<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 4, 1995
Registration No. 33-
==============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________
HORIZON/CMS HEALTHCARE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 91-1346899
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6001 INDIAN SCHOOL ROAD, N.E., SUITE 530
ALBUQUERQUE, NEW MEXICO 87110
(Address of principal executive offices, including zip code)
_________________
HORIZON/CMS HEALTHCARE CORPORATION 1995 STOCK INCENTIVE PLAN
HORIZON/CMS HEALTHCARE CORPORATION 1995 NON-EMPLOYEE
DIRECTORS' STOCK OPTION PLAN
(Full title of the plans)
COPIES TO:
SCOT SAUDER WILLIAM E. JOOR III
VICE PRESIDENT OF LEGAL AFFAIRS, VINSON & ELKINS L.L.P.
SECRETARY AND GENERAL COUNSEL 2300 FIRST CITY TOWER
HORIZON/CMS HEALTHCARE CORPORATION 1001 FANNIN
6001 INDIAN SCHOOL ROAD, N.E., SUITE 530 HOUSTON, TEXAS 77002-6760
ALBUQUERQUE, NM 87110 (713) 758-2582
(505) 881-4961
(Name, address and telephone number,
including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==================================================================================================
Title of Proposed maximum Proposed maximum
securities to be Amount to be offering price aggregate Amount of
registered registered per share(1) offering price(1) registration fee
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.001 per share(2)....... 5,700,000 $22.00 $125,400,000 $43,242
==================================================================================================
<FN>
(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(h) on the basis of the price of securities
of the same class, as determined in accordance with Rule 457(c), using
the average of the high and low prices reported on the New York Stock
Exchange for the Registrant's Common Stock on September 27, 1995.
(2) This Registration Statement also pertains to rights to purchase shares
of Series A Junior Participating Preferred Stock of the Registrant.
One right is attached to and trades with each share of Common Stock
of the Registrant. Until the occurrence of certain events, the
rights are not exercisable and will not be evidenced or transferred
apart from the Common Stock.
</TABLE>
==============================================================================
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents, which have been filed with the Securities
and Exchange Commission (the "Commission") by Horizon/CMS Healthcare
Corporation, a Delaware corporation (the "Company"), are incorporated herein
by reference and made a part hereof:
(a) Annual Report on Form 10-K for the fiscal year ended
May 31, 1995 (as amended by Amendment No. 1 on
Form 10-K/A dated October 3, 1995);
(b) Current Reports on Form 8-K dated June 23, 1995 (as
amended by Amendment No. 1 on Form 8-K/A dated August 8,
1995), July 25, 1995 and July 25, 1995 (as amended by
Amendment No. 1 on Form 8-K/A dated September 25, 1995
and Amendment No. 2 on Form 8-K/A dated September 26,
1995);
(c) Description of the Company's Common Stock, par value $.001
per share, contained in the Company's Registration Statement
on Form 8-A dated March 17, 1987, as amended by Amendment
No. 1 on Form 8-A/A dated June 23, 1994 and Amendment No. 2
on Form 8-A/A dated September 22, 1994; and
(d) Description of rights to purchase the Company's Series A
Junior Participating Preferred Stock, par value $.001 per
share, contained in the Company's Registration Statement
on Form 8-A dated September 16, 1994.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), subsequent to the effective date of this Registration
Statement, prior to the filing of a post-effective amendment to this
Registration Statement indicating that all securities offered hereby have
been sold or deregistering all securities then remaining unsold, shall be
deemed to be incorporated by reference herein and to be a part hereof from
the date of filing of such documents. Any statement contained herein or in
any document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this
Registration Statement to the extent that a statement contained in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed to constitute a part of this
Registration Statement, except as so modified or superseded.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
2
<PAGE>
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
None.
The audited consolidated financial statements and schedules of the
Company incorporated by reference in this Registration Statement, to the
extent and for the periods indicated in their reports, have been audited by
Arthur Andersen LLP, independent public accountants, and are included herein
in reliance upon the authority of said firm as experts in giving said reports.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Section 145 of the General Corporation Law of the State of
Delaware (the "DGCL"), a Delaware corporation has the power, under specified
circumstances, to indemnify its directors, officers, employees and agents in
connection with threatened, pending or completed actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in right of the corporation), brought against them by
reason of the fact that they were or are such directors, officers, employees
or agents, against expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred in any such action, suit or proceeding.
Article XIV of the Company's Restated Certificate of Incorporation together
with Article IX of its Bylaws provide for indemnification of each person who
is or was made a party to any actual or threatened civil, criminal,
administrative or investigative action, suit or proceeding because such
person is or was an officer or director of the Company or is a person who is
or was serving at the request of the Company as a director, officer, employee
or agent of another corporation or of a partnership, joint venture trust or
other enterprise, including service relating to employee benefit plans, to
the fullest extent permitted by the DGCL as it existed at the time the
indemnification provisions of the Company's Restated Certificate of
Incorporation and the Bylaws were adopted or as may be thereafter amended.
Article IX of the Company's Bylaws and Article XIV of its Restated
Certificate of Incorporation expressly provide that they are not the
exclusive methods of indemnification.
Article IX of the Bylaws and Article XIV of the Company's Restated
Certificate of Incorporation also provide that the Company may maintain
insurance, at its own expense, to protect itself and any director, officer,
employee or agent of the Company or of another entity against any expense,
liability or loss, regardless of whether the Company would have the power to
indemnify such person against such expense, liability or loss under the DGCL.
Section 102(b)(7) of the DGCL provides that a certificate of
incorporation may contain a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director (i) for
any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the DGCL (relating to liability for unauthorized acquisitions or
redemptions of, or dividends on, capital stock) or (iv) for any transaction
from which the director derived an improper personal benefit. Article XI of
the Company's Restated Certificate of Incorporation contains such a provision.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
3
<PAGE>
ITEM 8. EXHIBITS.
3.1 Restated Certificate of Incorporation of the Company dated
March 6, 1987, together with Certificate of Amendment of
Certificate of Incorporation dated January 6, 1992
(incorporated by reference to Exhibit 3.1 to the Company's
Annual Report on Form 10-K for the year ended May 31, 1994).
3.2 Certificate of Amendment of Restated Certificate of
Incorporation dated September 12, 1994 (incorporated by
reference to Exhibit 4.2 to the Company's Registration
Statement on Form S-8 filed with the Securities and Exchange
Commission on September 29, 1994).
3.3 Certificate of Amendment of Restated Certificate of
Incorporation dated July 6, 1995 (incorporated by
reference to Exhibit 4.2 to the Company's Registration
Statement on Form S-8 (Registration No. 33-61697)).
*3.4 Certificate of Amendment of Restated Certificate of
Incorporation dated September 28, 1995.
3.5 Certificate of Designation of Series A Junior Participating
Preferred Stock dated September 16, 1994 (incorporated by
reference to Exhibit 4.3 to the Company's Registration
Statement on Form S-8 filed with the Securities and Exchange
Commission on September 29, 1994).
3.6 Amended and Restated Bylaws of the Company dated as of
February 28, 1987, together with Amendment to Bylaws Section
9.1.1 dated August 30, 1993 (incorporated by reference to
Exhibit 3.2 to the Company's Annual Report on Form 10-K for
the year ended May 31, 1994).
3.7 Rights Agreement, dated as of September 15, 1994, between the
Company and Chemical Trust Company of California, as Rights
Agent, specifying the terms of the rights to purchase the
Company's Series A Junior Participating Preferred Stock, and
the exhibits thereto (incorporated by reference to Exhibit 1
to the Company's Registration Statement on Form 8-A dated
September 16, 1994).
*4.1 Horizon/CMS Healthcare Corporation 1995 Incentive Plan.
