<PAGE> 1
As filed with the Securities and Exchange Commission on
January 15, 1999. Subject to amendment.
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
NOVACARE, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 13-3247827
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
1016 West Ninth Avenue
King of Prussia, Pennsylvania 19406
(Address of principal executive offices)
NOVACARE, INC.
1998 STOCK OPTION PLAN
(Full title of the plan)
TIMOTHY E. FOSTER
Chief Executive Officer
NovaCare, Inc.
1016 West Ninth Avenue
King of Prussia, Pennsylvania 19406
(610) 992-7200
(Name, address and telephone number,
including area code, of agent for service)
Copy to:
RICHARD S. BINSTEIN, ESQ.
NovaCare, Inc.
1016 West Ninth Avenue
King of Prussia, Pennsylvania 19406
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the
Registration Statement becomes effective.
<PAGE> 2
2
CALCULATION OF REGISTRATION FEE
===============================================================================
<TABLE>
<CAPTION>
Proposed Proposed
Title of maximum maximum Amount of
securities to Amount to be offering price aggregate registration
be registered registered per share* offering price* fee**
------------- ------------ -------------- --------------- ------------
<S> <C> <C> <C> <C>
Common Stock 2,800,000 $2.8125 $7,875,000 $2,189.25
($.01 par
value)
</TABLE>
===============================================================================
* Estimated solely for purposes of calculating the registration fee on the
basis of the closing price of the Common Stock on January 13, 1999, as
reported on the New York Stock Exchange.
** Computed in accordance with Rule 457(h)(1).
<PAGE> 3
3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The Company hereby states that (i) the documents listed in (a)
through (d) below are incorporated by reference in this Registration Statement
and (ii) all documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended,
prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of filing of such
documents.
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1998.
(b) The Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998.
(c) The Company Current Report on Form 8-K dated July 9, 1998.
(d) The description of the Company's Common Stock contained in the
Company's registration statement on Form 8-A filed November 12, 1986.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
The legality of the securities registered hereunder has been passed
upon by Richard S. Binstein, Esq., Acting General Counsel to the Company. As of
January 14, 1999, Mr. Binstein owns 500 shares of the Company's Common Stock and
options to purchase 49,500 shares of the Company's Common Stock.
Item 6. Indemnification of Directors and Officers.
Under the provisions of Article SIXTH of the Certificate of
Incorporation of the Company, the Company is required to indemnify a director or
officer of the Company from and against any and all expenses and liabilities
that may be imposed upon or incurred by him in connection with, or as a result
of, any proceeding in which he may become involved, as a party or otherwise, by
reason of the fact that he is or was such a director, officer, employee or agent
of the Company, whether or not he continues to be such at the time such expenses
and liabilities shall have been imposed or incurred, to the extent permitted by
the laws of the State of Delaware, as they may be amended from time to time.
<PAGE> 4
4
Under the provisions of Article TWELFTH of the Certificate of
Incorporation of the Company, a director of the Company shall not have personal
liability to the Company or to any of its stockholders for monetary damages for
a breach of his fiduciary duty as a director, except as otherwise provided by
the laws of the State of Delaware.
Under the provisions of Article IV, Section 13 of the By-Laws of the
Company, directors are entitled to advancement of expenses incurred in defending
any actions against which they have a right of indemnification from the Company
provided that, if the laws of Delaware require, advancement of expenses may be
conditioned on an undertaking to repay if a final judicial decision is made that
the director is not entitled to indemnification.
The Company maintains indemnity insurance for its officers and
directors, insuring them against (i) expenses incurred by them in any proceeding
and (ii) any liabilities asserted against them in their capacities as officers
and/or directors of the Company.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
The Exhibits required to be filed as part of this Registration
Statement are listed in the attached Index to Exhibits.
Item 9. Undertakings.
The undersigned Registrant hereby undertakes, except as otherwise
specifically provided in the rules of the Securities and Exchange Commission
promulgated under the Securities Act of 1933:
(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 this Registration Statement (or the most recent
post-effective amendment hereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this Registration
Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if this
Registration Statement is on Form S-3 or Form S-8 and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant
<PAGE> 5
5
to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this 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; and
(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.
