<PAGE> 1
U N I T E D S T A T E S
S E C U R I T I E S A N D E X C H A N G E C O M M I S S I O N
W A S H I N G T O N, D C 2 0 5 4 9
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995
COMMISSION FILE NUMBER 1-10875
NOVACARE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3247827
(State of incorporation) (I.R.S. Employer Identification No.)
1016 W. Ninth Avenue, King of Prussia, PA 19406
(Address of principal executive office) (Zip code)
Registrant s telephone number: (610) 992-7200
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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
----- -----
As of October 31, 1995, NovaCare, Inc. had 65,540,194 shares of common
stock, $.01 par value, outstanding.
<PAGE> 2
NOVACARE, INC. AND SUBSIDIARIES
FORM 10-Q - QUARTER ENDED SEPTEMBER 30, 1995
INDEX
<TABLE>
<CAPTION>
PART NO. ITEM NO. DESCRIPTION PAGE NO.
--------- ---------- ----------- --------
<S> <C> <C> <C>
1 FINANCIAL INFORMATION
1 Financial Statements
- Condensed Consolidated Balance Sheets as of
September 30, 1995 and June 30, 1995
- Condensed Consolidated Statements of Operations
for the Three Months Ended September 30, 1995 and
1994
- Condensed Consolidated Statements of Cash Flows
for the Three Months Ended September 30, 1995 and
1994
- Notes to Condensed Consolidated Financial Statements
2 Management s Discussion and Analysis of Financial
Condition and Results of Operations
II OTHER INFORMATION
4 Submission of Matters to a Vote of Security Holders
6 Exhibits and Reports on Form 8-K
Signatures
</TABLE>
i
<PAGE> 3
NOVACARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 1995 and June 30, 1995
(In thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1995 1995
--------------- ---------------
<S> <C> <C>
ASSETS (Unaudited) (See Note 1)
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 115,845 $ 158,636
Accounts receivable, net of allowance at September 30, 1995
and at June 30, 1995 of $23,080 and $19,718,
respectively . . . . . . . . . . . . . . . . . . . . 191,712 192,652
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . 46,058 62,532
--------------- ---------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . 353,615 413,820
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . 66,146 63,659
Excess cost of net assets acquired, net . . . . . . . . . . . . . . . . 353,502 352,115
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,340 22,963
--------------- ---------------
$ 796,603 $ 852,557
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of financing arrangements . . . . . . . . . . . . . . . $ 32,099 $ 32,684
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . 71,022 93,088
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . 8,460 32,922
--------------- ---------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . 111,581 158,694
Financing arrangements, net of current portion . . . . . . . . . . . . . 190,545 192,331
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,404 13,897
--------------- ---------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . 316,530 364,922
--------------- ---------------
Stockholders' equity:
Common stock, $.01 par value; authorized 200,000 shares,
issued 65,540 shares at September 30, 1995 and 65,476
shares at June 30, 1995 . . . . . . . . . . . . . . . . . . . . . 656 656
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . 251,449 250,857
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . 246,152 238,149
--------------- ---------------
498,257 489,662
Less: Common stock in treasury (at cost), 2,208 shares at
September 30, 1995 and 187 shares at June 30, 1995 . . . (17,847) (1,614)
Deferred compensation . . . . . . . . . . . . . . . . . . . . . (337) (413)
--------------- ---------------
Total stockholders equity . . . . . . . . . . . . . . . . . . 480,073 487,635
--------------- ---------------
$ 796,603 $ 852,557
=============== ===============
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements
are an integral part of these statements.
<PAGE> 4
NOVACARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
----------------------------------
1995 1994
---------- -----------
<S> <C> <C>
Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 198,137 $ 230,810
Operating costs:
Salaries, wages and benefits . . . . . . . . . . . . . . . . . . 127,714 142,029
Rental expense . . . . . . . . . . . . . . . . . . . . . . . . . 6,818 8,932
Supply costs . . . . . . . . . . . . . . . . . . . . . . . . . . 6,022 5,399
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,184 39,840
Provision for uncollectible accounts . . . . . . . . . . . . . . 4,242 4,405
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . 5,206 4,400
Amortization of excess cost of net assets acquired . . . . . . . 2,454 2,739
---------- -----------
Income from operations . . . . . . . . . . . . . . . . . . . 15,497 23,066
Investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,904 851
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,340) (5,652)
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . (20) (154)
---------- -----------
Income before income taxes . . . . . . . . . . . . . . . . . 14,041 18,111
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,038 7,063
---------- -----------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,003 $ 11,048
========== ===========
Net income per share . . . . . . . . . . . . . . . . . . . . $ .12 $ .17
========== ===========
Weighted average number of shares outstanding . . . . . . . 65,593 65,389
========== ===========
</TABLE>
The accompanying Notes to Condensed Consolidated Financial
Statements are an integral part of these statements.
<PAGE> 5
NOVACARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
-------------------------------
1995 1994
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,003 $ 11,048
Adjustments to reconcile net income to net cash flows provided by
operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . 7,660 7,139
Minority interest . . . . . . . . . . . . . . . . . . . . . 20 154
Provision for uncollectible accounts . . . . . . . . . . . . 4,242 4,405
Deferred income taxes . . . . . . . . . . . . . . . . . . . 490 (830)
Changes in assets and liabilities, net of effects from acquisitions:
Accounts and notes receivable, net . . . . . . . . . . . (2,159) (17,167)
Other current assets . . . . . . . . . . . . . . . . . . (1,263) (709)
Accounts payable and accrued expenses . . . . . . . . . (20,543) 1,634
Income taxes payable . . . . . . . . . . . . . . . . . . 7,577 (2,441)
Other, net . . . . . . . . . . . . . . . . . . . . . . . 64 (273)
----------- -----------
Net cash flows provided by operating activities . . . . 4,091 2,960
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of available for sale securities . . . . . . -- 34,478
Sale of hospital operations . . . . . . . . . . . . . . . . . . . (13,208) --
Payments for businesses acquired, net of cash acquired . . . . . (7,165) (51,611)
Additions to property, equipment and capitalized software . . . . (7,795) (5,969)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (842)
----------- -----------
Net cash flows used in investing activities . . . . . . (28,168) (23,944)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from financing arrangements . . . . . . . . . . . . . . -- 40,952
Payment of financing arrangements . . . . . . . . . . . . . . . . (2,471) (29,781)
Net (payment for)/proceeds from common stock
purchased/issued . . . . . . . . . . . . . . . . . . . . . . . (16,243) 904
----------- -----------
Net cash flows provided by financing activities . . . . (18,714) 12,075
----------- -----------
Net decrease in cash and cash equivalents . . . . . . . . . . . . (42,791) (8,909)
Cash and cash equivalents, beginning of period . . . . . . . . . 158,636 38,024
----------- -----------
Cash and cash equivalents, end of period . . . . . . . . . . . . $ 115,845 29,115
=========== ===========
Supplemental disclosures of cash flow information:
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . $ 4,456 $ 6,919
=========== ===========
Income taxes paid, including $9,523 from recurring operations $ 38,723 $ 10,069
=========== ===========
</TABLE>
The accompanying Notes to Condensed Consolidated Financial
Statements are an integral part of these statements.
<PAGE> 6
NOVACARE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(In thousands)
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements of
NovaCare, Inc. (the Company ) are unaudited. The balance sheet as of June 30,
1995 is condensed from the audited balance sheet of the Company at that date.
These statements have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission and should be read in
conjunction with the Company's consolidated financial statements and the notes
thereto for the year ended June 30, 1995. Certain information and footnote
disclosures normally in the financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. In the opinion of Company management,
the condensed consolidated financial statements for the unaudited interim
periods presented include all adjustments (consisting of only normal recurring
adjustments) necessary to present a fair statement of the results for such
interim periods.
Operating results for the three-month period ended September 30, 1995
are not necessarily indicative of the results that may be expected for a full
year or any portion thereof. Effective April 1, 1995, the Company sold its
medical rehabilitation hospital division which contributed $34.6 million to
consolidated net revenues for the quarter ended September 30, 1994.
2. RESTRUCTURING LIABILITY
During the fourth quarter of fiscal 1995, the Company recorded a charge
of $29,875 for a productivity and cost reduction program in certain operations
of the Company, including costs to close certain contract services operations,
orthotic and prosthetic branches and outpatient centers in selected markets.
The program also contemplated consolidation of certain finance and other
administrative functions. At September 30, 1995, approximately $5,001 and
$5,739 remained accrued for employee severance costs and for lease termination
and other costs, respectively.