*4.2 Horizon/CMS Healthcare Corporation 1995 Non-Employee
Directors' Stock Option Plan.
*5.1 Opinion of Vinson & Elkins L.L.P.
23.1 Consent of Vinson & Elkins L.L.P. (set forth in Exhibit 5.1).
*23.2 Consent of Arthur Andersen LLP.
*23.3 Consent of Ernst & Young LLP.
*23.4 Consent of Price Waterhouse LLP.
24.1 Powers of Attorney (set forth on signature pages).
_______________
* Filed herewith.
4
<PAGE>
ITEM 9. UNDERTAKINGS
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, as amended (the "Securities Act");
(b) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information
set forth in this Registration Statement;
(c) 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)(a) and (1)(c) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for the purposes of determining any liability under
the Securities Act, each filing of the Company's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, 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 may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise,
the Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company 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 Company 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
Securities Act and will be governed by the final adjudication of such issue.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Company
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 Albuquerque, State of New Mexico, on October 3,
1995.
HORIZON/CMS HEALTHCARE CORPORATION
By: /s/ ERNEST A. SCHOFIELD
-----------------------------------
Ernest A. Schofield
Senior Vice President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Klemett L. Belt, Jr., Ernest A.
Schofield and Scot Sauder, or any of them, his true and lawful
attorney-in-fact and agent, with full power of substitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement, and to file the same with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and
ratifying and confirming all that said attorney-in-fact and agent or his
substitute or substitutes may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed by the following persons in the
capacities indicated on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ NEAL M. ELLIOTT President, Chief Executive Officer October 3, 1995
- ----------------------- and Chairman of the Board of
Neal M. Elliott Directors (Principal Executive
Officer)
/s/ KLEMETT L. BELT, JR. Director October 3, 1995
- -----------------------
Klemett L. Belt, Jr.
Director
- -----------------------
Russell L. Carson
/s/ BRYAN C. CRESSEY Director October 3, 1995
- -----------------------
Bryan C. Cressey
/s/ CHARLES H. GONZALES Director October 3, 1995
- -----------------------
Charles H. Gonzales
/s/ MICHAEL A. JEFFRIES Director October 3, 1995
- -----------------------
Michael A. Jeffries
/s/ GERARD M. MARTIN Director October 3, 1995
- -----------------------
Gerard M. Martin
/s/ FRANK M. McCORD Director October 3, 1995
- -----------------------
Frank M. McCord
6
<PAGE>
/s/ RAYMOND N. NOVECK Director October 3, 1995
- -----------------------
Raymond N. Noveck
/s/ ROCCO A. ORTENZIO Director October 3, 1995
- -----------------------
Rocco A. Ortenzio
/s/ ROBERT A. ORTENZIO Director October 3, 1995
- -----------------------
Robert A. Ortenzio
/s/ BARRY M. PORTNOY Director September 29, 1995
- -----------------------
Barry M. Portnoy
/s/ LEROY S. ZIMMERMAN Director October 3, 1995
- -----------------------
LeRoy S. Zimmerman
/s/ ERNEST A. SCHOFIELD Senior Vice President, Chief October 3, 1995
- ----------------------- Financial Officer and Chief
Ernest A. Schofield Accounting Officer (Principal
Financial and Accounting
Officer)
7
<PAGE>
EXHIBIT INDEX
Exhibit Sequentially
Number Description Numbered Page
------ ----------- -------------
3.1 Restated Certificate of Incorporation of the
Company dated March 6, 1987, together with
Certificate of Amendment of Certificate of
Incorporation dated January 6, 1992
(incorporated by reference to Exhibit 3.1 to
the Company's Annual Report on Form 10-K for
the year ended May 31, 1994).
3.2 Certificate of Amendment of Restated
Certificate of Incorporation dated September 12,
1994 (incorporated by reference to
Exhibit 4.2 to the Company's Registration
Statement on Form S-8 filed with the
Securities Exchange Commission on
September 29, 1994).
3.3 Certificate of Amendment of Restated
Certificate of Incorporation dated July 6,
1995 (incorporated by reference to Exhibit 4.2
to the Company's Registration Statement on
Form S-8 (Registration No. 33-61697)).
*3.4 Certificate of Amendment of Restated Certificate of
Incorporation dated September 28, 1995.
3.5 Certificate of Designation of Series A Junior
Participating Preferred Stock dated September 16,
1994 (incorporated by reference to
Exhibit 4.3 to the Company's Registration
Statement on Form S-8 filed with the
Securities Exchange Commission on
September 29, 1994).
3.6 Amended and Restated Bylaws of the Company
dated as of February 28, 1987, together with
Amendment to Bylaws Section 9.1.1 dated
August 30, 1993 (incorporated by reference to
Exhibit 3.2 to the Company's Annual Report on
Form 10-K for the year ended May 31, 1994).
3.7 Rights Agreement, dated as of September 15,
1994, between the Company and Chemical Trust
Company of California, as Rights Agent,
specifying the terms of the rights to
purchase the Company's Series A Junior
Participating Preferred Stock, and the
exhibits thereto (incorporated by reference
to Exhibit 1 to the Company's Registration
Statement on Form 8-A dated September 16,
1994).
*4.1 Horizon/CMS Healthcare Corporation 1995
Incentive Plan.
*4.2 Horizon/CMS Healthcare Corporation 1995
Non-Employee Directors' Stock Option Plan.
8
<PAGE>
*5.1 Opinion of Vinson & Elkins L.L.P.
23.1 Consent of Vinson & Elkins L.L.P. (set forth
in Exhibit 5.1).
*23.2 Consent of Arthur Andersen LLP.
*23.3 Consent of Ernst & Young LLP.
*23.4 Consent of Price Waterhouse LLP.
24.1 Powers of Attorney (set forth on signature
pages).
__________________
* Filed herewith.
9
<PAGE>
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
Horizon/CMS Healthcare Corporation, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
(the "DGCL"),
DOES HEREBY CERTIFY:
FIRST: that the Board of Directors of Horizon/CMS Healthcare Corporation
(the "Company") has duly adopted resolutions setting forth a proposed
amendment (the "Amendment") to the Restated Certificate of Incorporation of
the Company, declaring the Amendment to be advisable and calling for
consideration thereof at the 1995 Annual Meeting of Stockholders (the "Annual
Meeting").
SECOND: that the Amendment provides that Section 4 of the Article VII
of the Restated Certificate of Incorporation of the Company be amended and
restated in its entirety to read as follows:
4. The Board of Directors may, by resolution passed by 80% of the
then authorized number of directors, designate one or more committees,
each committee to consist of one or more of the directors of the
corporation, to exercise such powers and authority of the Board of
Directors in the management of the business and affairs of the
corporation as the directors may authorize in such resolution; PROVIDED,
HOWEVER, that no such committee shall have any power or authority to
amend this Amended and Restated Certificate of Incorporation, to
recommend to the stockholders a merger, consolidation or dissolution of
this corporation or a sale, lease or exchange of all or substantially
all of the corporation's assets or any amendment to the bylaws of this
corporation, or to declare a dividend. The Board of Directors may by the
affirmative vote of 80% of the then authorized number of directors, fill
any vacancies on any committee or remove any member thereof, either with
or without cause, at any time.
THIRD: That on September 27, 1995, the Annual Meeting was duly called
and held, upon notice and in accordance with Section 222 of the DGCL, at
which meeting the necessary number of shares as required by statute and the
Company's Restated Certificate of Incorporation were voted in favor of the
Amendment.
FOURTH: That the Amendment was duly adopted in accordance with the
provisions of Section 242 of the DGCL.
IN WITNESS WHEREOF, the Company has caused this Certificate to be
signed by Ernest A. Schofield, Senior Vice President, this 28th day of
September, 1995.
