<PAGE> 1
As filed with the Securities and Exchange Commission on December 23, 1999
Registration No. 333-___
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
MANOR CARE, INC.
(Exact name of registrant as specified in its charter)
34-1687107
Delaware (I.R.S. Employer
(State of incorporation) Identification Number)
MANOR CARE, INC.
333 North Summit Street
Toledo, Ohio 43604-2617
(419) 252-5500
(Address of principal executive offices)
MANOR CARE, INC.
NONQUALIFIED RETIREMENT SAVINGS AND INVESTMENT PLAN
(FULL TITLE OF THE PLAN)
------------------
R. Jeffrey Bixler Copies to: Mark D. Gerstein
Vice President, General Counsel Latham & Watkins
and Secretary Sears Tower, Suite 5800
Manor Care, Inc. Chicago, Illinois 60606
333 North Summit Street (312) 876-7700
Toledo, Ohio 43604-2617 Counsel to Registrant
(419) 252-5500
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
--------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==================================================================================================================================
Title of each class of Amount Proposed maximum Proposed maximum Amount of
securities to be registered(1) to be registered offering price per aggregate offering registration fee
share (2) price
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 100,000 Shares $14.1875 $1,418,750 $374.55
per share
==================================================================================================================================
</TABLE>
(1) In addition, pursuant to Rule 416(c) of the Securities Act of 1933, this
registration statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the employee benefit plan described herein.
(2) Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(h), the proposed maximum offering price per share is
based upon the average of the high and low prices reported on the New York
Stock Exchange for the Company's Common Stock on December 17, 1999, which
was $14.1875 per share .
===============================================================================
<PAGE> 2
PART I
Item 1. Plan Information
Not required to be filed with this Registration Statement.
Item 2. Registrant Information and Employee Plan Annual Information
Not required to be filed with this Registration Statement.
PART II
Item 3. Incorporation of Documents by Reference
The documents listed below have been filed by Manor Care,
Inc., a Delaware corporation (the "Company"), with the Securities and Exchange
Commission (the "Commission") and are incorporated in this Registration
Statement by reference:
a. The Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998;
b. The Company's Quarterly Report on Form 10-Q for
the fiscal quarters ended March 31, June 30 and September 30, 1999;
c. All other reports filed by the Company pursuant to Section
13(a) and 15(d) of the Securities Exchange Act of 1934 since the end of the
Company's fiscal year ended December 31, 1998; and
d. The description of the Company's Common Stock contained in
the Company's Registration Statement on Form 8-A filed on September 12, 1991
pursuant to Section 12 of the Securities Exchange Act of 1934, including any
amendment or reports filed for the purpose of updating such description.
All documents filed by the Company or the Manor Care, Inc.
Nonqualified Retirement Savings and Investment Plan (the "Plan") pursuant to
Section 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934 prior
to the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in this Registration
Statement and to be part hereof from the date of filing such documents.
Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein, or in any other subsequently filed document that
also is or is deemed to be incorporated by reference herein, modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
<PAGE> 3
Item 4. Description of Securities
Not required to be filed with this Registration Statement.
Item 5. Interests of Named Experts and Counsel
The validity of the issuance of the shares of common stock
registered hereby has been passed upon by R. Jeffrey Bixler who serves as Vice
President, General Counsel and Secretary of the Company.
Item 6. Indemnification of Directors and Officers
Section 145 of the General Corporation Law of the State of
Delaware (the "DGCL") provides, in summary, that Delaware corporations such as
the Company may, under certain circumstances, indemnify their directors and
officers, as well as other employees and individuals, against all expenses and
liabilities (including attorneys' fees) incurred by them as a result of suits
brought against them in their capacity as a director, officer, employee or agent
of the corporation, if they acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, if they had no reasonable
cause to believe their conduct was unlawful. A corporation may also indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that the person is or was
a director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation or other enterprise against expenses (including attorneys'
fees) incurred by the person in connection with the defense or settlement of
such action if the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
corporation except that no indemnification may be made against expenses in
respect of any claim, issue or matter as to which they shall have been adjudged
to be liable to the corporation unless and only to the extent that the court in
which such action or suit was brought shall determine upon application that
despite the adjudication of liability but in view of all the circumstances of
the case, they are fairly and reasonably entitled to indemnity for such expenses
which such court shall deem proper. Any such indemnification may be made by the
corporation only as authorized in each specific case upon a determination by the
stockholders or disinterested directors that indemnification is proper because
the indemnitee has met the applicable standard of conduct. Article III, Section
14 of the Company's Amended and Restated By-Laws entitles officers and directors
of the Company to indemnification to the full extent permitted by Section 145 of
DGCL, as the same may be supplemented or amended from time to time.
Article III, Section 14 of the Company's Amended and Restated
By-Laws provides:
Section 14. INDEMNIFICATION. The Corporation shall
indemnify every person who was or is a party or is or
was threatened to be made a party to any action,
suit, or proceeding, whether civil, criminal,
administrative or investigative, by reason of the
fact that he is or was a director or officer of the
Corporation or, while a director or officer of the
Corporation, is or was serving at the request of the
Corporation as a director, officer, employee, agent
or trustee of another corporation, partnership, joint
venture, trust, employee benefit plan or other
enterprise, against expenses (including counsel
fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in
<PAGE> 4
connection with such action, suit or proceeding, to
the full extent permitted by applicable law. Expenses
incurred by a person who is or was a director or
officer of the Corporation in appearing at,
participating in or defending any such action, suit
or proceeding shall be paid by the Corporation at
reasonable intervals in advance of the final
disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of the
director or officer to repay such amount if it shall
ultimately be determined that he is not entitled to
be indemnified by the Corporation as authorized by
this Section 14. If a claim under this Section 14 is
not paid in full by the Corporation within ninety
days after a written claim has been received by the
Corporation, the claimant may at any time thereafter
bring suit against the Corporation to recover the
unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be paid also the
expense of prosecuting such claim. It shall be a
defense to any such action (other than an action
brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final
disposition where the required undertaking, if any is
required, has been tendered to the Corporation) that
the claimant has not met the standards of conduct
which make it permissible under the Delaware General
Corporation Law or other applicable law for the
Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall
be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors (or any
committee thereof), independent legal counsel, or its
stockholders) to have made a determination prior to
the commencement of such action that indemnification
of the claimant is proper in the circumstances
because he has met the applicable standard of conduct
set forth in the Delaware General Corporation Law or
other applicable law, nor an actual determination by
the Corporation (including its Board of Directors (or
a committee thereof), independent legal counsel, or
its stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to
the action or create a presumption that the claimant
has not met the applicable standard of conduct.
