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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A-1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR QUARTERLY PERIOD ENDED FEBRUARY 28, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER 0-19393
MANAGED CARE SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-3338328
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer
Identification No.)
7600 NORTH 16TH STREET
SUITE 150
PHOENIX, ARIZONA 85020
(Address of principal executive offices)
(Zip Code)
602-331-5100
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No _______
There were 4,602,723 shares of common stock outstanding as of April 1, 1998.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(10.1) Agreement between the registrant and the State of
Indiana.(1)
(10.2) Purchase Agreement between the registrant and Beverly
Enterprises, Inc.(1)
(10.3) 1998 CEO Stock Option Plan
(10.4) Stock Option Certificate for Options Granted to
Michael D. Hernandez
(27) Financial data schedule.(1)
(b) Reports on Form 8-K
None
(1) Filed as part of the registrant's Quarterly Report on Form 10-Q for
the quarter ended February 28, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MANAGED CARE SOLUTIONS, INC.
By: /s/ Michael D. Hernandez
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Michael D. Hernandez, Chairman and Chief
Executive Officer
By: /s/ Michael J. Kennedy
----------------------
Michael J. Kennedy, Chief Financial Officer
Dated: April 15, 1998
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[TYPE] EX-10.3 1998 CEO Stock Option Plan
Exhibit 10.3
MANAGED CARE SOLUTIONS, INC.
1998 CEO STOCK OPTION PLAN
The purpose of this Stock Option Plan (the "Plan") is to benefit Managed
Care Solutions, Inc. (the "Company") and its subsidiaries through the
maintenance and development of management by offering certain present and future
executive and key personnel a favorable opportunity to become holders of stock
in the Company over a period of years, thereby giving them a permanent stake in
the growth and prosperity of the Company and encouraging the continuance of
their services with the Company or its subsidiaries. Options granted under this
Plan are intended not to qualify as "Incentive Stock Options" as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and
the Plan shall be construed so as to carry out that intention.
1. ADMINISTRATION. The Plan shall be administered by a committee (the
"Committee") of the Board of Directors composed of no fewer than two
"non-employee" "outside" directors designated by the Board of Directors. For
purposes of this Plan, "non-employee" directors shall include directors who meet
the tests for "non-employee directors" under the rules and regulations adopted
by the Securities and Exchange Commission under Section 16 of the Securities
Exchange Act of 1934 and (b) "outside" directors shall include directors who
meet the tests for "outside director" under the Regulations adopted by the
Internal Revenue Service relating to Section 162 of the Code, including all of
the transition rules thereunder. A majority of the Committee shall constitute a
quorum, and the acts of a majority of the members present at any meeting at
which a quorum is present, or acts approved in writing by all of the members,
shall be the acts of the Committee. This Plan and options granted under this
Plan are intended to qualify for exemption from Section 16(b) of the Securities
Exchange Act of 1934 and to qualify as performance-based compensation under
Section 162 of the Code and shall be interpreted in such a way as to result in
such qualification.
Subject to the provisions of the Plan, the Committee shall have full and
final authority, in its absolute discretion, (a) to determine the persons to be
granted options under the Plan, (b) to determine the number of shares subject to
each option, (c) to determine the time or times at which options will be
granted, (d) to determine the option price of the shares subject to each option,
which price shall not be less than the minimum specified in Section 4 of the
Plan, (e) to determine the time or times when each option becomes exercisable
and the duration of the exercise period, (f) to prescribe the form or forms of
the agreements evidencing any options granted under the Plan (which forms shall
be consistent with the Plan), (g) to adopt, amend and rescind such rules and
regulations as, in the Committee's opinion, may be advisable in the
administration of the Plan, and (h) to construe and interpret the Plan, the
rules and regulations and the agreements evidencing options granted under the
Plan and to make all other determinations deemed necessary or advisable for the
administration of the Plan. Any decision made or action taken in good faith by
the Committee in connection with the administration, interpretation, and
implementation of the Plan and of its rules and regulations shall, to the extent
permitted by law, be conclusive and binding upon all optionees under the Plan
and upon any person claiming under or through such an optionee, and no director
of the Company shall be liable for any such decision made or action taken by the
Committee.