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 section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
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.
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.
<PAGE> 6
6
POWER OF ATTORNEY
The Registrant and each person whose signature appears below hereby
appoints John H. Foster, Timothy E. Foster and James W. McLane as
attorneys-in-fact with full power of substitution, severally, to execute in the
name and on behalf of the Registrant and each such person, individually and in
each capacity stated below, one or more post-effective amendments to this
Registration Statement as the attorney-in-fact acting in the premises deems
appropriate and to file any such amendment to this Registration Statement with
the Securities and Exchange Commission.
SIGNATURES
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 King of Prussia, Commonwealth of Pennsylvania on the
14th day of January, 1999.
NOVACARE, INC.
By: /s/ Timothy E. Foster
-------------------------------------
Timothy E. Foster
Chief Executive Officer and
Director
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
--------- ----- ----
<S> <C> <C>
/s/ John H. Foster Chairman of the Board January 14, 1999
- ------------------------------
John H. Foster
/s/Timothy E. Foster Chief Executive Officer January 14, 1999
- ------------------------------ and Director
Timothy E. Foster
/s/ James W. McLane President, Chief January 14, 1999
- ------------------------------ Operating Officer and
James W. McLane Director
/s/ Robert E. Healy, Jr. Sr. Vice President, January 14, 1999
- ------------------------------ Finance and
Robert E. Healy, Jr. Administration and
Chief Financial Officer
</TABLE>
<PAGE> 7
7
<TABLE>
<S> <C> <C>
/s/ Barry E. Smith Vice President, January 14, 1999
- ------------------------------ Controller and Chief
Barry E. Smith Accounting Officer
/s/ Peter O. Crisp Director January 14, 1999
- ------------------------------
Peter O. Crisp
/s/ E. Martin Gibson Director January 14, 1999
- ------------------------------
E. Martin Gibson
/s/ Siri S. Marshall Director January 14, 1999
- ------------------------------
Siri S. Marshall
/s/ Stephen E. O'Neil Director January 14, 1999
- ------------------------------
Stephen E. O'Neil
/s/ George W. Siguler Director January 14, 1999
- ------------------------------
George W. Siguler
/s/ Daniel C. Tosteson Director January 14, 1999
- ------------------------------
Daniel C. Tosteson
</TABLE>
<PAGE> 8
8
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated July 31, 1998, appearing on page 55 of
NovaCare, Inc.'s Annual Report on Form 10-K for the year ended June 30, 1998.
PRICEWATERHOUSECOOPERS LLP
Philadelphia, PA
January 11, 1999
<PAGE> 9
9
CONSENT OF COUNSEL
The consent of Richard S. Binstein, Esq., is contained in his
opinion filed as Exhibit 5 to this Registration Statement.
<PAGE> 10
10
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Number Description of Exhibit Page
- ------ ---------------------- ----
<S> <C> <C>
4 - NovaCare, Inc. 1998 Stock Option Plan 11
5 - Opinion of Richard S. Binstein, Esq. 21
23(i) - Consent of PricewaterhouseCoopers LLP, --
(see "Consent of Independent
Accountants" in the Registration
Statement)
23(ii) - Consent of Richard S. Binstein, Esq. --
(contained in Exhibit 5)
24 - Power of Attorney (see "Power of --
Attorney" in the Registration
Statement)
</TABLE>
<PAGE> 1
EXHIBIT 4
NOVACARE, INC.
1998 STOCK OPTION PLAN
<PAGE> 2
NOVACARE, INC.
1998 STOCK OPTION PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
<S> <C>
I. PURPOSE AND EFFECTIVE DATE.............. 1
II. DEFINITIONS............................. 1
III. ADMINISTRATION.......................... 3
IV. AWARDS.................................. 4
V. STOCK OPTIONS........................... 5
VI. GENERAL PROVISIONS...................... 6
VII. CHANGE IN CONTROL....................... 8
</TABLE>
<PAGE> 3
ARTICLE I - PURPOSE AND EFFECTIVE DATE
Section 1
SECTION 1.1. PURPOSE. The purpose of the Plan is to provide financial incentives
for selected members of management, certain key consultants and advisors and
members of the Board of the Company, thereby promoting the long-term growth and
financial success of the NovaCare Group by (i) attracting and retaining
individuals of outstanding ability, (ii) strengthening the NovaCare Group's
capability to develop, maintain, and direct a competent management team, (iii)
providing an effective means for participants to acquire and maintain ownership
of Company Stock, (iv) motivating participants to achieve long-range Performance
Goals and objectives and (v) providing incentive compensation opportunities
competitive with those of other major corporations.