The Company has entered into separate indemnification
agreements with directors and officers of the Company, pursuant to which the
Company will indemnify such directors and officers to the fullest extent
permitted by Delaware law, as the same may be amended from time to time.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 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 of 1933 and will be governed by the final adjudication of such
issue.
<PAGE> 5
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
Exhibit Number Description
-------------- -----------
4 Manor Care, Inc. Nonqualified Retirement
Savings and Investment Plan
5 Opinion of R. Jeffrey Bixler, General
Counsel of the Company
23.1 Consent of Ernst & Young LLP
23.2 Consent of R. Jeffrey Bixler (included in
the opinion filed as Exhibit 5)
Item 9. Undertakings
a. The undersigned registrant and the Plan hereby undertake:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement;
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts
or events arising after the effective date of 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. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered
(if the total dollar value of securities offered
would not exceed that which was registered) and any
deviation from the low or high end of the estimated
maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent
change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table
in the effective 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)
shall not apply to information contained in periodic reports
filed by the registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
<PAGE> 6
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
b. The undersigned registrant and the Plan hereby undertake
that, for purposes of determining any liability under Securities Act of
1933, each filing of the registrant's annual report to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 and each filing of
the Plan's annual report pursuant to section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration
statement relating to the securities offered herein, 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 of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933 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 of 1933
and will be governed by the final adjudication of such issue.
<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Toledo, State of Ohio, on December 23, 1999.
MANOR CARE, INC.
By: /s/ R. Jeffrey Bixler
---------------------------------
R. Jeffrey Bixler, Vice President,
General Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
)
/s/ Stewart Bainum, Jr. Chairman of the Board, Director )
- ------------------------------------
Stewart Bainum, Jr. )
)
/s/ Stewart Bainum Director )
- ------------------------------------
Stewart Bainum )
)
)
/s/ Joseph H. Lemieux Director )
- ------------------------------------
Joseph H. Lemieux ) December 23, 1999
)
)
/s/ William H. Longfield Director )
- ------------------------------------
William H. Longfield )
)
)
/s/ Frederic V. Malek Director )
- ------------------------------------
Frederic V. Malek )
)
)
/s/ Geoffrey G. Meyers Executive Vice President and Chief )
- ------------------------------------ Financial Officer (Principal Financial
Geoffrey G. Meyers Officer) )
)
)
/s/ Spencer C. Moler Vice President and Controller (Principal )
- ------------------------------------ Accounting Officer)
Spencer C. Moler )
)
/s/ Paul A. Ormond President and Chief Executive Officer )
- ------------------------------------ (Principal Executive Officer); Director
Paul A. Ormond )
)
)
</TABLE>
<PAGE> 8
<TABLE>
<S> <C> <C>
/s/ Robert G. Siefers Director )
- ------------------------------------
Robert G. Siefers )
)
)
/s/ M. Keith Weikel Senior Executive Vice President and Chief )
- ------------------------------------ Operating Officer; Director
M. Keith Weikel )
)
/s/ Gail R. Wilensky Director )
- ------------------------------------
Gail R. Wilensky )
)
)
/s/ Thomas L. Young Director )
- ------------------------------------
Thomas L. Young )
</TABLE>
Pursuant to the requirements of the Securities Act of 1933,
the plan administrator has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Toledo, State of Ohio, on December 23, 1999.
MANOR CARE, INC. NONQUALIFIED
RETIREMENT SAVINGS AND INVESTMENT PLAN
By: MANOR CARE, INC.
EMPLOYEE BENEFITS COMMITTEE
PLAN ADMINISTRATOR
By: /s/ Wade B. O'Brian
-----------------------------------
Name: Wade B. O'Brian
-----------------------------
Title: Chairman
-----------------------------
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------ ----------- ----
<S> <C> <C>
*4 Manor Care, Inc. Nonqualified Retirement Savings and Investment Plan E-1
*5 Opinion of R. Jeffrey Bixler E-26
*23.1 Consent of Ernst & Young LLP E-27
*23.2 Consent of R. Jeffrey Bixler (included in opinion file as Exhibit 5)
</TABLE>
- ----------------------
* Filed herewith
<PAGE> 1
Exhibit 4
MANOR CARE, INC.
