<PAGE>
As Filed with the Securities and Exchange Commission on June 28, 1996
-----------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-----------------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
REGENCY HEALTH SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-0210226
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2742 Dow Avenue
Tustin, California 92780-7245
(Address of principal executive offices) (zip code)
Regency Health Services, Inc. Directors Stock Plan
(Full Title of the Plan)
David A. Grant
Senior Vice President and General Counsel
Regency Health Services, Inc.
2742 Dow Avenue
Tustin, California 92780-7245
(Name and address of agent for service)
714-544-4443
(Telephone number, including area code, of agent for service)
With a copy to:
Moshe J. Kupietzky, Esq.
Sidley & Austin
555 West Fifth Street
Los Angeles, California 90013
(213) 896-6000
Approximate date of commencement of proposed sale
to the public: from time to time after the
Registration Statement becomes effective.
----------------
<TABLE>
CALCULATION OF REGISTRATION FEE
======================== ====================== ====================== ===================== ======================
<S> <C> <C> <C> <C> <C>
Proposed Proposed
Title of maximum maximum
securities Amount offering aggregate Amount of
to be to be price per offering registration
Registered registered share(1)(2) price(2) fee
======================== ====================== ====================== ===================== ======================
Common Stock, 200,000(3) $10.5625 $2,112,500 $726.70
par value $.01 per
share)
======================== ====================== ====================== ===================== ======================
</TABLE>
(1) Estimated pursuant to Rules 457(c) and (h) under the Securities
Act of 1933, as amended (the "Securities Act"), on the basis of
the average of the high and low sale prices for a share of common
stock of Regency Health Services, Inc. ("Common Stock") on the
New York Stock Exchange on June 24, 1996.
(2) Estimated solely for the purpose of calculating the registration
fee.
(3) Plus additional shares of Common Stock as may be issuable
pursuant to the antidilution provisions of the above-referenced
plan.
<PAGE>
===============================================================================
================================================================================
PROSPECTUS
120,000 Shares
REGENCY HEALTH SERVICES, INC.
Common Shares
------------
This Prospectus has been prepared by Regency Health Services, Inc., a
Delaware corporation (the "Company") for use upon resale of shares of common
stock, par value $.01 per share (the "Common Stock"), by certain selling
stockholders, some of whom may be "Affiliates" in the Company under Rule 405 of
the Securities Act of 1933, as amended (the "Securities Act") who have acquired
or may acquire shares of Common Stock upon exercise of options (the "Options")
granted by the Company under the Regency Health Services, Inc. Directors Stock
Plan (the "Plan"). The maximum number of shares of Common Stock which may be
offered or sold hereunder is subject to adjustment in the event of stock splits,
dividends, recapitalizations and other similar changes affecting the Common
Stock. Other than the proceeds received by the Company from the exercise of the
Options, the Company will not receive any proceeds from the sale of the shares
of Common Stock offered hereby. The holders of the 120,000 shares of Common
Stock covered in this Prospectus intend to sell the shares offered hereby from
time to time for their own respective accounts in the open market at the prices
prevailing therein or in individually negotiated transactions at such prices as
may be agreed upon. Each such holder will bear all expenses with respect to the
offering of shares of Common Stock by him except the costs associated with
preparing and printing this Prospectus. See "Plan of Distribution." The Common
Stock of the Company is traded on the New York Stock Exchange.
See "Risk Factors" beginning on page 5 for a discussion of certain
factors that should be considered by prospective investors in evaluating an
investment in the Common Stock.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is June 28, 1996
<PAGE>
The Company is incorporated in the State of Delaware. Its principal
executive offices are located at 2742 Dow Avenue, Tustin, California 92780-7245
and its telephone number is (714) 544-4443.
No person is authorized to give any information or to make any
representations not contained or incorporated by reference in this Prospectus,
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Company. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any securities
other than the registered securities to which it relates or an offer of any
securities in any jurisdiction to any person where such an offer would be
unlawful.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files periodic reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information filed by the Company with the
Commission, can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's Regional Offices at 7
World Trade Center, New York, New York 10007 and Northwestern Atrium Center, 500
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can be obtained upon written request addressed to the Commission,
Public Reference Section, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and its public reference facilities in New York, New
York and Chicago, Illinois, at prescribed rates and from the Web site maintained
by the Commission at (http://www.sec.gov). The Company's Common Stock is listed
on the New York Stock Exchange and such reports, proxy statements, and other
information concerning the Company can also be inspected at the offices of the
New York Stock Exchange, Public Reference Section, 20 Broad Street, New York,
New York. Statements contained in this Prospectus as to the contents of any
agreement or other document are not necessarily complete, and in each instance
reference is made to the copy of such agreement or document filed as an exhibit
to the Registration Statement, each such statement being qualified in all
respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission under the Securities Act and the Exchange Act are incorporated by
reference in this Prospectus:
1. Annual Report on Form 10-K for the year ended December 31, 1995;
2. Quarterly Report on Form 10-Q for the quarter ended March 31, 1996;
3. Amendment to Quarterly Report on Form 10-Q/A for the quarter ended
March 31, 1996;
4. Current Report on Form 8-K dated February 1, 1996;
5. Amendment to Current Report on Form 8-K/A dated February 1, 1996; and
6. The description of the common stock, par value $.01 par share, set forth in
the section entitled "Description of Regency Securities" in the Company's
Registration Statement on Form S-4 filed with the Commission on March 4,
1994 (File No. 33-52497), including any amendment or report filed for the
purpose of updating such information.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering made hereby shall be deemed to be incorporated
by reference herein and to be a part hereof from the respective dates those
documents are filed. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein and to be a part hereof shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or 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, except as so modified or superseded, to
constitute a part of this Prospectus. The Company will provide without charge to
each person to whom this Prospectus is delivered, upon written or oral request
of that person, a copy of any or all of the documents which have been or may be
incorporated by reference in this Prospectus (other than certain exhibits to
those documents). Requests should be directed to Regency Health Services, Inc.,
2742 Dow Avenue, Tustin, California 92780-7245, Attention: David A. Grant
(telephone 714-544-4443).
THE COMPANY Regency Health Services, Inc. is one of the largest post-acute
care providers in the United States, with operations in 14 states. The Company
provides a broad continuum of post-acute care through in-patient services such
as subacute care, skilled nursing care, intermediate care and residential care,
together with ancillary services such as rehabilitation, home healthcare and
pharmacy services.
The Company provides in-patient care in 112 facilities with an aggregate of
11,541 licensed beds. In addition, the Company provides contract rehabilitation
services, including physical, speech, occupational and audiology therapy in 133
Company-owned and non-affiliated facilities with approximately 14,600 beds in 14
states. The Company also provides pharmacy services in three states to 131
Company-owned and non-affiliated healthcare facilities with over 12,000 beds. To
augment the continuum of care provided, the Company offers home healthcare
services in 29 locations in California and Ohio.