SECTION 1.2. EFFECTIVE DATE AND EXPIRATION Of PLAN. Subject to shareholder
approval, the Plan is effective September 28, 1998. Unless earlier terminated by
the Board, the Plan shall terminate on the tenth anniversary of its Effective
Date. No Option shall be granted pursuant to the Plan after its termination
date, but exercise and payment of Options granted prior to the termination date
may extend beyond that date.
ARTICLE II - DEFINITIONS
The following words and phrases, as used in the Plan, shall have these
meanings:
Section 2
SECTION 2.1. "ACT" means the Securities Exchange Act of 1934, as amended.
SECTION 2.2. "BOARD" means the Board of Directors of the Company.
SECTION 2.3. "CHANGE IN CONTROL" means any of the following events:
(a) a "person" (meaning an individual, a partnership, or other group or
association as defined in Sections 13(d) and 14(d) of the Act), either (A)
acquires twenty percent (20%) or more of the combined voting power of the
outstanding securities of the Company having a right to vote in elections of
directors and such acquisition shall not have been approved within sixty (60)
days following such acquisition by a majority of the Continuing Directors then
in office or (B) acquires fifty percent (50%) or more of the combined voting
power of the outstanding securities of the Company having a right to vote in
elections of directors; or
(b) Continuing Directors shall for any reason cease to constitute a majority of
the Board; or
(c) all or substantially all of the business and/or assets of the Company is
disposed of by the Company to a party or parties other than a subsidiary or
other affiliate of the Company, pursuant to a partial or complete liquidation of
the Company, sale of assets (including stock of a subsidiary of the Company) or
otherwise; or
1
<PAGE> 4
(d) one or more of the Company's operating businesses are distributed to
shareholders by means of a spin-off, split-off, split-up, stock split, stock
dividend or other similar transaction, as determined by the Board of Directors.
Section 2.4. "CODE" means the Internal Revenue Code of 1986, as amended.
Section 2.5. "COMMITTEE" means the Compensation Committee of the Board. All
members of the Committee shall be "Outside Directors," as defined or interpreted
for purposes of Section 162(m) of the Code, and "Disinterested Persons," within
the meaning of Rule 16b-3 under the Act.
Section 2.6. "COMPANY" means NovaCare, Inc. and any successor corporation.
Section 2.7. "COMPANY STOCK" means common stock of the Company, or such other
class or kind of shares or other securities resulting from the application of
Section 6.2.
SECTION 2.8. "CONTINUING DIRECTOR" means a member of the Board who either was a
member of the Board on the Effective Date or who subsequently became a member
and whose election, or nomination of election, was approved by a vote of at
least two-thirds of the Continuing Directors then in office.
Section 2.9. "EFFECTIVE DATE" means September 28, 1998.
Section 2.10. "FAIR MARKET VALUE" means, as of any specified date, an amount
equal to the mean between the reported high and low prices of actual sales of
Company Stock on the New York Stock Exchange or, if no sale was made on such
date, on the last preceding day on which the Company Stock was traded.
Section 2.11. "GRANT DATE" means the date that an Option is granted to a
Participant, which shall be specified by the Committee in the applicable
Option Letter.
Section 2.12. "INCENTIVE STOCK OPTION" means an Option which meets the
requirements of Section 422 of the Code and which is designated as such in
the applicable Option Letter.
Section 2.13. "NONQUALIFIED STOCK OPTION" means an Option not intended to be an
Incentive Stock Option and designated as a Nonqualified Stock Option in the
applicable Option Letter.
Section 2.14. "NOVACARE GROUP" means the Company and any Subsidiary or Parent.