NONQUALIFIED RETIREMENT SAVINGS & INVESTMENT PLAN
E-1
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
SECTION 1. PURPOSE OF PLAN.........................................................................1
A. Designation......................................................................1
B. Purpose..........................................................................1
C. Voluntary Participation..........................................................1
SECTION 2. DEFINITIONS.............................................................................1
SECTION 3. REQUIREMENTS FOR ELIGIBILITY............................................................6
SECTION 4. PARTICIPATION IN THE PLAN...............................................................7
SECTION 5. ADMINISTRATION OF THE PLAN..............................................................7
A. Responsibility for Administration of the Plan....................................7
B. Appointment of Administrative Committee..........................................7
C. Delegation of Powers.............................................................8
D. Records..........................................................................8
E. General Administrative Powers....................................................8
F. Appointment of Professional Assistance and Investment Manager....................8
G. Actions by the Administrative Committee..........................................8
H. Discretionary Acts...............................................................8
I. Payment of Fees and Expenses.....................................................8
J. Plan Administrator...............................................................9
K. Allocation and Delegation of Administrative Committee Responsibilities...........9
SECTION 6. PARTICIPANTS' ACCOUNTS..................................................................9
A. Maintenance of Accounts..........................................................9
B. Accounts of Participant Transferred to an Affiliated Company.....................9
C. Annual Adjustment of Participants' Accounts......................................9
D. Investment of Contributions......................................................9
E. No Right to Specific Assets.....................................................10
F. Treatment of Participants Transferred to In-Home Health, Inc....................10
G. Special Rules Regarding Choice Hotels International, Inc. Stock.................11
SECTION 7. ALLOCATIONS TO PARTICIPANT'S ACCOUNTS..................................................11
A. Salary Reduction Contributions..................................................11
B. Company Matching Contributions..................................................12
</TABLE>
E-2
<PAGE> 3
<TABLE>
<S> <C>
SECTION 8. EIGHT DISABILITY BENEFITS.............................................................13
A. Disability Retirement Benefits..................................................13
B. Determination of Disability.....................................................14
SECTION 9. RETIREMENT BENEFITS....................................................................14
SECTION 10. DEATH BENEFITS........................................................................14
A. Death Benefits..................................................................14
B. Designation of Beneficiaries....................................................14
C. Failure of Participant to Designate.............................................15
D. Beneficiaries' Rights...........................................................15
SECTION 11. EMPLOYMENT TERMINATION BENEFITS.......................................................15
A. Vesting Upon Termination of Employment..........................................15
B. Counting Years of Service.......................................................15
C. Forfeiture of Non-Vested Amount.................................................16
SECTION 12. PAYMENT OF BENEFITS...................................................................16
A. Retirement, Disability and Death Benefits.......................................16
B. Employment Termination Benefits.................................................17
C. Distribution of Benefits........................................................17
D. Benefits of Persons Who Cannot Be Located.......................................19
E. Distribution for Minor Beneficiary..............................................19
SECTION 13. BENEFIT CLAIMS PROCEDURE..............................................................19
A. Claims for Benefits.............................................................19
B. Request for Review of Denial....................................................20
C. Decision on Review of Denial....................................................20
SECTION 14. INALIENABILITY OF BENEFITS............................................................20
SECTION 15. AMENDMENT OF THE PLAN.................................................................20
SECTION 16. PERMANENCY OF THE PLAN................................................................20
SECTION 17. STATUS OF EMPLOYMENT RELATIONS........................................................21
SECTION 18. FUNDING...............................................................................21
SECTION 19. APPLICABLE LAW........................................................................22
SECTION 20. ADOPTION OF PLAN BY AFFILIATED COMPANIES..............................................22
</TABLE>
E-3
<PAGE> 4
THE MANOR CARE, INC.
NONQUALIFIED RETIREMENT SAVINGS AND INVESTMENT PLAN
---------------------------------------------------
Effective November 1, 1996, Manor Care, Inc. (the "Sponsoring Company")
hereby amends and restates the Manor Care, Inc. Nonqualified Retirement Savings
and Investment Plan (the "Plan") in accordance with the terms and conditions set
forth below. The Plan, as established in 1992, superseded and replaced the Manor
Care, Inc. Supplemental Savings Plan (the "Prior Plan").
SECTION 1.
PURPOSE OF PLAN
---------------
A. DESIGNATION. The Plan is designated the "Manor Care, Inc.
Nonqualified Retirement Savings and Investment Plan."
B. PURPOSE. The purpose of the Plan is to provide retirement,
disability, death and employment termination benefits for a select group of
management and highly compensated employees of the Participating Companies and
for the beneficiaries of those employees.
C. VOLUNTARY PARTICIPATION. An Employee who completes the eligibility
requirements set forth in Section Three of the Plan may voluntarily elect to
participate in the Plan by notifying the Administrative Committee as described
in Paragraph A of Section Seven.
SECTION 2.
DEFINITIONS
-----------
As used in the Plan:
A. "Accounts" shall mean a Participant's Company Contribution Account,
his Salary Reduction Contribution Account and if applicable, his Predecessor
Account and his Company Stock Account. The term "Accounts" shall also include
any additional accounts established by the Administrative Committee, in its sole
discretion.
B. "Administrative Committee" shall mean the person or persons or
entity appointed to administer the Plan in accordance with the provisions of
Section Five of the Plan. Notwithstanding the foregoing, "Administrative
Committee" may also include any individual or committee to which the
Administrative Committee has delegated authority to act with respect to a
specific activity. The Administrative Committee shall be the "named fiduciary,"
as referred to in Section 402(a) of ERISA, with respect to the management,
operation and administration of the Plan.
C. "Affiliated Company" shall mean (i) a member of a controlled group
of corporations of which the Sponsoring Company is a member, as determined in
accordance with Section 414(b) of the Internal Revenue Code and the regulations
issued thereunder, (ii) a trade or business which is under common control with
the Sponsoring Company, as determined in accordance with Section 414(c) of the
Internal Revenue Code and the regulations issued thereunder, or (iii) a member
of an affiliated service group of which the Sponsoring Company is a member, as
determined in
E-4
<PAGE> 5
accordance with Section 414(m) of the Internal Revenue Code. In addition,
"Affiliated Company" shall also include any other entity designated by the Board
of Directors in its sole discretion in which any Participating Company owns an
equity interest which exceeds fifty percent (50%).
D. "Beneficiary" shall mean any person entitled to receive benefits
which are payable upon or after a Participant's death pursuant to Section Ten of
the Plan.
E. "Board of Directors" shall mean the Board of Directors of the
Sponsoring Company or any individual or committee to which the Board of
Directors has delegated authority to act with respect to a specific activity.
F. "Company Contribution Account" shall mean the account maintained for
a Participant reflecting Company Matching Contributions allocated to such
Participant pursuant to Paragraph B of Section Seven of the Plan, as adjusted
for earnings or losses thereon in accordance with the provisions of Section Six
of the Plan.
G. "Company Matching Contribution" shall mean the contributions made by
the Participating Company to each Participant's Company Contribution Account
pursuant to Paragraph B of Section Seven. With respect to the Plan Year
beginning January 1, 1996, each Participant eligible to receive an allocation of
Company Matching Contributions will receive 100% of such allocation of Company
Matching Contributions in the form of shares of Company Stock.
H. "Company Stock" shall mean common stock issued by the Sponsoring
Company.
I. "Company Stock Account" shall mean the separate account maintained
on behalf of a Participant reflecting the Company Stock allocated to such
Participant's Company Stock Account, together with any cash or stock dividends
on such Company Stock.