By: /s/ ERNEST A. SCHOFIELD
-----------------------------------
Ernest A. Schofield
Senior Vice President
<PAGE>
HORIZON/CMS HEALTHCARE CORPORATION
1995 STOCK INCENTIVE PLAN
I. PURPOSE
The purpose of the HORIZON/CMS HEALTHCARE CORPORATION 1995 STOCK INCENTIVE
PLAN (the "Plan") is to provide a means through which HORIZON/CMS HEALTHCARE
CORPORATION, a Delaware corporation (the "Company"), and its subsidiaries may
attract able persons to enter the employ of the Company and to provide a means
whereby those employees upon whom the responsibilities of the successful
administration and management of the Company rest, and whose present and
potential contributions to the welfare of the Company are of importance, can
acquire and maintain stock ownership, thereby strengthening their concern for
the welfare of the Company and their desire to remain in its employ. A further
purpose of the Plan is to provide such employees with additional incentive and
reward opportunities designed to enhance the profitable growth of the Company.
Accordingly, the Plan provides for granting Incentive Stock Options, options
which do not constitute Incentive Stock Options, Restricted Stock Awards, or any
combination of the foregoing, as is best suited to the circumstances of the
particular employee as provided herein.
II. DEFINITIONS
The following definitions shall be applicable throughout the Plan unless
specifically modified by any paragraph:
(a) "AWARD" means, individually or collectively, any Option or Restricted
Stock Award.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended. Reference in
the Plan to any section of the Code shall be deemed to include any amendments or
successor provisions to such section and any regulations under such section.
(d) "COMMITTEE" means not less than two members of the Board who are
selected by the Board as provided in Paragraph IV(a).
(e) "COMMON STOCK" means the common stock, par value $.001 per share, of the
Company.
(f) "COMPANY" means Horizon/CMS Healthcare Corporation.
(g) "DIRECTOR" means an individual elected to the Board by the stockholders
of the Company or by the Board under applicable corporate law who is serving on
the Board on the date the Plan is adopted by the Board or is elected to the
Board after such date.
(h) An "EMPLOYEE" means any person (including a Director) in an employment
relationship with the Company or any parent or subsidiary corporation (as
defined in section 424 of the Code).
(i) "FAIR MARKET VALUE" means, as of any specified date, the mean of the
high and low sales prices of the Common Stock (i) reported by the National
Market System of NASDAQ on that date or (ii) if the Common Stock is listed on a
national stock exchange, reported on the stock exchange composite tape on that
date; or, in either case, if no prices are reported on that date, on the last
preceding date on which such prices of the Common Stock are so reported. If the
Common Stock is traded over the counter at the time a determination of its fair
market value is required to be made hereunder, its fair market value shall be
deemed to be equal to the average between the reported high and low or closing
bid and asked prices of Common Stock on the most recent date on which Common
Stock was publicly traded. In the event Common Stock is not publicly traded at
the time a determina-tion of its value is required to be made hereunder, the
determination of its fair market value shall be made by the Committee in such
manner as it deems appropriate.
1
<PAGE>
(j) "HOLDER" means an employee who has been granted an Award.
(k) "INCENTIVE STOCK OPTION" means an incentive stock option within the
meaning of section 422 of the Code.
(l) "1934 ACT" means the Securities Exchange Act of 1934, as amended.
(m) "OPTION" means an Award granted under Paragraph VII of the Plan and
includes both Incentive Stock Options to purchase Common Stock and Options which
do not constitute Incentive Stock Options to purchase Common Stock.
(n) "OPTION AGREEMENT" means a written agreement between the Company and a
Holder with respect to an Option.
(o) "PLAN" means the Horizon Healthcare Corporation 1995 Stock Incentive
Plan, as amended from time to time.
(p) "RESTRICTED STOCK AGREEMENT" means a written agreement between the
Company and a Holder with respect to a Restricted Stock Award.
(q) "RESTRICTED STOCK AWARD" means an Award granted under Paragraph VIII of
the Plan.
(r) "RULE 16B-3" means SEC Rule 16b-3 promulgated under the 1934 Act, as
such may be amended from time to time, and any successor rule, regulation or
statute fulfilling the same or a similar function.
(s) "STOCK APPRECIATION RIGHT" shall have the meaning assigned to such term
in Paragraph VII(d) of the Plan.
III. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan shall become effective upon the date of its adoption by the Board,
provided the Plan is approved by the shareholders of the Company within twelve
months thereafter. Notwithstanding any provision in the Plan, in any Option
Agreement or in any Restricted Stock Agreement, no Option shall be exercisable
and no Restricted Stock Award shall vest prior to such shareholder approval. No
further Awards may be granted under the Plan after ten years from the date the
Plan is adopted by the Board. The Plan shall remain in effect until all Awards
granted under the Plan have been satisfied or expired.
IV. ADMINISTRATION
(a) COMPOSITION OF COMMITTEE. The Plan shall be administered by a committee
which shall be (i) appointed by the Board, (ii) constituted so as to permit the
Plan to comply with Rule 16b-3, and (iii) constituted solely of two or more
"outside directors," within the meaning of section 162(m) of the Code and
applicable interpretive authority thereunder. No member of the Committee shall
be eligible to receive an Award under the Plan and no person who has received an
Award in the preceding year shall be eligible to serve on the Committee.
(b) POWERS. Subject to the express provisions of the Plan, the Committee
shall have authority, in its discretion, to determine which employees shall
receive an Award, the time or times when such Award shall be made, whether an
Incentive Stock Option or nonqualified Option shall be granted, and the number
of shares to be subject to each Option or Restricted Stock Award. In making such
determinations the Committee shall take into account the nature of the services
rendered by the respective employees, their present and potential contribution
to the Company's success and such other factors as the Committee in its
discretion shall deem relevant.
(c) ADDITIONAL POWERS. The Committee shall have such additional powers as
are delegated to it by the other provisions of the Plan. Subject to the express
provisions of the Plan, this shall include the power to construe the Plan and
the respective agreements executed hereunder, to prescribe rules and regulations
relating to the Plan, and to determine the terms, restrictions and provisions of
the
2
<PAGE>
agreement relating to each Award, including such terms, restrictions and
provisions as shall be requisite in the judgment of the Committee to cause
designated Options to qualify as Incentive Stock Options, and to make all other
determinations necessary or advisable for administering the Plan. The Committee
may correct any defect or supply any omission or reconcile any inconsistency in
the Plan or in any agreement relating to an Award in the manner and to the
extent it shall deem expedient to carry it into effect. The determinations of
the Committee on the matters referred to in this Paragraph IV shall be
conclusive.
V. GRANT OF OPTIONS AND RESTRICTED STOCK AWARDS;
SHARES SUBJECT TO THE PLAN
(a) STOCK GRANT AND AWARD LIMITS. The Committee may from time to time grant
Awards to one or more employees determined by it to be eligible for
participation in the Plan in accordance with the provisions of Paragraph VI.
Subject to Paragraph IX, the aggregate number of shares of Common Stock that may
be issued under the Plan shall not exceed 5,000,000 shares. Shares shall be
deemed to have been issued under the Plan only (i) to the extent actually issued
and delivered pursuant to an Award, or (ii) to the extent an Award is settled in
cash. To the extent that an Award lapses or the rights of its Holder terminate,
any shares of Common Stock subject to such Award shall again be available for
the grant of an Award to the extent permitted under Rule 16b-3. Notwithstanding
any provision in the Plan to the contrary, the maximum number of shares of
Common Stock that may be subject to Awards granted to any one individual during
the term of the Plan as provided in Paragraph III hereof may not exceed
5,000,000 (subject to adjustment in the same manner as provided in Paragraph IX
hereof with respect to shares of Common Stock subject to Awards then
outstanding). The limitation set forth in the preceding sentence shall be
applied in a manner which will permit compensation generated in connection with
the exercise of Options and Stock Appreciation Rights to constitute
"performance-based" compensation for purposes of section 162(m) of the Code,
including, without limitation, counting against such maximum number of shares,
to the extent required under section 162(m) of the Code and applicable
interpretive authority thereunder, any shares subject to Options or Stock
Appreciation Rights that are cancelled or repriced.