Section 2.15. "OPTION" means the right, granted from time to time under the
Plan, to purchase Company Stock for a specified period of time at a stated
price. An Option may be either a Nonqualified Stock Option or an Incentive Stock
Option.
Section 2.16. "OPTION LETTER" means a written confirmation of an Option under
the Plan furnished to the Participant.
Section 2.17. "OPTION PRICE" means the price at which Company Stock may be
purchased under an Option.
2
<PAGE> 5
Section 2.18. "PARENT" means a parent corporation of the Company within the
meaning of Section 425(e) of the Code.
Section 2.19. "PARTICIPANT" means (i) a member of the NovaCare Group's
management team who is an employee of any member of the NovaCare Group, (ii) an
advisor or consultant providing services to a member of the NovaCare Group,
(iii) a member of the Board or (iv) a non-continuing director of an acquired
company or a company with which the NovaCare Group combines and who does not
become an employee or director of the NovaCare Group, in each case, who is
designated by the Committee as eligible to participate in the Plan and who is
awarded an Option under the Plan. Unless otherwise determined by the Board, no
member of the Board who serves on the Committee shall be eligible to participate
in the Plan.
Section 2.20. "PERFORMANCE GOALS" means goals established by the Committee
pursuant to Article IV.
Section 2.21. "PERSONAL REPRESENTATIVE" means the person or persons who, upon
the death, disability, or incompetency of a Participant, shall have acquired, by
will or by the laws of descent and distribution or by other legal proceedings,
the right to exercise an Option theretofore granted to such Participant.
Section 2.22. "PLAN" means the NovaCare, Inc. 1998 Stock Option Plan.
Section 2.23. "SUBSIDIARY" means a corporation, domestic or foreign, the
majority of the voting stock of which is owned directly or indirectly by the
Company or a subsidiary corporation within the meaning of Section 425(f) of the
Code.
ARTICLE III - ADMINISTRATION
Section 3
SECTION 3.1. COMMITTEE TO ADMINISTER. The Plan shall be administered by the
Committee. The Committee shall have full power and authority to interpret and
administer the Plan and to establish and amend rules and regulations for its
administration. The Committee's decisions shall be final and conclusive with
respect to the interpretation of the Plan and any Option granted under it.
The Board shall designate one of the members of the Committee as its
Chairman. The Committee shall hold its meetings at such times and places as it
may determine which may include a meeting by conference telephone call held in
accordance with applicable law. Action may be taken without a meeting if written
consent thereto is given in accordance with applicable law. A majority of its
members shall constitute a quorum. All determinations of the Committee shall be
made by a majority of its members. Any decision or determination reduced to
writing and signed by all members shall be as effective as if it had been made
by a majority vote at a meeting duly called and held. The Committee may appoint
a secretary (who need not be a member of the Committee). No member of the
Committee shall be liable for any act or omission with respect to his service on
the Committee, if he acts in good faith and in a manner he reasonably believes
to be in or not opposed to the best interests of the Company. Service on the
Committee shall constitute service as a director of the Company for all
purposes.
3
<PAGE> 6
SECTION 3.2. POWERS OF COMMITTEE.
(a) Subject to the provisions of the Plan, the Committee shall have authority,
in its discretion, to determine those individuals who shall receive an Option,
the time or times when such Option shall be granted, the vesting schedule, if
any, for the Option and the type of Option to be granted and the number of
shares to be subject to each Option.
(b) The Committee shall determine and set forth in an Option Letter the terms of
each Option (which terms shall not be inconsistent with the terms of the Plan),
including such terms, restrictions, and provisions as shall be necessary to
cause certain options to qualify as Incentive Stock Options. The Committee may
correct any defect or supply any omission or reconcile any inconsistency in the
Plan or in any Option Letter relating to an Option, in such manner and to the
extent the Committee shall determine in order to carry out the purposes of the
Plan. The Committee may, in its discretion, accelerate the date on which any
Option may be exercised, if the Committee determines that to do so will be in
the best interests of the Company and the Participants in the Plan.