J. "Compensation" shall mean basic cash compensation before any payroll
deductions for taxes or any other purposes, including regular commissions paid
by the Participating Companies to an Employee in respect of such Employee's
service to the Participating Companies during the Plan Year increased by any
amounts with respect to which the Employee has elected to defer or reduce
remuneration for federal income tax purposes (i) under this Plan, (ii) under the
Manor Care, Inc. Retirement Savings and Investment Plan or (iii) under any
"cafeteria plan" (as described in Section 125 of the Internal Revenue Code)
maintained by the Participating Companies. Compensation shall not include any
amounts paid to the Employee as (i) bonuses, (ii) overtime pay, (iii) except as
otherwise provided in the preceding sentence, any amounts paid during that Plan
Year on account of the Employee under this Plan or under any other employee
pension benefit plan (as defined in Section 3(2) of ERISA), and (iv) except as
otherwise provided in the preceding sentence, any amounts which are not
includible in the Employee's income for federal income tax purposes.
K. "Effective Date" of the Plan shall mean January 1, 1992.
2
E-5
<PAGE> 6
L. "Eligibility Computation Period" for each Employee shall mean a
twelve (12) consecutive month period beginning on the date such Employee first
performs an Hour of Service with a Participating Company or an Affiliated
Company; provided, however, that if the Employee does not complete one thousand
(1,000) or more Hours of Service during such twelve (12) month period, the
Eligibility Computation Period shall be the Plan Year, beginning with the Plan
Year immediately following the Plan Year within which the Employee first
performs an Hour of Service with a Participating Company or an Affiliated
Company. If the Employee has a One-Year Break in Service prior to becoming
eligible to participate in the Plan and is subsequently rehired, his Eligibility
Computation Period shall be determined pursuant to this Paragraph beginning on
the date the Employee first completes an Hour of Service with the Participating
Company or the Affiliated Company immediately following his rehire.
M. "Eligible Participant" shall mean any Participant who (i) completed
at least one thousand (1,000) Hours of Service with the Participating Companies
during such Plan Year, (ii) was employed by a Participating Company on the last
day of the Plan Year, and (iii) elected, pursuant to Paragraph A of Section
Seven, to reduce his Compensation during such Plan Year.
N. "Eligibility Year of Service" shall mean an Eligibility Computation
Period during which an Employee completes one thousand (1,000) or more Hours of
Service.
O. "Employee" shall mean any person employed by a Participating Company
who is or will be a "Highly Compensated Employee" (as defined in the Manor Care,
Inc. Retirement Savings and Investment Plan) with respect to a Plan Year. The
term "Employee" shall not include nonresident aliens who do not receive earned
income (within the meaning of section 911(d)(2) of the Internal Revenue Code)
from the Participating Companies which constitute income from sources within the
United States (within the meaning of section 861(a)(3) of the Internal Revenue
Code).
P. "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time. References in the Plan to any Section of
ERISA shall include any successor provision thereto.
Q. "Five-Percent Owner" shall mean an individual who (i) owns (or is
considered as owning within the meaning of Section 318 of the Internal Revenue
Code) more than five percent (5%) of the outstanding stock of a Participating
Company or an Affiliated Company or stock possessing more than five percent (5%)
of the total combined voting power of all stock of a Participating Company or an
Affiliated Company provided such entity is a corporation or (ii) owns more than
five percent (5%) of the capital or profits interest in a Participating Company
or an Affiliated Company if such entity is not a corporation.
R. "Hour of Service" shall be determined from records maintained by the
Participating Companies and the Affiliated Companies and shall include the
following:
(i) PERFORMANCE OF DUTIES. Each hour for which an Employee is
directly or indirectly paid, or entitled to payment, by a Participating Company
or an Affiliated Company for the performance of duties. Each such Hour of
Service shall be credited to the Eligibility Computation Period or the Plan
Year, as the case may be, in which the duties were performed.
3
E-6
<PAGE> 7
(ii) BACK PAY. Each hour for which back pay (irrespective of
mitigation of damages) has been either awarded or agreed to by a Participating
Company or an Affiliated Company. Each such Hour of Service shall be credited to
the Eligibility Computation Period or the Plan Year, as the case may be, to
which the agreement or award for back pay pertains rather than to the
Eligibility Computation Period or Plan Year, as the case may be, in which the
award, agreement or payment is made.
(iii) NON-WORKING TIME PAY. Each hour for which an Employee is
directly or indirectly paid, or entitled to payment, by a Participating Company
or an Affiliated Company on account of a period of time during which no duties
are performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
disability), lay-off, jury duty or lease of absence. Each such Hour of Service
shall be computed and credited in accordance with Department of Labor Regulation
Section 2530.200b.
(iv) NO DUPLICATION. An Employee shall not be credited with
any Hour of Service under both clause (ii) above and clause (i) or (iii) above
(as the case may be) with respect to the same item.
(v) MATERNITY AND PATERNITY LEAVE. Solely for purposes of
determining whether an Employee has incurred a One-Year Break in Service, such
Employee shall be credited for up to five hundred and one (501) Hours of Service
in respect of any period of absence attributable to a maternity or paternity
leave, based upon the number of Hours of Service which otherwise normally would
have been credited to such Employee but for such absence or, in any case in
which the Plan is unable to determine the number of Hours of Service which would
have normally been so credited, then such Employee shall be credited with eight
(8) Hours of Service per day of absence. Any such Hours of Service attributable
to a maternity or paternity leave shall be credited in the Eligibility
Computation Period or the Plan Year, as the case may be, in which the maternity
or paternity absence begins if such crediting will prevent the Employee from
incurring a One-Year Break in Service in such Eligibility Computation Period or
Plan Year. Otherwise, such Hours of Service shall be credited in the Eligibility
Computation Period or the Plan Year, as the case may be, following the
Eligibility Computation Period or Plan Year in which the maternity or paternity
leave begins. For these purposes, a maternity or paternity leave of absence
shall include any time during which an Employee is absent from work for any
period: (a) by reason of the pregnancy of the Employee; (b) by reason of the
birth of a child of the Employee; (c) by reason of the placement of a child with
the Employee in connection with the adoption of such child by such individual;
or (d) for purposes of caring for such child for a period beginning immediately
following such birth or placement.