3. CONTINGENCIES
The Company is subject to legal proceedings and claims which arise in
the ordinary course of its business. In the opinion of management, the amount
of ultimate liability, if any, with respect to these actions will not have a
materially adverse affect on the financial position or results of operations of
the Company.
Certain purchase agreements require additional payments if specific
financial targets and non-financial conditions are met. Aggregate contingent
payments in connection with these acquisitions at September 30, 1995 of
approximately $32,348 in cash and 1,135 shares of common stock have not been
included in the initial determination of cost of the businesses acquired since
the amount of such contingent consideration, if any, is not presently
determinable. For the three months ended September 30, 1995 and September 30,
1994, the Company paid $6,851 and $5,053 in cash, respectively, and issued 42
and 72 shares, respectively, of common stock in connection with businesses
acquired in prior years.
<PAGE> 7
NOVACARE, INC AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1995 AND 1994
Net revenues for the three months ended September 30, 1995 decreased
from the prior year by $32.7 million or 14.2% to $198.1 million and earnings
before interest, taxes, depreciation, amortization and minority interest (
EBITDA ) decreased by $7.0 million or 23.3% to $23.2 million.
The principal reason for the net revenues decrease during this period
was the sale of the medical rehabilitation hospital division effective April 1,
1995; this division had net revenues of $34.6 in the first quarter of fiscal
1995. This was offset by (i) an increase in contract therapy services billable
hours of 105,298 hours, or 5.3%, combined with an aggregate decrease in net
revenue per billable hour of approximately 2.2%, (ii) an increase in outpatient
rehabilitation visits of 121,071 visits, or 26.3%, resulting primarily from the
full effect of 25 acquisitions in fiscal 1995, offset by an aggregate decrease
in net revenue per visit of 4% and (iii) an increase in O&P patients billed of
864, or 2.2%, combined with an aggregate increase in net revenue per patient of
6.2%. The decrease in outpatient rehabilitation net revenues per visit
reflects an increase in the penetration of managed care in this business. This
trend is expected to continue.
The decrease in EBITDA principally resulted from the sale of the
medical rehabilitation hospital division which recorded EBITDA of $6.0 million
in the first quarter of fiscal 1995 and an increase in the costs of contract
therapy and outpatient rehabilitation services as a percentage of net revenues.
The increases resulted primarily from (i) contract therapy services salary rate
increases for therapists despite an aggregate decrease in net revenues per
billable hour, (ii) a decrease in the percentage of billable hours in the
higher-margin speech-language pathology services and (iii) an increase in the
portion of outpatient rehabilitation services reimbursed by managed care payors
with attendant lower margins.
Depreciation and amortization for the three months ended September 30,
1995 increased by $521,000 as compared with the prior year, primarily due to
the full-year effect of acquisitions made during fiscal 1995 and the placing in
service of certain internally-developed software.
Interest expense, net of investment income, decreased $3.4 million
compared with the prior period principally as a result of the payoff of the
Company's credit facility and increased cash as a result of the medical
rehabilitation hospital division sale.
Income tax expense as a percentage of pre-tax income increased to 43%
for the three months ended September 30, 1995 from 39% for the previous year.
The increase in the rate principally resulted from higher non-deductible
goodwill.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1995, the Company's working capital decreased $13.1
million to $242.0 million compared with $255.1 million at June 30, 1995. The
decrease in working capital principally resulted from the purchase of
approximately 2.3 million shares of the Company s stock for approximately $18
million.
<PAGE> 8
NOVACARE, INC AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, Continued
The Company used $7.8 million of cash for capital expenditures during
the first three months of fiscal 1996 compared with $6.0 million in the first
three months of fiscal 1995. Capital expenditures generally relate to the
costs incurred in connection with internally-developed software and normal
leasehold renovations and equipment replacement. The Company anticipates
spending approximately $26.3 million for capital expenditures during the
remainder of fiscal 1996. In the first three months of fiscal 1996, the
Company also paid $7.2 million for acquisitions, principally relating to two
acquired outpatient rehabilitation centers, and earnout arrangements relating
to previous acquisitions.
In connection with the sale of the hospital division, the Company is in
the process of amending the credit facility, upon which no amounts are
currently drawn, to reflect the sale and other matters. At September 30, 1995,
commitment availability had been reduced by $6.3 million for issued letters of
credit.
The Company believes that the cash flows generated by the Company's
operations, together with its existing cash and availability of credit under
the credit facility, will be sufficient to meet the Company's short and
long-term cash needs.
<PAGE> 9
NOVACARE, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the three months ended September 30, 1995, the Company did not
submit any matters to a vote of security holders. On October 26, 1995, the
Company held its Annual Meeting of Stockholders for the fiscal year ended June
30, 1995. The following matters were submitted for vote:
1. The following individuals were nominated and elected to serve
as the directors of the Company:
John H. Foster For: 55,111,926
Withhold Authority: 1,287,095
Timothy E. Foster For: 55,113,616
Withhold Authority: 1,285,405
C. Arnold Renschler, M.D. For: 55,146,091
Withhold Authority: 1,252,930
E. Martin Gibson For: 55,146,091
Withhold Authority: 1,252,930
Siri S. Marshall For: 55,142,591
Withhold Authority: 1,256,430
Stephen E. O Neil For: 55,146,831
Withhold Authority: 1,252,190
George W. Siguler For: 55,145,911
Withhold Authority: 1,253,110
Robert G. Stone, Jr. For: 55,143,537
Withhold Authority: 1,255,484
Daniel C. Tosteson, M.D. For: 55,142,037
Withhold Authority: 1,256,984
2. The holders of 51,700,679 shares voted for, the holders of
4,162,375 shares voted against and the holders of 535,967 shares abstained with
respect to the approval of the grant to Timothy E. Foster, President and Chief
Operating Officer of the Company, of certain options to purchase shares of the
common stock, $.01 par value, of the Company.
3. The holders of 55,767,823 shares voted in favor of, the holders
of 477,532 shares voted against, and the holders of 153,666 shares abstained
with respect to the ratification of the selection of Price Waterhouse LLP,
independent certified public accountants, to serve as independent accountants
for the Company.
<PAGE> 10
NOVACARE, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION - Continued
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(A) EXHIBIT
NUMBER EXHIBIT DISCRIPTION PAGE NUMBER
------ ------------------- -----------
<S> <C> <C>
3 Bylaws of the Company, as amended to date.
10(a) Revolving Credit Facility Agreement Third Amendment dated as of May 15,
1995 by and among NovaCare and certain of its subsidiaries and PNC Bank,
N.A., First Union National Bank of North Carolina, Mellon Bank, N.A.,
Nationsbank, N.A. (Carolina), CoreStates Bank, N.A., NatWest Bank, N.A.,
and Fleet Bank of Massachusetts, N.A.
10(b) Revolving Credit Facility Agreement Fourth Amendment dated as of May 19,
1995 by and among NovaCare and certain of its subsidiaries and PNC Bank,
N.A., First Union National Bank of North Carolina, Mellon Bank, N.A.,
Nationsbank, N.A. (Carolina), CoreStates Bank, N.A., NatWest Bank, N.A.,
and Fleet Bank of Massachusetts.
27 Financial Data Schedule
</TABLE>
<PAGE> 11
NOVACARE, INC. AND SUBSIDIARIES
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.
NOVACARE, INC.
-------------------
(Registrant)
November 13, 1995 By/s/ Bruce J. Colburn
---------------------------------
Bruce J. Colburn,
Senior Vice President,
Chief Financial Officer and
Treasurer
<PAGE> 1
EXHIBIT 3
NOVACARE, INC.
--------------------
BY-LAWS
--------------------
As in effect on October 26, 1995
<PAGE> 2
NOVACARE, INC.
BY-LAWS
ARTICLE I
Offices
The registered office of the Corporation shall be in the City of Dover,
County of Kent, State of Delaware.
The Corporation may also have offices at such other places, both within
and without the State of Delaware, as may from time to time be designated by
the Board of Directors.
ARTICLE II
Books
The books and records of the Corporation may be kept (except as
otherwise provided by the laws of the State of Delaware) outside of the State
1
<PAGE> 3
of Delaware and at such place or places as may from time to time be designated
by the Board of Directors.
ARTICLE III
Stockholders
Section 1. Annual Meetings. The annual meeting of the stockholders
of the Corporation for the election of Directors and the transaction of such
other business as may properly come before said meeting shall be held at the
principal business office of the Corporation or at such other place or places
either within or without the State of Delaware as may be designated by the
Board of Directors and stated in the notice of the meeting, on the first Monday
of May in each year, if not a legal holiday, and, if a legal holiday, then on
the next day not a legal holiday, at 10:00 o'clock in the forenoon, or such
other day as shall be determined by the Board of Directors.
