<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
VIA THE EDGAR SYSTEM ON NOVEMBER 21, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-8
Registration Statement
under
The Securities Act of 1933
CAPSTONE PHARMACY SERVICES, INC.
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(Exact name of issuer as specified in its charter)
Delaware 11-231052
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
9901 East Valley Ranch Parkway, Suite 3001
Irving, Texas 75063
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(Address of principal executive offices) Zip Code
CAPSTONE PHARMACY SERVICES, INC.
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NON-QUALIFIED DEFERRED COMPENSATION PLAN FOR EXECUTIVES
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(Full title of the Plan)
James D. Shelton
Executive Vice President,
Chief Financial Officer and Secretary
Capstone Pharmacy Services, Inc.
9901 East Valley Ranch Parkway, Suite 3001
Irving, Texas 75063
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(Name and address of agent for service)
(972) 401-1541
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(Telephone number, including area code, of agent for service)
Copies to:
M. David Cox, Esquire
Harwell Howard Hyne Gabbert & Manner, P.C.
1800 First American Center
315 Deaderick Street
Nashville, Tennessee 37238
(615) 256-0500
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed Proposed
maximum maximum
Amount offering aggregate Amount of
Title of securities to be price per offering registration
to be registered registered share (1) price (1) fee (2)
- ------------------- ---------- --------- --------- ------------
<S> <C> <C> <C> <C>
Deferred Compensation $1,200,000 100% $1,200,000 $ 363.64
Obligations
</TABLE>
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(1) The deferred compensation obligations to which this Registration
Statement relates (the "Deferred Compensation Obligations") arise under
the Capstone Pharmacy Services, Inc. Non-Qualified Deferred
Compensation Plan for Executives (the "Plan") and are unsecured
obligations of Capstone Pharmacy Services, Inc. to pay deferred
compensation in the future pursuant to compensation deferral elections
made by participants in the Plan in accordance with the terms of the
Plan.
(2) Calculated pursuant to Rule 457(h) under the Securities Act of 1933,
solely for the purposes of calculating the registration fee.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by Capstone Pharmacy Services, Inc.
(the "Registrant") with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934 are incorporated into this registration
statement by reference:
1. The Registrant's Annual Report on Form 10-K, for the year
ended December 31, 1996.
2. The Registrant's Quarterly Report on Form 10-Q, for the
quarter ended March 31, 1997.
3. The Registrant's Quarterly Report on Form 10-Q, for the
quarter ended June 30, 1997.
4. The Registrant's Quarterly Report on Form 10-Q, for the
quarter ended September 30, 1997.
5. The Registrant's Current Report on Form 8-K dated January
2, 1997.
6. The Registrant's Current Report on Form 8-K dated January
31, 1997.
7. The Registrant's Current Report on Form 8-K dated
September 30, 1997.
8. The description of the Registrant's shares of Common
Stock, par value $.01 per share (the "Common Stock"), contained in the
Registration Statement on Form 8-A dated June 18, 1996 filed by the Registrant
to register such securities under the Securities Exchange Act of 1934, as
amended by a Form 8-A/A dated July 18, 1996 and all other amendments and reports
filed for the purpose of updating such description prior to the termination of
the offering of the Common Stock offered hereby.
All documents filed by the Registrant pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this
registration statement and prior to the filing of a post-effective amendment to
this Registration Statement which indicates that all deferred compensation
obligations covered by such registration statement have been incurred by the
Company or which deregisters all of such deferred compensation obligations not
then incurred, shall be deemed to be incorporated by reference in this
registration statement and to be a part hereof from the date of filing such
documents. Any statement contained in a document incorporated by reference
herein shall be deemed to be modified or superseded for
<PAGE> 3
purposes hereof to the extent that a statement contained herein (or in any other
subsequently filed document which also is incorporated by reference herein)
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed to constitute a part hereof except as so modified or
superseded.
Item 4. Description of Securities.
The following description of the deferred compensation obligations of
the Registrant under the PharMerica, Inc. Non-Qualified Deferred Compensation
Plan for Executives (the "Plan") is qualified by reference to the Plan, which is
included as an exhibit to this registration statement. Capitalized terms used in
this Item 4 and not otherwise defined in this registration statement shall have
the respective meanings attributed to such terms in the Plan.
The deferred compensation obligations incurred by the Registrant
under the Plan will be unsecured general obligations of the Registrant to pay
the Compensation deferred in accordance with the terms of the Plan, and will
rank equally with other unsecured and unsubordinated indebtedness of the
Registrant, from time to time outstanding, payable from the general assets of
the Registrant. Because the Registrant has subsidiaries, the right of the
Registrant, and hence the right of creditors of the Registrant (including
Participants in the Plan), to participate in a distribution of the assets of a
subsidiary upon its liquidation or reorganization or otherwise, necessarily is
subject to the prior claims of creditors of the subsidiary, except to the extent
that claims of the Registrant itself as a creditor may be recognized.
Under the Plan, the Registrant will provide Eligible Employees of the
Registrant and each of the Registrant's affiliates whose employees are eligible
to participate in the Registrant's 401(k) Profit Sharing Plan (the "401(k)
Plan") with the opportunity to elect to defer a portion of their Compensation
otherwise payable to the Eligible Employee consistent with the terms of the
Plan.
Effective January 1, 1998, each Eligible Employee who elects to
become a Participant in the Plan with respect to a Plan Year will have a portion
of his or her Compensation deferred under the terms of the Plan. The portion of
the Participant's Compensation that is deferred will depend on the Participant's
election in effect at the beginning of the Plan Year with respect to his or her
elective contributions under the 401(k) Plan. To the extent the percentage of
Compensation the Participant elects to have contributed under the 401(k) Plan
would, when applied to the Participant's Compensation for the Plan Year, result
in a contribution in excess of the maximum contribution permitted under Section
401(g) of the Internal Revenue Code of 1986, as amended (the "Code") (limited to
$10,000 for 1998, which limitation is adjusted annually by the IRS for increases
in the cost of living), the excess will be deferred under the Plan as of the
date such excess contribution would have been made under the terms of the 401(k)
Plan
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if contributions had been made without regard to the statutory limitation on
such contributions.