(b) STOCK OFFERED. The stock to be offered pursuant to the grant of an
Award may be authorized but unissued Common Stock or Common Stock previously
issued and outstanding and reacquired by the Company.
VI. ELIGIBILITY
Awards may be granted only to persons who, at the time of grant, are
employees. Awards may not be granted to any Director who is not an employee. An
Award may be granted on more than one occasion to the same person, and, subject
to the limitations set forth in the Plan, such Award may include an Incentive
Stock Option, an Option which is not an Incentive Stock Option, a Restricted
Stock Award, or any combination thereof.
VII. STOCK OPTIONS
(a) OPTION PERIOD. The term of each Option shall be as specified by the
Committee at the date of grant.
(b) LIMITATIONS ON EXERCISE OF OPTION. An Option shall be exercisable in
whole or in such installments and at such times as determined by the Committee.
(c) SPECIAL LIMITATIONS ON INCENTIVE STOCK OPTIONS. To the extent that the
aggregate Fair Market Value (determined at the time the respective Incentive
Stock Option is granted) of Common Stock with respect to which Incentive Stock
Options granted after 1986 are exercisable for the first time by an individual
during any calendar year under all incentive stock option plans of the Company
and its parent and subsidiary corporations exceeds $100,000, such Incentive
Stock Options shall be treated as
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options which do not constitute Incentive Stock Options. The Committee shall
determine, in accordance with applicable provisions of the Code, Treasury
Regulations and other administrative pronouncements, which of a Holder's
Incentive Stock Options will not constitute Incentive Stock Options because of
such limitation and shall notify the Holder of such determination as soon as
practicable after such determination. No Incentive Stock Option shall be granted
to an individual if, at the time the Option is granted, such individual owns
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company or of its parent or subsidiary corporation, within the
meaning of section 422(b)(6) of the Code, unless (i) at the time such Option is
granted the option price is at least 110% of the Fair Market Value of the Common
Stock subject to the Option and (ii) such Option by its terms is not exercisable
after the expiration of five years from the date of grant.
(d) OPTION AGREEMENT. Each Option shall be evidenced by an Option Agreement
in such form and containing such provisions not inconsistent with the provisions
of the Plan as the Committee from time to time shall approve, including, without
limitation, provisions to qualify an Incentive Stock Option under section 422 of
the Code. Each Option Agreement shall provide that the Option may not be
exercised, subject to Paragraph IX, earlier than six months from the date of
grant and shall specify the effect of termination of employment on the
exercisability of the Option. An Option Agreement may provide for the payment of
the option price, in whole or in part, by the delivery of a number of shares of
Common Stock (plus cash if necessary) having a Fair Market Value equal to such
option price. Moreover, an Option Agreement may provide for a "cashless
exercise" of the Option by establishing procedures whereby the Holder, by a
properly-executed written notice, directs (i) an immediate market sale or margin
loan respecting all or a part of the shares of Common Stock to which he is
entitled upon exercise pursuant to an extension of credit by the Company to the
Holder of the option price, (ii) the delivery of the shares of Common Stock from
the Company directly to a brokerage firm, and (iii) the delivery of the option
price from sale or margin loan proceeds from the brokerage firm directly to the
Company. In addition, an Option Agreement may authorize the Committee, in its
discretion and on such terms and conditions as the Committee in its sole
discretion may prescribe, to direct the Company to loan to the Holder the funds
necessary to pay all or any portion of the option price and related tax
withholding obligations owned by the Holder to the Company upon exercise of the
Option; provided, however, that (i) the Holder shall have personal liability to
make the payments required under such loan and (ii) such loan shall be
structured so that it will not constitute a "below-market loan" within the
meaning of section 7872 of the Code. Further, an Option Agreement may provide
for the surrender of the right to purchase shares under the Option in return for
a payment in cash or shares of Common Stock or a combination of cash and shares
of Common Stock equal in value to the excess of the Fair Market Value of the
shares with respect to which the right to purchase is surrendered over the
option price therefor ("Stock Appreciation Rights"), on such terms and
conditions as the Committee in its sole discretion may prescribe; provided, that
with respect to Stock Appreciation Rights granted to employees who are subject
to Section 16 of the 1934 Act, except as provided in Subparagraph IX(c) hereof,
the Committee shall retain final authority (i) to determine whether a Holder
shall be permitted, or (ii) to approve an election by a Holder, to receive cash
in full or partial settlement of Stock Appreciation Rights. In the case of any
such Stock Appreciation Right that is granted in connection with an Incentive
Stock Option, such right shall be exercisable only when the Fair Market Value of
the Common Stock exceeds the price specified therefor in the Option or the
portion thereof to be surrendered. The terms and conditions of the respective
Option Agreements need not be identical.
(e) OPTION PRICE AND PAYMENT. The price at which a share of Common Stock
may be purchased upon exercise of an Option shall be determined by the Committee
but, subject to adjustment as provided in Paragraph IX, (i) in the case of an
Incentive Stock Option, such purchase price shall not be less than the Fair
Market Value of a share of Common Stock on the date such Option is granted and
(ii) in the case of an Option that does not constitute an Incentive Stock
Option, such purchase price shall not be less than 50% of the Fair Market Value
of a share of Common Stock on the date such Option is granted. The Option or
portion thereof may be exercised by delivery of an irrevocable notice of
exercise to the Company. The purchase price of the Option or portion thereof
shall be paid in full in
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the manner prescribed by the Committee. Separate stock certificates shall be
issued by the Company for those shares acquired pursuant to the exercise of an
Incentive Stock Option and for those shares acquired pursuant to the exercise of
any Option which does not constitute an Incentive Stock Option.
(f) SHAREHOLDER RIGHTS AND PRIVILEGES. The Holder shall be entitled to all
the privileges and rights of a shareholder only with respect to such shares of
Common Stock as have been purchased under the Option and for which certificates
of stock have been registered in the Holder's name.
(g) OPTIONS AND RIGHTS IN SUBSTITUTION FOR STOCK OPTIONS GRANTED BY OTHER
CORPORATIONS. Options and Stock Appreciation Rights may be granted under the
Plan from time to time in substitution for stock options held by individuals
employed by corporations who become employees as a result of a merger or
consolidation of the employing corporation with the Company or any subsidiary,
or the acquisition by the Company or a subsidiary of the assets of the employing
corporation, or the acquisition by the Company or a subsidiary of stock of the
employing corporation with the result that such employing corporation becomes a
subsidiary.
VIII. RESTRICTED STOCK AWARDS
(a) FORFEITURE RESTRICTIONS TO BE ESTABLISHED BY THE COMMITTEE. Shares of
Common Stock that are the subject of a Restricted Stock Award shall be subject
to restrictions on disposition by the Holder and an obligation of the Holder to
forfeit and surrender the shares to the Company under certain circumstances (the
"Forfeiture Restrictions"). The Forfeiture Restrictions shall be determined by
the Committee in its sole discretion, and the Committee may provide that the
Forfeiture Restrictions shall lapse upon (i) the attainment of targets
established by the Committee that are based on (1) the price of a share of
Common Stock, (2) the Company's earnings per share, (3) the Company's market
share, (4) the market share of a business unit of the Company designated by the
Committee, (5) the Company's sales, (6) the sales of a business unit of the
Company designated by the Committee, or (7) the return on stockholders' equity
achieved by the Company, (ii) the Holder's continued employment with the Company
for a specified period of time, or (iii) a combination of any two or more of the
factors listed in clauses (i) and (ii) of this sentence. Each Restricted Stock
Award may have different Forfeiture Restrictions, in the discretion of the
Committee. The Forfeiture Restrictions applicable to a particular Restricted
Stock Award shall not be changed except as permitted by Paragraph VIII(b) or
Paragraph IX.