Written notice of the place designated for the annual meeting of the
stockholders of the Corporation shall be delivered personally or mailed to each
2
<PAGE> 4
stockholder entitled to vote thereat not less than ten (10) and not more than
sixty (60) days prior to said meeting, but at any meeting at which all
stockholders shall be present, or of which all stockholders not present have
waived notice in writing, the giving of notice as above described may be
dispensed with. If mailed, said notice shall be directed to each stockholder at
his address as the same appears on the stock ledger of the Corporation unless he
shall have filed with the Secretary of the Corporation a written request that
notices intended for him be mailed to some other address, in which case it shall
be mailed to the address designated in such request.
At an annual meeting of the stockholders, only such business shall be
conducted as shall have been brought before the meeting (a) pursuant to the
Corporation's notice of meeting, (b) by or at the direction of the Board of
Directors or (c) by any stockholder of the Corporation who is a stockholder of
record at the time of giving of the notice provided for in this By-Law, who
shall be entitled to vote at such meeting and who complies with the notice
procedures set forth in this By-Law.
For business to be properly brought before an annual meeting by a
stockholder pursuant to clause (c) of the preceding paragraph of this By-Law,
the stockholder must have given timely notice thereof in writing to the
Secretary of the Corporation.
3
<PAGE> 5
To be timely, a stockholder's notice must be delivered to or mailed and
received at the principal executive offices of the Corporation not less than
sixty (60) days nor more than ninety (90) days prior to the first anniversary
of the preceding year's annual meeting; provided, however, that in the event
that the date of the meeting is changed by more than thirty (30) days from such
anniversary date, notice by the stockholder to be timely must be received no
later than the close of business on the 10th day following the earlier of the
day on which notice of the date of the meeting was mailed or public disclosure
was made. A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the meeting (a) a brief
description of the business desired to be brought before the meeting and the
business reasons for conducting such business at the meeting, (b) the name and
address, as they appear on the Corporation's books, of the stockholder
proposing such business, and the name and address of the beneficial owner, if
any, on whose behalf the proposal is made, (c) the class and number of shares
of the Corporation which are owned beneficially and of record by such
stockholder of record and by the beneficial owner, if any, on whose behalf the
proposal is made and (d) any material interest of such stockholder of record
and the beneficial owner, if any, on whose behalf the proposal is made in such
business.
Notwithstanding anything in these By-Laws to the contrary, no business
shall be conducted at an annual meeting except in accordance with the
procedures set forth in this By-Law. The Chairman of the meeting shall, if the
facts warrant, determine and declare to the meeting that business was not
properly brought before
4
<PAGE> 6
the meeting and in accordance with the procedures prescribed by these By-Laws,
and if he should so determine, he shall so declare to the meeting and any such
business not properly brought before the meeting shall not be transacted.
Notwithstanding the foregoing provisions of this By-Law, a stockholder shall
also comply with all applicable requirements of the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder with respect to the
matters set forth in this By-Law.
Section 2. Special Meetings. Special meetings of the stockholders of
the Corporation shall be held whenever called in the manner required by the
laws of the State of Delaware for purposes as to which there are special
statutory provisions, and for other purposes whenever called by resolution of
the Board of Directors, or by the Chairman of the Board, or by the President of
the Corporation. Any such special meeting of stockholders may be held at the
principal business office of the Corporation or at such other place or places,
either within or without the State of Delaware, as may be specified in the
notice thereof. Business transacted at any special meeting of stockholders of
the Corporation shall be limited to the purposes stated in the notice thereof.
Except as otherwise expressly required by the laws of the State of
Delaware, written notice of each special meeting, stating the day, hour and
place, and in general terms the business to be transacted thereat, shall be
delivered personally or mailed to each stockholder entitled to vote thereat not
less than ten (10) and not more than sixty (60) days before the meeting. If
mailed, said notice shall be directed to each stockholder at his address as
the same appears on the stock ledger of the Corporation
5
<PAGE> 7
unless he shall have filed with the Secretary of the Corporation a written
request that notices intended for him be mailed to some other address, in which
case it shall be mailed to the address designated in said request. At any
special meeting at which all stockholders shall be present, or of which all
stockholders not present have waived notice in writing, the giving of notice as
above described may be dispensed with.
Section 3. List of Stockholders. The officer of the Corporation who
shall have charge of the stock ledger of the Corporation shall prepare and
make, at least ten (10) days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at said meeting, arranged in
alphabetical order and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 4. Quorum. At any meeting of the stockholders of the
Corporation, except as otherwise expressly provided by the laws of the State of
Delaware, the Certificate of Incorporation or these By-Laws, there must be
present, either in person or by proxy, in order to constitute a quorum,
stockholders owning a majority of the issued and outstanding shares of the
capital stock of the Corporation entitled to vote
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at said meeting. At any meeting of stockholders at which a quorum is not
present, the holders of, or proxies for, a majority of the stock which is
represented at such meeting, shall have power to adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the meeting as originally noticed. If the adjournment is
for more than thirty (30) days, or if after the adjournment a new record date
is fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
Section 5. Organization. The Chairman of the Board, or in his
absence the President, or in his absence any Vice President, shall call to
order meetings of the stockholders and shall act as chairman of such meetings.
The Board of Directors or the stockholders may appoint any stockholder or any
Director or officer of the Corporation to act as chairman of any meeting in the
absence of the Chairman of the Board, the President and all of the Vice
Presidents.
The Secretary of the Corporation shall act as secretary of all meetings
of the stockholders, but in the absence of the Secretary the presiding officer
may appoint any other person to act as secretary of any meeting.
Section 6. Voting. Except as otherwise provided in the Certificate
of Incorporation or these By-Laws, each stockholder of record of the
Corporation shall, at every meeting of the stockholders of the Corporation, be
entitled to one (1) vote for
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each share of stock standing in his name on the books of the Corporation on any
matter on which he is entitled to vote, and such votes may be cast either in
person or by proxy, appointed by an instrument in writing, subscribed by such
stockholder or by his duly authorized attorney, and filed with the Secretary
before being voted on, but no proxy shall be voted after three (3) years from
its date, unless said proxy provides for a longer period. If the Certificate
of Incorporation provides for more or less than one (1) vote for any share of
capital stock of the Corporation, on any matter, then any and every reference
in these By-Laws to a majority or other proportion of capital stock shall refer
to such majority or other proportion of the votes of such stock.
The vote on all elections of Directors and on any other questions before
the meeting need not be by ballot, except upon demand of any stockholder.
When a quorum is present at any meeting of the stockholders of the
Corporation, the vote of the holders of a majority of the capital stock
entitled to vote at such meeting and present in person or represented by proxy
shall decide any question brought before such meeting, unless the question is
one upon which, under any provision of the laws of the State of Delaware or of
the Certificate of Incorporation, a different vote is required in which case
such provision shall govern and control the decision of such question.
Section 7. Consent. Except as otherwise provided by the Certificate
of Incorporation, whenever the vote of the stockholders at a meeting thereof is
required or permitted to be taken in connection with any corporate action by
any provision of the laws of the State of Delaware or of the Certificate of
Incorporation, such corporate
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action may be taken without a meeting, without prior notice and without a vote,
if a consent in writing, setting forth the action so taken, shall be signed by
the holders of outstanding capital stock of the Corporation having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate action without
a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented thereto in writing.
Section 8. Judges. At every meeting of the stockholders of the
Corporation at which a vote by ballot is taken, the polls shall be opened and
closed, the proxies and ballots shall be received and taken in charge, and all
questions touching the qualifications of voters, the validity of proxies and
the acceptance or rejection of votes shall be decided by, two (2) judges. Said
judges shall be appointed by the Board of Directors before the meeting, or, if
no such appointment shall have been made, by the presiding officer of the
meeting. If for any reason any of the judges previously appointed shall fail
to attend or refuse or be unable to serve, judges in place of any so failing to
attend, or refusing or unable to serve, shall be appointed in like manner.
ARTICLE IV
Directors
Section 1. Number, Election and Term of Office. The business and
affairs of the Corporation shall be managed by the Board of Directors. The
number of Directors which shall constitute the whole Board shall be not less
than three (3) nor more than
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twelve (12). Within such limits, the number of Directors may be fixed from
time to time by vote of the stockholders or of the Board of Directors, at any
regular or special meeting, subject to the provisions of the Certificate of
Incorporation. Directors need not be stockholders. Directors shall be elected
at the annual meeting of the stockholders of the Corporation, except as
provided in Section 2 of this Article, to serve until the next annual meeting
of stockholders and until their respective successors are duly elected and have
qualified.
