Data Services, Inc. and vendor agency (2) 10.15 Form of Subscription Agreement dated December 23, 1996 (2) 10.16 Form of Subscription Agreement dated September 12, 1996 (2) 10.17 Form of Common Stock Purchase Warrant ($5.00 Exercise Price) (2) 10.18 Form of Common Stock Purchase Warrant ($7.00 Exercise Price) (2) 10.19 Form of Redeemable Common Stock Purchase Warrant (2) 10.20 Employment Agreement dated February 1, 1997 between the Registrant and Bert E. Brodsky (3) 10.21 Form of Pledge Agreement (4) 10.22 Form of Non-Negotiable Promissory Note (4) 10.23 Stock Option Agreement dated December 10, 1998 between the Registrant and Bert E. Brodsky (6) 10.24 Stock Option Agreement dated February 3, 2000 between the Registrant and Bert E. Brodsky (6) 10.25 Stock Option Agreement dated April 15, 2000 between the Registrant and Stephen Davies (6) 10.26 Promissory Note dated May 31, 2000 between National Medical Health Card Systems, Inc. and the Registrant (6) 10.27 Amended Promissory Note dated May 31, 2000 between National Medical Health Card Systems, Inc. and the Registrant (7) 10.28 Second Amendment to Promissory Note dated May 31, 2000 between National Medical Health Card Systems, Inc. and the Registrant 10.29 Employment Agreement dated October 17, 2000 between the Registrant and Stephen Davies 10.30 Stock Option Agreement dated October 17, 2000 between the Registrant and Stephen Davies 16 Letter re Change in Certifying Accountant (1) 27 Financial Data Schedule (for electronic filing) - --------------------------- (1) The Company hereby incorporates the footnoted Exhibit by reference in accordance with Rule 12b-32, as such Exhibit was originally filed as an Exhibit to the Company's Report on Form 10-KSB for the fiscal year ended May 31, 1995. (2) The Company hereby incorporates the footnoted Exhibit by reference in accordance with Rule 12b-32, as such Exhibit was originally filed as an Exhibit to Amendment No. 1 to Form S-3 Registration Statement as filed with the Securities and Exchange Commission on May 27, 1997. (3) The Company hereby incorporates the footnoted Exhibit by reference in accordance with Rule 12b-32, as such Exhibit was originally filed as an Exhibit to the Company's Report on Form 10-KSB for the fiscal year ended May 31, 1997. (4) The Company hereby incorporates the footnoted Exhibit by reference in accordance with Rule 12b-32, as such Exhibit was originally filed as an Exhibit to the Company's Report on Form 10-KSB for the fiscal year ended May 31, 1998. (5) The Company hereby incorporates the footnoted Exhibit by reference in accordance with Rule 12b-32, as such Exhibit was originally filed as an Exhibit to the Company's Report on Form 10-KSB for the fiscal year ended May 31, 1999. (6) The Company hereby incorporates the footnoted Exhibit by reference in accordance with Rule 12b-32, as such Exhibit was originally filed as an Exhibit to the Company's Report on Form 10-KSB for the fiscal year ended May 31, 2000. (7) The Company hereby incorporates the footnoted Exhibit by reference in accordance with Rule 12b-32, as such Exhibit was originally filed as an Exhibit to the Company's Report on Form 10-QSB for the period ended August 31, 2000. (b) Reports on Form 8-K There were no Current Reports on Form 8-K filed by the Company during the quarter ended November 30, 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SANDATA, INC. (Registrant) Date: January 12, 2001 By: /s/ Bert E. Brodsky Bert E. Brodsky Chairman of the Board Principal Executive Officer and Principal Financial and Accounting Officer EX-27 2 0002.txt FDS --
5 (Replace this text with the legend) 0000755465 Sandata, Inc. 1 $ 3-MOS MAY-31-2001 SEP-01-2000 NOV-30-2000 1.0 401,791 0 2,413,994 484,746 18,123 3,828,044 20,584,308 11,513,049 13,856,527 2,416,965 0 0 0 2,506 4,284,045 13,856,527 4,523,115 4,660,750 0 4,538,974 0 0 77,725 40,051 36,221 7,830 0 0 0 7,830 0.01 0.01
EX-10.9 3 0003.txt MATERIAL CONTRACTS EXHIBIT 10.9 SANDATA, INC. 2000 STOCK OPTION PLAN 1. PURPOSE OF THE PLAN. The Sandata, Inc. 2000 Stock Option Plan (the "Plan") is intended to advance the interests of Sandata, Inc. (the "Company") by inducing individuals or entities of outstanding ability and potential to join and remain with, or provide consulting or advisory services to, the Company, by encouraging and enabling eligible employees, non-employee Directors, consultants and advisors to acquire proprietary interests in the Company, and by providing the participating employees, non-employee Directors, consultants and advisors with an additional incentive to promote the success of the Company. This is accomplished by providing for the granting of "Options," which term as used herein includes both "Incentive Stock Options" and "Nonstatutory Stock Options," as later defined, to employees, non-employee Directors, consultants and advisors. 2. ADMINISTRATION. The Plan shall be administered by the Board of Directors of the Company (the "Board of Directors") or by a committee (the "Committee") consisting of at least one (1) person chosen by the Board of Directors. Except as herein specifically provided, the interpretation and construction by the Board of Directors or the Committee of any provision of the Plan or of any Option granted under it shall be final and conclusive. The receipt of Options by Directors, or any members of the Committee, shall not preclude their vote on any matters in connection with the administration or interpretation of the Plan. 3. SHARES SUBJECT TO THE PLAN. The stock subject to Options granted under the Plan shall be shares of the Company's common stock, par value $.001 per share (the "Common Stock"), whether authorized but unissued or held in the Company's treasury, or shares purchased from stockholders expressly for use under the Plan. The maximum number of shares of Common Stock which may be issued pursuant to Options granted under the Plan shall not exceed in the aggregate one million five hundred thousand (1,500,000) shares, subject to adjustment in accordance with the provisions of Section 14 hereof. The Company shall at all times while the Plan is in force reserve such number of shares of Common Stock as will be sufficient to satisfy the requirements of all outstanding Options granted under the Plan. In the event any Option granted under the Plan shall expire or terminate for any reason without having been exercised in full or shall cease for any reason to be exercisable in whole or in part, the unpurchased shares subject thereto shall again be available for Options under the Plan. In the event shares of Common Stock are delivered to, or withheld by, the Company pursuant to Sections 13(b)(ii) or 23 hereof, only the net number of shares issued, i.e., net of the shares so delivered or withheld, shall be considered to have been issued pursuant to the Plan. 4. PARTICIPATION. The class of individuals that shall be eligible to receive Options under the Plan shall be (a) with respect to Incentive Stock Options described in Section 6 hereof, all employees of either the Company or any parent or subsidiary corporation of the Company, and (b) with respect to Nonstatutory Stock Options described in Section 7 hereof, all employees and non-employee Directors of, or consultants and advisors to, either the Company or any parent or subsidiary corporation of the Company; provided, however, that Nonstatutory Stock Options shall not be granted to any such consultant or advisor unless (i) the consultant or advisor is a natural person (or an entity wholly-owned by the consultant or advisor), (ii) bona fide services have been or are to be rendered by such consultant or advisor and (iii) such services are not in connection with the offer or sale of securities in a capital raising transaction and do not directly or indirectly promote or maintain a market for the Company's securities. The Board of Directors or the Committee, in its sole discretion, but subject to the provisions of the Plan, shall determine the employees and non-employee Directors of, and the consultants and advisors to, the Company and its parent and subsidiary corporations to whom Options shall be granted, and the number of shares to be covered by each Option, taking into account the nature of the employment or services rendered by the individuals or entities being considered, their annual compensation, their present and potential contributions to the success of the Company, and such other factors as the Board of Directors or the Committee may deem relevant. For purposes hereof, a non-employee to whom an offer of employment has been extended shall be considered an employee, provided that the Options granted to such individual shall not be exercisable, in whole or in part, for a period of at least one year from the date of grant and in the event the individual does not commence employment with the company, the Options granted shall be considered null and void. 5. STOCK OPTION AGREEMENT. Each Option granted under the Plan shall be authorized by the Board of Directors or the Committee, and shall be evidenced by a Stock Option Agreement which shall be executed by the Company and by the individual to whom such Option is granted. The Stock Option Agreement shall specify the number of shares of Common Stock as to which any Option is granted, the period during which the Option is exercisable, and the option price per share thereof, and such other terms and provisions as the Board of Directors or the Committee may deem necessary or appropriate. 