ARTICLE IV - AWARDS
Section 4
SECTION 4.1. SHARES AVAILABLE UNDER THE PLAN. The Company Stock to be offered
under the Plan will be authorized but unissued Company Stock or Company Stock
previously issued and outstanding and reacquired by the Company. Subject to
adjustment under Section 6.2, the total number of shares of Company Stock
available for Options under the Plan shall be 2,800,000. Any shares of Company
Stock tendered in exercise of an Option or subject to an Option that for any
reason is canceled or terminated without having been exercised shall again be
available for grants of Options under the Plan.
SECTION 4.2. LIMITATION ON AWARDS. The maximum number of shares for which
Options may be granted to any Participant in any one Fiscal Year shall not
exceed 500,000 shares.
SECTION 4.3. PERFORMANCE GOALS.
(a) Establishment of Goals. The Committee may establish, in writing, Performance
Goals, which shall be set forth in the applicable Option Letter.
(b) Criteria for Goals. Performance Goals will be comprised of specified annual
levels of one or more performance criteria as the Committee may deem
appropriate. Such goals may include, but shall not be limited to, earnings per
share, net earnings, operating earnings, unit volume, net sales, market share,
balance sheet measurements, revenue, cash flow, cash return on assets,
shareholder return, return on equity, return on capital or other value-based
performance measures. The Committee may disregard or offset the effect of any
special charges or gains, the cumulative effect of a change in accounting, or
the effect of other expenses or losses that are unusual in nature or infrequent
in occurrence, in determining the attainment of Performance Goals.
4
<PAGE> 7
ARTICLE V - STOCK OPTIONS
SECTION 5
SECTION 5.1. AWARD OF STOCK OPTIONS. The Committee may, from time to time,
subject to the limitations and provisions of the Plan and such terms and
conditions as the Committee may prescribe, grant Options to any Participant.
Each Option Letter shall state whether the Option is an Incentive Stock Option
or Nonqualified Stock Option.
SECTION 5.2. VESTING. Options granted under the Plan may be subject to a vesting
schedule set forth in the applicable Option Letter. Any restrictions and
conditions with respect to the time and method of vesting of Options shall be
prescribed by the Committee.
SECTION 5.3. OPTION PRICE. The Option Price of Company Stock under each Option
shall be determined by the Committee, but in the case of an Incentive Stock
Option shall be a price not less than 100 percent of the Fair Market Value of
Company Stock at the date such Option is granted. With respect to Incentive
Stock Options granted to a Participant who at the time such Option is granted
owns Company Stock possessing more than ten percent (10%) of the total combined
voting power of all classes of Company Stock, the Option Price of Company Stock
under such Option shall be a price not less than 110 percent of the Fair Market
Value of Company Stock at the date such Option is granted.
SECTION 5.4. OPTION PERIOD. Each Option granted shall expire ten (10) years from
its Grant Date, and shall be subject to earlier termination under the terms of
the Plan; provided, however, that if an Incentive Stock Option is granted to a
Participant who at the time such Option is granted owns Company Stock possessing
more than ten percent (10%) of the total combined voting power of all classes of
Company Stock, such Option shall not be exercisable in full or in part after the
expiration of five (5) years from the Grant Date.
SECTION 5.5. OPTION LETTER. Each Option shall be evidenced by a Option Letter.
SECTION 5.6. OPTION EXERCISE AND PAYMENT. Options may be exercised from time to
time by giving notice to the Company, or the agent of the Company, specifying
the number of shares to be purchased. The notice of exercise shall be
accompanied by payment in full of the Option Price in cash or a check payable to
the order of the Company or, at the Committee's discretion, the Option Price may
be paid in whole or in part through the transfer to the Company of shares of
Company Stock which has a Fair Market Value on the date of surrender equal to
the aggregate exercise price of the Company Stock as to which such Option shall
be exercised. For the purpose of assisting a Participant to exercise an Option,
the Company may make loans to the Participant or guarantee loans made by third
parties to the Participant, on such terms and conditions as the Board may
authorize. The Company shall not issue or transfer Company Stock upon exercise
of an Option until the Option Price is fully paid.
SECTION 5.7. PAYMENT OF TAXES. The Company shall have the power to withhold, or
require a Participant to remit to the Company, any federal, state, local or
foreign taxes required to be paid in connection with any Option, the exercise
thereof and the transfer of Company Stock pursuant to this Plan.