(b) OTHER TERMS AND CONDITIONS. Common Stock awarded pursuant to a
Restricted Stock Award shall be represented by a stock certificate registered in
the name of the Holder of such Restricted Stock Award. The Holder shall have the
right to receive dividends with respect to Common Stock subject to a Restricted
Stock Award, to vote Common Stock subject thereto and to enjoy all other
shareholder rights, except that (i) the Holder shall not be entitled to delivery
of the stock certificate until the Forfeiture Restrictions have expired, (ii)
the Company shall retain custody of the stock until the Forfeiture Restrictions
have expired, (iii) the Holder may not sell, transfer, pledge, exchange,
hypothecate or otherwise dispose of the stock until the Forfeiture Restrictions
have expired, and (iv) a breach of the terms and conditions established by the
Committee pursuant to the Restricted Stock Agreement, shall cause a forfeiture
of the Restricted Stock Award. At the time of such Award, the Committee may, in
its sole discretion, prescribe additional terms, conditions or restrictions
relating to Restricted Stock Awards, including, but not limited to, rules
pertaining to the termination of employment (by retirement, disability, death or
otherwise) of a Holder prior to expiration of the Forfeitures Restrictions. Such
additional terms, conditions or restrictions shall be set forth in a Restricted
Stock Agreement made in conjunction with the Award.
(c) PAYMENT FOR RESTRICTED STOCK. The Committee shall determine the amount
and form of any payment for Common Stock received pursuant to a Restricted Stock
Award, provided that in the absence of such a determination, a Holder shall not
be required to make any payment for Common Stock received pursuant to a
Restricted Stock Award, except to the extent otherwise required by law.
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(d) AGREEMENTS. At the time any Award is made under this Paragraph VIII,
the Company and the Holder shall enter into a Restricted Stock Agreement setting
forth each of the matters contemplated hereby and such other matters as the
Committee may determine to be appropriate. The terms and provisions of the
respective Restricted Stock Agreements need not be identical.
IX. RECAPITALIZATION OR REORGANIZATION
(a) The existence of the Plan and the Awards granted hereunder shall not
affect in any way the right or power of the Board or the shareholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of debt or equity securities ahead of or
affecting Common Stock or the rights thereof, the dissolution or liquidation of
the Company or any sale, lease, exchange or other disposition of all or any part
of its assets or business or any other corporate act or proceeding.
(b) The shares with respect to which Options may be granted are shares of
Common Stock as presently constituted, but if, and whenever, prior to the
expiration of an Option theretofore granted, the Company shall effect a
subdivision or consolidation of shares of Common Stock or the payment of a stock
dividend on Common Stock without receipt of consideration by the Company, the
number of shares of Common Stock with respect to which such Option may
thereafter be exercised (i) in the event of an increase in the number of
outstanding shares shall be proportionately increased, and the purchase price
per share shall be proportionately reduced, and (ii) in the event of a reduction
in the number of outstanding shares shall be proportionately reduced, and the
purchase price per share shall be proportionately increased.
(c) If the Company recapitalizes, reclassifies its capital stock, or
otherwise changes its capital structure (a "recapitalization"), the number and
class of shares of Common Stock covered by an Option theretofore granted shall
be adjusted so that such Option shall thereafter cover the number and class of
shares of stock and securities to which the Holder would have been entitled
pursuant to the terms of the recapitalization if, immediately prior to the
recapitalization, the Holder had been the holder of record of the number of
shares of Common Stock then covered by such Option. If (i) the Company shall not
be the surviving entity in any merger or consolidation (or survives only as a
subsidiary of an entity other than a previously wholly owned subsidiary of the
Company), (ii) the Company sells, leases or exchanges or agrees to sell, lease
or exchange all or substantially all of its assets to any other person or entity
(other than a wholly-owned subsidiary of the Company), (iii) the Company is to
be dissolved and liquidated, (iv) any person or entity, including a "group" as
contemplated by Section 13(d)(3) of the 1934 Act, acquires or gains ownership or
control (including, without limitation, power to vote) of more than 50% of the
outstanding shares of the Company's voting stock (based upon voting power), or
(v) as a result of or in connection with a contested election of directors, the
persons who were directors of the Company before such election shall cease to
constitute a majority of the Board (each such event is referred to herein as a
"Corporate Change"), no later than (x) ten days after the approval by the
shareholders of the Company of such merger, consolidation, reorganization, sale,
lease or exchange of assets or dissolution or such election of directors or (y)
thirty days after a Corporate Change of the type described in clause (iv), the
Committee, acting in its sole discretion without the consent or approval of any
Holder, shall effect one or more of the following alternatives, which may vary
among individual Holders and which may vary among Options held by any individual
Holder: (1) accelerate the time at which Options then outstanding may be
exercised so that such Options may be exercised in full for a limited period of
time on or before a specified date (before or after such Corporate Change) fixed
by the Committee, after which specified date all unexercised Options and all
rights of Holders thereunder shall terminate, (2) require the mandatory
surrender to the Company by selected Holders of some or all of the outstanding
Options held by such Holders (irrespective of whether such Options are then
exercisable under the provisions of the Plan) as of a date, before or after such
Corporate Change, specified by the Committee, in which event the Committee shall
thereupon cancel such Options and pay to each Holder an amount of cash per share
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equal to the excess, if any, of the amount calculated in Subparagraph (d) below
(the "Change of Control Value") of the shares subject to such Option over the
exercise price(s) under such Options for such shares, (3) make such adjustments
to Options then outstanding as the Committee deems appropriate to reflect such
Corporate Change (provided, however, that the Committee may determine in its
sole discretion that no adjustment is necessary to Options then outstanding) or
(4) provide that the number and class of shares of Common Stock covered by an
Option theretofore granted shall be adjusted so that such Option shall
thereafter cover the number and class of shares of stock or other securities or
property (including, without limitation, cash) to which the Holder would have
been entitled pursuant to the terms of the agreement of merger, consolidation or
sale of assets and dissolution if, immediately prior to such merger,
consolidation or sale of assets and dissolution, the Holder had been the holder
of record of the number of shares of Common Stock then covered by such Option.
(d) For the purposes of clause (2) in Subparagraph (c) above, the "Change of
Control Value" shall equal the amount determined in clause (i), (ii) or (iii),
whichever is applicable, as follows: (i) the per share price offered to
shareholders of the Company in any such merger, consolidation, sale of assets or
dissolution transaction, (ii) the price per share offered to shareholders of the
Company in any tender offer or exchange offer whereby a Corporate Change takes
place, or (iii) if such Corporate Change occurs other than pursuant to a tender
or exchange offer, the fair market value per share of the shares into which such
Options being surrendered are exercisable, as determined by the Committee as of
the date determined by the Committee to be the date of cancellation and
surrender of such Options. In the event that the consideration offered to
shareholders of the Company in any transaction described in this Subparagraph
(d) or Subparagraph (c) above consists of anything other than cash, the
Committee shall determine the fair cash equivalent of the portion of the
consideration offered which is other than cash.
(e) In the event of changes in the outstanding Common Stock by reason of
recapitalization, reorganizations, mergers, consolidations, combinations,
exchanges or other relevant changes in capitalization occurring after the date
of the grant of any Award and not otherwise provided for by this Paragraph IX,
any outstanding Awards and any agreements evidencing such Awards shall be
subject to adjustment by the Committee at its discretion as to the number and
price of shares of Common Stock or other consideration subject to such Awards.