6. INCENTIVE STOCK OPTIONS. The Board of Directors or the Committee may grant Options under the Plan which are intended to meet the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), with respect to "incentive stock options," and which are subject to the following terms and conditions and any other terms and conditions as may at any time be required by Section 422 of the Code (referred to herein as an "Incentive Stock Option"): (a) No Incentive Stock Option shall be granted to individuals other than employees of the Company or of a parent or subsidiary corporation of the Company. (b) Each Incentive Stock Option under the Plan must be granted prior to September 1 , 2010, which is within ten (10) years from the date the Plan was adopted by the Board of Directors. (c) The option price of the shares subject to any Incentive Stock Option shall not be less than the fair market value (as defined in subsection (f) of this Section 6) of the Common Stock at the time such Incentive Stock Option is granted; provided, however, if an Incentive Stock Option is granted to an individual who owns, at the time the Incentive Stock Option is granted, more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of a parent or subsidiary corporation of the Company (a "10% Stockholder"), the option price of the shares subject to the Incentive Stock Option shall be at least one hundred ten percent (110%) of the fair market value of the Common Stock on the date upon which such Incentive Stock Option is granted. (d) No Incentive Stock Option granted under the Plan shall be exercisable after the expiration of ten (10) years from the date of its grant. However, if an Incentive Stock Option is granted to a 10% Stockholder, such Incentive Stock Option shall not be exercisable after the expiration of five (5) years from the date of its grant. Every Incentive Stock Option granted under the Plan shall be subject to earlier termination as expressly provided in Section 12 hereof. (e) For purposes of determining stock ownership under this Section 6, the attribution rules of Section 424(d) of the Code shall apply. (f) For purposes of the Plan, fair market value shall be determined by the Board of Directors or the Committee. If the Common Stock is listed on a national securities exchange or The Nasdaq Stock Market ("Nasdaq") or traded on the Over-the-Counter market, fair market value shall be the closing selling price or, if not available, the closing bid price or, if not available, the high bid price of the Common Stock quoted on such exchange or Nasdaq, or on the Over-the-Counter market, as reported by the exchange, Nasdaq or the National Association of Securities Dealers OTC Electronic Bulletin Board, or if the Common Stock is not so reported, then by the Pink Sheets, LLC, as the case may be, on the day immediately preceding the day on which the Option is granted (or, if granted after the close of business for trading, then on the day on which the Option is granted), or, if there is no selling or bid price on that day, the closing selling price, closing bid price or high bid price, as the case may be, on the most recent day which precedes that day and for which such prices are available. If there is no selling or bid price for the ninety (90) day period preceding the date of grant of an Option hereunder, fair market value shall be determined in good faith by the Board of Directors or the Committee. 7. NONSTATUTORY STOCK OPTIONS. The Board of Directors or the Committee may grant Options under the Plan which are not intended to meet the requirements of Section 422 of the Code, as well as Options which are intended to meet the requirements of Section 422 of the Code but the terms of which provide that they will not be treated as Incentive Stock Options (referred to herein as a "Nonstatutory Stock Option"). Nonstatutory Stock Options shall be subject to the following terms and conditions: (a) A Nonstatutory Stock Option may be granted to any individual or entity eligible to receive an Option under the Plan pursuant to clause (b) of Section 4 hereof. (b) The option price of the shares subject to a Nonstatutory Stock Option shall be determined by the Board of Directors or the Committee, in its sole discretion, at the time of the grant of the Nonstatutory Stock Option. (c) A Nonstatutory Stock Option granted under the Plan may be of such duration as shall be determined by the Board of Directors or the Committee (subject to earlier termination as expressly provided in Section 12 hereof). 8. RELOAD FEATURE. The Board of Directors or the Committee may grant Options with a reload feature. A reload feature shall only apply when the option price is paid by delivery of Common Stock (as set forth in Section 13(b)(ii)). The Stock Option Agreement for the Options containing the reload feature shall provide that the Option holder shall receive, contemporaneously with the payment of the option price in shares of Common Stock, a reload stock option (the "Reload Option") to purchase that number of shares of Common Stock equal to the sum of (i) the number of shares of Common Stock used to exercise the Option, and (ii) with respect to Non-Statutory Stock Options, the number of shares of Common Stock used to satisfy any tax withholding requirement incident to the exercise of such Non-Statutory Stock Option. The terms of the Plan applicable to the Option shall be equally applicable to the Reload Option with the following exceptions: (i) the option price per share of Common Stock deliverable upon the exercise of the Reload Option, (A) in the case of a Reload Option which is an Incentive Stock Option being granted to a 10% Stockholder, shall be one hundred ten percent (110%) of the fair market value of a share of Common Stock on the date of grant of the Reload Option and (B) in the case of a Reload Option which is an Incentive Stock Option being granted to a person other than a 10% Stockholder or is a Non-Statutory Stock Option, shall be the fair market value of a share of Common Stock on the date of grant of the Reload Option; and (ii) the term of the Reload Option shall be equal to the remaining option term of the Option (including a Reload Option) which gave rise to the Reload Option. The Reload Option shall be evidenced by an appropriate amendment to the Stock Option Agreement for the Option which gave rise to the Reload Option. In the event the exercise price of an Option containing a reload feature is paid by check and not in shares of Common Stock, the reload feature shall have no application with respect to such exercise. 9. RIGHTS OF OPTION HOLDERS. The holder of an Option granted under the Plan shall have none of the rights of a stockholder with respect to the stock covered by his Option until such stock shall be transferred to him upon the exercise of his Option. 10. ALTERNATE STOCK APPRECIATION RIGHTS. (a) Concurrently with, or subsequent to, the award of any Option to purchase one or more shares of Common Stock, the Board of Directors or the Committee may, in its sole discretion, subject to the provisions of the Plan and such other terms and conditions as the Board of Directors or the Committee may prescribe, award to the optionee with respect to each share of Common Stock covered by an Option ("Related Option"), a related alternate stock appreciation right ("SAR"), permitting the optionee to be paid the appreciation on the Related Option in lieu of exercising the Related Option. An SAR granted with respect to an Incentive Stock Option must be granted together with the Related Option. An SAR granted with respect to a Non-Statutory Stock Option may be granted together with, or subsequent to, the grant of such Related Option. (b) Each SAR granted under the Plan shall be authorized by the Board of Directors or the Committee, and shall be evidenced by an SAR Agreement which shall be executed by the Company and by the individual or entity to whom such SAR is granted. The SAR Agreement shall specify the period during which the SAR is exercisable, and such other terms and provisions not inconsistent with the Plan. (c) An SAR may be exercised only if and to the extent that its Related Option is eligible to be exercised on the date of exercise of the SAR. To the extent that a holder of an SAR has a current right to exercise, the SAR may be exercised from time to time by delivery by the holder thereof to the Company at its principal office (attention: Secretary) of a written notice of the number of shares with respect to which it is being exercised. Such notice shall be accompanied by the agreements evidencing the SAR and the Related Option. In the event the SAR shall not be exercised in full, the Secretary of the Company shall endorse or cause to be endorsed on the SAR Agreement and the Related Option Agreement the number of shares which have been exercised thereunder and the number of shares that remain exercisable under the SAR and the Related Option and return such SAR and Related Option to the holder thereof. (d) The amount of payment to which an optionee shall be entitled upon the exercise of each SAR shall be equal to one hundred percent (100%) of the amount, if any, by which the fair market value of a share of Common Stock on the exercise date exceeds the exercise price per share of the Related Option; provided, however, the Company may, in its sole discretion, withhold from any such cash payment any amount necessary to satisfy the Company's obligation for withholding taxes with respect to such payment. (e) The amount payable by the Company to an optionee upon exercise of a SAR may, in the sole determination of the Company, be paid in shares of Common Stock, cash or a combination thereof, as set forth in the SAR Agreement. In the case of a payment in shares, the number of shares of Common Stock to be paid to an optionee upon such optionee's exercise of an SAR shall be determined by dividing the amount of payment determined pursuant to Section 10(d) hereof by the fair market value of a share of Common Stock on the exercise date of such SAR. For purposes of the Plan, the exercise date of an SAR shall be the date the Company receives written notification from the optionee of the exercise of the SAR in accordance with the provisions of Section 10(c) hereof. As soon as practicable after exercise, the Company shall either deliver to the optionee the amount of cash due such optionee or a certificate or certificates for such shares of Common Stock. All such shares shall be issued with the rights and restrictions specified herein. (f) SARs shall terminate or expire upon the same conditions and in the same manner as the Related Options, and as set forth in Section 12 hereof. (g) The exercise of any SAR shall cancel and terminate the right to purchase an equal number of shares covered by the Related Option. (h) Upon the exercise or termination of any Related Option, the SAR with respect to such Related Option shall terminate to the extent of the number of shares of Common Stock as to which the Related Option was exercised or terminated. (i) An SAR granted pursuant to the Plan shall be transferable to the same extent as the Related Option. (j) All references in this Plan to "Options" shall be deemed to include "SARs" where applicable. 