In addition to the powers by these By-Laws expressly conferred upon
them, the Board may exercise all such powers of the Corporation as are not by
the laws of the State of Delaware, the Certificate of Incorporation or these
By-Laws required to be exercised or done by the stockholders.
Section 2. Vacancies and Newly Created Directorships. Except as
hereinafter provided, any vacancy in the office of a Director occurring for any
reason other than the removal of a Director pursuant to Section 3 of this
Article, and any newly created Directorship resulting from any increase in the
authorized number of Directors, may be filled by a majority of the Directors
then in office or by a sole remaining Director. In the event that any vacancy
in the office of a Director occurs as a result of the removal of a Director
pursuant to Section 3 of this Article, or in the event that vacancies occur
contemporaneously in the offices of all of the Directors, such vacancy or
vacancies shall be filled by the stockholders of the Corporation at a meeting
of stockholders called for the purpose. Directors chosen or elected as
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aforesaid shall hold office until the next annual meeting of stockholders and
until their respective successors are duly elected and have qualified.
Section 3. Removals. At any meeting of stockholders of the
Corporation called for the purpose, the holders of a majority of the shares of
capital stock of the Corporation entitled to vote at such meeting may remove
from office, with or without cause, any or all of the Directors.
Section 4. Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such time and place, either within or
without the State of Delaware, as shall from time to time be determined by
resolution of the Board.
Section 5. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board or by the President or any
two Directors on notice given to each Director, and such meetings shall be held
at the principal business office of the Corporation or at such other place or
places, either within or without the State of Delaware, as shall be specified
in the notices thereof.
Section 6. Annual Meetings. The first meeting of each newly elected
Board of Directors shall be held as soon as practicable after each annual
election of Directors and on the same day, at the same place at which regular
meetings of the Board of Directors are held, or at such other time and place as
may be provided by resolution of the Board. Such meeting may be held at any
other time or place which shall be specified in a notice given, as hereinafter
provided, for special meetings of the Board of Directors.
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Section 7. Notice. Notice of any meeting of the Board of Directors
requiring notice shall be given to each Director by mailing the same, addressed
to him at his residence or usual place of business, at least forty-eight (48)
hours, or shall be sent to him at such place by facsimile transmission,
courier, telegraph, cable or wireless, or shall be delivered personally or by
telephone, at least twelve (12) hours, before the time fixed for the meeting.
At any meeting at which every Director shall be present or at which all
Directors not present shall waive notice in writing, any and all business may
be transacted even though no notice shall be given.
Section 8. Quorum. At all meetings of the Board of Directors, the
presence of one-third or more of the Directors constituting the Board shall
constitute a quorum for the transaction of business. Except as may be
otherwise specifically provided by the laws of the State of Delaware, the
Certificate of Incorporation or these By-Laws, the affirmative vote of a
majority of the Directors present at the time of such vote shall be the act of
the Board of Directors if a quorum is present. If a quorum shall not be
present at any meeting of the Board of Directors, the Directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 9. Consent. Unless otherwise restricted by the Certificate
of Incorporation or these By-Laws, any action required or permitted to be taken
at any meeting of the Board of Directors may be taken without a meeting, if all
members of the Board consent thereto in writing, and the writing or writings
are filed with the minutes of proceedings of the Board.
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Section 10. Telephonic Meetings. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, members of the Board of
Directors may participate in a meeting of the Board by means of conference
telephone or similar communications equipment by means of which all persons
participating in such meeting can hear each other, and participation in a
meeting pursuant to this Section 10 shall constitute presence in person at such
meeting.
Section 11. Compensation of Directors. Directors, as such, shall not
receive any stated salary for their services, but, by resolution of the Board,
a fixed sum and expenses of attendance, if any, may be allowed for attendance
at each regular or special meeting of the Board; provided that nothing herein
contained shall be construed to preclude any Director from serving the
Corporation in any other capacity and receiving compensation therefor.
Section 12. Resignations. Any Director of the Corporation may resign
at any time by giving written notice to the Board of Directors or to the
Chairman of the Board or to the President or the Secretary of the Corporation.
Any such resignation shall take effect at the time specified therein, or, if
the time be not specified, upon receipt thereof; and unless otherwise specified
therein, acceptance of such resignation shall not be necessary to make it
effective.
Section 13. Right to Advancement of Expenses. Any right to
indemnification conferred upon the Directors pursuant to the Certificate of
Incorporation of the Corporation, these By-Laws, the laws of the State of
Delaware or otherwise shall include the right to be paid by the Corporation the
expenses incurred in defending any
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action, suit or proceeding, whether civil, criminal, administrative or
investigative, in advance of its final disposition (hereinafter an "advancement
of expenses"); provided, however, that if the laws of the State of Delaware
require, an advancement of expenses incurred by a Director in his or her
capacity as a Director (and not in any other capacity in which service was or
is rendered by such Director) shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such Director, to repay all
amounts so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal that such Director is
not entitled to be indemnified for such expenses under this Section 13 or
otherwise. The right to advancement of expenses conferred in this Section 13
shall be a contract right and such right shall continue to any person entitled
to such right who has ceased to be a Director and shall inure to the benefit of
such person's heirs, executors and administrators.
Section 14. Nomination of Directors. Only persons who are nominated
in accordance with the procedures set forth in these By-Laws shall be eligible
to serve as Directors. Nominations of persons for election to the Board of
Directors of the Corporation may be made at a meeting of stockholders (a) by or
at the direction of the Board of Directors or (b) by any stockholder of the
Corporation who is a stockholder of record at the time of giving of notice
provided for in this By-Law, who shall be entitled to vote for the election of
Directors at the meeting and who complies with the notice procedures set forth
in this By-Law.
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Nominations by stockholders shall be made pursuant to timely notice in
writing to the Secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to or mailed and received at the principal executive
offices of the Corporation (a) in the case of an annual meeting, not less than
sixty (60) days nor more than ninety (90) days prior to the first anniversary
of the preceding year's annual meeting; provided, however, that in the event
that the date of the annual meeting is changed by more than thirty (30) days
from such anniversary date, notice by the stockholder to be timely must be so
received not later than the close of business on the 10th day following the
earlier of the day on which notice of the date of the meeting was mailed or
public disclosure was made, and (b) in the case of a special meeting at which
Directors are to be elected, not later than the close of business on the 10th
day following the earlier of the day on which notice of the date of the meeting
was mailed or public disclosure was made. Such stockholder's notice shall set
forth (a) as to each person whom the stockholder proposes to nominate for
election or reelection as a Director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
Directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a Director if elected); (b) as to the stockholder giving the notice
(i) the name and address, as they appear on the Corporation's books, of such
stockholder and (ii) the class and number of shares of the Corporation which
are beneficially owned by such stockholder and also which
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are owned of record by such stockholder; and (c) as to the beneficial owner, if
any, on whose behalf the nomination is made, (i) the name and address of such
person and (ii) the class and number of shares of the Corporation which are
beneficially owned by such person. At the request of the Board of Directors,
any person nominated by the Board of Directors for election as a Director shall
furnish to the Secretary of the Corporation that information required to be set
forth in a stockholder's notice of nomination which pertains to the nominee.
No person shall be eligible to serve as a Director of the Corporation
unless nominated in accordance with the procedures set forth in this By-Law.
The Chairman of the meeting shall, if the facts warrant, determine and declare
to the meeting that a nomination was not made in accordance with the procedures
prescribed by these By-Laws, and if he should so determine, he shall so declare
to the meeting and the defective nomination shall be disregarded.
Notwithstanding the foregoing provisions of this By-Law, a stockholder shall
also comply with all applicable requirements of the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder with respect to the
matters set forth in this By-Law.
ARTICLE V
Officers
Section 1. Number, Election and Term of Office. The officers of the
Corporation shall be a Chairman of the Board, a President, one or more Vice
Presidents, a Secretary and a Treasurer, and may at the discretion of the Board
of Directors include one or more Assistant Treasurers and Assistant
Secretaries. The
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officers of the Corporation shall be elected annually by the Board of Directors
at its meeting held immediately after the annual meeting of the stockholders,
and shall hold their respective offices until their successors are duly elected
and have qualified. Any number of offices may be held by the same person. The
Chairman of the Board may from time to time appoint such other officers and
agents as the interest of the Corporation may require and may fix their duties
and terms of office.