In the event of any such change in the outstanding Common Stock, the aggregate
number of shares available under the Plan may be appropriately adjusted by the
Committee, whose determination shall be conclusive.
(f) Any adjustment provided for in the above Subparagraphs shall be subject
to any required shareholder action.
(g) Except as hereinbefore expressly provided, the issuance by the Company
of shares of stock of any class or securities convertible into shares of stock
of any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number of
shares of Common Stock subject to Awards theretofore granted or the purchase
price per share, if applicable.
(h) Plan provisions to the contrary notwithstanding, with respect to any
Restricted Stock Awards outstanding at the time a Corporate Change as described
in Subparagraph (c) above occurs, the Committee may, in its discretion and as of
a date determined by the Committee, fully vest any or all Common Stock awarded
to the Holder pursuant to such Restricted Stock Award and then outstanding and,
upon such vesting, all restrictions applicable to such Restricted Stock Award
shall terminate as of such date. Any action by the Committee pursuant to this
Subparagraph may vary among individual Holders and may vary among the Restricted
Stock Awards held by any individual Holder.
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X. AMENDMENT AND TERMINATION OF THE PLAN
The Board in its discretion may terminate the Plan at any time with respect
to any shares of Common Stock for which Awards have not theretofore been
granted. The Board shall have the right to alter or amend the Plan or any part
thereof from time to time; provided that no change in any Award theretofore
granted may be made which would impair the rights of the Holder without the
consent of the Holder, and provided, further, that the Board may not, without
approval of the shareholders, amend the Plan:
(a) to increase the maximum number of shares of Common Stock which may be
issued on exercise or surrender of Options or pursuant to Restricted Stock
Awards, except as provided in Paragraph IX;
(b) to change the minimum Option price;
(c) to change the class of employees eligible to receive Awards or
materially increase the benefits accruing to employees under the Plan;
(d) to extend the maximum period during which Awards may be granted under
the Plan;
(e) to modify materially the requirements as to eligibility for
participation in the Plan; or
(f) to decrease any authority granted to the Committee hereunder in
contravention of Rule 16b-3.
XI. MISCELLANEOUS
(a) NO RIGHT TO AN AWARD. Neither the adoption of the Plan nor any action
of the Board or of the Committee shall be deemed to give an employee any right
to be granted an Option, a right to a Restricted Stock Award, or any other
rights hereunder except as may be evidenced by an Option Agreement or a
Restricted Stock Agreement duly executed on behalf of the Company, and then only
to the extent and on the terms and conditions expressly set forth therein. The
Plan shall be unfunded. The Company shall not be required to establish any
special or separate fund or to make any other segregation of funds or assets to
assure the payment of any Award.
(b) NO EMPLOYMENT RIGHTS CONFERRED. Nothing contained in the Plan shall (i)
confer upon any employee any right with respect to continuation of employment
with the Company or any subsidiary or (ii) interfere in any way with the right
of the Company or any subsidiary to terminate his or her employment at any time.
(c) OTHER LAWS; WITHHOLDING. The Company shall not be obligated to issue
any Common Stock pursuant to any Award granted under the Plan at any time when
the shares covered by such Award have not been registered under the Securities
Act of 1933 and such other state and federal laws, rules or regulations as the
Company or the Committee deems applicable and, in the opinion of legal counsel
for the Company, there is no exemption from the registration requirements of
such laws, rules or regulations available for the issuance and sale of such
shares. No fractional shares of Common Stock shall be delivered, nor shall any
cash in lieu of fractional shares be paid. The Company shall have the right to
deduct in connection with all Awards any taxes required by law to be withheld
and to require any payments required to enable it to satisfy its withholding
obligations.
(d) NO RESTRICTION ON CORPORATE ACTION. Nothing contained in the Plan shall
be construed to prevent the Company or any subsidiary from taking any corporate
action which is deemed by the Company or such subsidiary to be appropriate or in
its best interest, whether or not such action would have an adverse effect on
the Plan or any Award made under the Plan. No employee, beneficiary or other
person shall have any claim against the Company or any subsidiary as a result of
any such action.
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(e) RESTRICTIONS ON TRANSFER. An Award shall not be transferable otherwise
than by will or the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder. An
Award shall be exercisable during the lifetime of a Holder only by such Holder
or the Holder's guardian or legal representative.
(f) RULE 16B-3. It is intended that the Plan and any grant of an Award made
to a person subject to Section 16 of the 1934 Act meet all of the requirements
of Rule 16b-3. If any provision of the Plan or any such Award would disqualify
the Plan or such Award under, or would otherwise not comply with, Rule 16b-3,
such provision or Award shall be construed or deemed amended to conform to Rule
16b-3.
(g) GOVERNING LAW. THIS PLAN SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF DELAWARE.
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HORIZON/CMS HEALTHCARE CORPORATION
1995 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
I. PURPOSE OF THE PLAN
The HORIZON/CMS HEALTHCARE CORPORATION 1995 NON-EMPLOYEE DIRECTORS' STOCK
OPTION PLAN (the "Plan") is intended to promote the interests of HORIZON/CMS
HEALTHCARE CORPORATION, a Delaware corporation (the "Company"), and its
stockholders by helping to award and retain highly-qualified independent
directors, and allowing them to develop a sense of proprietorship and personal
involvement in the development and financial success of the Company.
Accordingly, the Company shall grant to directors of the Company who are not
employees of the Company or any of its subsidiaries ("Non-Employee Directors")
the option ("Option") to purchase shares of the common stock of the Company
("Stock"), as hereinafter set forth. Options granted under the Plan shall be
options which do not constitute incentive stock options, within the meaning of
section 422(b) of the Internal Revenue Code of 1986, as amended.
II. OPTION AGREEMENTS
Each Option shall be evidenced by a written agreement in the form attached
to the Plan.
III. ELIGIBILITY OF OPTIONEE
Options may be granted only to individuals who are Non-Employee Directors of
the Company. As of the date of the annual meeting of the stockholders of the
Company in each year that the Plan is in effect as provided in Paragraph VI
hereof, each Non-Employee Director then in office or elected to the Board of
Directors of the Company (the "Board") on such date shall receive, without the
exercise of the discretion of any person or persons, an Option exercisable for
7,000 shares of Stock (subject to adjustment in the same manner as provided in
Paragraph VII hereof with respect to shares of Stock subject to Options then
outstanding). If, as of any date that the Plan is in effect, there are not
sufficient shares of Stock available under the Plan to allow for the grant to
each Non-Employee Director of an Option for the number of shares provided
herein, each Non-Employee Director shall receive an Option for his or her
pro-rata share of the total number of shares of Stock then available under the
Plan. All Options granted under the Plan shall be at the Option price set forth
in Paragraph V hereof and shall be subject to adjustment as provided in
Paragraph VII hereof.
IV. SHARES SUBJECT TO THE PLAN
The aggregate number of shares which may be issued under Options granted
under the Plan shall not exceed 700,000 shares of Stock. Such shares may consist
of authorized but unissued shares of Stock or previously issued shares of Stock
reacquired by the Company. Any of such shares which remain unissued and which
are not subject to outstanding Options at the termination of the Plan shall
cease to be subject to the Plan, but, until termination of the Plan, the Company
shall at all times make available a sufficient number of shares to meet the
requirements of the Plan. Should any Option hereunder expire or terminate prior
to its exercise in full, the shares theretofore subject to such Option may again
be subject to an Option granted under the Plan. The aggregate number of shares
which may be issued under the Plan shall be subject to adjustment in the same
manner as provided in Paragraph VII hereof with respect to shares of Stock
subject to Options then outstanding. Exercise of an Option shall result in a
decrease in the number of shares of Stock which may thereafter be available,
both for purposes of the Plan and for sale to any one individual, by the number
of shares as to which the Option is exercised.