11. TRANSFERABILITY. (a) No Option granted under the Plan shall be transferable by the individual or entity to whom it was granted other than by will or the laws of descent and distribution, and, during the lifetime of an individual, shall not be exercisable by any other person, but only by him. (b) Notwithstanding Section 11(a) above, a Nonstatutory Stock Option granted under the Plan may be transferred in whole or in part during an optionee's lifetime, upon the approval of the Board of Directors or the Committee, to an optionee's "family members" (as such term is defined in Rule 701(c)(3) of the Securities Act of 1933, as amended, and General Instruction A(1)(a)(5) to Form S-8) through a gift or domestic relation order. The transferred portion of a Nonstatutory Stock Option may only be exercised by the person or entity who acquires a proprietary interest in such option pursuant to the transfer. The terms applicable to the transferred portion shall be the same as those in effect for the Option immediately prior to such transfer and shall be set forth in such documents issued to the transferee as the Board of Directors or the Committee may deem appropriate. As used in this Plan the terms "optionee" and "holder of an Option" shall refer to the grantee of the Option and not any transferee thereof. 12. TERMINATION OF EMPLOYMENT OR DEATH. (a) Unless otherwise provided in the Stock Option Agreement, if the employment of an employee by, or the services of a non-employee Director for, or consultant or advisor to, the Company or a parent or subsidiary corporation of the Company shall be terminated for cause or voluntarily by the employee, non-employee Director, consultant or advisor, then his Option shall expire forthwith. Unless otherwise provided in the Stock Option Agreement, and except as provided in subsections (b) and (c) of this Section 12, if such employment or services shall terminate for any other reason, then such Option may be exercised at any time within three (3) months after such termination, subject to the provisions of subsection (d) of this Section 12. For purposes hereof, "cause" shall include, without limitation, the termination of the optionee's employment or consulting or advisory relationship by the Company because of (i) conviction of, or a plea of nolo contendere to, a felony, or another serious crime which results or is likely to result in material injury to the Company; (ii) breach of fiduciary duty involving personal profit; (iii) continued and habitual neglect to perform material stated duties; or (iv) material breach of any provision of any employment, consulting or advisory agreement between the optionee and the Company or any parent or subsidiary thereof. For purposes of the Plan, the retirement of an individual either pursuant to a pension or retirement plan adopted by the Company or at the normal retirement date prescribed from time to time by the Company shall be deemed to be termination of such individual's employment other than voluntarily or for cause. For purposes of this subsection (a), an employee, non-employee Director, consultant or advisor who leaves the employ or services of the Company to become an employee or non-employee Director of, or a consultant or advisor to, a parent or subsidiary corporation of the Company or a corporation (or subsidiary or parent corporation of the corporation) which has assumed the Option of the Company as a result of a corporate reorganization or like event shall not be considered to have terminated his employment or services. (b) Unless otherwise provided in the Stock Option Agreement, if the holder of an Option under the Plan dies (i) while employed by, or while serving as a non-employee Director for or a consultant or advisor to, the Company or a parent or subsidiary corporation of the Company, or (ii) within three (3) months after the termination of his employment or services other than voluntarily or for cause, then such Option may, subject to the provisions of subsection (d) of this Section 12, be exercised by the estate of the employee or non-employee Director, consultant or advisor, or by a person who acquired the right to exercise such Option by bequest or inheritance or by reason of the death of such employee or non-employee Director, consultant or advisor, at any time within one (1) year after such death. (c) Unless otherwise provided in the Stock Option Agreement, if the holder of an Option under the Plan ceases employment or services because of permanent and total disability (within the meaning of Section 22(e)(3) of the Code) while employed by, or while serving as a non-employee Director for or consultant or advisor to, the Company or a parent or subsidiary corporation of the Company, then such Option may, subject to the provisions of subsection (d) of this Section 12, be exercised at any time within one (1) year after his termination of employment, termination of Directorship or termination of consulting or advisory services, as the case may be, due to the disability. (d) An Option may not be exercised pursuant to this Section 12 except to the extent that the holder was entitled to exercise the Option at the time of termination of employment, termination of Directorship, termination of consulting or advisory services, or death, and in any event may not be exercised after the expiration of the Option. (e) For purposes of this Section 12, the employment relationship of an employee of the Company or of a parent or subsidiary corporation of the Company will be treated as continuing intact while he is on military or sick leave or other bona fide leave of absence (such as temporary employment by the Government) if such leave does not exceed ninety (90) days, or, if longer, so long as his right to reemployment is guaranteed either by statute or by contract. 13. EXERCISE OF OPTIONS. (a) Unless otherwise provided in the Stock Option Agreement, any Option granted under the Plan shall be exercisable in whole at any time, or in part from time to time, prior to expiration. The Board of Directors or the Committee, in its absolute discretion, may provide in any Stock Option Agreement that the exercise of any Options granted under the Plan shall be subject (i) to such condition or conditions as it may impose, including, but not limited to, a condition that the holder thereof remain in the employ or service of, or continue to provide consulting or advisory services to, the Company or a parent or subsidiary corporation of the Company for such period or periods from the date of grant of the Option as the Board of Directors or the Committee, in its absolute discretion, shall determine; and (ii) to such limitations as it may impose, including, but not limited to, a limitation that the aggregate fair market value (determined at the time the Option is granted) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any employee during any calendar year (under all plans of the Company and its parent and subsidiary corporations) shall not exceed one hundred thousand dollars ($100,000). In addition, in the event that under any Stock Option Agreement the aggregate fair market value (determined at the time the Option is granted) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any employee during any calendar year (under all plans of the Company and its parent and subsidiary corporations) exceeds one hundred thousand dollars ($100,000), the Board of Directors or the Committee may, when shares are transferred upon exercise of such Options, designate those shares which shall be treated as transferred upon exercise of an Incentive Stock Option and those shares which shall be treated as transferred upon exercise of a Nonstatutory Stock Option. (b) An Option granted under the Plan shall be exercised by the delivery by the holder thereof to the Company at its principal office (attention of the Secretary) of written notice of the number of shares with respect to which the Option is being exercised. Such notice shall be accompanied, or followed within ten (10) days of delivery thereof, by payment of the full option price of such shares, and payment of such option price shall be made by the holder's delivery of (i) his check payable to the order of the Company, or (ii) previously acquired Common Stock, the fair market value of which shall be determined as of the date of exercise (provided that the shares delivered pursuant hereto are acceptable to the Board of Directors or the Committee in its sole discretion) or (iii) if provided for in the Stock Option Agreement, his check payable to the order of the Company in an amount at least equal to the par value of the Common Stock being acquired, together with a promissory note, in form and upon such terms as are acceptable to the Board or the Committee, made payable to the order of the Company in an amount equal to the balance of the exercise price, or (iv) by the holder's delivery of any combination of the foregoing (i), (ii) and (iii). 