5
<PAGE> 8
SECTION 5.8. TERMINATION OF EMPLOYMENT. Unless otherwise specifically provided
in the terms of a Option Letter, an Option granted to a Participant who is a
employee of the NovaCare Group or a member of the Board may not be exercised
after the Participant has ceased to be in the full-time employ of the Company or
a member of the Board, except in the following circumstances:
(a) If the Participant's employment or service is terminated by action of the
Company, or by reason of disability or retirement under any retirement plan
maintained by the Company, the Option may be exercised by the Participant within
three months after such termination, but only as to any shares exercisable on
the date the Participant's employment so terminates;
(b) In the event of the death of the Participant during the three month period
after termination of employment or service covered by Section 5.8(a), the
Participant's Personal Representative shall have the remainder of such three
month period to exercise any Options which were exercisable by the Participant
at the time of his death;
(c) In the event of the death of the Participant while employed or while a
member of the Board, the Option shall thereupon become exercisable in full, and
the Participant's Personal Representative shall have a period of one year from
the date of the Participant's death to exercise such Option. The provisions of
the foregoing sentence shall apply to any outstanding Options which are
Incentive Stock Options to the extent permitted by Section 422A(b)(7) of the
Code and such outstanding Options in excess thereof shall, immediately upon the
occurrence of the event described in the foregoing sentence, be treated for all
purposes of the plan as Nonqualified Stock Options and shall be immediately
exercisable as such as provided in the foregoing sentence.
(d) If the Participant is not an employee or member of the Board and is a
non-continuing director of a company acquired by the Company or with which the
Company has combined and the Company has become obligated to grant Options to
such Participant as a result of such acquisition or combination.
SECTION 5.9. SHAREHOLDER RIGHTS AND PRIVILEGES. A Participant shall have no
rights as a shareholder with respect to any shares of Company Stock covered by
an Option until the issuance of shares to the Participant.
SECTION 5.10. REPRICING. Unless otherwise approved by a majority of the
shareholders of the Company, the Committee shall not adjust or amend the
exercise price of Options previously granted under the Plan, whether through
amendment, cancellation or replacement Options or any other means.
ARTICLE VI - GENERAL PROVISIONS
Section 6
SECTION 6.1. TRANSFERABILITY. Except as provided below, Options may not be
pledged, assigned or transferred for any reason during the Participant's
lifetime and any attempt to do so shall be void and the relevant Option shall be
forfeited. With the prior written approval of the Committee, a Nonqualified
Stock Option may, at the election of the Participant, be transferred to the
spouse or
6
<PAGE> 9
a descendant of the Participant, or a trust for the benefit of the spouse or
descendants. With the prior written approval of the Committee, an Option that
has been transferred to a spouse or a descendant of a Participant may be
subsequently transferred. The transferee of the Participant shall, in all cases,
be subject to the provisions of the applicable Option Letter. The rights of the
transferee shall in no event be greater than the rights of the Participant.
SECTION 6.2. ADJUSTMENTS UPON CHANGES IN STOCK. In the event of a
reorganization, recapitalization, stock split, stock dividend, combination of
shares, merger, consolidation, rights offering, or any other change in the
corporate structure or shares of the Company, the Committee shall make such
adjustments, if any, as it deems appropriate in the number and kind of shares
subject to the Plan, in the number and kind of shares covered by outstanding
Options, and in the Option price per share. The determinations and adjustments
made by the Committee pursuant to this Section 6.2 shall be conclusive.
SECTION 6.3. AMENDMENT, SUSPENSION, AND TERMINATION OF PLAN.
(a) The Board may suspend or terminate the Plan or any portion thereof at any
time.
(b) The Committee may amend the Plan from time to time in such respects as the
Committee may deem advisable in order that any Options thereunder shall conform
to any change in applicable laws or regulations or in any other respect the
Committee may deem to be in the best interests of the Company. No such
amendment, suspension, or termination shall alter or impair any outstanding
Options without the consent of the Participant adversely affected thereby.