2. ELIGIBILITY. Options shall be granted only to key employees and
directors (other than members of the Committee) of the Company and its
subsidiaries.
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3. GRANTING OF OPTIONS.
(a) The Committee may grant options under which a total of not more
than 400,000 shares of the common stock of the Company may be purchased
from the Company, subject to adjustment as provided in paragraph 9. Since
this Plan is being adopted principally to be used for the Chief Executive
Officer of the Company, options to purchase up to 400,000 shares of the
common stock of the Company may be granted to the Chief Executive Officer
of the Company.
(b) No options shall be granted under the Plan after January 12,
2008. If an option expires or is terminated or canceled unexercised as to
any shares, such released shares may again be optioned (including a grant
in substitution for a canceled option). Shares subject to options may be
made available from unissued or reacquired shares of common stock.
(c) Nothing contained in the Plan or in any option granted pursuant
thereto shall confer upon any optionee any right to be continued in the
employment of the Company or any subsidiary of the Company, or interfere
in any way with the right of the Company or its subsidiaries to terminate
his employment at any time.
4. OPTION PRICE. The option price shall be determined by the Committee
and, subject to the provisions of paragraph 9, shall be not less than the fair
market value, at the time the option is granted, of the stock subject to the
option.
5. DURATION OF OPTIONS, INCREMENTS AND EXTENSIONS.
(a) Subject to the provisions of paragraph 7, each option shall be
for such term of not more than ten years as shall be determined by the
Committee at the date of the grant. Each option shall become exercisable
in such installments, at such time or times, and may be subject to such
conditions, including conditions based upon the performance of the
Company, as the Committee may in its discretion determine at the date of
grant.
(b) The Committee may in its discretion (i) accelerate the
exercisability of any option or (ii) at any time before the expiration or
termination of an option previously granted, extend the terms of such
option (including options held by officers) for such additional period as
the Committee, in its discretion, shall, determine, except that the
aggregate option period with respect to any option, including the original
term of the option and any extensions thereof, shall never exceed ten
years.
6. EXERCISE OF OPTION.
(a) An option may be exercised by giving written notice to the
Company, attention of the Secretary, specifying the number of shares to be
purchased, accompanied by the full purchase price for the shares to be
purchased in cash or by check, except that the Committee may permit the
purchase price for the shares to be paid, all or in part, by the delivery
to the Company of other shares of common stock of the Company in such
circumstances and manner as it may specify. For this purpose, the per
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share value of the Company's common stock shall be the fair market value
at the close of business on the date preceding the date of exercise.
(b) At the time of exercise of any option, the Committee may, if it
shall determine it necessary or desirable for any reason, require the
optionee (or his heirs, legatees, or legal representative, as the case may
be) as a condition upon the exercise, to deliver to the Company a written
representation of present intention to purchase the shares for his own
account for investment and an agreement not to distribute or sell such
shares in violation of the registration provisions of applicable
securities laws. If such representation and agreement are required to be
delivered, an appropriate legend may be placed upon each certificate
delivered to the optionee upon his exercise of part or all of the option
and a stop transfer order may be placed with the transfer agent.
(c) Each option shall also be subject to the requirement that, if at
any time the Committee determines, in its discretion, that the listing,
registration or qualification of the shares subject to the option upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as
a condition of, or in connection with, the issue or purchase of shares
thereunder, the option may not be exercised in whole or in part unless
such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the
Committee.
(d) If the Committee shall determine it necessary or desirable for
any reason, an option shall provide that it is contemplated that the
shares acquired through the exercise of the option will not be registered
under applicable federal and state securities laws and that such shares
cannot be resold unless they are registered under such laws or unless an
exemption from registration is available, and the certificate for any such
shares issued upon the exercise of the option shall bear a legend making
appropriate reference to such provisions.