Section 2. Chairman of the Board. The Chairman of the Board shall be
the chief executive officer of the Corporation and shall have general and
active management of the business of the Corporation, and shall see that all
orders and resolutions of the Board are carried into effect. He shall ensure
that the books, reports, statements, certificates and other records of the
Corporation are kept, made or filed in accordance with the laws of the State of
Delaware. He shall preside at all meetings of the Board of Directors and at
all meetings of the stockholders. He shall cause to be called regular and
special meetings of the stockholders and of the Board of Directors in
accordance with these By-Laws. He may sign, execute and deliver in the name of
the Corporation all deeds, mortgages, bonds, contracts or other instruments
authorized by the Board of Directors, except in cases where the signing,
execution or delivery thereof shall be expressly delegated by the Board of
Directors or by these By-Laws to some other officer or agent of the Corporation
or where any of them shall be required by law otherwise to be signed, executed
or delivered. He may sign, with the Treasurer or an Assistant Treasurer, or
the Secretary or an Assistant Secretary, certificates of stock of the
Corporation. He shall appoint and remove,
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employ and discharge, and fix the compensation of all servants, agents,
employees and clerks of the Corporation other than the duly elected or
appointed officers, subject to the approval of the Board of Directors. In
addition to the powers and duties expressly conferred upon him by these
By-Laws, he shall, except as otherwise specifically provided by the laws of the
State of Delaware, have such other powers and duties as shall from time to time
be assigned to him by the Board of Directors.
Section 3. President. The President shall be the chief operating
officer, or, if the office of Chairman of the Board shall be vacant, the chief
executive officer of the Corporation. At the request of the Chairman of the
Board, or in the case of his absence or inability to act, or if the office of
Chairman of the Board shall be vacant, the President shall perform the duties
of the Chairman of the Board, and when so acting, shall have all the powers of
the Chairman of the Board. He may sign, with the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary, certificates of stock of
the Corporation. In addition to the powers and duties expressly conferred upon
him by these By-Laws, he shall, except as otherwise specifically provided by
the laws of the State of Delaware, have such other powers and duties as shall
from time to time be assigned to him by the Chairman of the Board or by the
Board of Directors.
Section 4. Vice Presidents. The Vice Presidents shall perform such
duties as the Chairman of the Board, the President or the Board of Directors
shall require. Any Vice President shall, during the absence or incapacity of
the President, assume and perform his duties.
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Section 5. Secretary. The Secretary may sign all certificates of
stock of the Corporation. He shall record all the proceedings of the meetings
of the Board of Directors and of the stockholders of the Corporation in books
to be kept for that purpose. He shall have custody of the seal of the
Corporation and may affix the same to any instrument requiring such seal when
authorized by the Board of Directors, and when so affixed he may attest the
same by his signature. He shall keep the transfer books, in which all
transfers of the capital stock of the Corporation shall be registered, and the
stock books, which shall contain the names and addresses of all holders of the
capital stock of the Corporation and the number of shares held by each; and he
shall keep such stock and transfer books open daily during business hours to
the inspection of every stockholder and for transfer of stock. He shall notify
the Directors and stockholders of their respective meetings as required by law
or by these By-Laws, and shall perform such other duties as may be required by
law or by these By-Laws, or which may be assigned to him from time to time by
the Board of Directors.
Section 6. Assistant Secretaries. The Assistant Secretaries shall,
during the absence or incapacity of the Secretary, assume and perform all
functions and duties which the Secretary might lawfully do if present and not
under any incapacity.
Section 7. Treasurer. The Treasurer shall have charge of the funds
and securities of the Corporation. He may sign all certificates of stock. He
shall keep full and accurate accounts of all receipts and disbursements of the
Corporation in books belonging to the Corporation and shall deposit all monies
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be
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designated by the Board of Directors. He shall disburse the funds of the
Corporation as may be ordered by the Board, and shall render to the Chairman of
the Board or the President or the Directors, whenever they may require it, an
account of all his transactions as Treasurer and an account of the business and
financial position of the Corporation.
Section 8. Assistant Treasurers. The Assistant Treasurers shall,
during the absence or incapacity of the Treasurer, assume and perform all
functions and duties which the Treasurer might lawfully do if present and not
under any incapacity.
Section 9. Treasurer's Bond. The Treasurer and Assistant Treasurers
shall, if required so to do by the Board of Directors, each give a bond (which
shall be renewed every six (6) years) in such sum and with such surety or
sureties as the Board of Directors may require.
Section 10. Transfer of Duties. The Board of Directors or the
Chairman of the Board in its or his absolute discretion may transfer the power
and duties, in whole or in part, of any officer to any other officer, or
persons, notwithstanding the provisions of these By-Laws, except as otherwise
provided by the laws of the State of Delaware.
Section 11. Vacancies. If the office of Chairman of the Board,
President, Vice President, Secretary or Treasurer, or of any other officer or
agent becomes vacant for any reason, the Board of Directors may choose a
successor to hold office for the unexpired term.
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Section 12. Removals. At any meeting of the Board of Directors called
for the purpose, any officer or agent of the Corporation may be removed from
office, with or without cause, by the affirmative vote of a majority of the
entire Board of Directors.
Section 13. Compensation of Officers. The officers shall receive such
salary or compensation as may be determined by the Board of Directors.
Section 14. Resignations. Any officer or agent of the Corporation may
resign at any time by giving written notice to the Board of Directors or to the
Chairman of the Board or the President or the Secretary of the Corporation.
Any such resignation shall take effect at the time specified therein or, if the
time be not specified, upon receipt thereof; and unless otherwise specified
therein, acceptance of such resignation shall not be necessary to make it
effective.
ARTICLE VI
Contracts, Checks and Notes
Section 1. Contracts. Unless the Board of Directors shall otherwise
specifically direct, all contracts of the Corporation shall be executed in the
name of the Corporation by the Chairman of the Board, the President or a Vice
President.
Section 2. Checks and Notes. All checks, drafts, bills of exchange
and promissory notes and other negotiable instruments of the Corporation shall
be signed by such officers or agents of the Corporation as may be designated by
the Board of Directors.
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ARTICLE VII
Stock
Section 1. Certificates of Stock. The certificates for shares of the
stock of the Corporation shall be in such form, not inconsistent with the
Certificate of Incorporation, as shall be prepared or approved by the Board of
Directors. Every holder of stock in the Corporation shall be entitled to have
a certificate signed by, or in the name of the Corporation by, the Chairman of
the Board, the President or a Vice President, and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary certifying the
number of shares owned by him and the date of issue; and no certificate shall
be valid unless so signed. All certificates shall be consecutively numbered
and shall be entered in the books of the Corporation as they are issued.
Where a certificate is countersigned (l) by a transfer agent other than
the Corporation or its employee, or, (2) by a registrar other than the
Corporation or its employee, any other signature on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
All certificates surrendered to the Corporation shall be cancelled and,
except in the case of lost or destroyed certificates, no new certificates shall
be issued until the
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former certificates for the same number of shares of the same class of stock
shall have been surrendered and cancelled.
Section 2. Transfer of Stock. Upon surrender to the Corporation or
the transfer agent of the Corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
ARTICLE VIII
Registered Stockholders
The Corporation shall be entitled to treat the holder of record of any
share or shares of stock as the holder in fact thereof and, accordingly, shall
not be bound to recognize any equitable or other claim to, or interest in, such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, save as expressly provided by the laws of the
State of Delaware.
ARTICLE IX
Lost Certificates
Any person claiming a certificate of stock to be lost or destroyed,
shall make an affidavit or affirmation of the fact and advertise the same in
such manner as the Board of Directors may require, and the Board of Directors
may, in its discretion, require the owner of the lost or destroyed certificate,
or his legal representative, to give the Corporation a bond in a sum
sufficient, in the opinion of the Board of Directors, to indemnify the
Corporation against any claim that may be made against it on account
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of the alleged loss of any such certificate. A new certificate of the same
tenor and for the same number of shares as the one alleged to be lost or
destroyed may be issued without requiring any bond when, in the judgment of the
Directors, it is proper so to do.
ARTICLE X
Fixing of Record Date
In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or to receive payment of any dividend or other distribution or allotment of any
rights, or to exercise any rights in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful action (other than
stockholder consent to corporate action in writing without a meeting), the
Board of Directors may fix, in advance, a record date, which shall not be more
than sixty (60) nor less than ten (10) days before the date of such meeting,
nor more than sixty (60) days prior to any other action (other than stockholder
consent to corporate action in writing without a meeting). A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned
meeting.