14. ADJUSTMENT UPON CHANGE IN CAPITALIZATION. (a) In the event that the outstanding Common Stock is hereafter changed by reason of reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, combination of shares, reverse split, stock dividend or the like, an appropriate adjustment shall be made by the Board of Directors or the Committee in the aggregate number of shares available under the Plan, in the number of shares and option price per share subject to outstanding Options, and in any limitation on exerciseability referred to in Section 13(a)(ii) hereof which is set forth in outstanding Incentive Stock Options. If the Company shall be reorganized, consolidated, or merged with another corporation, the holder of an Option shall be entitled to receive upon the exercise of his Option the same number and kind of shares of stock or the same amount of property, cash or securities as he would have been entitled to receive upon the happening of any such corporate event as if he had been, immediately prior to such event, the holder of the number of shares covered by his Option; provided, however, that in such event the Board of Directors or the Committee shall have the discretionary power to take any action necessary or appropriate to prevent any Incentive Stock Option granted hereunder which is intended to be an "incentive stock option" from being disqualified as such under the then existing provisions of the Code or any law amendatory thereof or supplemental thereto; and provided, further, however, that in such event the Board of Directors or the Committee shall have the discretionary power to take any action necessary or appropriate to prevent such adjustment from being deemed or considered as the adoption of a new plan requiring shareholder approval under Section 422 of the Code and the regulations promulgated thereunder. (b) Notwithstanding Section 14(a) above, if the Company shall be reorganized, consolidated or merged with another corporation, the Board of Directors or the Committee may, in its sole discretion, upon written notice to the holder of an Option, provide that the Option must be exercised within 20 days of the date of such notice or it will be terminated. For purposes of this Section 14(b), the Board of Directors or the Committee may, in its discretion, advance the lapse of vesting periods, waiting periods and exercise dates. (c) Any adjustment in the number of shares shall apply proportionately to only the unexercised portion of the Option granted hereunder. If fractions of a share would result from any such adjustment, the adjustment shall be revised to the next lower whole number of shares. 15. FURTHER CONDITIONS OF EXERCISE. (a) Unless prior to the exercise of the Option the shares issuable upon such exercise have been registered with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended, the notice of exercise shall be accompanied by a representation or agreement of the person or estate exercising the Option to the Company to the effect that such shares are being acquired for investment purposes and not with a view to the distribution thereof, and such other documentation as may be required by the Company, unless in the opinion of counsel to the Company such representation, agreement or documentation is not necessary to comply with such Act. (b) The Company shall not be obligated to deliver any Common Stock until it has been listed on each securities exchange on which the Common Stock may then be listed or until there has been qualification under or compliance with such federal or state laws, rules or regulations as the Company may deem applicable. The Company shall use reasonable efforts to obtain such listing, qualification and compliance. 16. EFFECTIVENESS OF THE PLAN. The Plan was adopted by the Board of Directors on September 1, 2000. The Plan shall be subject to approval on or before September 1, 2001, which is within one (1) year of adoption of the Plan by the Board of Directors, by the affirmative vote of the holders of a majority of the votes of the outstanding shares of capital stock of the Company present in person or represented by proxy at a meeting of stockholders and entitled to vote thereon (or in the case of action by written consent in lieu of a meeting of stockholders, the number of votes required by applicable law to act in lieu of a meeting) ("Stockholder Approval"). In the event such Stockholder Approval is withheld or otherwise not received on or before the latter date, the Plan and, unless otherwise provided in the Stock Option Agreement, all Options that may have been granted hereunder shall become null and void. 17. TERMINATION, MODIFICATION AND AMENDMENT. (a) The Plan (but not Options previously granted under the Plan) shall terminate on September 1, 2010, which is within ten (10) years from the date of its adoption by the Board of Directors, or sooner as hereinafter provided, and no Option shall be granted after termination of the Plan. (b) The Plan may from time to time be terminated, modified, or amended if Stockholder Approval of the termination, modification or amendment is obtained. (c) The Board of Directors may at any time, on or before the termination date referred to in Section 17(a) hereof, without Stockholder Approval, terminate the Plan, or from time to time make such modifications or amendments to the Plan as it may deem advisable; provided, however, that the Board of Directors shall not, without Stockholder Approval, (i) increase (except as otherwise provided by Section 14 hereof) the maximum number of shares as to which Incentive Stock Options may be granted hereunder, change the designation of the employees or class of employees eligible to receive Incentive Stock Options, or make any other change which would prevent any Incentive Stock Option granted hereunder which is intended to be an "incentive stock option" from qualifying as such under the then existing provisions of the Code or any law amendatory thereof or supplemental thereto or (ii) make any other modifications or amendments that require Stockholder Approval pursuant to applicable law, regulation or exchange requirements. In the event Stockholder Approval is not received within one (1) year of adoption by the Board of Directors of the change provided for in (i) or (ii) above, then, unless otherwise provided in the Stock Option Agreement (but subject to applicable law), the change and all Options and SARs that may have been granted pursuant thereto shall be null and void. (d) No termination, modification, or amendment of the Plan may, without the consent of the individual or entity to whom any Option shall have been granted, adversely affect the rights conferred by such Option. 18. NOT A CONTRACT OF EMPLOYMENT. Nothing contained in the Plan or in any Stock Option Agreement executed pursuant hereto shall be deemed to confer upon any individual or entity to whom an Option is or may be granted hereunder any right to remain in the employ or service of the Company or a parent or subsidiary corporation of the Company or any entitlement to any remuneration or other benefit pursuant to any consulting or advisory arrangement. 19. USE OF PROCEEDS. The proceeds from the sale of shares pursuant to Options granted under the Plan shall constitute general funds of the Company. 20. INDEMNIFICATION OF BOARD OF DIRECTORS OR COMMITTEE. In addition to such other rights of indemnification as they may have, the members of the Board of Directors or the Committee, as the case may be, shall be indemnified by the Company to the extent permitted under applicable law against all costs and expenses reasonably incurred by them in connection with any action, suit, or proceeding to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any rights granted thereunder and against all amounts paid by them in settlement thereof or paid by them in satisfaction of a judgment of any such action, suit or proceeding, except a judgment based upon a finding of bad faith. Upon the institution of any such action, suit, or proceeding, the member or members of the Board of Directors or the Committee, as the case may be, shall notify the Company in writing, giving the Company an opportunity at its own cost to defend the same before such member or members undertake to defend the same on his or their own behalf. 21. CAPTIONS. The use of captions in the Plan is for convenience. The captions are not intended to provide substantive rights. 22. DISQUALIFYING DISPOSITIONS. If Common Stock acquired upon exercise of an Incentive Stock Option granted under the Plan is disposed of within two years following the date of grant of the Incentive Stock Option or one year following the issuance of the Common Stock to the optionee, or is otherwise disposed of in a manner that results in the optionee being required to recognize ordinary income, rather than capital gain, from the disposition (a "Disqualifying Disposition"), the holder of the Common Stock shall, immediately prior to such Disqualifying Disposition, notify the Company in writing of the date and terms of such Disqualifying Disposition and provide such other information regarding the Disqualifying Disposition as the Company may reasonably require. 23. WITHHOLDING TAXES. (a) Whenever under the Plan shares of Common Stock are to be delivered by an optionee upon exercise of a Nonstatutory Stock Option, the Company shall be entitled to require as a condition of delivery that the optionee remit or, in appropriate cases, agree to remit when due, an amount sufficient to satisfy all current or estimated future Federal, state and local income tax withholding requirements, including, without limitation, the employee's portion of any employment tax requirements relating thereto. At the time of a Disqualifying Disposition, the optionee shall remit to the Company in cash the amount of any applicable Federal, state and local income tax withholding and the employee's portion of any employment taxes. (b) The Board of Directors or the Committee may, in its discretion, provide any or all holders of Nonstatutory Stock Options with the right to use shares of Common Stock in satisfaction of all or part of the withholding taxes to which such holders may become subject in connection with the exercise of their Options. Such right may be provided to any such holder in either or both of the following formats: (i) Stock Withholding: The election to have the Company withhold, from the shares of Common Stock otherwise issuable upon the exercise of such Nonstatutory Stock Option, a portion of those shares with an aggregate fair market value equal to the percentage of the withholding taxes (not to exceed one hundred percent (100%)) designated by the holder. (ii) Stock Delivery: The election to deliver to the Company, at the time the Nonstatutory Stock Option is exercised, one or more shares of Common Stock previously acquired by such holder (other than in connection with the option exercise triggering the withholding taxes) with an aggregate fair market value equal to the percentage of the withholding taxes (not to exceed one hundred percent (100%)) designated by the holder. 