RISK FACTORS
In addition to the other information contained or incorporated by reference
in this Prospectus, prospective purchasers of the Common Stock should give
careful consideration to the specific factors set forth below.
Dependence on Reimbursement from Medicare and Medicaid. The Company's
business is dependent upon its ability to obtain and maintain reimbursement from
Medicare and Medicaid. The Company derives a significant percentage of its net
operating revenue from Medicaid (known as Medi-Cal in California); and Medicare.
In addition, a substantial portion of ancillary services that are provided by
the Company to both Company-owned and non-affiliated facilities are ultimately
reimbursed by Medicare and Medicaid. However, the revenue derived from these
services is not classified as Medicare or Medicaid since the facilities served
are billed directly and are subsequently reimbursed by these programs. Charges
to non-affiliates, though not directly regulated, are effectively limited by
regulatory reimbursement policies imposed on the in-patient facilities whose
patients receive these therapy services, as well as competitive market factors.
These government-sponsored healthcare programs are highly regulated and are
subject to budgetary and other constraints. In addition, these government
programs have instituted cost-containment measures designed to limit payments
made to healthcare providers. Furthermore, government reimbursement programs are
subject to statutory and regulatory changes, administrative rulings and
interpretations, determinations of intermediaries, government funding
restrictions and retroactive reimbursement adjustments, all of which could
materially increase or decrease the services covered by such programs, the rates
paid to healthcare providers for their services, or the eligibility of providers
to receive reimbursement. In addition, there can be no assurance that the
Company's facilities and the provision of services by the Company in the future
will continue to meet the requirements for participation in Medicare or Medicaid
programs as presently enacted or as they may be changed.
In addition, the Company's cash flow could be adversely affected by
periodic government program funding delays, shortfalls or other difficulties,
such as that which occurred in 1995 when the State of California failed to adopt
a new budget prior to the end of the 1994-1995 fiscal year. As a result,
Medi-Cal delayed reimbursement payments for several weeks. Medi-Cal also delayed
payments and rate increases for several weeks in 1990 and 1991. In addition, in
1992, as a result of the failure by the State of California to adopt a budget
prior to the end of the 1991-1992 fiscal year, Medi-Cal reimbursed providers
with registered warrants, which many banks refused to redeem at face value.
There can be no assurance that the Company will be able to mitigate the effects
of any future funding delays.
Substantial Leverage. The Company has a significant amount of outstanding
indebtedness. In the event that the Company's cash flow and working capital are
not sufficient to fund the Company's expenditures and to service its
indebtedness, the Company would be required to raise additional funds through
the sale of equity securities, the refinancing of all or part of its
indebtedness, the incurrence of additional permitted Indebtedness, or the sale
of assets. There can be no assurance that any of these sources of funds would be
available in amounts sufficient for the Company to meet its obligations.
The Company's credit facility and the indentures pursuant to which the
Company has issued senior subordinated notes and subordinated notes include, and
subsequent indebtedness or working capital facilities may include covenants
prohibiting or limiting, among other things, the sale of assets, the making of
acquisitions and other investments, capital expenditures, stock repurchases,
repurchases or redemptions of subordinated debt, the incurrence of additional
debt and liens and the payment of dividends, in addition to a number of
financial covenants. The Company's ability to comply with these terms (including
its ability to comply with such covenants), to make cash payments with respect
to its indebtedness and to otherwise satisfy its debt obligations will depend on
the future performance of the Company. The Company's failure to comply with any
of these covenants could result in an event of default under its indebtedness
which in turn could have a material adverse effect on the Company. In the event
the Company incurs additional indebtedness for acquisitions or purposes other
than repayment of indebtedness, the Company may become more vulnerable to, and
have less flexibility in satisfying its obligations in the event of a decline in
the Company's revenues (which could result from, among other factors, increased
competition, adverse regulatory developments or an economic downturn). The
Company's high degree of leverage may impair its ability to obtain financing in
the future for acquisitions, capital expenditures or other purposes. Risk of
Adverse Effect of Healthcare Reform. In the recently enacted federal budget
deficit reduction bill, various reimbursement rules and regulations were adopted
by the federal government that pertain to the Company. There have been (and the
Company expects that there will continue to be) a number of other proposals to
limit Medicare and Medicaid reimbursement for healthcare services. The Company
cannot predict at this time whether any of these types of proposals will be
adopted or, if adopted and implemented, what effect such proposals would have on
the Company. There can be no assurance that currently proposed or future
healthcare legislation or other changes in the administration or interpretation
of those programs will not have an adverse effect on the Company, or that
payments under governmental programs will remain at levels comparable to present
levels or will be sufficient to cover the cost allocable to patients eligible
for reimbursement pursuant to such programs. Concern about the potential effects
of the proposed reform measures has contributed to the volatility of the prices
of securities of companies in healthcare and related fields.
Government Regulation. The in-patient healthcare industry is subject to
extensive federal, state and local licensure and certification laws. In-patient
facilities and home healthcare agencies are often subject to certificate of need
requirements, the effect of which is to significantly limit internal growth, and
are also subject to annual and routine interim inspections to monitor compliance
with government regulations. Certain laws establish minimum healthcare standards
and provide for significant remedies or non-compliance including fines, new
patient admission moratoriums, federal or state monitoring of operations, and
closure of facilities. Changes in applicable laws and regulations or new
interpretations of existing laws and regulations could have a material adverse
effect on licensure, eligibility for participation, permissible activities,
operating costs or the levels of reimbursement from governmental, private and
other sources. There can be no assurance that regulatory authorities will not
adopt changes or interpretations that could adversely affect the Company. The
failure to maintain or renew any required regulatory approvals or licenses could
prevent the Company from offering existing services or from obtaining
reimbursement. In certain circumstances, failure of compliance at one facility
may affect the ability of the Company to obtain or maintain licenses or
approvals under Medicare and Medicaid programs at other facilities.
Recently effective provisions of the regulations adopted under the Omnibus
Budget Reconciliation Act of 1987 ("OBRA") have expanded remedies available to
the Health Care Financing Administration ("HCFA") to enforce compliance with the
detailed regulations mandating minimum healthcare standards, and may
significantly affect the consequences to the Company if annual or other HCFA
facility surveys disclose noncompliance with these regulations. Remedies include
fines, new patient admission moratoriums, denial of reimbursement, federal or
state monitoring of operations, closure of facilities and termination of
provider reimbursement agreements.