S. "Ineligible Participant" shall mean any Participant who (i) has not
completed at least one thousand (1,000) Hours of Service with the Participating
Companies during the Plan Year, (ii) was not employed by a Participating Company
or an Affiliated Company on the last day of the Plan Year, or (iii) did not
elect, pursuant to Paragraph A of Section Seven, to reduce his Compensation.
T. "Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended from time to time. References in the Plan to any Section of the
Internal Revenue Code shall include any successor provision thereto.
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U. "Investment Election" shall mean the form, filed with the
Administrative Committee, or its delegate, or such other procedure as may be
specified by the Administrative Committee at any time, and from time to time,
through which a Participant may designate the manner in which his Accounts
(other than his Company Stock Account) shall be allocated among the Investment
Funds.
V. "Investment Election Date" shall mean March 15, June 15, September
15, or December 15 of each Plan Year or such other dates as may be established
by the Administrative Committee. On and after August 1, 1996, "Investment
Election Date" shall mean the first business day of each month.
W. "Investment Fund" shall mean each fund, contract, or other
arrangement designated by the Administrative Committee as an Investment Fund in
which Participants may direct their Accounts to be invested.
X. "Net Profits" shall mean, with respect to any Fiscal Year that ends
within a Plan year with respect to which a determination of Net Profits is made,
the Sponsoring Company's consolidated net income or profit for such Fiscal Year
determined upon the basis of the Sponsoring Company's books of account in
accordance with generally accepted accounting principles, without any reduction
for taxes based upon income, or for contributions made by the Sponsoring Company
to this Plan. "Net Profits" shall not include capital gains or losses or income
or loss which is determined to be a nonrecurring nature. Such determination
shall be made solely by the Administrative Committee.
Y. "One-Year Break in Service" shall mean an Eligibility Computation
Period or a Plan Year, as the case may be, during which an Employee does not
complete more than five hundred (500) Hours of Service.
Z. "Participant" shall mean an eligible Employee who becomes a
Participant in the Plan as provided in Section Four of the Plan.
AA. "Participating Company" shall mean the Sponsoring Company or any
Affiliated Company which adopts the Plan and Trust pursuant to the provisions of
Section Twenty of the Plan.
BB. "Plan" shall mean the Manor Care, Inc. Nonqualified Retirement
Savings and Investment Plan as set forth in this document, and as hereafter
amended.
CC. "Plan Year" shall mean the twelve (12)-consecutive month period
ending on December 31.
DD. "Predecessor Account" shall mean the total amount in a
Participant's deferral account and matching account under the Prior Plan as of
December 31, 1991, as adjusted for earnings or losses thereon in accordance with
the provisions of Section Six of the Plan.
EE. "Prior Plan" shall mean the Manor Care, Inc. Supplemental Savings
Plan.
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FF. "Retirement Date" of a Participant shall mean the Participant's
sixty- fifth (65th) birthday. GG. "Salary Reduction Contribution" shall mean the
cumulative amount the Participating Company contributes to the Trust each Plan
year equal to the amount by which a Participant elected to reduce his
Compensation for such Plan Year pursuant to Paragraph A of Section Seven.
HH. "Salary Reduction Contribution Account" shall mean the account
maintained for a Participant reflecting the Salary Reduction Contributions
allocated to such Participant pursuant to Paragraph A of Section Seven, as
adjusted by earnings or losses thereon in accordance with the provisions of
Section Six of the Plan.
II. "Sponsoring Company" shall mean Manor Care, Inc.
JJ. "Termination of Employment" shall mean termination of employment
with the Participating Companies, whether voluntarily or involuntarily, other
than by reason of a Participant's death or his retirement after attaining his
Retirement Date or after sustaining a Total and Permanent Disability.
KK. "Total and Permanent Disability" shall mean physical and/or mental
incapacity of such a nature that it prevents a Participant from engaging in or
performing the principal duties of his customary employment or occupation on a
continuing or sustained basis.
LL. "Valuation Date" shall mean the last day of each month or any other
date the Administrative Committee, in its sole discretion, shall select as a
Valuation Date.
MM. "Year of Service" shall mean a Plan Year beginning on or after
January 1, 1992 during which an Employee completes one thousand (1,000) or more
Hours of Service. The term "Year of Service" shall also include all Years of
Service earned as of January 1, 1992 under the Manor Care, Inc. Retirement
Savings and Investment Plan. In addition, the Board of Directors, in its sole
discretion, may elect to grant Years of Service in connection with a stock or
asset acquisition to reflect employment periods prior to the date of such stock
of asset acquisition. "Years of Service," in the case of an individual who
transfers from the employment of Choice Hotels International, Inc. to the
employment of a Participating Company prior to June 1, 1998, shall also include
all Years of Service earned with respect to service performed on behalf of
Choice Hotels International, Inc.
NN. Wherever appropriate, words used in the Plan in the singular may
mean the plural, the plural may mean the singular, and the masculine may mean
the feminine.
SECTION 3.
REQUIREMENTS FOR ELIGIBILITY
----------------------------
Any Employee (other than a Leased Employee) shall be eligible to elect
to have Salary Reduction Contributions made on his behalf under the Plan and to
share in the allocations of Company Matching Contributions under the Plan as of
the first day of the first full pay period of
6
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the month following the date upon which such Employee has (i) completed an
Eligibility Year of Service and (ii) attained age twenty-one (21), provided such
Employee is employed by a Participating Company on such date. Any Employee who
does not elect to have Salary Reduction Contributions made on his behalf under
the Plan as of the first day of the first full pay period of the first month on
which he is first eligible shall be allowed to make a subsequent election to
have Salary Reduction Contributions made on his behalf as of the first business
day of any subsequent month. Leased Employees shall not be eligible to
participate in the Plan.
Any Participant who otherwise meets the requirements of this Section
Three, who suffers a Termination of Employment, and who is subsequently rehired
by a Participating Company, shall become eligible to elect to have Salary
Reduction Contributions made on his behalf under the Plan effective as of the
date of his rehire and to share in the allocations of the Company Matching
Contributions under the Plan provided the individual meets the criteria of an
Eligible Participant for such Plan Year and provided further that the period of
time between the individual's initial date of Termination of Employment and the
individual's date of rehire does not exceed the greater of (a) five (5) years or
(b) the period of the individual's employment performed prior to the date of his
initial Termination of Employment. Notwithstanding the foregoing, a Participant
who suffers a Termination of Employment with vested Accounts in the Plan and who
is not subsequently rehired until the occurrence of a period of absence greater
than (a) or (b) above shall be treated as a new Employee for purposes of
determining such individual's eligibility to participate in the Plan.