7. TERMINATION OF EMPLOYMENT-EXERCISE THEREAFTER.
(a) If the employment or tenure as a director of any optionee with
the Company or any of its subsidiaries is terminated for any reason other
than death, permanent disability, retirement or cause, such optionee's
option, to the extent the option is exercisable at the date of
termination, shall expire ninety days after the termination of employment
or directorship (or upon the scheduled termination of the option, if
earlier), and all rights to purchase shares pursuant thereto shall
terminate at such time. Temporary absence from employment because of
illness, vacation, approved leave of absence, or transfer of employment
among the Company and its parent or subsidiary corporations, shall not be
considered to terminate employment or to interrupt continuous employment.
(b) In the event of termination of employment or directorship
because of death or permanent disability (within the meaning of Section
22(e)(3) of the Code), the option may be exercised in full, unless
otherwise provided at the time of grant, without regard to any
installments established under paragraph 5 hereof, by the optionee or, if
he is not living, by his heirs, legatees, or legal representative or
alternate payee under a qualified domestic relations order, as the case
may be, during its specified term prior to one year after the date of
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death or permanent disability. In the event of termination of employment
or directorship because of retirement, the option may be exercised by the
optionee (or, if he dies within three months after such termination, by
his heirs, legatees, legal representative or alternate payee under a
qualified domestic relations order, as the case may be), at any time
during its specified term prior to three months after the date of such
termination, but only to the extent the option was exercisable at the date
of such termination.
(c) If an optionee is discharged for cause, his option shall expire
forthwith and all rights to purchase shares under it shall terminate
immediately. For this purpose, "discharge for cause" means a discharge on
account of dishonesty, disloyalty or insubordination.
(d) Notwithstanding the foregoing provisions of this paragraph 7,
the Committee may in the grant of any option make other and different
provisions with respect to its exercise after the optionee's termination
of employment or directorship.
8. NON-TRANSFERABILITY OF OPTIONS. No option shall be transferable by the
optionee otherwise than by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order, and each option shall be
exercisable during any optionee's lifetime only by the Optionee or Optionee's
legal representative.
9. ADJUSTMENT.
(a) In the event that the Company's outstanding common stock is
changed by any stock dividend, stock split or combination of shares, the
number of shares subject to this Plan and to options under this Plan shall
be proportionately adjusted.
(b) In case of any capital reorganization, or of any
reclassification of the common stock or in case of the consolidation of
the Company with or the merger of the Company with or into any other
corporation (other than a consolidation or merger in which the Company is
the continuing corporation and which does not result in any
reclassification of outstanding shares of common stock) or of the sale of
the properties and assets of the Company as, or substantially as, an
entirety to any other corporation, the Company, or the corporation
resulting from such consolidation or surviving such merger or to which
such sale shall be made, as the case may be, shall determine that upon
exercise of options granted under the Plan after such capital
reorganization, reclassification, consolidation, merger or sale there
shall be issuable upon exercise of an option a kind and amount of shares
of stock or other securities or property (which may, as an example, be a
fixed amount of cash equal to the consideration paid to stockholders of
the Company for shares transferred or sold by them) which the holders of
the common stock (immediately prior to the time of such capital
reorganization, reclassification, consolidation, merger or sale) are
entitled to receive in such transaction as in the judgment of the
Committee is required to compensate equitably for the effect of such event
upon the exercise rights of the optionees. The above provisions of this
paragraph shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers and sales.
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(c) In the event of any such adjustment the purchase price per share
shall be proportionately adjusted.
10. AMENDMENT OF PLAN. The Board of Directors may amend or discontinue the
Plan at any time. However, no such amendment or discontinuance shall (a) change
or impair any option previously granted without the consent of the optionee, (b)
increase the maximum number of shares which may be purchased by all optionees or
any one optionee, (c) change the minimum purchase price, (d) change the
limitations on the option period or increase the time limitations on the grant
of options, or (e) permit the granting of options to members of the Committee.