The amounts deferred under the Plan represent an obligation of the
Registrant to make payments to the Participant at some time in the future. The
amount that the Registrant is required to pay under the terms of the Plan are
equal to the amounts contributed, as adjusted for hypothetical gains or losses
attributable to the deemed investment of such contributions as elected by the
Participants from among designated hypothetical investment alternatives, all of
which is reflected in the Participant's Accounts (bookkeeping accounts
maintained by the Registrant for each of the Participants). As of January 1,
1998, the hypothetical investment alternatives available under the Plan are
identical with the investment alternatives available for participant directed
investment in the 401(k) Plan, but the hypothetical investments for
Participants' Accounts may be varied from time to time at the discretion of the
Board of Directors or the Committee (which may be appointed by the Board of
Directors to act as administrator of the Plan). In addition, the amount that is
payable by the Registrant to the Participants under the Plan is increased by
additional amounts that represent a hypothetical matching contribution by the
Registrant, determined by reference to the matching contribution program
actually in effect under the 401(k) Plan. The amount that is added as a
hypothetical matching contribution is equal to the excess of the amount that
would have been made as a matching contribution under the 401(k) Plan, if the
actual contributions to the 401(k) Plan along with the amounts actually deferred
under the Plan had all been made under the 401(k) Plan, over the amount actually
contributed as a matching contribution under the 401(k) Plan. If the matching
contribution under the 401(k) Plan is made in the form of common stock of the
Registrant, the hypothetical matching contribution under the Plan will also be
treated as initially having been invested in common stock of the Registrant.
Participants may elect to have any such hypothetical matching contribution
treated as invested in any of the available investment alternatives.
Participants may elect to have any other amounts treated as invested in the
Registrant's common stock under the Plan, nor may Participants elect to have any
amounts representing matching contributions treated as reinvested in the
Registrant's common stock once they elect to have a deemed investment in the
Registrant's common stock treated as liquidated and invested in the other
available investment alternatives under the Plan.
The amounts payable to Participants under the Plan are distributed in
accordance with the distribution provisions of the Plan, taking into account
certain elections which may be made by Participants when they initially elect to
participate. Specifically, the Registrant is obligated to pay the amount in a
Participant's Account if no election as to distributions has been made by the
Participant as follows:
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1. A lump sum on the Participant's termination of employment for any
reason other than disability or retirement, to be paid as soon as practicable
following such termination.
2. Ten substantially equal installments commencing as soon as
practicable following the Participant's termination of employment after
attaining the early or normal retirement age determined under the Registrant's
retirement plan, if any, in effect at the time of retirement, or, in the absence
of any such plan, at any time after attaining age 60, or on account of the
Participant's "disability" (determined under the Registrant's long term
disability policy or plan, if any, is in effect, or as determined for purposes
of Federal social security disability benefits).
3. Distribution of the amount needed in connection with a "hardship"
of the Participant if requested by a Participant.
4. Distribution of any amount (of $1,000 or more, or of the entire
Account, if that is less than $1,000) at the time requested by the Participant,
but subject to an early distribution penalty equal to 10% of the amount
distributed.
Distribution Options Available to Participants in connection with the
Participant's election when first electing to participate in the Plan:
1. The Participant may elect to have his or her Account distributed
or start to be distributed at any date specified by the Participant (if the
Account has not already been distributed or started to be distributed under
another distribution provision of the Plan).
2. A Participant may elect to have his or her Account distributed in
the form of a single lump sum if a "change of control" of the Registrant occurs
(as that is defined under the Registrant's stock option plan or as determined by
the Board of Directors of the Registrant if not defined under the Registrant's
stock option plan).
3. The Participant may also elect to have his or her Account paid in
up to ten annual installments rather than as a lump sum with respect to any
distributions other than: (a) distribution made following the Participant's
death or made following a change of control of the Registrant (which are lump
sum distributions); (b) distributions made with respect to the Participant's
termination of employment due to disability (which are always in the form of ten
annual installments); or (c) distributions made at the Participant's request on
account of hardship or as an elective early distributions (which are always
single distributions of all or a portion of the Participant's Account, with the
remaining portion, if any, of the Participant's Account continuing to be subject
to the Participant's distribution elections and other provisions of the Plan).
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<PAGE> 6
When any distribution (whether all or any portion) of a Participant's
Account is made, the Participant's current participation election, if any, is
revoked, and that Participant may not again make contributions under the Plan
until the second Plan Year following the year in the distribution occurs.
Whether or not the Registrant is a Participant's employer, all
Compensation deferred under the Plan will continue for all purposes to be a part
of the general funds of the Registrant and the Participant's Account will at all
times represent the general obligation of the Registrant. Each Participant will
be a general creditor of the Registrant with respect to all of the Registrant's
deferred compensation obligations to the Participant under the Plan, and will
not have a secured or preferred position with respect to his or her Account.
Nothing contained in the Plan shall be deemed to create an escrow, trust,
custodial account or fiduciary relationship of any kind or to eliminate any
priority or preferred position of a Participant in a bankruptcy matter with
respect to claims for wages. Under the terms of the Plan, the right of a
Participant in or to an Account, benefit or payment under the Plan shall not be
subject in any manner to attachment or other legal process for the debts of such
Participant; and no such Account, benefit or payment shall be subject to
anticipation, alienation, sale, transfer, assignment or encumbrance.
The Registrant, by action of the Board, without the consent of
Participants, may amend, modify or terminate the Plan at any time, with respect
to any provisions of the Plan, except that no amendment or termination may
reduce a Participant's Account as of the date of the amendment or the
Participant's rights to payments corresponding to his or her Account. Any
amendment which is required in order to ensure that the Plan qualifies as a
deferred compensation maintained for a select group of management or highly
compensated employees, as described in ERISA or to comply with applicable
provisions of ERISA or the Code shall be permitted in all events. If the Plan is
terminated, the Registrant may, at its discretion, continue to maintain the
Participants' Accounts under the terms of the Plan and Participants' elections
as otherwise in effect, or distribute Participants' Accounts as soon as
practicable.
The Registrant will settle a Participant's Account and discharge all
Obligations under the Plan in cash.
Item 5. Interests of Named Experts and Counsel.
The financial statements and schedules of Capstone Pharmacy Services,
Inc. as of December 31, 1996 and 1995 and for the year ended December 31, 1996,
the ten months ended December 31, 1995 and the year ended February 28, 1995
incorporated by reference in this registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and
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<PAGE> 7
are included herein in reliance upon the authority of said firm as experts in
giving said reports.
Item 6. Indemnification of Directors and Officers.
Under Section 145 of the General Corporation Law of the State of
Delaware, as amended, the Company has the power to indemnify directors and
officers under prescribed circumstances and subject to certain limitations
against certain costs and expenses, including attorneys' fees, actually and
reasonably incurred in connection with any action, suit or proceeding, whether
civil, criminal, administrative or investigative, to which any of them is a
party by reason of his or her being a director or officer of the Company if it
is determined that he or she acted in accordance with the applicable standard of
conduct set forth in such statutory provisions.