SECTION 4.
PARTICIPATION IN THE PLAN
-------------------------
Upon meeting the eligibility requirements of Section Three, each
eligible Employee shall be notified that he is eligible to participate in the
Plan and shall be provided with such information as is required by ERISA within
the time prescribed for providing such information. In addition, each
Participant shall be provided with a designation of beneficiary form with which
he may designate one or more Beneficiaries to receive benefits in the event of
his death.
SECTION 5.
ADMINISTRATION OF THE PLAN
--------------------------
A. RESPONSIBILITY FOR ADMINISTRATION OF THE PLAN. The Administrative
Committee shall be responsible for the management, operation and administration
of the Plan.
B. APPOINTMENT OF ADMINISTRATIVE COMMITTEE. The Board of Directors of
the Sponsoring Company shall appoint an Administrative Committee consisting of
at least one (1) but not more than seven (7) persons. The Administrative
Committee shall be responsible for the management, operation and administration
of the Plan. Any member of the Administrative Committee may resign upon ten (10)
days prior written notice to the Board of Directors of the Sponsoring Company.
The Board of Directors of the Sponsoring Company shall be authorized to remove
any member of the Administrative Committee at any time and in its sole
discretion to appoint a successor whenever a vacancy on the Administrative
Committee occurs.
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C. DELEGATION OF POWERS. The Administrative Committee may appoint such
assistants or representatives as it deems necessary for the effective exercise
of its duties in administering the Plan. The Administrative Committee may
delegate to such assistants and representatives any powers and duties, both
ministerial and discretionary, as it deems expedient or appropriate.
D. RECORDS. All acts and determinations with respect to the
administration of the Plan made by the Administrative Committee and any
assistants or representatives appointed by it shall be duly recorded by the
Administrative Committee or by the assistant or representative appointed by it
to keep such records. All records, together with such other documents as may be
necessary for the administration of the Plan, shall be preserved in the custody
of the Administrative Committee or the assistants or representatives appointed
by it.
E. GENERAL ADMINISTRATIVE POWERS. The Administrative Committee shall
have all powers necessary to administer the Plan in accordance with its terms,
including the power to construe the Plan and to determine all questions that may
arise thereunder. In the exercise of such powers under the Plan, the
Administrative Committee shall have discretionary authority to interpret the
terms of the Plan and to determine eligibility for and entitlement to Plan
benefits in accordance with the terms of the Plan. Any interpretation or
determination made pursuant to such discretionary authority shall be given full
force and effect, unless it can be shown that the interpretation or
determination was arbitrary and capricious.
F. APPOINTMENT OF PROFESSIONAL ASSISTANCE AND INVESTMENT MANAGER. The
Administrative Committee may engage accountants, attorneys, physicians and such
other personnel as it deems necessary or advisable. The functions of any such
persons engaged by the Administrative Committee shall be limited to the specific
services and duties for which they are engaged, and such persons shall have no
other duties, obligations or responsibilities under the Plan. Such persons shall
exercise no discretionary authority or discretionary control respecting the
management of the Plan. The fees and costs of such services shall be paid by the
Participating Companies.
G. ACTIONS BY THE ADMINISTRATIVE COMMITTEE. All actions of the
Administrative Committee shall be taken pursuant to the decision of a majority
of the then members of the Administrative Committee.
H. DISCRETIONARY ACTS. In the event the Administrative Committee
exercises any discretionary authority under the Plan with respect to a
Participant who is a member of the Administrative Committee, such discretionary
authority shall be exercised solely and exclusively by those members of the
Administrative Committee other than such Participant, or, if such Participant is
the sole member of the Administrative Committee, such discretionary authority
shall be exercised solely and exclusively by the Board of Directors of the
Sponsoring Company.
I. PAYMENT OF FEES AND EXPENSES. The members of the Administrative
Committee and their assistants and representatives shall be entitled to payment
from the Participating Companies for all reasonable costs, charges and expenses
incurred in the administration of the Plan, including, but not limited to,
reasonable fees for accounting, legal and other services rendered, to the extent
incurred by the members of the Administrative Committee or their
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assistants and representatives in the course of performance of their duties
under the Plan. Notwithstanding any other provision of the Plan, no person who
receives full-time pay from the Participating Companies shall receive
compensation from the Plan, except for reimbursement of expenses properly and
actually incurred.
J. PLAN ADMINISTRATOR. The Sponsoring Company shall be the
"administrator" (as defined in Section 3(16)(A) of ERISA) of the Plan. The Vice
President of Human Resources of the Sponsoring Company shall be the designated
agent for service of legal process.
K. ALLOCATION AND DELEGATION OF ADMINISTRATIVE COMMITTEE
RESPONSIBILITIES. The Administrative Committee may upon approval of a majority
of the members of the Administrative Committee, (i) allocate among any of the
members of the Administrative Committee any of the responsibilities of the
Administrative Committee under the Plan or (ii) designate any person, firm or
corporation that is not a member of the Administrative Committee to carry out
any of the responsibilities of the Administrative Committee under the Plan. Any
such allocation or designation shall be made pursuant to a written instrument
executed by a majority of the members of the Administrative Committee.
SECTION 6.
PARTICIPANTS' ACCOUNTS
----------------------
A. MAINTENANCE OF ACCOUNTS. There shall be maintained on behalf of each
Participant a Company Contribution Account, a Salary Reduction Contribution
Account and, if applicable, a Predecessor Account. The Participant's interest in
his Company Contribution Account shall be subject to the vesting schedule set
forth in Paragraph A of Section Eleven. The Participant's interest in his Salary
Reduction Contribution Account shall be one hundred percent (100%) vested at all
times. The Participant's interest in the deferral account component of his
Predecessor Account shall be one hundred percent (100%) vested at all times and
the matching account component of his Predecessor Account shall become vested in
accordance with Section 2.7 of the Prior Plan as in effect on December 31, 1991.