The Company is also subject to federal and state laws that govern financial
and other arrangements between healthcare providers. These laws often prohibit
certain direct and indirect payments or fee-splitting arrangements between
healthcare providers that are designed to induce or encourage the referral of
patients to, or the recommendation of, a particular provider for medical
products and services. These laws include 3. the federal "Stark legislations"
which prohibit, with limited exceptions, physician ownership of ancillary
service providers, and 4. the federal "anti-kickback law" which prohibits, among
other things, the offer, payment, solicitation or receipt of any form of
remuneration in return for the referral of Medicare and Medicaid patients. In
addition, some states restrict certain business relationships between physicians
and other providers of healthcare services. Many states prohibit business
corporations from providing, or holding themselves out as a provider of, medical
care. Possible sanctions for violation of any of these restrictions or
prohibitions include loss of licensure or eligibility to participate in
reimbursement programs and civil and criminal penalties. These laws vary from
state to state, are often vague and have seldom been interpreted by the courts
or regulatory agencies. From time to time the Company has sought guidance as to
the interpretation of these laws; however, there can be no assurance that such
laws will ultimately be interpreted in a manner consistent with the practices of
the Company.
The Company is unable to predict the future course of federal, state and
local regulation or legislation, including Medicare, Medicaid and Medi-Cal
statutes and regulations. Further changes in the regulatory framework could have
a material adverse effect on the Company's operations.
Related Party Transactions. Medicare regulations that apply to transactions
between related parties, such as between subsidiaries of the Company, determine
in part the amount of Medicare reimbursement the Company is entitled to receive
for contract rehabilitation therapy and pharmacy services that it provides to
Company-operated facilities. These regulations generally require that, amount
other things, 5. the Company's rehabilitation therapy and pharmacy subsidiaries
must each be a bona fide separate organization; 6. a substantial part of the
contract rehabilitation therapy services or pharmacy services, as the case may
be, of the relevant subsidiary must be transacted with non-affiliated entities,
and there must be an open, competitive market for the relevant services; 7.
contract rehabilitation therapy services and pharmacy services, as the case may
be, are services that commonly are obtain by in-patient facilities from other
organizations and are not a basic element of patient care ordinarily furnished
directly to patients by such facilities; and 8. the prices charged to the
Company's in-patient facilities by its contract rehabilitation therapy
operations subsidiary and pharmacy operations subsidiaries are consistent with
the charges for such services in the open market and no more than the prices
charged by its contract rehabilitation therapy operations subsidiary and
pharmacy operations subsidiaries under comparable circumstances to
non-affiliated in-patient facilities. The Company believes that each of the
foregoing requirements is currently being satisfied with respect to both its
contract rehabilitation therapy and pharmacy subsidiaries. Consequently, the
Company has claimed and received reimbursement under Medicare for contract
rehabilitation therapy services (since the acquisition of SCRS in July 1995) and
pharmacy services (beginning in January 1996) provided to patients in its own
facilities at a higher rate than if it did not satisfy these requirements. If
the Company is unable to satisfy these regulations in the future, the
reimbursement the Company receives for contract rehabilitation therapy and
pharmacy services provided to its own facilities would be materially adversely
affected. If, upon audit by relevant reimbursement agencies, such agencies find
that the requirements of any of these regulations has not been satisfied and if,
after appeal, such findings are sustained, the Company could be required to
refund some or all of the difference between its cost of providing these
services and the higher amount actually received. While the Company believes
that it has satisfied and will continue to satisfy these regulations, there can
be no assurance that its position would prevail if contested by relevant
reimbursement agencies.
Dependence on California. The Company's billings to Medi-Cal represent a
significant portion of net operating revenue. California has a less generous and
more heavily regulated healthcare reimbursement system, that typically provides
for lower reimbursement rates, than do a majority of other states, and
historically has enforced its regulations more strictly than most other
jurisdictions. In addition, California has a higher applicable minimum wage and
higher workers' compensation costs than most other states. The Company may be
materially and adversely affected by the failure of Medi-Cal reimbursement rates
to increase in proportion to cost increases, by any reduction in the levels of
reimbursement, or by healthcare reform measures that substantially increase its
operating costs. Further, there have been, and there are likely to continue to
be, strong legislative pressures to avoid increases in Medi-Cal reimbursement
levels and to impose reductions in such payments. The budget adopted by the
State of California for the 1995-1996 fiscal year (which commenced July 1, 1995
and ends June 30, 1996) included no increase or decrease in Medi-Cal
reimbursement rates.
Expansion Risk. The Company intends to pursue a strategy of growth through
strategic acquisitions. This growth is likely to increase the operating
complexity of the Company, as well as the level of responsibility for both
existing and new management personnel. In addition, there can be no assurance
that the Company will find suitable acquisition candidates.
The Company's growth strategy includes the selective acquisition of both
new facilities as well as other service providers. The Company incurs certain
costs and operating inefficiencies in connection with the acquisition of a new
facility relating to the integration of such facility's financial and
administrative system, physical plant and other aspects of its operations into
those of the Company. In addition, the introduction of a substantial portion of
the Company's ancillary services to a new facility may take as long as twelve
months to fully implement. There can be no assurance that each of the service
providers the Company may acquire will be profitable following such acquisition.
The acquisition of a service provider that is not profitable, or the acquisition
of new facilities that result in significant integration costs and
inefficiencies, could adversely affect the Company's profitability. The Company
expects to finance new acquisitions from a combination of the cash on hand,
funds from operations and borrowings under its credit facility. Depending on the
number, size and timing of such transactions, the Company may in the future
require additional financing in order to continue to make acquisitions. There is
no assurance that such additional financing, if any, will be available to the
Company on acceptable terms. In addition, certain of the Company's financing
arrangements include limitations on the Company's ability to incur additional
indebtedness.
Uncertainty of Litigation. The Company is from time to time sued by or on
behalf of patients at one or more of its facilities or to whom healthcare
services were provided seeking to recover for injuries sustained as a result of
alleged errors and omissions. Often these suits also allege that the injuries
resulted from intentional actions or omissions of healthcare personnel for whom
the Company is asserted to have legal responsibility, and consequently seek
awards of punitive damages. The Company also is from time to time sued by
persons claiming that their employment by the Company was improperly terminated,
that they were denied employment or promotions because of their race, creed,
religion, gender, ethnic origin or sexual orientation, or that they suffered
other tortious conduct, which suits seek awards of compensatory, incidental and
punitive damages. Although the Company maintains insurance for its professional
errors and omissions, it is not insured for damages sustained as a result of
wrongful termination or intentional torts, nor for punitive damages. The
Company's financial condition and results of operations could be adversely
affected by a significant award of damages that is not covered by insurance.
However, the Company is not aware of any pending litigation for which it has not
established an appropriate reserve or for which, in the Company's opinion it
does not have valid legal defenses.