24. OTHER PROVISIONS. Each Option granted under the Plan may contain such other terms and conditions not inconsistent with the Plan as may be determined by the Board or the Committee, in its sole discretion. Notwithstanding the foregoing, each Incentive Stock Option granted under the Plan shall include those terms and conditions which are necessary to qualify the Incentive Stock Option as an "incentive stock option" within the meaning of Section 422 of the Code and the regulations thereunder and shall not include any terms and conditions which are inconsistent therewith. 25. DEFINITIONS. For purposes of the Plan, the terms "parent corporation" and "subsidiary corporation" shall have the meanings set forth in Sections 424(e) and 424(f) of the Code, respectively, and the masculine shall include the feminine and the neuter as the context requires. 26. GOVERNING LAW. The Plan shall be governed by, and all questions arising hereunder shall be determined in accordance with, the laws of the State of Delaware. EX-10.10 4 0004.txt MATERIAL CONTRACTS EXHIBIT 10.10 SANDATA, INC. 2000 RESTRICTED STOCK GRANT PLAN 1. Purpose. The Sandata, Inc. 2000 Restricted Stock Grant Plan (the "Plan") is intended to advance the interests of Sandata, Inc., a Delaware corporation (the "Company"), by encouraging and enabling eligible employees, non-employee Directors, consultants and advisors, upon whose judgment, initiative and effort the Company is largely dependent for the successful conduct of its business, to acquire and retain a proprietary interest in the Company by ownership of its stock. 2. Definitions. For purposes of the Plan, the following terms shall have the indicated meanings unless the context clearly indicates otherwise: "Board" means the Board of Directors of the Company. "Cause" means termination of the Participant's employment or consulting or advisory relationship by the Company because of (A) conviction of, or a plea of nolo contendere to, a felony, or another serious crime which results or is likely to result in material injury to the Company; (B) breach of fiduciary duty involving personal profit; (C) continued and habitual neglect to perform material stated duties; or (D) material breach of any provision of any employment, consulting or advisory agreement between the Participant and the Company or any subsidiary thereof. "CEO" means the Chief Executive Officer of the Company as of the Initial Adoption Date. "Chairman" means the Chairman of the Board as of the Initial Adoption Date. "Code" means the Internal Revenue Code of 1986, as it may be amended from time to time. "Committee" means the committee designated in Section 3 below to administer the Plan. "Common Stock" means the Company's Common Stock, par value $.001 per share. "Change in Control" of the Company shall be deemed to have occurred (A) when either the CEO or Chairman is either removed as a director or not nominated by the Board for re-election as a director of the Company; or (B) when any nominee for election as a director of the Company contained in the Company's Proxy Statement sent to shareholders in connection with the Board's solicitation of proxies to be voted at any annual meeting of shareholders is not so elected by the shareholders, except where the person elected instead of the nominee is acceptable to the CEO and Chairman; or (C) upon any person or entity gaining ownership, directly or indirectly, of securities that, in the aggregate, represent more than thirty-five percent (35%) of the voting power of the Company's outstanding securities (whether or not such securities are in fact voted); or (D) upon the sale or disposition of fifty percent (50%) or more of the voting securities of any of the Company's subsidiaries or all or substantially all of the assets of any such subsidiary, except where such sale or disposition was approved by the CEO; or (E) upon the termination of employment by the Company other than for Cause, or the Resignation for Good Reason of, the CEO or Chairman. "Exchange Act" means the Securities Exchange Act of 1934, as it may be amended from time to time. "Grant" means a grant of Shares, whether or not restricted, pursuant to a written instrument that awards Shares to a Participant pursuant to the Plan. "Initial Adoption Date" means September 1, 2000. "Parent" means a parent corporation of the Company as defined in section 424(e) of the Code. "Participants" means the employees and non-employee Directors of, or consultants and advisors to, either the Company or any Parent or Subsidiary corporation of the Company; provided, however, the term "Participants" shall not include any such consultant or advisor unless (i) the consultant or advisor is a natural person (or an entity wholly-owned by the consultant or advisor), (ii) bona fide services have been or are to be rendered by such consultant or advisor and (iii) such services are not in connection with the offer or sale of securities in a capital raising transaction and do not directly or indirectly promote or maintain a market for the Company's securities. For purposes hereof, a non-employee to whom an offer of employment has been extended shall be considered an employee. "Permanent Disability" means such mental or physical illness or incapacity as shall result in the Participant being unable to render services to the Company, its Parents or its Subsidiaries for a continuous period of twelve (12) months. "Plan" means this Sandata, Inc. 2000 Restricted Stock Grant Plan. "Resignation for Good Reason" means a resignation of employment or consulting or advisory services following the failure by the Company to comply with any material provision of any employment, consulting or advisory agreement with the Company or any subsidiary thereof, which failure was not cured with thirty (30) days after a notice of noncompliance was given by the employee, consultant or advisor to the Company. "Shares" means shares of Common Stock which are granted to a Participant pursuant to a Grant under the Plan. "Standard Restrictions" means those restrictions set forth in Section 8(b) hereof. "Subsidiary" means a subsidiary corporation of the Company, as defined in Section 424(f) of the Code. 3. Administration of the Plan. The Plan shall be administered by the Board or a committee (the "Committee") composed of not less than one (1) person. The Committee shall report all action taken by it to the Board which shall review and ratify or approve those actions which are required by law to be so reviewed and ratified or approved by the Board. The Board or the Committee shall have full and final authority in its discretion, subject to the provisions of the Plan, (a) to determine the Participants, the time or times at which Grants shall be made and the number of Shares so granted; (b) to construe and interpret the Plan; (c) to determine the terms, restrictions and provisions of the respective Grants, which need not be identical, including, but without limitation, restrictions on Shares granted and the amount and terms of the purchase price, if any, of Shares granted; and (d) to make all other determinations and take all other actions deemed necessary or advisable for the proper administration of the Plan. All such actions and determinations shall be conclusively binding for all purposes and upon all persons. 4. Number of Shares Subject to the Plan. The total number of Shares available for Grants under the Plan may not exceed in the aggregate 700,000, subject to adjustment upon occurrence of any of the events indicated in Section 6 hereof. The Board may, from time to time, increase the number of Shares available for grant under the Plan. The Shares to be delivered under the Grants may consist, in whole or in part, of authorized but unissued Common Stock or treasury Common Stock not reserved for any other purpose. 5. Lapsed Grants. If a Grant, or any portion thereof, is forfeited for any reason, any Shares forfeited shall be available again for the making of a later Grant hereunder. 6. Adjustment in Capitalization. In the event of any change in the outstanding shares of Common Stock that occurs after the Initial Adoption Date by reason of a stock dividend, stock split, reorganization, reclassification, recapitalization, merger, consolidation, combination, exchange of shares, or other similar change, then the aggregate number and class of shares or other securities that may be issued or transferred pursuant to the Plan, and the provisions, terms and conditions of each outstanding Grant affected thereby, shall be adjusted appropriately by the Board or the Committee, whose determination shall be conclusive. 7. Eligibility and Participation. The Board of Directors or the Committee, in its sole discretion, but subject to the provisions of the Plan, shall determine the Participants to whom Grants shall be granted, and the number of shares to be covered by each Grant, taking into account the nature of the employment or services rendered by the individuals or entities being considered, their annual compensation, their present and potential contributions to the success of the Company, and such other factors as the Board of Directors or the Committee may deem relevant. 