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V. OPTION PRICE
The purchase price of Stock issued under each Option shall be the fair
market value of Stock subject to the Option as of the date the Option is
granted. For all purposes under the Plan, the fair market value of a share of
Stock on a particular date shall be equal to the mean of the high and low sales
prices of the Stock (i) reported by the National Market System of NASDAQ on that
date or (ii) if the Stock is listed on a national stock exchange, reported on
the stock exchange composite tape on that date; or, in either case, if no prices
are reported on that date, on the last preceding date on which such prices of
the Stock are so reported. If the Stock is traded over the counter at the time a
determination of its fair market value is required to be made hereunder, its
fair market value shall be deemed to be equal to the average between the
reported high and low or closing bid and asked prices of Stock on the most
recent date on which Stock was publicly traded. In the event Stock is not
publicly traded at the time a determination of its value is required to be made
hereunder, the determination of its fair market value shall be made by the Board
in such manner as it deems appropriate.
VI. TERM OF PLAN
The Plan shall be effective on the date the Plan is approved by the
stockholders of the Company. Except with respect to Options then outstanding, if
not sooner terminated under the provisions of Paragraph VIII, the Plan shall
terminate upon and no further Options shall be granted after the expiration of
ten years from the date the Plan is approved by the stockholders of the Company.
VII. RECAPITALIZATION OR REORGANIZATION
A. The existence of the Plan and the Options granted hereunder shall not
affect in any way the right or power of the Board or the stockholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of debt or equity securities, the
dissolution or liquidation of the Company or any sale, lease, exchange or other
disposition of all or any part of its assets or business or any other corporate
act or proceeding.
B. The shares with respect to which Options may be granted are shares of
Stock as presently constituted, but if, and whenever, prior to the expiration of
an Option theretofore granted, the Company shall effect a subdivision or
consolidation of shares of Stock or the payment of a stock dividend on Stock
without receipt of consideration by the Company, the number of shares of Stock
with respect to which such Option may thereafter be exercised (i) in the event
of an increase in the number of outstanding shares shall be proportionately
increased, and the purchase price per share shall be proportionately reduced,
and (ii) in the event of a reduction in the number of outstanding shares shall
be proportionately reduced, and the purchase price per share shall be
proportionately increased.
C. If the Company recapitalizes, reclassifies its capital stock, or
otherwise changes its capital structure (a "recapitalization"), the number and
class of shares of Stock covered by an Option theretofore granted shall be
adjusted so that such Option shall thereafter cover the number and class of
shares of stock and securities to which the optionee would have been entitled
pursuant to the terms of the recapitalization if, immediately prior to the
recapitalization, the optionee had been the holder of record of the number of
shares of Stock then covered by such Option.
D. Any adjustment provided for in Subparagraphs (b) or (c) above shall be
subject to any required stockholder action.
E. Except as hereinbefore expressly provided, the issuance by the Company
of shares of stock of any class or securities convertible into shares of stock
of any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, and in any case
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whether or not for fair value, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number of shares of Stock subject to
Options theretofore granted or the purchase price per share.
VIII. AMENDMENT OR TERMINATION OF THE PLAN
The Board in its discretion may terminate the Plan at any time with respect
to any shares for which Options have not theretofore been granted. The Board
shall have the right to alter or amend the Plan or any part thereof from time to
time; provided, that no change in any Option theretofore granted may be made
which would impair the rights of the optionee without the consent of such
optionee; and provided, further, that the Board may not make any alteration or
amendment which would materially increase the benefits accruing to participants
under the Plan, increase the aggregate number of shares which may be issued
pursuant to the provisions of the Plan, change the class of individuals eligible
to receive Options under the Plan or extend the term of the Plan, without the
approval of the stockholders of the Company.
IX. SECURITIES LAWS
A. The Company shall not be obligated to issue any Stock pursuant to any
Option granted under the Plan at any time when the offering of the shares
covered by such Option have not been registered under the Securities Act of
1933, as amended, and such other state and federal laws, rules or regulations as
the Company deems applicable and, in the opinion of legal counsel for the
Company, there is no exemption from the registration requirements of such laws,
rules or regulations available for the offering and sale of such shares.
B. It is intended that the Plan and any grant of an Option made to a person
subject to Section 16 of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), meet all of the requirements of Rule 16b-3, as currently in effect
or as hereinafter modified or amended ("Rule 16b-3"), promulgated under the 1934
Act. If any provision of the Plan or any such Option would disqualify the Plan
or such Option under, or would otherwise not comply with, Rule 16b-3, such
provision or Option shall be construed or deemed amended to conform to Rule
16b-3.
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FORM OF
NON-EMPLOYEE DIRECTOR'S STOCK OPTION AGREEMENT
AGREEMENT made as of the day of , 19 , between HORIZON/CMS HEALTHCARE
CORPORATION, a Delaware corporation (the "Company"), and
("Director").
To carry out the purposes of the HORIZON/CMS HEALTHCARE CORPORATION 1995
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN (the "Plan"), a copy of which is
attached hereto as Exhibit A, by affording Director the opportunity to purchase
shares of common stock of the Company ("Stock"), and in consideration of the
mutual agreements and other matters set forth herein and in the Plan, the
Company and Director hereby agree as follows:
1. GRANT OF OPTION. The Company hereby irrevocably grants to Director the
right and option ("Option") to purchase all or any part of an aggregate of
shares of Stock, on the terms and conditions set forth herein and in the
Plan, which Plan is incorporated herein by reference as a part of this
Agreement. This Option shall not be treated as an incentive stock option within
the meaning of section 422(b) of the Internal Revenue Code of 1986, as amended
(the "Code").
2. PURCHASE PRICE. The purchase price of Stock purchased pursuant to the
exercise of this Option shall be $ per share, which has been determined to be
not less than the fair market value of the Stock at the date of grant of this
Option. For all purposes of this Agreement, fair market value of Stock shall be
determined in accordance with the provisions of the Plan.
3. EXERCISE OF OPTION. Subject to the earlier expiration of this Option as
herein provided, this Option may be exercised, by written notice to the Company
at its principal executive office addressed to the attention of its Chief
Executive Officer, at any time and from time to time after the date of grant
hereof, but, except as otherwise provided below, this Option shall not be
exercisable for more than a percentage of the aggregate number of shares offered
by this Option determined by the number of full years from the date of grant
hereof to the date of such exercise, in accordance with the following schedule:
<TABLE>
<CAPTION>
PERCENTAGE
OF SHARES
THAT MAY
BE
NUMBER OF FULL YEARS PURCHASED
- ---------------------------------------- --------
<S> <C>
Less than 1 year 0 %
1 year but less than 2 years 33 1/3%
2 years but less than 3 years 66 2/3%
3 years or more 100 %
</TABLE>
Notwithstanding the foregoing, if (i) the Company shall not be the surviving
entity in any merger, consolidation or other reorganization (or survives only as
a subsidiary of an entity other than a previously wholly-owned subsidiary of the
Company), (ii) the Company sells, leases or exchanges or agrees to sell, lease
or exchange all or substantially all of its assets to any other person or entity
(other than a wholly-owned subsidiary of the Company), (iii) the Company is to
be dissolved and liquidated, (iv) any person or entity, including a "group" as
contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934,
acquires or gains ownership or control (including, without limitation, power to
vote) of more than 50% of the outstanding shares of the Company's voting stock
(based upon voting power), or (v) as a result of or in connection with a
contested election of directors, the persons who were directors of the Company
before such election shall cease to constitute a majority of the Board of
Directors of the Company (each such event is referred to herein as a "Corporate
Change"), then effective as of the earlier of (1) the date of approval by the
stockholders of the Company of such merger, consolidation, reorganization, sale,
lease or exchange of assets or dissolution or such election of directors or (2)
the date of such Corporate Change, this Option shall be exercisable in full.