Control by Stockholder Groups and Officers and Directors. Based on their
filings on Schedule 13D, two stockholder groups reported beneficial ownership of
approximately 21% and 7%, on a primary basis, respectively, of the Common Stock,
and the officers and directors of the Company have reported beneficial ownership
of approximately 9%, on a primary basis, of the Common Stock. As a result of
such holdings, these stockholder groups and the Company's officers and directors
have the ability to exert significant influence over the outcome of all matters
submitted to the Company's stockholders for approval, including the election of
directors.
Dependence on Key Personnel. The Company is dependent on the management
experience and continued services of the Company's executive offers. The loss of
the services of one or more of such officers for any reason could have a
material adverse effect on the Company's business. In addition, the Company's
continued growth depends on its ability to attract and retain skilled employees,
and on the ability of its officers and key employees to manage growth
successfully.
Competition. The Company operates in a highly competitive industry. The
Company's facilities, pharmacy operations, home healthcare agencies and
therapists generally operate in communities that are also served by similar
facilities and agencies operated by others. Some competing facilities and
agencies provide services that are not offered by the Company and some are
operated by entities having greater financial and other resources and longer
operating histories than the Company. In addition, some are operated by
nonprofit organizations or government agencies supported by endowments,
charitable contributions, tax revenues and other sources that are not available
to the Company. There can be no assurance that the Company will not encounter
increased competition in the future that would adversely affect the Company's
results of operations.
Forward-Looking Statements. This Prospectus (including the statements
incorporated by reference) contains forward-looking statements within the
meaning of Section 27A of the Securities Act. Discussions containing such
forward-looking statements may be found in the material set forth in the
Company's annual and quarterly reports, under "Management's Discussion and
Analysis of Financial Condition and Results of Operations Liquidity and Capital
Resources" and "Business," as well as within this Prospectus (including the
statements incorporated by reference), generally. In addition, when used in this
Prospectus (including the statements incorporated by reference), the words
"believes," "anticipates," "expects," and similar expressions are intended to
identify forward-looking statements. Such statements are subject to a number of
risks and uncertainties. Actual results in the future could differ materially
from those described in the forward-looking statements as a result of risk
factors set forth above (which list may not be exhaustive) and the matters set
forth in this Prospectus (including the statements incorporated by reference)
generally. The Company does not undertake to publicly release any revisions to
these forward-looking statements to reflect any future events or circumstances.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the shares
of Common Stock covered by this Prospectus. The Company will, however, receive
proceeds from the exercise of the Options in an amount equal to the number of
shares of Common Stock purchased upon exercise of Options multiplied by the
exercise price of such Options, the closing price on the New York Stock Exchange
for the Common Stock on the date of grant of the Options. Any net proceeds to
the Company resulting from the exercise of such securities may be used for
general working capital purposes.
SELLING SHAREHOLDERS
The persons that may offer shares of Common Stock pursuant to this
Prospectus (the "Selling Shareholders") are persons that have heretofore been
granted shares of Common Stock and Options pursuant to the Plan. Each of the
Selling Shareholders serves as a non-employee director of the Company. All of
the 120,000 shares of Common Stock of the Company offered by this Prospectus are
being offered for the account of the Selling Shareholders. All of such shares
are shares that may hereafter be acquired by Selling Shareholders upon the
exercise of Options that have heretofore been granted to Selling Shareholders
pursuant to the Plan. Selling Shareholders that are currently identifiable
(i.e., that currently hold options granted pursuant to the Plan), are named in
the table below. Additional Selling Stockholders may be named in one or more
supplements to this Prospectus.
The following table sets forth certain information concerning the
Selling Shareholders as of the date of this Prospectus:
<TABLE>
<CAPTION>
Percentage of Common Shares
Owned
--------------- ---------------
Number of
Common Shares Shares
Beneficially Offered Before After
Name (1) Owned (2) for Resale Offer (10) Sale (11)
--------- --------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
John W. Adams 57,564 16,000(3) * *
Gregory S. Anderson 572,707 24,000(4) 3.4% 3.3%
Tony M. Astorga 25,000 24,000(5) * *
Robert G. Coo 39,199 16,000(6) * *
Cecil R. Mays 109,774 8,000(7) * *
John F. Nickoll 501,893 16,000(8) 3.0% 2.9%
Arthur J. Pasmas 18,000 16,000(9) * *
- ---------------
* represents less than 1%
(1) The address of each such individual is c/o Regency Health Services, Inc.,
2742 Dow Avenue, Tustin, California 92780-7245.
(2) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares of a given date which such person has
the right to acquire within 60 days after such date.
(3) Includes 4,000 shares of Common Stock granted pursuant to the Plan, 6,000
shares of Common Stock issuable upon exercise of options granted pursuant
to the Plan at an exercise price of $15.00 per share and 6,000 shares of
Common Stock issuable upon exercise of options granted pursuant to the Plan
at an exercise price of $10.50 per share, all of which may be offered for
resale pursuant to this Prospectus.
(4) Includes 6,000 shares of Common Stock granted pursuant to the Plan, 6,000
shares of Common Stock issuable upon exercise of options granted pursuant
to the Plan at an exercise price of $10.44 per share, 6,000 shares of
Common Stock issuable upon exercise of options granted pursuant to the Plan
at an exercise price of $15.00 per share and 6,000 shares of Common Stock
issuable upon exercise of options granted pursuant to the Plan at an
exercise price of $10.50 per share, all of which may be offered for resale
pursuant to this Prospectus.
(5) Includes 6,000 shares of Common Stock granted pursuant to the Plan, 6,000
shares of Common Stock issuable upon exercise of options granted pursuant
to the Plan at an exercise price of $10.44 per share, 6,000 shares of
Common Stock issuable upon exercise of options granted pursuant to the Plan
at an exercise price of $15.00 per share and 6,000 shares of Common Stock
issuable upon exercise of options granted pursuant to the Plan at an
exercise price of $10.50 per share, all of which may be offered for resale
pursuant to this Prospectus.
(6) Includes 4,000 shares of Common Stock granted pursuant to the Plan, 6,000
shares of Common Stock issuable upon exercise of options granted pursuant
to the Plan at an exercise price of $15.00 per share and 6,000 shares of
Common Stock issuable upon exercise of options granted pursuant to the Plan
at an exercise price of $10.50 per share, all of which may be offered for
resale pursuant to this Prospectus.
(7) Includes 2,000 shares of Common Stock granted pursuant to the Plan and
6,000 shares of Common Stock issuable upon exercise of options granted
pursuant to the Plan at an exercise price of $10.50 per share, all of which
may be offered for resale pursuant to this Prospectus.
(8) Includes 4,000 shares of Common Stock granted pursuant to the Plan, 6,000
shares of Common Stock issuable upon exercise of options granted pursuant
to the Plan at an exercise price of $15.00 per share and 6,000 shares of
Common Stock issuable upon exercise of options granted pursuant to the Plan
at an exercise price of $10.50 per share, all of which may be offered for
resale pursuant to this Prospectus.