All payments to a Participant or his Beneficiaries shall be charged against the
respective Accounts of such Participant.
B. ACCOUNTS OF PARTICIPANT TRANSFERRED TO AN AFFILIATED COMPANY. If a
Participant is transferred to an Affiliated Company which has not adopted the
Plan, the amounts which are credited to his Accounts shall continue to be
governed by the provisions of the Plan.
C. ANNUAL ADJUSTMENT OF PARTICIPANTS' ACCOUNTS. Promptly after the last
day of each Plan Year, the Administrative Committee shall adjust the Accounts of
each Participant so that the amount of net income, loss, appreciation or
depreciation in the value of the amount invested in an Investment Fund shall be
allocated equitably and exclusively to the Accounts of the Participants invested
in such Investment Fund.
D. INVESTMENT OF CONTRIBUTIONS.
(i) Participant-Directed Investments. In accordance with procedures
established by the Administrative Committee, each Participant shall have the
opportunity, on or before each Investment Election Date, to make an Investment
Election with the Administrative
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Committee or its delegate. This election shall be effective beginning on the
Investment Election Date following its receipt by the Administrative Committee,
or its delegate, and shall continue in effect until revoked or modified as of a
subsequent Investment Election Date. Any such modification or revocation of an
Investment Election shall be effective on the Investment Election Date following
the receipt by the Administrative Committee of a new Investment Election. The
following restrictions shall apply to such investment elections:
(a) No election may be made in violation of any applicable investment
contract or other agreement establishing an Investment Fund;
(b) Transfers among the available Investment Funds may be made only in
whole percentage multiples of one percent (1%) of the balances therein; and
(c) Prior to January 1, 1997, no shares of Company Stock which have
been allocated to a Participant's Company Contribution Account or Company Stock
Account may be liquidated or otherwise converted into another form of investment
except in the case of a distribution of benefits from such Account. On and after
January 1, 1997, shares of Company Stock which have been allocated to a
Participant's Company Contribution Account or Company Stock Account may be
liquidated or otherwise converted into another form of investment. Any shares of
Company Stock which must be acquired by the Trust to effectuate an investment
election shall be purchased on the open market as soon as practicable after the
next applicable Valuation Date. Any dividends paid with respect to Company Stock
shall be used to purchase additional whole or partial shares of Company Stock as
soon as practicable after the next Valuation Date.
In addition, the Administrative Committee, in its sole discretion, may
from time to time establish special Investment Election Dates to provide the
Participants with additional opportunities to designate the manner in which
their Accounts shall be allocated among the then-available Investment Funds.
(ii) Other Investments. All Accounts not subject to an
Investment Election filed with the Administrative Committee pursuant to
subparagraph (i) above shall be invested in a money market fund or other liquid
or pooled fund investment vehicle selected by the Administrative Committee.
E. NO RIGHT TO SPECIFIC ASSETS. The fact that for administrative
purposes Accounts are maintained for each Participant under the Plan shall not
be deemed to segregate for such Participant, or to give such Participant any
direct interest in, any specific assets of the Participating Companies except as
otherwise provided in Section Eighteen below.
F. TREATMENT OF PARTICIPANTS TRANSFERRED TO IN-HOME HEALTH, INC. In the
event that a Participant is transferred to the employ of In-Home Health, Inc.,
such Participant's Hours of Service performed on behalf of In-Home Health, Inc.
shall be recognized in determining such Participant's Years of Service under
this Plan when computing the vested amount in such Participant's Company
Contribution Account under this Plan. However, no further benefits shall accrue
under this Plan with respect to compensation earned by such Participant as an
employee of In-Home Health, Inc. Finally, so long as the Sponsoring Company is
in `effective control' of In-Home Health, Inc., as defined by Treas. Reg. (S)
414(c)-2(c)(2), such Participant shall not be
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entitled to receive a distribution from this Plan until such Participant
terminates employment with In-Home Health, Inc."
G. SPECIAL RULES REGARDING CHOICE HOTELS INTERNATIONAL, INC. STOCK. It
is anticipated that the Sponsoring Company shall cause a stock dividend to be
paid in shares of Choice Hotels International, Inc. stock and that such dividend
shall be paid with respect to all shares of Company Stock including Company
Stock allocated to the Company Stock Accounts and the Company Contribution
Accounts of Participants under this Plan. The Administrative Committee shall
establish a uniform and non-discriminatory set of procedures pursuant to which a
Participant may elect that all or any portion of the Choice Hotels
International, Inc. stock received with respect to Company Stock held in a
Company Stock Account or Company Contribution Account be liquidated and the
proceeds therefrom reinvested among the then-available investment funds. It is
anticipated that such election period shall occur in November and December of
Choice Hotels International, Inc. stock which is not so liquidated will be
retained in the Participant's Company Stock Account and Company Contribution
Account. Such shares may not be liquidated prior to the payment of benefits to
such Participant from his Company Stock Account and Company Contribution Account
in accordance with the provisions of the Plan. Any dividends payable with
respect to Choice Hotels International, Inc. stock retained by the Plan will be
reinvested in additional shares of Choice Hotels International, Inc. stock.
SECTION 7.
ALLOCATIONS TO PARTICIPANT'S ACCOUNTS
-------------------------------------
A. SALARY REDUCTION CONTRIBUTIONS. Each Plan Year, the Participating
Company employing a Participant who has elected to reduce his Compensation
pursuant to subparagraph (i) of this Paragraph A shall withhold from such
Participant's Compensation the Salary Reduction Contributions, as elected by
such Participant.
(i) COMPENSATION REDUCTION ELECTION. (a) A Participant may
elect to reduce his Compensation by an amount equal to the difference between
the amount of his Compensation which he elected to contribute to the Manor Care,
Inc. Retirement Savings and Investment Plan and the actual amount which he is
allowed to contribute to the Manor Care, Inc. Retirement Savings and Investment
Plan taking into account the various limits and eligibility service requirements
set forth in the Manor Care, Inc. Retirement Savings and Investment Plan;
provided, however, that the aggregate amount by which a Participant may elect to
reduce his Compensation under subparagraph (i)(a) of this Plan and under the
Manor Care, Inc. Retirement Savings and Investment Plan shall be in whole
percentages of his Compensation and shall not exceed fifteen percent (15%) of
his Compensation for any Plan Year. Such contributions shall be made through
regular payroll deductions by notifying the Administrative Committee, no later
than the first business day of the month as of which such election is intended
to become effective, pursuant to such notification procedures as the
Administrative Committee may establish, from time to time. Such election shall
remain in effect for subsequent Plan Years until suspended or revoked pursuant
to subparagraph (ii) of this Paragraph A.