In order that the Corporation may determine the stockholders entitled to
consent to corporate action in writing without a meeting, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date
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shall not be more than ten (10) days after the date upon which the resolution
fixing the record date is adopted by the Board of Directors. Any stockholder
of record seeking to have the stockholders authorize or take corporate action
by written consent shall, by written notice to the Secretary, request the Board
of Directors to fix a record date. The Board of Directors shall promptly, but
in all events within ten (10) days after the date on which such a request is
received, adopt a resolution fixing the record date. If no record date has
been fixed by the Board of Directors within ten (10) days of the date on which
such a request is received, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting, when no
prior action by the Board of Directors is required by applicable law, shall be
the first date on which a signed written consent setting forth the action taken
or proposed to be taken is delivered to the Corporation by delivery to its
registered office in the State of Delaware, its principal place of business, or
any officer or agent of the Corporation having custody of the book in which
proceedings of stockholders meetings are recorded, to the attention of the
Secretary of the Corporation. Delivery shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the Board of Directors and prior action by the Board of Directors is required
by applicable law, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting shall be at the close
of business on the date on which the Board of Directors adopts the resolution
taking such prior action.
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ARTICLE XI
Dividends
Subject to the relevant provisions of the Certificate of Incorporation,
dividends upon the capital stock of the Corporation may be declared by the
Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock
of the Corporation, subject to the provisions of the Certificate of
Incorporation.
Before payment of any dividend, there may be set aside out of any funds
of the Corporation available for dividends such sums as the Directors from time
to time, in their absolute discretion, think proper as a reserve or reserves to
meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for such other purpose as the
Directors shall think conducive to the interest of the Corporation, and the
Directors may modify or abolish any such reserve in the manner in which it was
created.
ARTICLE XII
Waiver of Notice
Whenever any notice whatever is required to be given by statute or under
the provisions of the Certificate of Incorporation or these By-Laws, a waiver
thereof in writing signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be equivalent thereto.
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ARTICLE XIII
Seal
The corporate seal of the Corporation shall have inscribed thereon the
name of the Corporation, the year of its organization and the words "Corporate
Seal, Delaware."
ARTICLE XIV
Amendments
Subject to the provisions of the Certificate of Incorporation, these
By-Laws may be altered, amended or repealed or new By-Laws may be adopted by
the stockholders or by the Board of Directors, at any regular meeting of the
stockholders or of the Board of Directors or at any special meeting of the
stockholders or of the Board of Directors if notice of such alteration,
amendment or repeal of the By-Laws or of adoption of new By-Laws be contained
in the notice of such special meeting.
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EXHIBIT 10(a)
NOVACARE, INC.
1016 WEST NINTH AVENUE
KING OF PRUSSIA, PA 19406
May 15, 1995
PNC Bank, National Association,
as Agent
One PNC Plaza
Fifth Avenue and Wood Street
Pittsburgh, PA 15265
Attn: Frank A. Taucher
RE: Third Amendment and Waiver Under Credit Agreement ("Third
Amendment and Waiver")
Gentlemen:
We refer to that certain Credit Agreement, dated as of May 27, 1994,
as amended (the "Credit Agreement"), by and among NovaCare, Inc. ("NovaCare")
and certain of its Subsidiaries, the Banks party thereto and PNC Bank, National
Association, as agent for the Banks ("Agent"). Defined terms used herein, not
otherwise defined herein, shall have the meanings given to them under the
Credit Agreement.
The Borrowers and Guarantors, the Banks and the Agent hereby desire to
waive compliance with certain sections of the Credit Agreement and amend the
Credit Agreement as hereinafter provided;
The parties hereto in consideration of their mutual covenants and
agreements hereinafter set forth, and intending to be legally bound hereby,
covenant and agree as follows:
<PAGE> 2
AGREEMENT
I. Waiver.
Minimum Fixed Charge Coverage Ratio. For the fiscal
quarter of the Loan Parties ended March 31, 1995, Section
8.02(o) of the Credit Agreement provides that the Loan Parties
shall not permit the ratio of Consolidated Earnings Available
For Fixed Charges to Consolidated Fixed Charges to be less
than 2.5 to 1.0, and as indicated in the Compliance
Certificate of the Loan Parties for such fiscal quarter, such
ratio is 2.4 to 1.0 for the fiscal quarter ended March 31,
1995. The Loan Parties have requested that compliance with
Section 8.02(o) of the Credit Agreement be waived as of March
31, 1995 for the fiscal quarter then ended. The Banks hereby
waive compliance with Section 8.02(o) of the Credit Agreement
only for the fiscal quarter ended March 31, 1995. The Banks'
waiver is subject to the terms and conditions set forth in
Section IV of this Third Amendment and Waiver.
II. Amendment to Credit Agreement
The definition of Permitted Investment in Category 2
Excluded Entities contained in Section 1.01 of the Credit
Agreement is hereby amended by the deletion of the number
"$600,000", and in lieu thereof, the insertion of the number
"$950,000".
II. Representations, Covenants, Events of Default
The Borrowers and Guarantors hereby represent to the
Agent and the Banks that: the representations and warranties
contained in Article VI of the Credit Agreement or elsewhere
in the Credit Agreement or anywhere in the Loan Documents
remain true and accurate on and as of the date hereof (except
for representations and warranties which relate solely to an
earlier date or time, which representations and warranties
were true and correct on and as of the specific dates or times
referred to therein); the Borrowers and Guarantors have
performed and are in compliance with all covenants contained
in Article VIII of the Credit Agreement or elsewhere in the
Credit Agreement or anywhere in the Loan Documents, all after
giving effect to this Third Amendment and Waiver; and no Event
of Default or Potential Default has occurred and is
continuing.
<PAGE> 3
IV. Conditions of Effectiveness; Third Amendment and Waiver
Effective Date
The effectiveness of this Third Amendment and Waiver
is expressly conditioned upon the occurrence and completion of
all of the following: (i) the Agent's receipt of counterparts
of this Third Amendment and Waiver duly executed by the
Borrowers and Guarantors and the Required Banks; (ii) the
Agent's receipt of a certificate signed by the Secretary or
Assistant Secretary of the Borrowers and Guarantors,
certifying as to all action taken by the Borrowers and
Guarantors to authorize the execution, delivery and
performance of this Third Amendment and Waiver; and (iii) the
accuracy of the factual matters described above and in the
Compliance Certificates relating to the fiscal quarters ended
December 31, 1994 and March 31, 1995.
This Third Amendment and Waiver shall be dated as of
and shall be effective as of the date and year first above
written subject to satisfaction of all conditions precedent to
effectiveness as set forth in this Section IV (the "Third
Amendment and Waiver Effective Date"). If the conditions
precedent to effectiveness have not been satisfied on or
before June 15, 1995, this Third Amendment and Waiver shall be
null and void.
V. Consent of Required Banks
Pursuant to Section 11.01(c) of the Credit Agreement,
this Third Amendment and Waiver will require the written
consent of the Required Banks.
VI. Full Force and Effect
No novation is intended by this Third Amendment and
Waiver and except as expressly modified and amended by this
Third Amendment and Waiver, the Credit Agreement and the other
Loan Documents are hereby ratified and confirmed and shall
remain in full force and effect without modification.
VII. Costs, Expenses, Disbursements
The Borrowers hereby agree to reimburse the Agent and
the Banks on demand for all costs, expenses and disbursements
relating to this Third Amendment and Waiver which are payable
by the Borrowers as provided in Section 10.05 of the Credit
Agreement.
<PAGE> 4
VIII. Counterparts
This Third Amendment and Waiver may be executed by
different parties hereto in any number of separate
counterparts, each of which, when so executed and delivered,
shall be an original, and all of such counterparts shall
together constitute one and the same instrument.
IX. Governing Law
This Third Amendment and Waiver shall be deemed to be
a contract under the laws of the Commonwealth of Pennsylvania
and for all purposes shall be governed by and construed and
enforced in accordance with the internal laws of the
Commonwealth of Pennsylvania without regard to its conflict of
laws principles.
<PAGE> 5
Yours very truly,
NOVACARE, INC. and each of the
Borrowers and Guarantors under the
Credit Agreement
By: /s/ TIMOTHY E. FOSTER
--------------------------
Timothy E. Foster, President of
NovaCare, Inc. and Vice President
of each of the entities listed on
Schedule 6.01(c) other than those
listed below
By: /s/ JOSEPH C. O'NEILL
--------------------------
Joseph C. O'Neill, President of
each of the entities listed above
his name on the signature lines to
the Credit Agreement
By: /s/ ANDREW J. BECK
--------------------------
Andrew J. Beck, Vice President of
Mill River III, Inc., a Delaware
corporation
NovaCare Management Business Trust
By: /s/ WILLIAM J. MCGINNIS
--------------------------
Name: William J. McGinnis
Title: Secretary of NovaCare
Management Services, Inc., a
Delaware corporation and Trustee
of NovaCare Management
Business Trust
<PAGE> 6
ACKNOWLEDGED AND AGREED TO AS
OF THE 15th DAY OF May, 1995.