Article Eleventh of the Company's Certificate of Incorporation
provides indemnification to directors and officers of the Company against all
expenses, liability and loss incurred as a result of such person's being a party
to, or threatened to be made a party to, any action, suit or proceeding by
reason of the fact that he or she is or was a director or officer of the Company
or is or was serving at the request of the Company as a director, officer,
employee or agent of another enterprise, to the fullest extent authorized by the
General Corporation Law of the State of Delaware. Article Eleventh further
permits the Company to maintain insurance, at its expense, to protect itself and
any such director or officer of the Company or another enterprise against any
such expenses, liability or loss, whether or not the Company would have the
power to indemnify such person against such expenses, liability or loss under
the General Corporation Law of the State of Delaware. The Company has purchased
directors' and officers' liability insurance.
Item 7. Exemption from Registration Claimed.
Not applicable.
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Item 8. Exhibits.
The following Exhibits are filed as part of this Registration
Statement:
4 Capstone Pharmacy Services, Inc. Non-Qualified Deferred
Compensation Plan for Executives
5.1 Opinion of Harwell Howard Hyne Gabbert & Manner, P.C.
5.2 Opinion of Wolf, Block, Schorr and Solis-Cohen L.L.P.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Harwell Howard Hyne Gabbert & Manner, P.C.
(contained in Exhibit 5.1)
23.3 Consent of Wolf, Block, Schorr and Solis-Cohen L.L.P.
(contained in Exhibit 5.2)
24 Power of Attorney (contained on signature page in Part II
of the Registration Statement)
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which is registered) and any deviation from the low or
high of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Securities and Exchange Commission pursuant to Rule
424(b), if, in the aggregate, the changes in volume and price represent no more
than 20 percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in
the registration statement;
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<PAGE> 9
provided, however, that paragraphs (a)(l)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
2. That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Irving, State of Texas on November 19, 1997.
CAPSTONE PHARMACY SERVICES, INC.
By: /s/ James D. Shelton
---------------------------------
James D. Shelton
Executive Vice President, Chief
Financial Officer and Secretary
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints James D. Shelton and Robert Della Valle,
and each of them, such person's true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for such person and in such
person's name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including post-effective amendments,
and to file the same with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be lawfully done in
connection with any such filing, as fully as such person might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or their substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
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<S> <C> <C>
/s/ Joseph F. Furlong Director November 19, 1997
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Joseph F. Furlong, III
/s/ John Haronian Director November 19, 1997
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John Haronian
/s/ Morris A. Perlis Director November 19, 1997
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Morris A. Perlis
</TABLE>
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<TABLE>
<S> <C> <C>
/s/ Albert Reichmann Director November 19, 1997
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Albert Reichmann
/s/ Allan C. Silber Director and Principal November 19, 1997
- ------------------------- Executive Officer
Allan C. Silber
/s/ Edward Sonshine Director November 19, 1997
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Edward Sonshine, Q.C.
/s/ Gail Wilensky Director November 19, 1997
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Gail Wilensky, Ph.D.
/s/ John E. Zuccotti Director November 19, 1997
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John E. Zuccotti
/s/ James D. Shelton Principal Financial November 19, 1997
- ----------------------- Officer and Principal
James D. Shelton Accounting Officer
</TABLE>
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CAPSTONE PHARMACY SERVICES, INC.
REGISTRATION STATEMENT ON FORM S-8
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No.
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<S> <C>
4 Capstone Pharmacy Services, Inc.
Non-Qualified Deferred Compensation
Plan for Executives....................................
5.1 Opinion of Harwell Howard Hyne Gabbert & Manner,
P.C......................................................
5.2 Opinion of Wolf, Block, Schorr and Solis-Cohen
L.L.P....................................................
23.1 Consent of Arthur Andersen LLP ..........................
23.2 Consent of Harwell Howard Hyne Gabbert & Manner,
P.C.(contained in Exhibit 5.1)...........................
23.3 Consent of Wolf, Block, Schorr and Solis-Cohen
L.L.P.(contained in Exhibit 5.2).........................
24 Power of Attorney (contained on
signature page in Part II of the
Registration Statement)..................................
</TABLE>
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<PAGE> 1
Exhibit 4
PHARMERICA, INC.
NON-QUALIFIED DEFERRED COMPENSATION PLAN
FOR EXECUTIVES
<PAGE> 2
PHARMERICA, INC.
NON-QUALIFIED DEFERRED COMPENSATION PLAN
FOR EXECUTIVES
EFFECTIVE JANUARY 1, 1998
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I - DEFINITIONS................................................ 1
ARTICLE II - ELIGIBILITY AND PARTICIPATION............................. 2
ARTICLE III - PARTICIPANT ELECTION AND CONTRIBUTIONS................... 2
ARTICLE IV - ALLOCATION OF FUNDS....................................... 3
ARTICLE V - ENTITLEMENT TO BENEFITS.................................... 5
ARTICLE VI - BENEFICIARIES; PARTICIPANT DATA........................... 6
ARTICLE VII - ADMINISTRATION........................................... 7
ARTICLE VIII - AMENDMENT............................................... 9
ARTICLE IX - TERMINATION............................................... 10
ARTICLE X - MISCELLANEOUS.............................................. 10
</TABLE>
<PAGE> 3
PHARMERICA, INC.
NON-QUALIFIED DEFERRED COMPENSATION PLAN
FOR EXECUTIVES
EFFECTIVE JANUARY 1, 1998
This Plan allows certain key executives of PharMerica, Inc. (the
"Company") or its affiliates who are eligible to participate in the 401(k) Plan
to elect pursuant to the provisions of this Plan as set forth below, in
connection with their election to make contributions under the "cash or deferred
arrangement" of the 401(k) Plan, to make contributions under this Plan of
amounts that would, if made under the 401(k) Plan, exceed the dollar limitation
in effect under Section 402(g) of the Code. The amounts so contributed are to be
treated as though accumulated on behalf of the Participant, along with earnings
as specified herein, and held by the Company until such time as they become
distributable from the Company to the Participant under the terms of this Plan
at termination of employment or upon the occurrence of other specified events.
This Plan is intended to be a "top hat plan" (i.e., an unfunded deferred
compensation plan maintained for a select group of management or highly
compensated employees) within the meaning of Sections 201(2), 301(a)(3) and
401(a)(1) of ERISA.
ARTICLE I - DEFINITIONS
The following definitions apply to this Plan:
1.1 ACCOUNT means the account established for a Participant on the
books of the Company as provided in Article IV.
1.2 BENEFICIARY means any person or persons so designated in accordance
with Article VI.