8. Grants of Restricted Stock. (a) Grant of Restricted Stock. Subject to the provisions of Section 7, the Board or the Committee, at any time and from time to time, may make Grants to such Participants and in such amounts as it shall determine. Each Grant shall be made pursuant to a written instrument which must be executed by the grantee in order to be effective. (b) Standard Restrictions. In addition to any other applicable provisions hereof and except as may otherwise be specifically provided in a Grant, the following restrictions in this Section 8(b) (the "Standard Restrictions") shall apply to Grants made by the Board or the Committee: (i) No Shares granted pursuant to a Grant may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated until, and to the extent that, such Shares are vested. (ii) Shares granted pursuant to a Grant are non-vested at the time the Grant is made, but shall, unless earlier forfeited hereunder, vest according to the following vesting schedule: Vested Percentage Vesting Dates of Shares Granted One (1) year from the date of Grant 14% Two (2) years from the date of Grant 28% Three (3) years from the date of Grant 42% Four (4) years from the date of Grant 56% Five (5) years from the date of Grant 70% Six (6) years from the date of Grant 84% Seven (7) years from the date of Grant 100% The foregoing notwithstanding (but subject to the provisions of (iii) hereof and subject to the discretion of the Board or the Committee), a Participant shall forfeit all Shares not previously vested, if any, at such time as the Participant is no longer employed by, or rendering consulting or advisory services to, the Company or a Parent or Subsidiary. All forfeited Shares shall be returned to the Company. (iii)Notwithstanding any other provision of this Section 8(b) to the contrary, a Participant who has not previously forfeited any non-vested Shares that are granted pursuant to a Grant, shall automatically have such non-vested Shares vest upon the earlier of (a) the effective date of a Change in Control, (b) the termination by the Company of the Participant's employment with, or consulting or advisory services to, the Company and all Parents and Subsidiaries other than for Cause, (c) the Resignation for Good Reason by the Participant, and (d) the Participant's death or Permanent Disability. (c) Other Restrictions. Notwithstanding the Standard Restrictions of Section 8(b) above, the Board or the Committee may impose such other or different restrictions on any Shares granted as it may deem advisable including, without limitation, restrictions relating to length of service, corporate performance, attainment of individual or group performance objectives, and federal or state securities laws, and may legend the certificates representing restricted Shares to give appropriate notice of such restrictions. Any such other or different restrictions shall be specifically set forth in the Grant instrument. (d) Holding of Restricted Shares. Certificates representing Shares granted that are subject to restrictions shall be held by the Company or, if the Board or the Committee so specifies, deposited with a third-party custodian or trustee until lapse of all restrictions on the Shares. After such lapse, certificates for such Shares (or the vested percentage of such Shares) shall be delivered by the Company to the Participant who received the grant of such Shares; provided, however, that the Company need not issue fractional Shares. (e) Rights in Restricted Shares. During any applicable period of restriction, a Participant who has been granted Shares hereunder shall be the record owner thereof and shall be entitled to vote such Shares and receive all dividends and other distributions paid with respect to such Shares while they are so restricted. However, if any such dividends or distributions are paid in shares of Company stock during an applicable period of restriction, the shares received shall be subject to the same restrictions as the Shares with respect to which they were issued. Moreover, the Board or the Committee may provide in each Grant such other restrictions, terms and conditions as it may deem advisable with respect to the treatment and holding of any stock, cash or property that is received in exchange for restricted Shares. (f) Conflicting Provisions. In case of any conflict between the provisions of this Plan and the provisions of a Grant, the provisions of this Plan shall control. 9. Conditions to Grants. The making of any Grant and the issuance of any Shares to a Participant shall be subject to the condition that, if at any time the Company shall determine in its discretion that the satisfaction of withholding tax or other withholding liabilities, or that the listing, registration, or qualification of any Shares otherwise deliverable hereunder upon any securities exchange or under any state or federal law, or that the consent or approval of any regulatory body, is necessary or desirable as a condition of, or in connection with, the delivery or purchase of Shares pursuant hereto, then in any such event, such Grant or such issuance of Shares shall not be effective unless such withholding, listing, registration, qualification, consent, or approval shall have been effected or obtained free of any conditions not acceptable to the Company. 10. Amendment, Suspension, and Termination of Plan. The Board may at any time suspend or terminate the Plan or any portion thereof or may amend it from time to time in such respects as the Board may deem advisable in order that the Grants granted hereunder may conform to any change in the law or in any other respects which the Board may deem to be in the best interests of the Company. No Grants may be made during any suspension or after the termination of the Plan. Except as provided in the Plan, no amendment, suspension, or termination of the Plan shall, without the Participant's consent, alter or impair any of the rights or obligations under any Grant theretofore granted to such Participant under the Plan. 11. Tax Withholding. The Board or the Committee may, in its sole discretion, (a) require a Participant to remit to the Company a cash amount sufficient to satisfy, in whole or in part, any federal, state and local withholding tax requirements prior to the delivery of any certificate for vested Shares pursuant to a Grant hereunder; (b) require a Participant to satisfy, in whole or in part, any such withholding tax requirements by having the Company, upon any delivery of vested Shares, withhold from such Shares that number of full Shares having a fair market value equal to the amount or portion of the amount required or permitted to be withheld; or (c) satisfy such withholding requirements through another lawful method. 12. Code Section 83(b) Elections. Each Participant making an election pursuant to Section 83(b) of the Code shall, upon the making of such election, promptly provide a copy of such election to the Company. 13. Employment. Nothing in this Plan shall interfere with or limit in any way the right of the Company or any Parent or Subsidiary to terminate any Participant's employment or consulting or advisory arrangement at any time, nor confer upon any Participant any right to continue in the employ of, or render consulting or advisory services to, the Company or any Parent or Subsidiary. 14. Effective Date of the Plan. The effective date of the Plan is September 1, 2000, the date of its adoption by the Board. 15. Term. No Grants may be made under the Plan after September 1, 2010. The provisions of the Plan shall, however, continue to apply as to any Grants made prior to such date. Dated: September 1, 2000 EX-10.28 5 0005.txt MATERIAL CONTRACTS EXHIBIT 10.28 SECOND AMENDMENT TO PROMISSORY NOTE $ 500,000.00 Date May 31, 2000 This Promissory Note amends and replaces that certain note dated May 31, 2000 made by the undersigned to the Lender in the principal amount of $500,000, as amended. On March 31, 2002 we promise to pay to the order of NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC. FIVE HUNDRED THOUSAND AND NO CENTS ($500,000.00) Dollars Payable at 26 Harbor Park Drive, Port Washington, NY 11050 for value received with interest at nine and one-half percent (9-1/2%) per annum payable quarterly. The Lender represents that this loan may be prepaid at any time without penalty. SANDATA, INC. By: /s/Bert E. Brodsky Bert E. Brodsky, Chairman Witness: EX-10.29 6 0006.txt MATERIAL CONTRACTS EXHIBIT 10.29 SANDATA, INC. EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT, dated as of October 17, 2000, by and between SANDATA, INC., a Delaware corporation with an office and place of business at 26 Harbor Park Drive, Port Washington, New York 11050 (the "Company"), and STEPHEN DAVIES, who resides at 315 West Neck Road, Huntington, New York 11743 (the "Employee"). RECITALS: A. The Company is engaged in providing computerized data processing services and custom software programming services principally to the health care industry as well as the general commercial market. B. The Company wishes to assure itself of the services of the Employee for the period provided in this Agreement, and the Employee is willing to serve in the employ of the Company on a full-time basis, for said period, and upon the other terms and conditions hereinafter provided. AGREEMENT: 1. TERM OF EMPLOYMENT. 1.1 The Company hereby employs the Employee, and the Employee hereby accepts employment with the Company, all in accordance with the terms and conditions hereof, for an indefinite term commencing on the Commencement Date (as defined in Subsection 1.2 hereof) and continuing (subject to the provisions of Section 5 hereof) until either party terminates the Agreement (the "Employment Period"). 1.2 As used in this Agreement, the term "Commencement Date" shall mean October 17, 2000. 1.3 After expiration of the Employment Period and upon the subsequent termination of the Employee's employment hereunder (but not in the event of termination by the Employee), the Employee shall be paid severance pay for six (6) months (the "Severance Period") at the annual salary rate in effect on the date of termination and as more specifically described in Section 3 below (the "Severance Pay"). However, such Severance Pay shall immediately be reduced by the amount of salary received by the Employee during the Severance Period upon Employee's obtaining full time employment with another employer. The Company shall assist Employee in procuring new employment and Employee agrees to give consideration to any and all prospective employers procured by the Company; however, Employee may accept or reject any such offer in his sole discretion. 2. DUTIES. 2.1 During the Employment Period, the Employee shall be employed by the Company and shall serve as its President and Chief Operating Officer, shall be responsible for the day-to-day operations of the Company and shall perform such duties and have such powers relating to the Company as shall from time to time be assigned to him by the Board of Directors of the Company. 