PNC BANK, NATIONAL ASSOCIATION,
as a Bank and as Agent
By: /s/ Frank Taucher
-------------------------------
Title: Vice President
----------------------------
CORESTATES BANK, N.A.
By: /s/ CRISTINA I. LOPEZ ONA
-------------------------------
Title: Commercial Officer
----------------------------
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By: /s/ JAMES F. YOUNG
-------------------------------
Title: Vice President
----------------------------
MELLON BANK, N.A.
By: /s/ CAROL PAIGE
-------------------------------
Title: Vice President
----------------------------
NATIONSBANK, N.A. (CAROLINAS)
By: /s/ ------
-------------------------------
Title: Vice President
----------------------------
NATWEST BANK N.A.
By: /s/ ------
-------------------------------
Title: Vice President
----------------------------
FLEET BANK OF MASSACHUSETTS, N.A.
By: /s/ AMY E. MILLER - FREDERICKS
-------------------------------
Title: Vice President
----------------------------
<PAGE> 1
EXHIBIT 10(b)
NOVACARE, INC.
1016 WEST NINTH AVENUE
KING OF PRUSSIA, PA 19406
May 19, 1995
PNC Bank, National Association,
as Agent
One PNC Plaza
Fifth Avenue and Wood Street
Pittsburgh, PA 15265
Attn: Frank A. Taucher
RE: Amendment and Waiver and Consent Under Credit Agreement to Sale
of Rehab Systems Company Stock (the "Waiver and Consent")
Dear Frank:
We refer to that certain Credit Agreement, dated as of May 27, 1994, as
amended (the "Credit Agreement"), by and among NovaCare, Inc. ("NovaCare") and
certain of its Subsidiaries, the Banks party thereto and PNC Bank, National
Association, as agent for the Banks ("Agent"). Defined terms used herein, not
otherwise defined herein, shall have the meanings given to them under the
Credit Agreement.
The Borrowers and Guarantors, the Banks and the Agent hereby desire to
consent to certain actions by the Borrowers and Guarantors, waive compliance
with certain sections of the Credit Agreement and amend the Credit Agreement,
as hereinafter provided;
The parties hereto in consideration of their mutual covenants and
agreements hereinafter set forth, and intending to be legally bound hereby,
covenant and agree as follows:
<PAGE> 2
AGREEMENT
I. Waivers and Consents.
NC Resources, Inc. ("NC") is a newly-formed, wholly-owned
Subsidiary of NovaCare, and is the record and beneficial owner of
all of the issued and outstanding shares of capital stock of
Rehab Systems Company ("RSC") and the other Subsidiaries listed
on Schedule 1 attached hereto and made a part hereof (the "RSC
Subsidiaries"). Pursuant to that certain Stock Purchase
Agreement dated February 3, 1995 by and among NovaCare, NC and
HealthSouth Corporation ("HealthSouth") (the "Stock Purchase
Agreement"), HealthSouth desires to purchase from NC all of the
issued and outstanding shares of capital stock of RSC and the RSC
Subsidiaries, now currently pledged to the Banks as Pledged
Collateral, for a cash purchase price of approximately
$215,000,000, subject to certain adjustments (the "Stock Sale"),
on the closing date as determined under the Stock Purchase
Agreement (the "Stock Purchase Closing Date"). The Banks hereby
consent to such Stock Sale and waive compliance with Section
8.02(e)(iv) of the Credit Agreement and consent to the
accompanying release of pledged stock of RSC and the RSC
Subsidiaries. The Banks hereby agree that, effective as of the
Stock Purchase Closing Date, and upon satisfaction of all
conditions of effectiveness under this Waiver and Consent, RSC
and the RSC Subsidiaries shall cease to be Guarantors under the
Loan Documents. The Banks' consent and waiver are subject to the
following terms and conditions.
II. Amendment to Credit Agreement.
NationsBank of North Carolina, N.A. has undergone a name
change and is now know as Nationsbank, N.A. (Carolinas).
Therefore, the parties hereto do hereby modify and amend the
Credit Agreement by deleting all references in the Credit
Agreement to NATIONSBANK OF NORTH CAROLINA, N.A. and inserting in
lieu thereof NATIONSBANK, N.A. (CAROLINAS).
National Westminster Bank, N.A. has undergone a name
change and is now know as NatWest Bank, N.A. Therefore, the
parties hereto do hereby modify and amend the Credit Agreement by
deleting all references in the Credit Agreement to NATIONAL
<PAGE> 3
WESTMINSTER BANK, N.A. and inserting in lieu thereof NATWEST
BANK, N.A.
II. Representations, Covenants, Events of Default
The Borrowers and Guarantors hereby represent to the
Agent and the Banks that: the representations and warranties
contained in Article VI of the Credit Agreement or elsewhere in
the Credit Agreement or anywhere in the Loan Documents remain
true and accurate on and as of the date hereof (except for
representations and warranties which relate solely to an earlier
date or time, which representations and warranties were true and
correct on and as of the specific dates or times referred to
therein); the Borrowers and Guarantors have performed and are in
compliance with all covenants contained in Article VIII of the
Credit Agreement or elsewhere in the Credit Agreement or anywhere
in the Loan Documents, all after giving effect to the Stock Sale
and this Waiver and Consent; and no Event of Default or Potential
Default has occurred and is continuing.
It is acknowledged and agreed that the parties are
entering into this Waiver and Consent to accommodate the time
constraints of the Borrowers and Guarantors under the Stock
Purchase Agreement. The Borrowers, Guarantors, the Agent and the
Banks have discussed the need for the amendment and restatement
of the Credit Agreement, and the other Loan Documents and,
therefore, in consideration of this Waiver and Consent, the
Borrowers and Guarantors hereby covenant and agree with the Agent
and the Banks that they will use their best efforts to, within
thirty (30) days from the Stock Purchase Closing Date, enter into
an amended and restated Credit Agreement, with the Agent and the
Banks, including the terms identified in that certain term sheet
dated March 21, 1995, and an amendment and restatement of certain
Schedules to the Credit Agreement and the other Loan Documents to
properly reflect the Stock Sale, which amendment and restatement
shall be in form and substance satisfactory to the Agent, the
Banks and Buchanan Ingersoll Professional Corporation, counsel to
the Agent.
The Borrowers and Guarantors hereby covenant to the Agent
and the Banks that the proceeds received by the Borrowers and
Guarantors pursuant to the Stock Sale shall be first used to
repay any and all outstanding obligations under the Credit
Agreement. Any excess proceeds shall be used by the Borrower and
the Guarantors, subject to any restrictions or limitations
contained in the Credit Agreement.
<PAGE> 4
IV. Conditions of Effectiveness; Waiver and Consent Effective Date
The effectiveness of this Waiver and Consent is expressly
conditioned upon the occurrence and completion of all of the
following: (i) the Agent's receipt of counterparts of this
Waiver and Consent duly executed by the Borrowers and Guarantors
and the Banks; (ii) the Agent's receipt of a certificate signed
by the Secretary or Assistant Secretary of the Borrowers and
Guarantors, certifying as to all action taken by the Borrowers
and Guarantors to authorize the execution, delivery and
performance of this Waiver and Consent; (iii) with respect to NC
and each other new Guarantor or new Borrower (a "Joining
Subsidiary"), documentation as required under Section 11.18 of
the Credit Agreement, including without limitation the completion
of the following: (1) executing and delivering to the Agent (A)
in the case of a Joining Subsidiary which becomes a Borrower, a
Revolving Credit Note in the form of Exhibit 1.01(R) payable to
each Bank, (B) a joinder to the Credit Agreement in form
satisfactory to the Agent, (C) a counterpart signature page to
the Guaranty Agreement executed by certain Loan Parties which is
in the form of Exhibit 1.01 (G)(1), in the case of a Joining
Subsidiary which becomes a Borrower, and Exhibit 1.01(G)(2), in
the case of a Joining Subsidiary which becomes a Guarantor, (D)
if it owns stock or other ownership interests in any Qualifying
Subsidiary, a joinder to the Pledge Agreement executed by certain
Loan Parties which is in the form of Exhibit 1.01(P)(4),
1.01(P)(5) or 1.01(P)(6), as applicable, and delivering, as
applicable, the original certificates evidencing such stock or
other ownership interest if it is certificated with appropriate
stock powers or other assignments signed in blank and UCC-1
financing statements necessary to perfect the security interests
of the Agent for the benefit of the Banks therein, (E) a joinder
to the Subordination Agreement (Intercompany) executed by certain
Loan Parties which is in the form of Exhibit 1.01(S) and (F) a
joinder to the Agency Agreement executed by certain Loan Parties
appointing NovaCare as agent; (2) delivering to the Agent an
opinion of counsel reasonably satisfactory to the Agent regarding
such Joining Subsidiary and such joinder; (3) delivering to the
Agent certified copies of its organizational documents and other
documents as requested by the Agent; and (4) the Loan Party which
owns the stock or other ownership interest of the Joining
Subsidiary shall execute and deliver to the Agent for the benefit
of the Banks a Pledge Agreement in the form of Exhibit
1.01(P)(4), 1.01(P)(5) or 1.01(P)(6), as applicable, and the
original certificates evidencing such stock or other ownership
interest if it is certificated with appropriate stock powers or
other assignments signed in blank and UCC-1 financing statements
necessary to perfect the security interests of the Agent for the
benefit
<PAGE> 5
of the Banks therein; (iv) the Agent's receipt of evidence
satisfactory to Agent that NovaCare has been released as a
guarantor, that NovaCare is not directly or indirectly obligated
in any way and that there is no recourse against any assets of
NovaCare or any subsidiary of NovaCare with respect to the
outstanding indebtedness of (1) West Virginia Rehabilitation
Services, Inc. in connection with bonds issued by Wood County,
West Virginia in the original principal amount of $9,220,000 and
(2) American Health Enterprises, Ltd. in connection with bonds
issued by Mercer County, West Virginia, in the original principal
amount of $9,400,000 on or before June 30, 1995; and (v) the
Stock Purchase Closing Date occurring on or before May 19, 1995.