11. EFFECTIVE DATE. The Plan has been adopted and authorized by the Board
of Directors for submission to the stockholders of the Company. If the Plan is
approved by the affirmative vote of the holders of a majority of the outstanding
voting stock of the Company at a duly held stockholders' meeting, it shall be
deemed to have become effective on January 12, 1998, the date of adoption by the
Board of Directors. Options may be granted under the Plan before its approval by
the stockholders, but subject to such approval, and in each such case the date
of grant shall be determined without reference to the date of the approval of
the Plan by stockholders.
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[TYPE] EX-10.4 Stock Option Certificate
Exhibit 10.4
MANAGED CARE SOLUTIONS, INC.
STOCK OPTION CERTIFICATE
(NOT QUALIFYING AS AN INCENTIVE STOCK OPTION)
This is to certify that Managed Care Solutions, Inc., a Delaware
corporation (the "Company"), has on JANUARY 12, 1998, granted to
-----------------
MICHAEL D. HERNANDEZ (the "Optionee") an option to purchase 400,000 shares of
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its common stock, par value $.01 per share, upon the terms and conditions set
forth herein.
1. The purchase price payable upon exercise of this option, shall be
$4.00 per share, subject to adjustment as provided in paragraph 6 below.
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2. The exercise of this option shall be subject to the following
conditions:
(a) This option shall become exercisable with respect to 25% of the shares
subject to this option 12 months after the date of its grant and with respect to
an additional 25% at the end of each 12-month period thereafter during the
succeeding three years, provided that a disinterested committee of the Board of
Directors may in its discretion accelerate the exercisability of this option
subject to such terms and conditions as it deems necessary and appropriate. All
or any part of the shares with respect to which the right to purchase has
accrued may be purchased at the time of such accrual or at any time or times
thereafter during the option period.
(b) This option may be exercised by giving written notice to the Company,
attention of the Secretary, specifying the number of shares to be purchased,
accompanied by (i) the full purchase price for the shares to be purchased either
in cash or by check; and (ii) payment in full of all withholding taxes due as a
result of the exercise or another arrangement satisfactory to the Company for
the payment of such withholding taxes except that the Committee may permit the
payment of such withholding taxes, all or in part, by the delivery to the
Company of other shares of common stock of the Company in such circumstances and
manner as it may specify. For this purpose, the per share value of the Company's
common stock shall be the fair market value at the close of business on the date
preceding the date of exercise.
(c) At the time of any exercise of this option, the Company may, if it
shall determine it necessary or desirable for any reason, require the Optionee
(or his heirs, legatees or legal representative, as the case may be) as a
condition upon the exercise, to deliver to the Company a written representation
of present intention to purchase the shares for his own account for investment
and an agreement not to distribute or sell such shares in violation of the
registration provisions of applicable securities laws. If such representation
and agreement are required to be delivered, an appropriate legend may be placed
upon each certificate delivered to the Optionee upon his exercise of part or all
of this option and a stop transfer order may be placed with the transfer agent.
(d) If at any time a disinterested committee of the Board of Directors
determines, in its discretion, that the listing, registration or qualification
of the shares subject to this option upon any securities exchange or under any
state or federal law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection with, the
issue or purchase of shares thereunder, this option may not be exercised in
whole or in part unless such listing, registration, qualification, consent or
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approval shall have been effected or obtained free of any conditions not
acceptable by the disinterested committee of the Board of Directors.
3. The term of this option is ten years, but subject to earlier expiration
as provided in paragraph 5. This option is thus not exercisable to any extent
after the expiration of ten years from the date of this stock option
certificate, or after any earlier expiration date that may be applicable under
the terms of paragraph 5.
4. This option is not transferable by the Optionee otherwise than by will
or the laws of descent and distribution, and during the life of the Optionee it
is exercisable only by him.
5. (a) If the employment of the Optionee with the Company or any of its
subsidiaries is terminated for any reason other than death, permanent
disability, retirement or cause, this option, to the extent it is exercisable on
the date of termination, shall expire ninety days after the termination of
employment (or upon the scheduled termination of this option, if earlier), and
all rights to purchase shares pursuant thereto shall terminate at such time.