1.3 CODE means the Internal Revenue Code of 1986, as amended from time
to time.
1.4 COMMITTEE means the Board of Directors of the Company or such other
Committee as the Board of Directors may designate to take on administrative
responsibilities with respect to the Plan.
1.5 EFFECTIVE DATE means January 1, 1998.
1.6 ELIGIBLE EMPLOYEE means a management or highly compensated employee
of the Company or any of its affiliates who is eligible to participate in the
401(k) Plan and who is eligible to participate in the Plan in accordance with
the provisions of Article II.
<PAGE> 4
1.7 ERISA means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.8 401(K) PLAN means the PharMerica, Inc. 401(k) Profit Sharing Plan
1.9 PARTICIPANT means any person with an Account.
1.10 PLAN means the PharMerica, Inc. Non-qualified Deferred
Compensation Plan for Executives, as amended from time to time.
1.11 PLAN YEAR shall mean each calendar year starting as of the
Effective Date.
1.12 VALUATION DATE means the valuation date as established in
accordance with Article IV and Article V.
ARTICLE II - ELIGIBILITY AND PARTICIPATION
2.1 An employee shall be an Eligible Employee for purposes of the Plan
provided all of the following requirements are met:
(a) Such employee's compensation is equal to or exceeds the
minimum compensation level established by the Committee with respect to the Plan
from time to time, which compensation level shall not be less than $80,000;
(b) Such employee is employed in a position with the title of
"vice president" or in a position which the committee determines is of equal or
greater authority
(c) Such employee is eligible as of the first day of the Plan
Year to participate in the 401(k) Plan; and
(d) Such employee is either specifically designated by the
Committee as eligible to participate in the Plan or is in a category of
employees that is designated as eligible to participate in the Plan.
2.2 Notwithstanding the foregoing, the Committee shall have the
discretion to modify, on a case by case basis, the eligibility requirements for
participation in the Plan; provided, however, that the Committee shall in all
events apply its discretionary authority in a manner that is consistent with the
Plan's continued qualification as a "top hat plan" as that term is used in
applicable Department of Labor regulations.
2.3 In the event the Committee determines, at its discretion, that a
Participant no longer qualifies as an Eligible Employee, such Participant's
election to have amounts added to his or her
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<PAGE> 5
Account maintained under the Plan shall be ineffective, and any amounts that
would otherwise have been added to such Account shall be paid over in cash to
such Participant.
2.4 Each Eligible Employee shall be permitted to become a Participant
by making an election on a form provided by the Committee electing, in
accordance with the terms of the Plan, to have a portion of what would otherwise
be payable to the Participant as cash compensation added to the Participant's
Account maintained under the Plan.
ARTICLE III - PARTICIPANT ELECTION AND CONTRIBUTIONS
3.1 EXCESS DEFERRAL ELECTION. A Participant elects to have
contributions made to his or her Account maintained under the Plan by filing
with the Committee an irrevocable election (an "Excess Deferral Election") at
any time prior to the beginning of a Plan Year.
3.2 REVOCATION OF ELECTION. A Participant's Excess Deferral Election
under the Plan shall remain in effect for the first Plan Year starting
subsequent to the date on which such election is submitted to the Committee, and
shall continue in force indefinitely from Plan Year to Plan Year, unless revoked
by the Participant. A revocation of an Excess Deferral Election shall be
effective as of the first day of the first Plan Year starting subsequent to the
date on which the revocation is filed with the Committee.
3.3 AUTOMATIC REVOCATION OF ELECTION. A Participant's Excess Deferral
Election shall be automatically revoked in the event there is a distribution of
all or any portion of the Participant's Account for any reason. In the event of
such an automatic revocation of a Participant's Excess Deferral Election, such
Participant shall not be eligible to submit a new Excess Deferral Election until
after the end of the Plan Year in which such automatic revocation occurs.
3.4 AMOUNT OF CONTRIBUTIONS. The amounts contributed under the Plan
with respect to a Participant (referred to as the Participant's "Excess
Contributions") are determined by reference to the percentage of compensation
that the Participant has indicated is to be contributed as a salary deferral
contribution under the 401(k) Plan (as in effect on the first day of the Plan
Year). This percentage is referred to as the Participant's "Contribution
Percentage." The amount to be contributed during the Plan Year will be equal to
the excess of the Participant's "Maximum Contribution" over the dollar
limitation imposed on elective contributions to the 401(k) Plan under Section
402(g) of the Code, where the Participant's Maximum Contribution is determined
by applying the Participant's Contribution Percentage to the Participant's
"Compensation" (as that term is defined for purposes of the 401(k) Plan).
3.5 TIMING OF CONTRIBUTIONS. Contributions to the Plan shall be treated
as if made in the amounts and at the times the Participant's Excess
Contributions would have been taken into account under the 401(k) Plan if
actually made to that plan.
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3.6 COMPANY MATCHING CONTRIBUTIONS. With respect to each Plan Year,
additional amounts shall be added to a Participant's Account as of the last day
of the Plan Year equal to the excess of the Participant's "Maximum Matching
Contribution" over the amount actually contributed as a Company matching
contribution under the 401(k) Plan with respect to such Plan Year, where the
Maximum Matching Contribution is equal to the amount the Company would have
contributed as a Company matching contribution under the 401(k) Plan if the
Participant's actual contributions to the 401(k) Plan and the Participant's
actual contributions to the Plan had all been contributed to the 401(k) Plan.
Any additions to a Participant's Account under this Section 3.6 shall be treated
as though invested in Company stock if Company matching contributions for such
Plan Year under the 401(k) Plan would be made to a Company stock fund under the
401(k) Plan.
ARTICLE IV - ALLOCATION OF FUNDS
4.1 SEPARATE ACCOUNTS. The Company shall establish and maintain a
separate bookkeeping Account under the Plan to reflect all amounts contributed
with respect to each Participant, adjusted for gain or loss as described in
Section 4.2.
4.2 GAIN OR LOSS ADJUSTMENT. Each Participant's separate Account as
established under the Plan in accordance with Section 4.1 shall be adjusted at
the end of each Plan Year, on the date the Account is distributed, or as of such
other date as may be established for this purpose by the Committee (any such
date being referred to herein as a "Valuation Date") to take into account the
gain or loss adjustment as determined under this Section 4.2 for such period
applicable to such separate Account. For purposes of the Plan, the gain or loss
adjustment applicable to a Participant's separate Account shall be determined as
follows:
(a) Each Participant shall be permitted to specify an
investment or investments (from among Permissible Investments, as that term is
defined below) which shall be the basis for determining the gain or loss
adjustment applicable to such Participant's separate Account in accordance with
such rules as may be established by the Committee. The rules regarding
investment specifications established by the Committee may include provisions
requiring the Participant to provide advance notice to the Committee of intended
changes in investment specifications. The length of time required for such
advance notice shall be as determined by the Committee. Each Participant shall
be permitted to change his or her specified investments at the same times as
investment changes are permitted under the 401(k) Plan, except to the extent
other rules regarding investment specifications are established by the
Committee. "Permissible Investments" under the Plan shall be those investments
which are available as participant directed investments under the 401(k) Plan;
provided, however that the Committee may, at its sole discretion, modify the
definition of "Permissible Investments" without regard to the investment
alternatives available to participants in the 401(k) Plan.