2.2 During the Employment Period, the Employee shall devote his full business time, best efforts, energies, attention and ability to the business and interests of the Company. 3. COMPENSATION. 3.1 As full compensation for his services and undertakings pursuant to this Agreement, the Employee shall be entitled to receive (i) a salary at the rate of $175,000.00 per year, subject to adjustment as hereafter provided, payable in twenty-six (26) equal installments or other more frequent installments in accordance with the regular pay policies of the Company; and (ii) a bonus of $10,000 on January 31, 2001, provided Employee is in the employ of the Company at such time, when such salary will increase to $200,000 per year; and (iii) such other bonuses as shall from time to time be agreed upon. 3.2 During the Employment Period, the Employee shall also be entitled to (a) four (4) weeks paid vacation annually and (b) participate under the same terms and conditions as other employees of similar rank in group medical insurance and other benefits or programs of the Company hereafter established and made available by the Company to its employees. 3.3 The Company shall deduct from the Employee's salary, bonus or incentive compensation any federal, state or city withholding taxes, social security contributions and any other amounts which may be required to be deducted or withheld by the Company pursuant to any federal, state or city laws, rules or regulations. 3.4 The Company shall reimburse the Employee, or cause him to be reimbursed, for all reasonable out-of-pocket expenses incurred by him in the performance of his duties hereunder or in furtherance of the business and/or interest of the Company, provided, however, that the Employee shall have previously furnished to the Company an itemized account, satisfactory to the Company, in substantiation of such expenditures. 4. STOCK OPTIONS. 4.1 The Employee has been granted by the Company an option to purchase 100,000 shares of Common Stock of the Company, such options to vest over three (3) years, in accordance with the terms of the Stock Option Agreement attached thereto and made part of this Agreement as Exhibit A. 4.2 Simultaneously upon the execution of this Agreement, the Employee will be granted by the Company an option to purchase 150,000 shares of Common Stock of the Company, such options to vest over seven (7) years commencing December 2000, in accordance with the terms of the Stock Option Agreement attached thereto and made part of this Agreement as Exhibit B. 4.3 If the Company is separated or reorganized, or merged or consolidated with another corporation during the Employment Period, there shall be substituted for the shares issuable upon exercise of the outstanding Options an appropriate number of shares of each class of stock, other securities or other assets of the separated or reorganized, or merged or consolidated corporation which were distributed to the shareholders of the Company in respect of such shares; provided, however, that 100% of the total number of options granted pursuant to the terms of the Stock Option Agreement set forth in Section 4.1 above, may be exercised in full by the Optionee as of the effective date of any such separation, reorganization, merger, or consolidation of the Company without regard to the installment exercise provisions of the Employee's Stock Option Agreement, by the Optionee giving notice in writing to the Company of his intention to so exercise. 5. TERMINATION. 5.1 If the Employee dies or becomes disabled during the Employment Period, his salary and all other rights under this Agreement shall terminate at the end of the month during which death or disability occurs. For the purposes of this Agreement, the Employee shall be deemed to be "disabled" if he has been unable to perform his duties for six consecutive months or nine months in any twelve-month period, all as determined in good faith by the Board of Directors of the Company. Notwithstanding the definition of disabled contained in the preceding sentence, in the event that the Employee is receiving disability insurance benefits during any period prior to termination of this Agreement as provided in this Section 5.1, the Employee's salary shall be reduced by an amount equal to such disability insurance benefits during such period unless such disability payments are as a result of an insurance policy funded by the employee personally. 5.2 The Company, in addition to any other remedies available to it, either at law or in equity, may terminate this Agreement without any further liability or obligation to the Employee from and after the date of such termination, by delivering to Employee written notice upon the occurrence of any of the following events: (a) commission by the Employee of a material breach of this Agreement; provided that the employee shall have sixty (60) days from receipt of notice to cure any technical breach or (b) commission by the Employee of a felony or other serious crime more serious than a misdemeanor. 5.3 In the event that the Company terminates this Agreement for a reason other than those set forth in Section 5.2 hereof (but not in the event of termination by Employee), the Company shall pay the Employee such Severance Pay as described in Section 1.3 above. 6. COVENANT NOT TO DISCLOSE 6.1 The Employee covenants and undertakes that he will not at any time during or after the termination of his employment hereunder reveal, divulge, or make known to any person, firm, corporation, or other business organization (other than the Company or its affiliates, if any), or use for his own account any customers' lists, trade secrets, or any secret or any confidential information ("Confidential Information") of any kind used by the Company during his employment by the Company, and made known (whether or not with the knowledge and permission of the Company, whether or not developed, devised, or otherwise created in whole or in part by the efforts of the Employee, and whether or not a matter of public knowledge unless as a result of authorized disclosure) to the Employee by reason of his employment by the Company. The Employee further covenants and agrees that he shall retain such knowledge and information which he has acquired or shall acquire and develop during his employment respecting such Confidential Information in trust for the sole benefit of the Company, its successors and assigns and upon termination of his employment with the Company, return same to the Company. Employee shall, if asked to by the Company, sign a statement acknowledging, among other things, that Employee has returned all such Confidential Information. 7. COVENANT NOT TO COMPETE; NON-INTERFERENCE. 7.1 The Employee covenants and undertakes that, during the period of his employment hereunder and if the Company terminates Employee's employment hereunder pursuant to Sections 5.2 (a) or (b), or if Employee voluntarily terminates his employment hereunder, for a period of three (3) years thereafter, he will not, without the prior written consent of the Company, directly or indirectly, and whether as principal or as agent, officer, director, employee, consultant, or otherwise, alone or in association with any other person, firm, corporation, or other business organization, carry on, or be engaged, concerned, or take part in, or render services to, or own, share in the earnings of, or invest in the stock, bonds, or other securities of any person, firm, corporation, or other business organization (other than the Company or its affiliates, if any) engage in a business which is in direct competition with the Company's core business of data processing and/or system programming (a "Similar Business") except in the course of his employment hereunder; provided, however, that the Employee may invest in stock, bonds, or other securities of any Similar Business (but without otherwise participating in the activities of such Similar Business) if (A) such stock, bonds, or other securities are listed on any national or regional securities exchange or have been registered under Section 12 (g) of the Securities Exchange Act of 1934; and (B) his investment does not exceed, in the case of any class of the capital stock of any one issuer, two (2%) percent of the issued and outstanding shares, or in the case of bonds or other securities, two (2%) percent of the aggregate principal amount thereof issued and outstanding. 7.2 The Employee covenants and undertakes that during the Employment Period and for a period of three (3) years thereafter, he will not, whether for his own account or for the account of any other person, firm, corporation or other business organization, interfere with the Company's relationship with, or endeavor to entice away from the Company any person, firm, corporation or other business organization who or which at any time during the Employee's employment with the Company was an employee, consultant, agent, supplier, a customer of the Company or in the habit of dealing with the Company. 8. COVENANT TO REPORT; PATENT, ETC. 8.1 The Employee shall promptly communicate and disclose to the Company all technical inventions, discoveries, improvements and new writings, in any form, whatsoever (hereinafter "Inventions") including, without limitation, all software, programs, routines, techniques, procedures, training aides and instructional manuals conceived, developed or made by him during his employment by the Company, whether solely or jointly with others, and whether or not patentable or copyrightable, (A) which relate to any matters or business carried on or being developed by the Company, or (B) which result from or are suggested by any work done by him in the course of his employment by the Company. The Employee shall also promptly communicate and disclose to the Company all other data obtained by him concerning the business or affairs of the Company in the course of his employment by the Company. Provided, however, that nothing herein shall prevent the Employee from using general business knowledge and management techniques developed during the course of his employment. 