(9) Includes 4,000 shares of Common Stock granted pursuant to the Plan, 6,000
shares of Common Stock issuable upon exercise of options granted pursuant
to the Plan at an exercise price of $15.00 per share and 6,000 shares of
Common Stock issuable upon exercise of options granted pursuant to the Plan
at an exercise price of $10.50 per share, all of which may be offered for
resale pursuant to this Prospectus.
(10) Percentages are based upon 16,712,285 shares issued and outstanding as of
May 15, 1996. All figures assume no exercise of any warrants or other
outstanding options, other than with respect to those set forth for the
individual persons listed in the above table, pursuant to Rule 13d-3 of the
Exchange Act.
(11) Does not constitute a commitment to sell any or all of the stated number of
shares of Common Stock to be registered. The number of shares to be offered
shall be determined from time to time by each Selling Shareholder at his
sole discretion.
</TABLE>
PLAN OF DISTRIBUTION
The Selling Shareholders are offering the shares of Common Stock for their
own account and not for the account of the Company. The Company will not receive
any proceeds from the sales by the Selling Shareholders.
See "Use of Proceeds."
The shares of Common Stock offered by the Selling Shareholders may be sold
from time to time by the Selling Shareholders directly to purchasers or,
alternatively, may be offered from time to time through agents, brokers, dealers
or underwriters, who may receive compensation in the form of concessions or
commissions from the Selling Shareholders or purchasers of the shares of Common
Stock (which compensation may be in excess of customary commissions). Sales of
the shares of Common Stock may be made in one or more transactions through the
New York Stock Exchange, otherwise in the over-the-counter market, or in
privately negotiated transactions or otherwise, and such sales may be made at
the market price prevailing at the time of sale, a price related to such
prevailing market price or a negotiated price.
Under the Exchange Act and the regulations thereunder, any person engaged
in the distribution of the shares of Common Stock of the Company offered by this
Prospectus may not simultaneously engage in market making activities with
respect to the shares of Common Stock of the Company during the applicable
"cooling off" periods prior to the commencement of such distribution. In
addition, and without limiting the foregoing, such Selling Shareholder will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder including, without limitation, Rules 10b-6 and 10b-7,
which provisions may limit the timing of purchases and sales of shares of Common
Stock by the Selling Shareholders.
To the extent required, the Company will use its best efforts to file,
during any period in which offers or sales are being made, one or more
supplements to this Prospectus to describe any material information with respect
to the plan of distribution not previously disclosed in this Prospectus or any
material change to such information in this Prospectus.
LEGAL MATTERS
The validity of the shares of Common Stock that may be offered hereby has
been passed upon for the Company by Sidley & Austin, 555 West Fifth Street, Los
Angeles, California 90013.
EXPERTS
The financial statements and schedules incorporated in this Prospectus by
reference to the Annual Report on Form 10-K have been audited by Arthur Andersen
LLP, public accountants, as indicated in their reports with respect thereto and
are included herein in reliance upon authorities of said firm as experts in
accounting and auditing.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents which have heretofore been filed by Regency Health
Services, Inc. (the "Company" or the "Registrant"), with the Commission pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are
incorporated by reference herein and shall be deemed to be a part hereof:
(1) The Company's Annual Report on Form 10-K for the year ended December 31,
1995;
(2) The Company's Quarterly Report on Form 10-Q for the period ended March 31,
1996;
(3) An amendment to the Company's Quarterly Report on Form 10-Q/A for the
period ended March 31, 1996;
(4) The Company's Current Report on Form 8-K dated February 1, 1996;
(5) An amendment to the Company's Current Report on Form 8-K/A dated
February 1, 1996; and
(6) The description of the Company's common stock, par value $.01 per share,
set forth in the section entitled "Description of Regency Securities" in
the Company's Registration Statement on Form S-4, filed with the Commission
on March 4, 1994 (File No. 33-52497), including any amendment or report
filed for the purpose of updating such information.
In addition, all documents filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment to this Registration Statement 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 made a part hereof from their
respective dates of filing (such documents, and the documents enumerated above,
being hereinafter referred to as "Incorporated Documents"); provided, however,
that the documents enumerated above or subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act in each year
during which the offering made by this Registration Statement is in effect prior
to the filing with the Commission of the Company's Annual Report on Form 10-K
covering such year shall not be Incorporated Documents or be incorporated by
reference in this Registration Statement or be a part hereof from and after the
filing of such Annual Report on Form 10-K.
Any statement contained in an Incorporated Document shall be deemed to be
modified or superseded for purposes of this Registration Statement to the extent
that a statement contained herein or in any other subsequently filed
Incorporated Document modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Registration Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
The Company is incorporated in the State of Delaware. Under Section 145 of
the General Corporation Law of the State of Delaware (the "DGCL"), a Delaware
corporation generally has the power to indemnify its present and former
directors and officers against expenses and liabilities incurred by them in
connection with any suit to which they are, or are threatened to be made, a
party by reason of their serving in those positions so long as they acted in
good faith and in a manner they reasonably believed to be in, or not opposed to,
the best interests of the company, and with respect to any criminal action, they
had no reasonable cause to believe their conduct was unlawful. The statute
expressly provides that the power to indemnify authorized thereby is not
exclusive of any rights granted under any by-law, agreement, vote of
stockholders or disinterested directors, or otherwise. The Restated Certificate
of Incorporation of the Company ("the Restated Certificate") and the Restated
Bylaws of the Company ("Restated Bylaws") provide that the Company shall
indemnify, defend and hold harmless any and all of its existing and former
directors, advisory directors, officers and agents from and against any and all
losses, claims, damages, expenses, fees or liabilities, whether joint or
several, incurred by each of them including but not limited to all legal fees,
judgments, penalties or amounts paid in defense, settlement or compromise, all
of which may arise or be incurred, rendered or levied in any legal action or
administrative proceeding brought to threatened against any of them for or on
account of any action or omission while acting as a director, advisory director,
officer or agent of the Company.
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 such 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 (relating to liability for authorized
acquisitions or redemptions of, or dividends on, capital stock) of the DGCL, or
(iv) for any transactions from which the director derived an improper personal
benefit. The Restated Certificate contains such a provision.
The preceding discussion of the Restated Certificate, the Restated Bylaws
and Section 145 of the DGCL is not intended to be exhaustive and is qualified in
its entirety by the Restated Certificate, the Restated Bylaws and Section 145 of
the DGCL.
Item 7. Exemption from Registration Claimed.
The shares of Common Stock to be reoffered or resold pursuant to this
Registration Statement were, or will be, issued by the Company pursuant to
restricted stock awards and options granted under the Company's Director Stock
Plan prior to the filing of this Registration Statement. Such awards were
granted solely to eligible participants who were non-employee directors of the
Company under the exemption provided by Section 4(2) of the Act.