(b) On each Valuation Date, each Participant's separate
Account shall be adjusted to reflect the gain or loss that would have been
realized if an amount equal to the Participant's separate
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Account balance as of the prior Valuation Date, along with any additional
amounts added to the Participant's separate Account on account of the
Participant's Elective Deferrals occurring during the period prior to the
Valuation Date (but subsequent to any prior Valuation Date), had been invested
in accordance with the investment specifications of the Participant. For
purposes of the determination of the gain or loss adjustment for the applicable
Valuation Date, such adjustment shall be calculated by taking into account any
brokerage fees or other transactional costs that would have been incurred in
actually carrying out the investment specifications of the Participant, whether
or not such costs were actually incurred by the Company. For purposes of these
calculations, the balance in a Participant's separate Account as of the prior
Valuation Date shall be treated as having been invested for the full period
through the applicable Valuation Date, while the Participant's Elective
Deferrals shall be treated as having been invested starting as of the date the
contributions are deemed to have been made under Article III above.
(c) Notwithstanding anything to the contrary contained herein,
including those provisions giving a Participant the right of designating
investments from among Permissible Investments for the purposes of determining
the benefit paid under the Plan, the Company reserves the right to invest its
assets, including any assets that may have been set aside for the purpose of
funding the benefits to be provided under the Plan, at its own discretion, and
such assets shall remain the property of the Company, subject to the claims of
its general creditors, and no Participant shall have any right to any portion of
such assets other than as an unsecured general creditor of the Company.
(d) At the discretion of the Committee, the Account of each
Participant may be deemed to be invested at all times in the same investment
alternatives and in the same proportions as the investments made with respect to
such Participant's accrued benefit under the 401(k) Plan.
4.3 FEES AND EXPENSES. Fees and expenses incurred by the Company in
connection with the Plan shall be ratably allocated and charged against
Participants' Accounts unless the Company, in its discretion, elects to pay some
or all such items without charging them against Participants' Accounts.
4.4 VESTING OF ACCOUNTS. Participants are fully vested in amounts
credited to their Accounts.
4.5 ACCOUNT STATEMENTS. Each Participant shall receive a statement of
his or her Account as soon as practicable after the end of each Plan Year, and
at such other times as the Committee determines to provide such statements.
ARTICLE V - ENTITLEMENT TO BENEFITS
5.1 COMMENCEMENT OF DISTRIBUTIONS. Distribution of a Participant's
Account shall be made or begin as soon as practicable after employment
terminates. Alternatively, the participant may
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elect at the time his Excess Deferral Election is submitted to the Committee to
receive payment on a specified date if such date occurs prior to the
Participant's termination of employment. A Participant shall also have the right
to elect to receive a distribution in a lump sum of his or her Account as soon
as practicable following a "Change of Control" if that occurs before the
Participant's Account has been completely distributed. For purposes of the Plan,
a "Change of Control" shall be deemed to occur if there has been a "Change of
Control" as that term is defined in the Capstone Pharmacy Services, Inc. 1995
Stock Option Plan, as amended, or any successor to such plan, or at the
discretion of the Board of Directors.
5.2 DEATH. A Participant's Account shall be paid to the Participant's
Beneficiary (or to the Participant's estate if no Beneficiary has been
designated) as soon as practicable after the Participant's Death in a single
lump sum.
5.3 HARDSHIP DISTRIBUTIONS. If a Participant incurs a financial
hardship, as hereinafter defined, the Participant may apply to the Committee for
a cash lump sum distribution of all or any part of his or her Account. The
Committee shall fully consider the circumstances of each such case, and shall
have the right to allow such distribution, to direct a distribution of part of
the amount requested, or to refuse to allow any distribution. Upon a finding of
financial hardship, the Committee shall make the appropriate distribution to the
Participant from amounts credited to the Participant's Account, and such Account
shall be reduced to reflect such distribution. Whether a Participant is entitled
to a distribution on account of financial hardship and the extent to which such
distribution shall be determined using the same standards as are applicable to
hardship distributions under the 401(k) Plan. In applying these financial
hardship standards, the Committee shall make its determination of hardship
assuming that a distribution from the Plan would be available to a Participant
before any distribution on account of hardship would be available from the
401(k) Plan. It is anticipated that any distribution on account of hardship
under the 401(k) Plan would also take into account the availability of a
distribution from the Plan prior to a distribution from the 401(k) Plan.
5.4 DISABILITY DISTRIBUTION. If the Participant becomes "Disabled" the
Participant's Account shall be distributed in substantially equal annual
installments over a ten (10) year period. For purposes of the Plan, "Disability"
shall mean a medically determinable physical or mental impairment that qualifies
as a "disability" for purposes of the Company's long term disability policy, if
any, in effect as of the date of determination, or a condition such that the
Participant qualifies as disabled for purposes of receiving Federal social
security long-term disability benefits.
5.5 METHOD OF PAYMENT. Except as otherwise specified in the Plan,
distributions made under the Plan shall be made in a cash lump sum or in
substantially equal annual installments over not more than ten (10) years. A
Participant's Accounts shall continue to be adjusted for gain or loss in
accordance with Section 4.2 until it is completely distributed. A Participant
shall elect the method under which his or her Account will be paid at the time
the Participant first files a Excess Deferral Election under the terms of the
Plan, and the length of time over which installments payments are to be made if
applicable.
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5.6 DISTRIBUTIONS PRIOR TO THE DESIGNATED BEGINNING DATE; FORFEITURE.
At any time prior to the date elected by the Participant for the distribution of
his or her Account to commence, a Participant may elect in writing to receive a
distribution of all or a portion of his or her Account in a single lump sum
payment; provided, however, that upon such election, the Participant shall
forfeit an amount equal to ten percent (10%) of the amount of the requested
distribution as of the Valuation Date applicable to the election, and provided,
further, that the distribution to you permitted pursuant to such an election
must not be less than $1,000 or the entire amount available to be distributed to
you, whichever is less. The Excess Deferral Election of any Participant who
receives a distribution under this section shall be treated as automatically
revoked immediately and such Participant shall not be permitted to make a
subsequent Excess Deferral Election until after the beginning of the Plan Year
first commencing after the date of such distribution, effective as of the first
day of the second Plan Year commencing after the date of such distribution.