8.2 All written materials, records and documents made by the Employee or coming into his possession during the Employment Period concerning the business or affairs of the Company shall be the sole property of the Company, and, upon the termination of the Employment Period or upon the request of the Company during the Employment Period, the Employee agrees to render to the Company such reports of the activities undertaken by the Employee or conducted under the Employee's direction, pursuant hereto during the Employment Period as the Company may request. 8.3 The Employee will assign to the Company all right in the Inventions and will assist the Company or its designee during and subsequent to his employment, at the Company's sole expense, in filing patent and/or copyright applications on, and obtaining for the Company's benefit patents and/or copyrights for such Inventions in any and all countries, and will assign to the Company all such patent and/or copyright applications, all patents and/or copyrights which may issue thereon, said Inventions to be and remain the sole and exclusive property of the Company or its designee whether or not patented and/or copyrighted. 8.4 Any Invention conceived, developed or made by the Employee within one (1) year of the termination of his employment, whether such termination of employment is voluntary or involuntary, shall be deemed to have arisen out of and been conceived, developed or made by the Employee during his employment by the Company, unless established to have been conceived, developed or made after the termination of such employment. 9. REMEDIES. The Employee acknowledges that the Company will have no adequate remedy at law if the Employee violates the terms of Section 6, 7 or 8 hereof. In such event, the Company shall have the right, in addition to any other rights it may have, to obtain in any court of competent jurisdiction injunctive relief to restrain any breach or threatened breach of or otherwise to specifically enforce any of the covenants of such Sections. 10. COMPLIANCE WITH OTHER AGREEMENTS. 10.1 Employee and Company represent and warrant to the other that each is under no contract, restriction or obligation which is inconsistent with execution of this Agreement or the performance of his/its duties hereunder. Each hereby agrees to indemnify the other for all losses, damages, costs, fees and expenses including attorney's fees incurred by the other in connection with any of the following: (a) any breach of the foregoing representations and warranties; (b) any lawsuit or other legal proceeding in which it is claimed that the other has breached any trust, confidence or duty of loyalty, etc.; (c) any action or matter relating to the above representations and warranties. 11. WAIVERS. A waiver by the Company or the Employee of a breach of any of the provisions of this Agreement shall not operate or be construed as a waiver of any subsequent breach. 12. BINDING EFFECT; BENEFITS. This Agreement shall inure to the benefit of, and shall be binding upon, the parties hereto and their respective successors, assigns, heirs, and legal representatives, including any corporation or other business organization with which the Company may merge or consolidate or to which it may transfer substantially all of its assets. Insofar as the Employee is concerned, this Agreement, being personal, cannot be assigned. 13. NOTICES. All notices, requests, demands and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given or made when delivered in person or four (4) days after dispatch by registered or certified mail, postage paid, return receipt requested, to the party to whom the same is so given or made, to the address of such party hereinabove set forth. 14. ENTIRE AGREEMENT; AMENDMENTS; SURVIVAL COVENANTS. This Agreement contains the entire Agreement, and supersedes all prior agreements and understandings, oral or written, between the parties hereto with respect to the subject matter hereof. This Agreement may not be waived, changed, amended, modified or discharged orally, but only by an agreement in writing signed by the party against whom any waiver, change, amendment, modification or discharge is sought. The covenants of the Employee contained in Sections 6, 7 and 8 (insofar as they relate to the Employment Period) of this Agreement shall survive the termination of the Employment Period. 15. HEADINGS. The headings contained in this Agreement are for reference purposes only and shall not affect the construction or interpretation of this Agreement. 16. SEVERABILITY. The invalidity of all or any part of any Section of this Agreement shall not render invalid the remainder of this Agreement or the remainder of such Section. If any provision of this Agreement is so broad as to be enforceable, such provisions shall be interpreted to be only so broad as is enforceable. 17. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall, when executed, be deemed to be an original, but all of which together shall constitute one and the same instrument. 18. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to principles relating to conflict of laws. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above. SANDATA, INC. By: /s/Bert E. Brodsky Bert E. Brodsky Chairman By: /s/Stephen Davies Stephen Davies EX-10.30 7 0007.txt MATERIAL CONTRACTS EXHIBIT 10.30 STOCK OPTION AGREEMENT made as of the 17th day of October, 2000 between SANDATA, INC., a Delaware corporation (the "Company"), and Stephen Davies (the "Optionee"). WHEREAS, the Optionee is an employee of the Company or a subsidiary thereof; WHEREAS, the Company desires to provide to the Optionee an additional incentive to promote the success of the Company; NOW, THEREFORE, in consideration of the foregoing, the Company hereby grants to the Optionee (the "Grant") the right and option to purchase Common Shares of the Company under and pursuant to the terms and conditions of the 2000 Stock Option Plan (the "Plan") and upon and subject to the following terms and conditions: 1. GRANT OF OPTION. The Company hereby grants to the Optionee the right and option (the "Option") to purchase up to One Hundred Fifty Thousand (150,000) Common Shares of the Company (the "Option Shares") during the following period(s): (a) All or any part of Thirty-Three Thousand Three Hundred Thirty-Three (33,333) Common Shares may be purchased during the period commencing on December 31, 2000 and terminating at 5:00 P.M. on December 31, 2010 (the "Expiration Date"). (b) All or any part of Thirty-Three Thousand Three Hundred Thirty-Three (33,333) Common Shares may be purchased during the period commencing on December 31, 2004 and terminating at 5:00 P.M. on the Expiration Date. (c) All or any part of Thirty-Three Thousand Three Hundred Thirty-Three (33,333) Common Shares may be purchased during the period commencing on December 31, 2005 and terminating at 5:00 P.M. on the Expiration Date. (d) All or any part of Thirty-Three Thousand Three Hundred Thirty-Three (33,333) Common Shares may be purchased during the period commencing on December 31, 2006 and terminating at 5:00 P.M. on the Expiration Date. (e) All or any part of Sixteen Thousand Six Hundred Sixty-Eight (16,668) Common Shares may be purchased during the period commencing on December 31, 2007 and terminating at 5:00 P.M. on the Expiration Date. 2. NATURE OF OPTION. Such Options to purchase the Option Shares are intended to meet the requirements of Section 422 of the Internal Revenue Code of 1986, as amended, relating to "incentive stock options". 3. EXERCISE PRICE. The exercise price of each of the Option Shares shall be Three Dollars and no cents ($3.00) (the "Option Price"). The Company shall pay all original issue or transfer taxes on the exercise of the Option. 4. EXERCISE OF OPTIONS. The Option shall be exercised in accordance with the provisions of the Plan. As soon as practicable after the receipt of notice of exercise (in the form annexed hereto as Exhibit A) and payment of the Option Price as provided for in the Plan, the Company shall tender to the Optionee certificates issued in the Optionee's name evidencing the number of Option Shares covered thereby. 5. TRANSFERABILITY. The Option shall not be transferable other than by will or the laws of descent and distribution and, during the Optionee's lifetime, shall not be exercisable by any person other than the Optionee. 6. INCORPORATION BY REFERENCE. The terms and conditions of the Plan are hereby incorporated by reference and made a part hereof. 7. NOTICES. Any notice or other communication given hereunder shall be deemed sufficient if in writing and hand delivered or sent by registered or certified mail, return receipt requested, addressed to the Company, 26 Harbor Park Drive, Port Washington, New York 11050, Attention: Secretary and to the Optionee at the address indicated below. Notices shall be deemed to have been given on the date of hand delivery or mailing, except notices of change of address, which shall be deemed to have been given when received. 8. BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, successors and assigns. 9. REGISTRATION. The underlying shares will be registered whenever the next Registration Statement is filed. 10. ANTIDILUTION. The number of shares underlying the options governed by this Agreement and the purchase price thereof will be adjusted to reflect any stock splits, reorganizations, recapitalizations or similar transactions. 11. ENTIRE AGREEMENT. This Agreement, together with the Plan, contains the entire understanding of the parties hereto with respect to the subject matter hereof and may be modified only by an instrument executed by the party sought to be charged. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. SANDATA, INC. By: /s/Bert E. Brodsky /s/Stephen Davies Signature of Optionee Stephen Davies Name of Optionee Address of Optionee EXHIBIT A SANDATA, INC. OPTION EXERCISE FORM The undersigned hereby irrevocably elects to exercise the within Option dated October 17, 2000 to the extent of purchasing Common Shares of Sandata, Inc. The undersigned hereby makes a payment of $ in payment therefor. Stephen Davies Name of Optionee Signature of Optionee Address of Holder Date -----END PRIVACY-ENHANCED MESSAGE-----