This Option and all rights granted hereunder are not transferable by
Director other than by will or the laws of descent and distribution or pursuant
to a qualified domestic relations order as defined by the Code or Title 1 of the
Employee Retirement Income Security Act of 1974, as amended, or the
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rules thereunder, and may be exercised during Director's lifetime only by
Director or Director's guardian or legal representative. This Option may be
exercised only while Director remains a member of the Board of Directors of the
Company (the "Board") and will terminate and cease to be exercisable upon
Director's termination of membership on the Board, except that:
(a) If Director's membership on the Board terminates by reason of
disability, this Option may be exercised in full by Director (or Director's
estate or the person who acquires this Option by will or the laws of descent
and distribution or otherwise by reason of the death of Director) at any
time during the period of one year following such termination.
(b) If Director dies while a member of the Board, Director's estate, or
the person who acquires this Option by will or the laws of descent and
distribution or otherwise by reason of the death of Director, may exercise
this Option in full at any time during the period of one year following the
date of Director's death.
(c) If Director's membership on the Board terminates for any reason
other than as described in (a) or (b) above, this Option may be exercised by
Director at any time during the period of three months following such
termination, or by Director's estate (or the person who acquires this Option
by will or the laws of descent and distribution or otherwise by reason of
the death of Director) during a period of one year following Director's
death if Director dies during such three-month period, but in each case only
as to the number of shares Director was entitled to purchase hereunder upon
exercise of this Option as of the date Director's membership on the Board so
terminates.
This Option shall not be exercisable in any event after the expiration of ten
years from the date of grant hereof. The purchase price of shares as to which
this Option is exercised shall be paid in full at the time of exercise (A) in
cash (including check, bank draft or money order payable to the order of the
Company), (B) by delivering to the Company shares of Stock having a fair market
value equal to the purchase price, or (C) any combination of cash or Stock. No
fraction of a share of Stock shall be issued by the Company upon exercise of an
Option or accepted by the Company in payment of the purchase price thereof;
rather, Director shall provide a cash payment for such amount as is necessary to
effect the issuance and acceptance of only whole shares of Stock. Unless and
until a certificate or certificates representing such shares shall have been
issued by the Company to Director, Director (or the person permitted to exercise
this Option in the event of Director's death) shall not be or have any of the
rights or privileges of a stockholder of the Company with respect to shares
acquirable upon an exercise of this Option.
4. WITHHOLDING OF TAX. To the extent that the exercise of this Option or
the disposition of shares of Stock acquired by exercise of this Option results
in compensation income to Director for federal or state income tax purposes,
Director shall deliver to the Company at the time of such exercise or
disposition such amount of money or shares of Stock as the Company may require
to meet its obligation under applicable tax laws or regulations, and, if
Director fails to do so, the Company is authorized to withhold from any cash or
Stock remuneration then or thereafter payable to Director any tax required to be
withheld by reason of such resulting compensation income. Upon an exercise of
this Option, the Company is further authorized in its discretion to satisfy any
such withholding requirement out of any cash or shares of Stock distributable to
Director upon such exercise.
5. STATUS OF STOCK. The Company intends to register for issuance under the
Securities Act of 1933, as amended (the "Act"), the shares of Stock acquirable
upon exercise of this Option, and to keep such registration effective throughout
the period this Option is exercisable. In the absence of such effective
registration or an available exemption from registration under the Act, issuance
of shares of Stock acquirable upon exercise of this Option will be delayed until
registration of such shares is effective or an exemption from registration under
the Act is available. The Company intends to use its best efforts to ensure that
no such delay will occur. In the event exemption from registration under the Act
is available upon an exercise of this Option, Director (or the person permitted
to exercise this
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Option in the event of Director's death or incapacity), if requested by the
Company to do so, will execute and deliver to the Company in writing an
agreement containing such provisions as the Company may require to assure
compliance with applicable securities laws.
Director agrees that the shares of Stock which Director may acquire by
exercising this Option will not be sold or otherwise disposed of in any manner
which would constitute a violation of any applicable federal or state securities
laws. Director also agrees (i) that the certificates representing the shares of
Stock purchased under this Option may bear such legend or legends as the Company
deems appropriate in order to assure compliance with applicable securities laws,
(ii) that the Company may refuse to register the transfer of the shares of Stock
purchased under this Option on the stock transfer records of the Company if such
proposed transfer would in the opinion of counsel satisfactory to the Company
constitute a violation of any applicable securities law and (iii) that the
Company may give related instructions to its transfer agent, if any, to stop
registration of the transfer of the shares of Stock purchased under this Option.
6. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of any successors to the Company and all persons lawfully claiming under
Director.
7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officer thereunto duly authorized, and Director has executed
this Agreement, all as of the day and year first above written.
HORIZON/CMS HEALTHCARE CORPORATION
By:
--------------------------------------
--------------------------------------
Director
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EXHIBIT 5.1
VINSON & ELKINS L.L.P. LETTERHEAD
October 3, 1995
Horizon/CMS Healthcare Corporation
6001 Indian School Road, N.E., Suite 530
Albuquerque, N.M. 87110
Ladies and Gentlemen:
We have acted as counsel for Horizon/CMS Healthcare Corporation,
a Delaware corporation (the "Company"), in connection with the Company's
Registration Statement on Form S-8 (the "Registration Statement") relating
to the offering and sale of up to 5,700,000 shares (the "Shares") of common
stock, par value $.001 per share, of the Company pursuant to the Horizon/CMS
Healthcare Corporation 1995 Stock Incentive Plan and the Horizon/CMS
Healthcare Corporation 1995 Non-Employee Directors' Stock Option Plan
(collectively, the "Plans").
Before rendering our opinion, we examined the Registration Statement,
the Restated Certificate of Incorporation, as amended, and bylaws of the
Company and certain resolutions of the Board of Directors of the Company.
Based upon the foregoing, we are of the opinion that the Shares to be
issued pursuant to the Plans have been validly authorized for issuance and,
when the Registration Statement has become effective under the Securities Act
of 1933, as amended (the "Act"), and the Shares are issued and paid for in
accordance with the terms of the Plans, the Shares so issued will be validly
issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. By giving such consent, we do not admit that we are
within the category of persons whose consent is required under Section 7 of
the Act or the rules and regulations of the Securities and Exchange Commission
issued thereunder. For purposes of this opinion, we assume that the
securities to be issued pursuant to the Registration Statement will be issued
in compliance with all applicable state securities or Blue Sky laws.
Very truly yours,
/s/ VINSON & ELKINS L.L.P.
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report, included in Horizon/CMS Healthcare Corportion's Annual Report
on Form 10-K/A Amendment No. 1 for the year ended May 31, 1995, into this
Registration Statement on Form S-8.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Albuquerque, New Mexico
October 3, 1995
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference into this
Registration Statement on Form S-8 of Horizon/CMS Healthcare Corporation of
our report dated August 9, 1994, with respect to the consolidated financial
statements and schedules of Continental Medical Systems, Inc. included in its
Annual Report on Form 10-K (as amended by Amendment No. 1 on Form 10K/A) for
the year ended June 30, 1994, filed with the Securities and Exchange
Commission.
/s/ ERNST & YOUNG LLP
Ernst & Young LLP
Harrisburg, Pennsylvania
October 3, 1995
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference into this
Registration Statement on Form S-8 of Horizon/CMS Healthcare
Corporation of our report dated August 10, 1993 included in Continental
Medical Systems, Inc.'s Form 10-K/A Amendment No. 1 for the year
ended June 30, 1994.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Philadelphia, Pennsylvania
September 29, 1995