ARTICLE VI - BENEFICIARIES; PARTICIPANT DATA
6.1 DESIGNATION OF BENEFICIARIES. Each Participant may designate the
person or persons (who may be named contingently) and or trusts for the benefit
of such persons to receive such benefits as may be payable under the Plan upon
the Participant's death. Each Beneficiary designation will revoke all prior
designations by the same Participant, shall be in a form prescribed by the
Committee, and will be effective only when filed in writing with the Committee
during the Participant's lifetime.
If a Participant dies without a valid Beneficiary designation,
the Company shall distribute the Participant's Account to the Participant's
estate. In determining the existence or identity of anyone entitled to a benefit
payment, the Committee may rely conclusively upon information supplied by the
Participant's personal representative, executor or administrator. If the
Committee does not receive adequate information, or if any question arises as to
the existence or identity of anyone entitled to receive a benefit payment, or if
a dispute arises with respect to any such payment, then, notwithstanding the
foregoing, the Committee, in its sole discretion, may distribute such payment to
the Participant's estate without liability for any tax or other consequences
which might flow therefrom, or may take such other action as the Committee deems
to be appropriate.
6.2 INFORMATION TO BE FURNISHED BY PARTICIPANTS AND BENEFICIARIES:
INABILITY TO LOCATE PARTICIPANTS OR BENEFICIARIES. Any communication addressed
to a Participant or to a Beneficiary at his or her last post office address as
shown on the Company's records, shall be binding on the Participant or
Beneficiary for all purposes of the Plan. The Company shall not be obliged to
search for any Participant or Beneficiary beyond sending a registered letter to
such last known address. If a Participant or Beneficiary fails to claim an
amount to which he or she is entitled to under the Plan within three (3) years
of the notice from the Company sent to the Participant's or Beneficiary's last
known address, then, except as otherwise required by law, the Committee may, in
its discretion, direct the Company to distribute to any one or more or all of
the Participant's next of kin, in such proportions as the Committee determines.
If neither the Participant nor any next of kin can be located, the Committee
shall have the right to direct that the amount payable shall be deemed to be a
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forfeiture to the Company, except that the dollar amount of the forfeiture,
unadjusted for gains or losses in the interim, shall be paid by the Company if a
claim for the benefit subsequently is made by the Participant or the Beneficiary
to whom it was payable. If a benefit payable to a missing Participant or
Beneficiary is subject to escheat pursuant to applicable state law, any payment
made in accordance with such law shall fully satisfy and discharge the Company's
obligations under this Plan.
ARTICLE VII - ADMINISTRATION
7.1 ADMINISTRATIVE AUTHORITY. The Committee shall administer the Plan.
The Committee shall have the power to take all actions and to make all decisions
and interpretations which may be necessary or appropriate in order to administer
and operate the Plan. All Committee decisions, interpretations, actions and
determinations with respect to the Plan shall be final and binding on all
parties. Without limiting the generality of the foregoing, the Committee shall
have the following specific powers, duties and responsibilities:
(a) To resolve and determine all disputes or questions arising
under the Plan, including the power to determine the rights of Eligible
Employees, Participants and Beneficiaries, and their respective benefits, and to
remedy any ambiguities, inconsistencies, or omissions in the Plan;
(b) To adopt such rules of procedure and regulations as in its
opinion may be necessary for the proper and efficient administration of the Plan
and as are consistent with the Plan;
(c) To implement the Plan in accordance with its terms and the
rules and regulations adopted as above;
(d) To make determinations concerning the eligibility of any
Eligible Employee as a Participant and make determinations concerning the
crediting and distribution of Plan Accounts;
(e) To appoint any persons or firms, or otherwise act to
secure specialized advise or assistance, as it deems necessary or desirable in
connection with the administration and operation of the Plan, and the Company
shall be entitled to rely conclusively upon, and shall be fully protected in any
action or omission taken by it in good faith reliance upon, the advice or
opinion of such firms or persons.
7.2 DELEGATION OF ADMINISTRATIVE FUNCTIONS. The Committee may delegate
from time to time by written instrument all or any part of its duties, powers or
responsibilities under the Plan, both ministerial and discretionary, as it deems
appropriate, to any person or committee, and in the same manner to revoke any
such delegation of duties, powers or responsibilities. Any action of such person
or committee in the exercise of such delegated duties, powers or
responsibilities shall have the same force and effect as if such action had been
taken by the Committee. The Committee shall not be liable for any act or
omission of any person to whom the Committee's duties, powers and
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responsibilities have been delegated, nor shall any person or committee to whom
or to which any duties, powers or responsibilities have been delegated have any
liabilities with respect to any duties, powers or responsibilities not delegated
to him, her or it, except to the extent required by law.
7.3 LITIGATION. In any action or judicial proceeding affecting the
Plan, it shall be necessary to join as a party only the Company. Except as may
be otherwise required by law, no Participant or Beneficiary shall be entitled to
any notice or service of process, and any final judgment entered in such action
shall be binding on all persons interested in, or claiming under, the Plan.
7.4 CLAIMS PROCEDURE. Any person claiming a benefit under the Plan ( a
"Claimant") shall present the claim, in writing, to the Committee and the
Committee shall respond in writing. If the claim is denied, the written notice
of denial shall state, in a manner calculated to be understood by the Claimant:
(a) The specific reason or reasons for denial, with specific
references to the Plan provisions on which the denial is based;
(b) A description of any additional material or information
necessary for the Claimant to perfect his or her claim and an explanation of why
such material or information is necessary; and
(c) An explanation of the Plan's claims review procedure.
The written notice denying or granting the Claimant's claim
shall be provided to the Claimant within ninety (90) days after the Committee's
receipt of the claim, unless special circumstances require an extension of time
for processing the claim. If such an extension is required, written notice of
the extension shall be furnished by the Committee to the Claimant within the
initial ninety (90) day period and in no event shall such an extension exceed a
period of ninety (90) days from the end of the initial ninety (90) day period.
Any extension notice shall indicate the special circumstances requiring the
extension and the date on which the Committee expects to render a decision on
the claim. Any claim not granted or denied within the period noted above shall
be deemed to have been denied.