Temporary absence from employment because of illness, vacation or approved
leaves of absence, or transfers of employment among the Company and its parent
or subsidiary corporations, shall not be considered to terminate employment or
to interrupt continuous employment.
(b) In the event of termination of employment because of death or
permanent disability (within the meaning of section 22(e)(3) of the Internal
Revenue Code, as amended), this option may be exercised in full, without regard
to the installments established by paragraph 2(a), by the Optionee or, if he is
not living, by his heirs, legatees, or legal representative, as the case may be,
during its specified term prior to one year after the date of death or permanent
disability. In the event of termination of employment because of retirement,
this option may be exercised by the Optionee (or if he dies within three months
after such termination, by his heirs, legatees or legal representative, as the
case may be) at any time during its specified term prior to three months after
the date of such termination, but only to the extent this option was exercisable
at the date of such termination.
(c) If the Optionee is discharged for cause, this option shall expire
forthwith and all rights to purchase shares under it shall terminate
immediately. For this purpose, "discharge for cause" shall mean termination on
account of gross negligence, dishonesty, willful material breach of an agreement
with the Company, or violation of any reasonable rule or regulation of the
Company of which the Optionee has been advised in writing.
6. (a) In the event that the Company's outstanding common stock is changed
by any stock dividend, stock split or combination of shares, the number of
shares subject to this option shall be proportionately adjusted.
(b) In case of any capital reorganization, or of any reclassification of
the common stock or in case of the consolidation of the Company with or the
merger of the Company with or into any other corporation (other than a
consolidation or merger in which the Company is the continuing corporation and
which does not result in any reclassification of outstanding shares of common
stock) or of the sale of the properties and assets of the Company as, or
substantially as, an entirety to any other corporation, the Company, or the
corporation resulting from such consolidation or surviving such merger or to
which such sale shall be made, as the case may be, shall give notice to the
Optionee providing that upon exercise of this option after such capital
reorganization, reclassification, consolidation, merger or sale there shall be
issuable upon exercise of this option a kind and amount of shares of stock or
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other securities or property (which may, as an example, be a fixed amount of
cash equal to the consideration paid to stockholders of the Company for shares
transferred or sold by them) which the holders of the common stock (immediately
prior to the time of such capital reorganization, reclassification,
consolidation, merger or sale) are entitled to receive in such transaction upon
exercise as in the judgment of a disinterested committee of the Board of
Directors is required to compensate equitably for the effect of such event upon
the exercise rights of the Optionee. The above provisions of this Section shall
similarly apply to successive reorganizations, reclassifications,
consolidations, mergers and sales.
(c) In the event of any such adjustment the purchase price per share shall
be proportionately adjusted.
7. The granting of this option shall not confer upon the Optionee any
right to be continued in the employment of the Company or any subsidiary of the
Company, or interfere in any way with the right of the Company or its
subsidiaries to terminate his employment at any time.
8. Neither the Optionee nor his heirs, legatees, or legal representative
shall have any rights of stockholders with respect to the shares subject to this
option until such shares are actually issued upon exercise of this option.
9. (a) This option is granted pursuant to the Managed Care Solutions 1998
CEO Stock Option Plan, and is explicitly not granted pursuant to or under an
Incentive Stock Option Plan as defined in the Internal Revenue Code. Thus this
option is intended not to qualify as an "incentive stock option" under the
Internal Revenue Code. THIS OPTION SHALL NOT BE EXERCISABLE UNLESS AND UNTIL A
MAJORITY OF STOCKHOLDERS OF THE COMPANY HAS APPROVED THE COMPANY'S 1998 CEO
STOCK OPTION PLAN.
(b) This option shall be administered by a disinterested committee of the
Board of Directors of the Company, whose interpretation of the terms and
provisions of this option shall be final and conclusive.
This certificate is executed as of the date on which the option evidenced
by it is granted as stated above.
Managed Care Solutions, Inc.
By: /s/ James A. Burns
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President
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