(c) With the consent of the Participant adversely affected thereby, the
Committee may amend or modify any outstanding Options in any manner to the
extent that the Committee would have had the authority under the Plan initially
to grant such Options as so modified or amended, including without limitation,
to change the date or dates as of which such Options may be exercised.
SECTION 6.4. NONUNIFORM DETERMINATIONS. The Committee's determinations under the
Plan, including without limitation, (i) the determination of the Participants
eligible to receive Options, (ii) the form, amount, and timing of such Options,
(iii) the terms and provisions of such Options and (iv) the Option Letters
evidencing the same, need not be uniform and may be made by it selectively among
Participants who receive, or who are eligible to receive, Options under the
Plan, whether or not such Participants are similarly situated.
SECTION 6.5. GENERAL RESTRICTION. Each Option under the Plan shall be subject to
the condition that, if at any time the Committee shall determine that (i) the
listing, registration, or qualification of the shares of Company Stock subject
or related thereto upon any securities exchange or under any state or federal
law, (ii) the consent or approval of any government or regulatory body or (iii)
an agreement by the Participant with respect thereto, is necessary or desirable,
then such Option shall not become exercisable in whole or in part unless such
listing, registration, qualification, consent, approval, or agreement shall have
been effected or obtained free of any conditions not acceptable to the
Committee.
SECTION 6.6. NO RIGHT TO EMPLOYMENT. Neither the action of the Company in
establishing the Plan, nor any action taken by it or by the Board or the
Committee under the Plan, nor any provision of
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the Plan, shall be construed as giving to any person the right to be retained in
the employment or service of the Company or service as a member of the Board.
SECTION 6.7. EFFECTIVENESS OF PLAN. The Plan will not be made effective unless
approved by a majority of the votes cast by the stockholders of the Company at a
meeting of stockholders duly called and held for such purpose, and no Option
granted hereunder shall be exercisable prior to such approval.
SECTION 6.8. GOVERNING LAW. To the extent that Federal laws do not otherwise
control, the Plan and all determinations made and actions taken pursuant
hereto shall be governed by the laws of the State of Delaware without
reference to any conflict of laws principles.
VII - CHANGE IN CONTROL
SECTION 7
SECTION 7.1. EFFECT OF CHANGE ON OPTIONS. Subject to the Board's ability to
amend this Plan but notwithstanding any provision of this Plan to the contrary,
all outstanding Options shall become fully vested and exercisable in full upon a
Change of Control.
* * * * * *
To record the adoption of the Plan, NovaCare, Inc. has caused its
authorized officers to affix its corporate name and seal as of this 28th day
of September, 1998
[CORPORATE SEAL] NOVACARE, INC.
Attest:
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EXHIBIT 5
January 14, 1999
NovaCare, Inc.
1016 West Ninth Avenue
King of Prussia, Pennsylvania 19406
Gentlemen:
This opinion is furnished in connection with the registration
statement on Form S-8 (the "Registration Statement"), pursuant to the Securities
Act of 1993, as amended (the "Act"), filed by NovaCare, Inc., a Delaware
corporation (the "Company"), with respect to 2,800,000 shares (the "Shares") of
the common stock, $.01 par value, of the Company which have been offered or are
to be offered by the Company to employees of the Company pursuant to the
Company's 1998 Stock Option Plan (the "Plan").
As Acting General Counsel of the Company, I have acted as counsel in
connection with the registration of the Shares under the Act. I have examined
the Certificate of Incorporation of the Company and amendments thereto; the
By-Laws of the Company; such records of proceedings of the Company's Board of
Directors as I have deemed material; the Registration Statement; and such other
documents as I considered necessary for the purposes of this opinion.
Based upon and subject to the foregoing, I am of the opinion that
the Shares have been duly and validly authorized and, when issued and paid for
in accordance with the terms of the Plan and stock options duly granted
thereunder, will be validly issued, fully paid and non-assessable.
I understand that this opinion is to be used in connection with the
Registration Statement. I consent to the use of my name in the Registration
Statement and the filing of this opinion as an Exhibit to the Registration
Statement.
Sincerely,
/s/ Richard S. Binstein
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Richard S. Binstein