Any Claimant whose claim is denied, or deemed to be denied
under the preceding sentence, (or such Claimant's authorized representative)
may, within sixty (60) days after the Claimant's receipt of notice of the
denial, or after the date of the deemed denial, request a review of the denial
by notice given, in writing, to the Committee. Upon such a request for review,
the claim shall be reviewed by the Committee (or its designated representative)
which may, but shall not be required to, grant the Claimant a hearing. In
connection with the review, the Claimant may have representation, may examine
pertinent documents, and may submit issues and comments in writing.
The decision on review normally shall be made within sixty
(60) days of the Committee's receipt of the request for review. If an extension
of time is required due to special circumstances, the Claimant shall be
notified, in writing, by the Committee, and the time limit for the
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<PAGE> 12
decision on review shall be extended to one hundred twenty (120) days. The
decision on review shall be in writing and shall state, in a manner calculated
to be understood by the Claimant, the specific reasons for the decision and
shall include references to the relevant Plan provision on which the decision is
based. The written decision on review shall be given to the Claimant within
sixty (60) days (or, if applicable, the one hundred twenty (120) day) time limit
discussed above. If the decision on review is not communicated to the Claimant
within the sixty (60) day (or, if applicable, the one hundred twenty (120) day)
period discussed above, the claim shall be deemed to have been denied upon
review. All decisions on review shall be final and binding with respect to all
concerned parties.
ARTICLE VIII - AMENDMENT
8.1 RIGHT TO AMEND. The Company reserves the right to amend the Plan by
action of its Board of Directors or by action of the Committee, and all
Participants, Beneficiaries and other interested parties shall be bound by any
such amendments; provided, however, that no amendment shall reduce the amount of
a Participant's Account or the Participant's rights therein as of the date of
the amendment.
8.2 AMENDMENT REQUIRED BY LAW. Notwithstanding the provisions of
Section 8.1, the Plan may be amended at any time, retroactively if required, if
the Committee finds it necessary to do so in order to ensure that the Plan is
characterized as a plan of deferred compensation maintained for a select group
of management or highly compensated employees, as described in ERISA Sections
201(2), 301(a)(3) and 401(a)(1), and to conform the Plan to the provisions and
requirements of any applicable law (including ERISA and the Code). No such
amendment shall be considered prejudicial to any interest of a Participant or a
Beneficiary hereunder.
ARTICLE IX - TERMINATION
9.1 COMPANY'S RIGHT TO TERMINATE OR SUSPEND PLAN. The Company reserves
the right, by action of its Board of Directors or by action of the Committee, to
terminate the Plan and/or its obligations to make further additions to the
Accounts maintained under the Plan on account of Elective Deferrals or to make
further adjustments to such Accounts on account of gain or loss under Section
4.2. If the Plan is terminated, all Accounts shall be distributed to
Participants as soon as practicable after the Plan terminates. The Company may
choose to terminate its obligation to credit Accounts prospectively with respect
to Elective Deferrals, while continuing to maintain the Plan. In such event, the
Company shall continue to give effect to all other applicable provisions of the
Plan, including those concerning adjustments to such Accounts on account of gain
or loss under Section 4.2.
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ARTICLE X - MISCELLANEOUS
10.1 LIMITATIONS ON LIABILITY OF EMPLOYER. Neither the establishment of
the Plan nor any modification thereof, nor the creation of any Account under the
Plan, nor the payment of any benefits under the Plan shall be construed as
giving to any Participant or other person any legal or equitable right against
the Company, or any officer or employee thereof, except as provided by law or by
any Plan provision. In no event shall the Company, or its employees or officers,
be liable for the failure of any Participant, Beneficiary or other person to be
entitled to any particular tax consequences with respect to the Plan or any
credit or contribution thereto or distribution therefrom.
10.2 CONSTRUCTION. If any provision of the Plan is held to be illegal
or void, such illegality or invalidity shall not affect the remaining provision
of the Plan, but shall be fully severable, and the Plan shall be construed and
enforced as if said illegal or invalid provisions had never been part of the
Plan. Where the context permits, the singular shall include the plural, and the
plural shall include the singular. Headings of Articles and Sections are
inserted only for convenience of reference and are not to be considered in the
construction of the Plan. The laws of the State of Maryland shall control the
Plan and all questions of law arising thereunder, except where those laws are
preempted by the laws of the United States.
10.3 NO RIGHT TO EMPLOYMENT. Participation under the Plan will not give
any Participant the right to be retained as an employee or otherwise in the
service of the Company or any affiliate of the Company.
10.4 UNFUNDED PLAN. The Plan is intended to be, and at all times shall
be interpreted and administered so as to qualify as, an unfunded plan of
deferred compensation. The rights of Participants and Beneficiaries to payments
under the Plan shall be those of general, unsecured, creditors of the Company
and shall not be secured by any trust, escrow or other arrangement; provided,
however, that the Company may, in its discretion, establish one or more trusts
for purposes of funding its obligations under this Plan as long as, in the
opinion of counsel to the Company, the establishment of such trust or trusts
will not cause the Plan to be considered "funded" for purposes of ERISA or the
Code or otherwise jeopardize the tax treatment of benefits hereunder. No
provision of this Plan shall be interpreted so as to give any individual any
right in any assets of the Company which is greater than the rights of any
general unsecured creditor of the Company.
10.5 SPENDTHRIFT PROVISION. No amount payable to a Participant or a
Beneficiary under the Plan will, except as otherwise specifically provided by
law, be subject in any manner to anticipation, alienation, attachment,
garnishment, sale, transfer, assignment (either at law or in equity), levy,
execution, pledge, encumbrance, charge or any other legal or equitable process,
and any attempt to do so will be void; nor will any benefit hereunder be in any
manner liable for or subject to the debts, contracts, liabilities, engagements
or torts of the person entitled thereto. Further, (i) the withholding of taxes
from Plan benefit payments, (ii) the recovery under the Plan of overpayments of
benefits previously made to a Participant or Beneficiary, (iii) if applicable,
the transfer of benefit rights from the Plan to another plan, or (iv) the direct
deposit of Plan benefit payments to an account in a
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<PAGE> 14
banking institution (if not actually part of an arrangement constituting an
assignment or alienation) shall not be construed as an assignment or alienation.
If any Participant's or Beneficiary's benefits hereunder are
garnished or attached by order of any court, the Company may bring an action for
a declaratory judgment in a court of competent jurisdiction to determine the
proper recipient of the benefits to be paid under the Plan. During the pendency
of said action, any benefits that become payable shall be held as credits to the
Participant's or Beneficiary's Account or, if the Company prefers, paid into the
court as they become payable, to be distributed by the court to the recipient as
it deems proper at the close of said action.