<PAGE>
Item 8. Exhibits.
The following exhibits are filed with this Registration Statement.
Exhibit Description
Number
- -------------------------------------------------------------------------
4.1 Regency Health Services, Inc. Directors Stock
Plan. (Incorporated by reference to the Company's
1993 Proxy Statement dated December 10, 1993 (File
No. 1-11144)(the "1993 Proxy Statement")).
4.2 Form of Stock Option Agreement for the Directors Stock Plan.
4.3 Form of Indenture, dated as of March 23, 1993
between Regency Health Services, Inc. and Chemical
Trust Company of California as Indenture Trustee
(Incorporated by reference to the Company's
Registration Statement of Form S-1 (No. 33-53590)).
4.4 Form of Indenture, dated as of October 12, 1995, for 9-7/8%
Senior Subordinated Notes due 2002, among Regency Health
Services, Inc., the Subsidiary Guarantors named therein
and U.S. Trust Company of California,
N.A., as Trustee (Incorporated by
reference to the Company's Current
Report on Form 8-K dated August 24,
1995 (File No. 1-11144)).
4.5 Voting Agreement, dated as of December 27, 1993, by and among
Regency Health Services, Inc. and the stockholders named therein
(Incorporated reference to the Company's and Care Enterprises,
Inc.'s Joint Proxy Statement dated March 7, 1994 (the "Joint
Proxy Statement")).
4.6 Voting Agreement, dated as of December 27, 1993,
by and between Care Enterprises, Inc. and the
stockholders named therein (Incorporated by
reference to the Joint Proxy Statement).
4.7 Second Amended and Restated Registration Rights
Agreement, dated as of January 31, 1994 among
Regency Health Services, Inc., Care Enterprises,
Inc. and the stockholders named therein
(Incorporated by referenced to the Joint Proxy
Statement).
4.8 Registrant's Long-Terms Incentive Plan
(Incorporated by reference to the 1993 Proxy
Statement).
4.9 Amendment to Regency Health Services, Inc.
Long-Terms Incentive (Incorporated by reference to
the Joint Proxy Statement).
5.1 Opinion of Sidley & Austin.
23.1 Consent of Sidley & Austin (Incorporated by
reference to Exhibit 5.1 hereof).
23.2 Consent of Arthur Andersen LLP.
<PAGE>
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, as amended (the "Securities
Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Company pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the 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 hereby which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
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 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 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 Securities Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
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 Tustin, State of California, on the 27th day of
June, 1996.
REGENCY HEALTH SERVICES, INC.
By /s/ Richard K. Matros
-------------------------------
Richard K. Matros
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
Signature Title Date
<S><C> <C> <C>
/s/ Richard K. Matros
- ----------------------- President, Chief Executive
Richard K. Matros Officer and Director June 24, 1996
/s/ Bruce D. Broussard
- ----------------------- Chief Financial Officer June 24, 1996
Bruce D. Broussard (Principal Financial Officer)
/s/ John W. Adams
- ----------------------- Director June 24, 1996
John W. Adams
/s/ Gregory S. Anderson
- ----------------------- Director June 24, 1996
Gregory S. Anderson
/s/ Tony M. Astorga
- ----------------------- Director June 24, 1996
Tony M. Astorga
/s/ Robert G. Coo
- ----------------------- Director June 24, 1996
Robert G. Coo
/s/ John F. Nickoll
- ----------------------- Director June 24, 1996
John F. Nickoll
/s/ Arthur J. Pasmas
- ----------------------- Director June 20, 1996
Arthur J. Pasmas
</TABLE>
<PAGE>
<TABLE>
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Description
Page
<S> <C> <C>
4.1 Directors Stock Plan (Included as Exhibit A to the
Company's 1993 Proxy Statement dated December 10, 1993
(File No. 1-11144) (the "1993 Proxy Statement)).
4.2 Form of Stock Option Agreement for the Directors Stock
Plan.
4.3 Form of Indenture, dated as of March 23, 1993 between
Regency Health Services, Inc. and Chemical Trust
Company of California, as Indenture
Trustee (Included as Exhibit 4.3 to the Company's
Registration Statement of Form S-1 (No. 33-53590)).
4.4 Form of Indenture, dated as of October 12, 1995, for
9-7/8% Senior Subordinated Notes due 2002, among Regency
Health Services, Inc., the Subsidiary Guarantors named
therein and U.S. Trust Company of California, N.A., as
Trustee (Included as Exhibit 10.02 to the Company's
Current Report on Form 8-K dated August 24, 1995 (File
No. 1-11144)).
4.5 Voting Agreement, dated as of December 27, 1993, by and
among Regency Health Services, Inc. and the stockholders
named therein (Included as Exhibit 4.3 to the Company's
and Care Enterprises, Inc.'s Joint Proxy Statement dated
March 7, 1994 (the "Joint Proxy Statement")).
4.6 Voting Agreement, dated as of December 27, 1993, by and
between Care Enterprises, Inc. and the stockholders
named therein (Included as Exhibit
4.4 to the Joint Proxy Statement).
4.7 Second Amended and Restated Registration Rights
Agreement, dated as of January 31, 1994 among Regency
Health Services, Inc., Care Enterprises,
Inc. and the stockholders named therein (Included as
Exhibit 10.112 to the Joint Proxy Statement).
4.8 Registrant's Long-Term Incentive Plan (Included as
Exhibit B to the 1993 Proxy Statement).
4.9 Amendment to Regency Health Services, Inc. Long-Term
Incentive (Included as Exhibit 10.113 to the Joint
Proxy Statement).
5.1 Opinion of Sidley & Austin.
23.1 Consent of Sidley & Austin (Incorporated by reference
to Exhibit 5.1 hereof).
23.2 Consent of Arthur Andersen LLP.
</TABLE>
REGENCY HEALTH SERVICES, INC. Exhibit 4.2
NON-QUALIFIED STOCK OPTION AGREEMENT
PURSUANT TO THE DIRECTORS STOCK PLAN
This Option Agreement is made and entered into by and between
REGENCY HEALTH SERVICES, INC., a Delaware corporation (the "Company") and
________________ ("Nonemployee Director"), as of the 1st day of July, 199_
(which date is hereinafter referred to as the "Date of Grant"). If Nonemployee
Director subsequently becomes employed by a subsidiary of the Company, the term
"Company" shall be deemed to refer collectively to Regency Health Services, Inc.
and the subsidiary or subsidiaries that employ the Nonemployee Director.