This Waiver and Consent shall be dated as of and shall be
effective as of the date and year first above written subject to
satisfaction of all conditions precedent to effectiveness as set
forth in this Section III (the "Waiver and Consent Effective
Date"). If the conditions precedent to effectiveness have not
been satisfied on or before May 19, 1995, this Waiver and Consent
shall be null and void.
V. Consent of All Banks
Pursuant to Section 11.01(c) of the Credit Agreement, this
Waiver and Consent will require the written consent of all of the
Banks.
VI. Full Force and Effect
No novation is intended by this Waiver and Consent and
except as expressly modified and amended by this Waiver and
Consent, the Credit Agreement and the other Loan Documents are
hereby ratified and confirmed and shall remain in full force and
effect without modification.
VII. Costs, Expenses, Disbursements
The Borrowers hereby agree to reimburse the Agent and the
Banks on demand for all costs, expenses and disbursements
relating to this Waiver and Consent which are payable by the
Borrowers as provided in Section 10.05 of the Credit Agreement.
VIII. Counterparts
This Waiver and Consent may be executed by different
parties hereto in any number of separate counterparts, each of
which, when
<PAGE> 6
so executed and delivered, shall be an original, and all of such
counterparts shall together constitute one and the same
instrument.
IX. Governing Law
This Waiver and Consent shall be deemed to be a contract
under the laws of the Commonwealth of Pennsylvania and for all
purposes shall be governed by and construed and enforced in
accordance with the internal laws of the Commonwealth of
Pennsylvania without regard to its conflict of laws principles.
<PAGE> 7
Yours very truly,
NOVACARE, INC. and each of the
Borrowers and Guarantors under the
Credit Agreement
By: /s/ TIMOTHY E. FOSTER
--------------------------
Timothy E. Foster, President of
NovaCare, Inc. and Vice President
of each of the entities listed on
Schedule 6.01(c) other than those
listed below
By: /s/ JOSEPH C. O'NEILL
--------------------------
Joseph C. O'Neill, President of
each of the entities listed above
his name on the signature lines to
the Credit Agreement
By: /s/ ANDREW J. BECK
--------------------------
Andrew J. Beck, Vice President of
Mill River III, Inc., a Delaware
corporation
NovaCare Management Business Trust
By: /s/ WILLIAM J. MCGINNIS
--------------------------
Name: William J. McGinnis
Title: Secretary of NovaCare
Management Services, Inc., a
Delaware corporation and Trustee
of NovaCare Management
Business Trust
<PAGE> 8
ACKNOWLEDGED AND AGREED TO AS
OF THE 19th DAY OF May, 1995.
PNC BANK, NATIONAL ASSOCIATION,
as a Bank and as Agent
By: /s/ Frank Taucher
-------------------------------
Title: Vice President
----------------------------
CORESTATES BANK, N.A.
By: /s/ JENNIFER W. LEIBOWITZ
-------------------------------
Title: COMMERCIAL OFFICER
----------------------------
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By: /s/ JAMES F. YOUNG
-------------------------------
Title: AMP
----------------------------
MELLON BANK, N.A.
By: /s/ CAROL PAIGE
-------------------------------
Title: VICE PRESIDENT
----------------------------
NATIONSBANK, N.A. (CAROLINAS)
By: /s/ ------
-------------------------------
Title: VICE PRESIDENT
----------------------------
NATWEST BANK N.A.
By: /s/ ------
-------------------------------
Title: VICE PRESIDENT
----------------------------
FLEET BANK OF MASSACHUSETTS, N.A.
By: /s/ AMY E. MILLER - FREDERICKS
-------------------------------
Title: VICE PRESIDENT
----------------------------
<PAGE> 9
SCHEDULE 1
1. American Health Enterprises, Ltd. (incorporated in Pennsylvania),
qualified in West Virginia (Southern Hills).
2. Arizona Rehabilitation Hospital, Inc. (incorporated in Delaware),
qualified in Arizona (Valley of the Sun).
3. NovaCare Bakersfield Regional Rehabilitation Hospital, Inc.
(incorporated in Delaware), qualified in California (Bakersfield).
4. CRH, Inc. (incorporated in Maryland)(corporate shell).
5. NovaCare Easton & Moran Physical Therapy, Inc. (incorporated in
California)(outpatient clinics).
6. Medical Rehabilitation Corporation of Maryland (incorporated in
Maryland)(Chesapeake).
7. NovaCare Meridian Point Rehabilitation Hospital, Inc. (incorporated in
Arizona)(Meridian Point).
8. NovaCare Rehabilitation Hospital of North Texas, Inc. (incorporated in
Delaware), qualified in Texas (N. Texas).
9. NovaCare SMC, Inc. (incorporated in Maryland)(outpatient clinic).
10. Rehab Systems Company (incorporated in Delaware), qualified in Arizona,
California, Indiana, Maryland, New Jersey, Nevada, Pennsylvania, Texas,
Virginia and West Virginia.
11. Rehab Systems Financial Corporation (incorporated in Delaware)(shell
corporation).
12. Rehab World of West Virginia, Inc. (incorporated in West
Virginia)(outpatient clinic).
13. Rehabilitation Corporation of Virginia (incorporated in
Virginia)(Richmond).
14. Rehabilitation Hospital Corporation of America (incorporated in
Delaware), qualified in Pennsylvania.
15. NovaCare Tri-State Regional Rehabilitation Hospital, Inc. (incorporated
in Indiana)(Tri-State).
<PAGE> 10
16. Tucson Regional Rehabilitation Hospital, Inc. (incorporated in
Delaware), qualified in Arizona (Rehab Institute of Tucson).
17. West Virginia Rehabilitation Hospital, Inc. (incorporated in West
Virginia) (Mountain View).
18. West Virginia Rehabilitation Services, Inc. (incorporated in
Pennsylvania), qualified in West Virginia (Western Hills).
19. East Capital Rehabilitation Corporation (incorporated in Maryland)
(Bowie, MD CON)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1995 AND THE CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30,
1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS IN
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 115,845
<SECURITIES> 0
<RECEIVABLES> 214,792
<ALLOWANCES> 23,080
<INVENTORY> 11,530
<CURRENT-ASSETS> 353,615
<PP&E> 106,194
<DEPRECIATION> 40,048
<TOTAL-ASSETS> 796,603
<CURRENT-LIABILITIES> 111,581
<BONDS> 190,545
<COMMON> 656
0
0
<OTHER-SE> 479,417
<TOTAL-LIABILITY-AND-EQUITY> 796,603
<SALES> 0
<TOTAL-REVENUES> 198,137
<CGS> 0
<TOTAL-COSTS> 170,738<F1>
<OTHER-EXPENSES> 5,776<F2>
<LOSS-PROVISION> 4,242
<INTEREST-EXPENSE> 3,340
<INCOME-PRETAX> 14,041
<INCOME-TAX> 6,038
<INCOME-CONTINUING> 8,003
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,003
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
<FN>
<F1>"Total Costs" Consist of Salaries, wages and benefits, rental expense,
Supply costs and other.
</FN>
<FN>
<F2>"Other Expenses" Consist of depreciation, amortization of excess cost of net
assets acquired and minority interest net of investment income.
</FN>
</TABLE>