10.6 WITHHOLDING. A Participant or a Beneficiary under the Plan shall
make appropriate arrangements with the Company for satisfaction of any Federal,
state or local income tax withholding requirements and Social Security or other
tax requirements applicable to the accrual or payment of benefits under the
Plan. If no other arrangements are made, the Company may provide, at its
discretion, for any withholding and tax payments as may be required prior to
making any payment of benefits under the Plan.
IN WITNESS WHEREOF, the Company has caused the Plan to be
executed and its seal to be affixed hereto, effective as of
ATTEST/WITNESS: PHARMERICA, INC.
_______________________________ By: __________________________(SEAL)
Print Name: ___________________ Print Name: ___________________
Date: _________________________
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Exhibit 5.1
Consent of Harwell Howard Hyne Gabbert and Manner P.C.
November 19, 1997
Capstone Pharmacy Services, Inc.
9901 East Valley Ranch Parkway, Suite 3001
Irving, Texas 75063
Ladies and Gentlemen:
We have acted as special counsel to Capstone Pharmacy Services, Inc.
(the "Company") in connection with the registration of the Company's
Non-Qualifed Deferred Compensation Plan for Executives pursuant to a
registration statement on Form S-8, as filed with the Securities and Exchange
Commission (the "Registration Statement"). This firm hereby consents to the
filing of this opinion as an exhibit to the Registration Statement and with
agencies of such states and other jurisdictions as may be necessary in the
course of complying with the laws of such states and jurisdictions regarding the
offering and sale of the stock in accordance with the Registration Statement.
We have examined originals, or certified or photostatic copies of such
statutes, records, regulations, certificates of the officers of the Company and
of public officials, and such other information as we have deemed necessary for
purposes of rendering this opinion.
In stating our opinion, we have assumed: (i) that all signatures are
genuine, all documents submitted to us as originals are authentic, and all
documents submitted to us as copies conform to authentic original documents; and
(ii) that the parties to such documents have the legal right and power under all
applicable laws, regulations and agreements to enter into, execute, deliver and
perform their respective obligations thereunder.
On the basis of such review, but subject to the limitations expressed
herein, we are of the opinion, as of the date hereof, that the securities being
registered by the Registration Statement will, when sold as contemplated under
the Registration Statement, be legally issued, fully paid and non-assessable.
Our opinion herein is limited solely to the laws of the United States
of America and the corporate law of the State of Delaware. In rendering the
opinion set forth herein, we have relied upon the documents referenced above and
have made no independent verification or investigation of factual matters
pertaining thereto or to the Company. The opinion expressed herein is subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws now or hereafter in effect relating to or
affecting the rights of creditors generally, judicial discretion, and equitable
principles whether applied pursuant to a proceeding at law or in equity; and no
opinion is expressed with respect to the availability of equitable remedies.
Very truly yours,
HARWELL HOWARD HYNE
GABBERT & MANNER, P.C.
<PAGE> 1
Exhibit 5.2
Consent of Wolf, Block, Schorr and Solis-Cohen L.L.P.
November 19, 1997
Capstone Pharmacy Services, Inc.
9901 East Valley Ranch Parkway, Suite 3001
Irving, Texas 75063
RE: PharMerica, Inc. Non-Qualified Deferred Compensation
Plan for Executives
Ladies and Gentlemen:
We have acted as special counsel to Capstone Pharmacy Services, Inc.
(the "Company") in connection with the registration by the Company under the
Securities Act of 1933, as amended (the "1933 Act"), of obligations ("Deferred
Compensation Obligations") which may be incurred by the Company pursuant to the
PharMerica, Inc. Non-Qualified Deferred Compensation Plan for Executives (the
"Plan"), and the filing with the Securities and Exchange Commission (the
"Commission") of a registration statement on Form S-8 relating to the Deferred
Compensation Obligations (the "Registration Statement").
As such special counsel, we have made such legal and factual
examinations and inquiries as we have deemed necessary or appropriate for
purposes of this opinion, and have made such additional assumptions as are set
forth below.
The Plan document states that the Plan is being established to permit
eligible employees to defer the receipt of compensation otherwise payable to
such eligible employees in accordance with the terms of the Plan. The Plan is
unfunded and by its terms is maintained primarily for the purpose of providing
deferred compensation to a select group of management or highly compensated
employees. For the purpose of this opinion, we have assumed that the Plan was
duly adopted by the Company on September 28, 1997, to be effective for deferrals
of compensation after January 1, 1998. We have also assumed that the Plan will
be operated consistent with its terms and will only permit deferrals of
compensation by employees who consist exclusively of "a select group of
management or highly compensated employees" (as this phrase used for purposes of
the Employee Retirement Income Security Act of 1974, as amended, "ERISA").
By its express terms, the Plan potentially results in a deferral of
income by employees for periods extending to the termination of covered
employment or beyond. Accordingly, the Plan is an "employee pension benefit
plan" described in section 3(3) of ERISA. However, the Plan is unfunded and is
intended to be maintained primarily for the purpose of providing deferred
compensation benefits for a select group of management or highly compensated
employees. Assuming the Plan is operated consistent with its terms and the
assumptions noted above, the Plan will be subject to parts 1 and 5 of Title I of
ERISA, but will not be subject to any other provisions of ERISA.
The Plan is not designed or operated with the purpose of satisfying the
requirements for qualification under section 401(a) of the Internal Revenue Code
of 1986, as amended.
Parts 1 and 5 of Title I of ERISA do not impose any specific written
requirements on non-qualified deferred compensation arrangements such as the
Plan as a condition to compliance with the applicable provisions of ERISA.
Further, the operation of the Plan pursuant to the written provisions of the
Plan will not cause the Plan to fail to comply with parts 1 or 5 of Title I of
ERISA.
On the basis of the foregoing, we are of the opinion that the
provisions of the written document constituting the Plan comply with the
requirements of ERISA pertaining to such provisions.
This opinion letter is issued as of the date hereof and is limited to
the laws now in effect, and in all respects is subject to and may be limited by
future legislation, as well as by future case law. We assume no responsibility
to keep this opinion current or to supplement it to reflect facts or
circumstances which may hereafter come to our attention or any changes in laws
which may hereafter occur.
We hereby expressly consent to the filing of this opinion with the
Commission as an exhibit to the Registration Statement. In giving this consent,
we do not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the 1933 Act or the Rules and Regulations of the
Commission.
Very truly yours,
WOLF, BLOCK, SCHORR and SOLIS-COHEN LLP
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated March 14, 1997,
included in Capstone Pharmacy Services, Inc.'s Form 10-K for the year ended
December 31, 1996, and to all references to our Firm included in this
registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
November 21, 1997
Baltimore, Maryland