R E C I T A L S
WHEREAS, the Company has adopted the Regency Health Services,
Inc. Directors Stock Plan (the "Plan") to encourage ownership in the Company by
directors, to strengthen the ability of the Company to attract and retain the
services of experienced and knowledgeable individuals as directors, and to
provide those individuals with an incentive to continue to work for the best
interests of the Company and its shareholders; and
WHEREAS, the Committee established pursuant to the Plan (the
"Committee") believes that the granting of the Option herein described to
Nonemployee Director is consistent with the stated purposes for which the Plan
was adopted;
NOW, THEREFORE, in consideration of the mutual covenants and
conditions hereinafter set forth and for other good and valuable consideration,
the Company and Nonemployee Director agree as follows:
A G R E E M E N T
1. Grant of Option. The Company hereby grants to Nonemployee Director the
right and option (hereinafter referred to as the "Option") to purchase an
aggregate of Six Thousand (6,000) shares (such number being subject to
adjustment as provided in paragraph 10 hereof and Article 4.3 of the Plan) of
the common stock of Regency Health Services, Inc. (the "Stock") on the terms and
conditions herein set forth. This Option may be exercised in whole or in part
and from time to time as hereinafter provided.
2. Purchase Price. The price at which Nonemployee
Director shall be entitled to purchase the Stock covered by the Option shall be
____________ Dollars ($____) per share.
3. Term of Option. The Option hereby granted shall be and remain in force
and effect for a period of ten (10) years from the Date of Grant, through and
including the normal close of business of the Company on July 1, 200_
("Expiration Date"), subject to earlier termination as provided in paragraphs 7,
8 and 10 hereof.
4. Exercise of Option. The Option may be exercised by Nonemployee Director
at any time within the time period beginning six (6) months and one day after
the grant of the Option, as to all or any part of the shares covered hereby by
delivery to the Company of written notice of exercise and payment of the
purchase price as provided in paragraphs 5 and 6 hereof.
In the event of a Change in Control of the Company, any Options under the
Plan that are still outstanding and not yet vested or are subject to
restrictions shall become immediately one hundred percent (100%) vested and
shall be free of any restrictions, as of the first day that the definition of
Change of Control has been fulfilled and shall be exercisable for the remaining
duration of the term of the Option. All Options that are exercisable as of the
effective date of the Change in Control will remain exercisable for the
remaining duration of the Options.
5. Method of Exercising Option. Subject to the terms and conditions of this
Option Agreement, the Option may be exercised by timely delivery to the Company
of written notice, which notice shall be effective on the date received by the
Company (the "Effective Date"). The notice shall state Nonemployee Director's
election to exercise the Option, the number of shares in respect of which an
election to exercise has been made, the method of payment elected (see paragraph
6 hereof), and the Social Security number of Nonemployee Director. Such notice
shall be signed by the Nonemployee Director and shall be accompanied by payment
of the purchase price of such shares. In the event the Option shall be exercised
by a person or persons other than Nonemployee Director pursuant to paragraph 7
hereof, such notice shall be signed by such other person or persons and shall be
accompanied by proof acceptable to the Company of the legal right of such person
or persons to exercise the Option. All shares delivered by the Company upon
exercise of the Option as provided herein shall be fully paid and nonassessable
upon delivery.
6. Method of Payment for Options. Payment for
shares purchased upon exercise of the Option shall be made by the Nonemployee
Director by:
a) cash or its equivalent;
b) tendering previously acquired Shares having
a Fair Market Value at the time of exercise
equal to the total Option Price (provided
that the Shares tendered upon Option
exercise have been held by the Nonemployee
Director for at least six (6) months prior
to their tender to satisfy the Option
Price); and
c) a combination of (a) and (b).
7. Termination of Service on Board of Directors Due to Death or Disability.
In the event that Nonemployee Director's service on the Board is terminated by
reason of death or disability, to the extent the Option is exercisable as of the
date of death or disability, it will remain exercisable at any time prior to its
expiration date or for one (1) year after the date of death or disability,
whichever period is shorter, by the Nonemployee Director or such person or
persons as shall have been named as the Nonemployee Director's legal
representative or beneficiary, or by such persons that have acquired the
Nonemployee Director's rights under the Option by will or by the laws of descent
and distribution. To the extent the Option is not exercisable as of the date of
death or disability, the Option will be forfeited and returned to the Company
(and shall once again be available for grant under the Plan). In no event shall
the Option, or any part thereof, be exercisable after the Expiration Date. The
Committee shall have the right to require evidence satisfactory to it of the
rights of any person or persons seeking to exercise the Option under this
paragraph 7 to exercise the Option.
8. Termination of Service on Board of Directors for Other Reasons. If the
Nonemployee Director's service on the Board is terminated for any reason other
than for death or disability, any outstanding Options held by the Nonemployee
Director that are not fully vested as of the date of termination are immediately
forfeited to the Company (and shall once again become available for grant under
the Plan). To the extent an Option is exercisable as of such date, it will
remain exercisable for ninety (90) days after the date the Nonemployee
Director's service on the Board terminates.
9. Nontransferability. The Option granted by this Option Agreement shall be
exercisable only during the term of the Option provided in paragraph 3 hereof
and, except as provided in paragraphs 7 and 8 above, only by Nonemployee
Director during his lifetime and while a Nonemployee Director of the Company.
The Option granted by this Option Agreement shall not be sold, transferred,
pledged, assigned, or otherwise alienated, other than by will, or by the laws of
descent and distribution.
10. Adjustments in Number of Shares and Option Price. In the event a stock
dividend is declared upon the Stock, the remaining shares of Stock then subject
to this Option shall be increased proportionately without any change in the
aggregate purchase price therefor. In the event the Stock shall be changed into
or exchanged for a different number or class of shares of stock of the Company
or of another corporation, whether through reorganization, recapitalization,
stock split-up, combination of shares, merger or consolidation, there shall be
substituted for each such remaining share of Stock then subject to this Option
the number and class of shares of stock into which each outstanding share of
Stock shall be so exchanged, all without any change in the aggregate purchase
price for the shares then subject to the Option.
11. Delivery of Shares. No shares of Stock shall be delivered upon exercise
of the Option until (i) the purchase price shall have been paid in full in the
manner herein provided; (ii) applicable taxes required to be withheld have been
paid or withheld in full; (iii) approval of any governmental authority required
in connection with the Option, or the issuance of shares thereunder, has been
received by the Company; and (iv) if required by the Committee, Nonemployee
Director has delivered to the Committee an Investment Letter in form and content
satisfactory to the Company as provided in paragraph 12 hereof.
12. Securities Act. The Company shall have the right, but not the
obligation, to cause the shares of Stock issuable upon exercise of the Option to
be registered under the appropriate rules and regulations of the Securities and
Exchange Commission.
The Company shall not be required to deliver any shares of Stock pursuant
to the exercise of all or any part of the Option if, in the opinion of counsel
for the Company, such issuance would violate the Securities Act of 1933 or any
other applicable federal or state securities laws or regulations. The Committee
may require that Nonemployee Director, prior to the issuance of any such shares
pursuant to exercise of the Option, sign and deliver to the Company a written
statement ("Investment Letter") stating (i) that Nonemployee Director is
purchasing the shares for investment and not with a view to the sale or
distribution thereof; (ii) that Nonemployee Director will not sell any shares
received upon exercise of the Option or any other shares of the Company that
Nonemployee Director may then own or thereafter acquire except either (a)
through a broker on a national securities exchange or (b) with the prior written
approval of the Company; and (iii) containing such other terms and conditions as
counsel for the Company may reasonably require to assure compliance with the
Securities Act of 1933 or other applicable federal or state securities laws and
regulations. Such Investment Letter shall be in form and content acceptable to
the Committee in its sole discretion.
If shares of Stock or other securities issuable pursuant to the exercise of
the Option have not been registered under the Securities Act of 1933 or other
applicable federal or state securities laws or regulations, such shares shall
bear a legend restricting the transferability thereof, such legend to be
substantially in the following form:
"The shares represented by this certificate have not been registered or
qualified under federal or state securities laws. The shares may not be offered
for sale, sold, pledged or otherwise disposed of unless so registered or
qualified, unless an exemption exists or unless such disposition is not subject
to the federal or state securities laws, and the availability of any exemption
or the inapplicability of such securities laws must be established by an opinion
of counsel, which opinion and counsel shall both be reasonably satisfactory to
the Company."
13. Federal and State Taxes. Upon exercise of the Option, or any part
thereof, the Nonemployee Director may incur certain liabilities for federal,
state, or local taxes and the Company may be required by law to withhold such
taxes for payment to taxing authorities. Upon determination by the Company of
the amount of taxes required to be withheld, if any, with respect to the shares
to be issued pursuant to the exercise of the Option, Nonemployee Director shall
pay all Federal, state, and local tax withholding requirements by having the
Company withhold Stock (to the extent that Stock is issued pursuant to the
Award) having a Fair Market Value on the date that tax is to be determined equal
to the tax otherwise required by the withheld.
14. Definitions: Copy of Plan. To the extent not specifically provided
herein, all capitalized terms used in this Option Agreement shall have the same
meanings ascribed to them in the Plan. By the execution of this Agreement,
Nonemployee Director acknowledges receipt of a copy of the Plan.
15. Administration. This Option Agreement shall at all times be subject to
the terms and conditions of the Plan and the Plan shall in all respects be
administered by the Committee in accordance with the terms of and as provided in
the Plan. The Committee shall have the sole and complete discretion with respect
to all matters reserved to it by the Plan and decisions of the majority of the
Committee with respect thereto and to this Option Agreement shall be final and
binding upon Nonemployee Director and the Company. In the event of any conflict
between the terms and conditions of this Option Agreement and the Plan, the
provisions of the Plan shall control.
16. Continuation of Service. This Option Agreement shall not be construed
to confer upon Nonemployee Director any right to continue his service on the
Board of the Company and shall not limit the right of the Company, in is sole
discretion, to terminate the service of Nonemployee Director at any time.
17. Obligations to Exercise. Nonemployee Director shall have no obligation
to exercise any option granted by this Agreement.
18. Governing Law. This Option Agreement shall be interpreted and
administered under the laws of the State of Delaware.
19. Amendments. This Option Agreement may be amended only by a written
agreement executed by the Company and Nonemployee Director. The Company and
Nonemployee Director acknowledge that changes in federal tax laws enacted
subsequent to the Date of Grant, and applicable to stock options, may provide
for tax benefits to the Company or Nonemployee Director. In any such event, the
Company and Nonemployee Director agree that this Option Agreement may be amended
as necessary to secure for the Company and Nonemployee Director any benefits
that may result from such legislation. Any such amendment shall be made only
upon the mutual consent of the parties, which consent (of either party) may be
withheld for any reason.
IN WITNESS WHEREOF, the Company has caused this Option agreement to be duly
executed by its officers thereunto duly authorized, and Nonemployee Director has
hereunto set his hand as of the day and year first above written.
"COMPANY" "NONEMPLOYEE DIRECTOR"
REGENCY HEALTH SERVICES, INC.
By:__________________________ ______________________________________
Richard K. Matros (Name of Nonemployee Director)
Chief Executive Officer
Exhibit 5.1
June 27, 1996
Regency Health Services, Inc.
2742 Dow Avenue
Tustin, California 92780
Re: Regency Health Services, Inc.
Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as special counsel to Regency Health Services, Inc., a
Delaware corporation ("Regency"), in connection with the registration statement
on Form S-8 (the "Registration Statement") being filed with the Securities and
Exchange Commission (the "Commission") on June 27, 1996 by Regency, relating to
the registration under the Securities Act of 1933, as amended (the "Securities
Act") of 200,000 shares (the "Shares") of common stock, par value $.01 per share
(the "Regency Common Stock"), of Regency to be issued in connection with options
and restricted stock awards granted under the Regency Health Services, Inc.
Director Stock Plan (the "Plan").
This opinion is delivered in connection with the requirements of Item
601(b)(5) of Regulation S-K under the Securities Act.
In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the Registration Statement, as filed with the Commission on the date hereof
under the Securities Act; (ii) the Plan; (iii) the Restated Certificate of
Incorporation and the Restated Bylaws of Regency; (iv) copies of certain
resolutions adopted by the Board of Directors of Regency; (v) a form of a
specimen certificate representing the Regency Common Stock and (vi) such other
documents as we have deemed necessary or appropriate as a basis for the opinion
set forth below. In our examination, we have assumed the genuineness of all
signatures, the legal capacity of all natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies. As to any facts material to this
opinion that we did not independently establish or verify, we have relied upon
statements and representations of officers and other representatives of Regency.
We express no opinion as to, the application of the securities or blue sky
laws of the various states to the sale of the Shares.
Based upon and subject to the foregoing, and assuming (i) the valid
issuance of options pursuant to and in accordance with the Plan and (ii) the
conformity of the certificates representing the Shares to the form of the
specimen thereof examined by us and the due and proper execution and delivery of
such certificates, we are of the opinion that the Shares, when issued upon
exercise of options or pursuant to restricted stock awards in accordance with
the terms of the Plan, will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5.1 to the Registration Statement.
Very truly yours,
/s/ Sidley & Austin
CONSENT OF INDEPENDENT PUBLIC ACCOUNTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our reports dated February 29,
1996, incorporated by reference in Regency Health Services, Inc.'s Form 10-K for
the year ended December 31, 1995 and to all references to our Firm included in
this registration statement.
ARTHUR ANDERSEN LLP
Orange County, California
June 27, 1996