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(b) In addition, a Participant may also elect to reduce his
Compensation by the amount, if any, paid to such Participant during the Plan
Year which is attributable to salary reduction contributions made by such
Participant to the Manor Care, Inc. Retirement Savings and Investment Plan or
the former Manor Healthcare Corp. Employee Stock Ownership, Profit Sharing and
Retirement Plan which were repaid to the Participant due to nondiscrimination
rules or other limitations set forth in such plans. The Administrative Committee
shall establish uniform and nondiscriminatory procedures regarding the timing
and manner in which such additional Salary Reduction Contributions are made to
the Plan.
(ii) SUSPENSION OF REDUCTIONS. A Participant may, by filing
the appropriate form, elect to suspend his Compensation reductions. Such
voluntary suspension shall be effective as of the first day of the first
applicable payroll period commencing after the receipt and completion of
processing of the appropriate form by the Administrative Committee. Any such
suspension shall remain in effect until the following month, at which time the
Participant may recommence such Compensation reductions. During such period of
suspension, the Compensation reductions of such Participant shall be suspended.
A Participant may not make up suspended Compensation reductions. The
Compensation reductions of a Participant shall be suspended automatically for
any payroll period in which such Participant does not receive any Compensation.
(iii) METHOD OF ALLOCATING SALARY REDUCTION CONTRIBUTIONS.
Each Participant who elected to reduce his Compensation during a Plan Year
pursuant to the provisions of this Paragraph A shall receive an allocation of
Salary Reduction Contributions to his Salary Reduction Contribution Account for
such Plan Year equal to the amount by which he elected to reduce his
Compensation for such Plan Year pursuant to the provisions of this Paragraph A.
B. COMPANY MATCHING CONTRIBUTIONS.
(i) Each Plan Year, each Eligible Participant shall receive an
allocation to his Company Contribution Account for such Plan Year in an
amount (the "Company Matching Contribution"), equal to a percentage of
the amount of Salary Reduction Contributions allocated to such Eligible
Participant under Paragraph A(i)(a) and A(i)(b) above for such Plan
Year. In order to receive a Company Matching Contribution with respect
to a Salary Reduction Contribution which is attributable to a refund of
a prior salary reduction contribution made by such Eligible Participant
to the Manor Care, Inc. Retirement Savings and Investment Plan, which
was refunded to the Participant due to nondiscrimination rules or other
limitations set forth in such plan, the Eligible Participant must be
employed by the Participating Company or an Affiliated Company on the
date such refund is made but need not have elected to make Salary
Reduction Contributions under Paragraph A with respect to the Plan Year
within which such refund is made. This percentage shall be based upon
the Eligible Participant's Years of Service in accordance with the
following schedule:
Years of Service Matching Percentage
---------------- -------------------
1 to 5 years 25%
6 to 9 years 75%
10 or more years 100%
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In addition, the Company Contribution Account of each Eligible Participant who
made a valid salary reduction contribution election with respect to the Manor
Care, Inc. Retirement Savings and Investment Plan shall be credited with an
amount equal to any Company matching contributions made to the Manor Care, Inc.
Retirement Savings and Investment Plan and earnings thereon for the Plan Year to
which such Eligible Participant's salary reduction contribution election
pertains which were forfeited or foregone due to (a) the requirements of
Internal Revenue Code Sections 401(k) or 401(m), (b) the refund of salary
reduction contributions previously made by such Eligible Participant under the
Manor Care, Inc. Retirement Savings and Investment Plan (provided that an amount
equal to the refund was contributed to this Plan), or (c) any other limitations
placed on the Eligible Participant's salary reduction contributions under the
Manor Care, Inc. Retirement Savings and Investment Plan. The aggregate amount of
the Company Matching Contribution which may be allocated to each Eligible
Participant's Company Contribution Account for such Plan Year under this Plan
and under the Manor Care, Inc. Retirement Savings and Investment Plan shall not
exceed six percent (6%) of his Compensation. Notwithstanding the above, however,
the combination of the Company Matching Contribution made to this Plan for any
Plan Year when combined with Company Matching Contribution made with respect to
such Plan Year under the Manor Care, Inc. Retirement Savings and Investment Plan
shall not exceed six percent (6%) of Net Profits of the Sponsoring Company
determined with respect to the fiscal year that ends within such Plan Year. If
the combined Company Matching Contributions would otherwise exceed the six
percent (6%) limitation, then the amount of available Company Matching
Contributions shall be pro-rated among the two plans based upon the relative
Company Matching Contributions otherwise due to both programs.
(ii) From time to time, the Administrative Committee may, in
its sole discretion, determine that the inclusion of an Employee in the Plan
jeopardizes the ability of the Plan to continue to satisfy the requirements
under Section 3(36) of ERISA. In such an instance, the Administrative Committee
may direct the immediate distribution to such Employee of any vested amount in
his Company Contribution Account and Salary Reduction Contribution Account.
(iii) If, in any Plan Year, any person who should not have
been included as a Participant in the Plan is erroneously included and discovery
of such incorrect inclusion is not made until after a contribution for the Plan
Year has been made and allocated, the Participating Company shall not be
entitled to recover the contribution made with respect to the Ineligible
Participant regardless of whether or not a deduction is allowable with respect
to such contribution. In such event, the amount contributed with respect to the
Ineligible Participant shall constitute a forfeiture for the Plan Year in which
the discovery is made.
SECTION 8.
DISABILITY BENEFITS
-------------------
A. DISABILITY RETIREMENT BENEFITS. If a Participant retires by reason
of Total and Permanent Disability while in the employ of a Participating
Company, his Company Contribution Account shall fully vest, and he shall be
entitled to receive benefits equal to the
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total amount in his Accounts in the Plan as determined in accordance with the
provisions of Paragraph A of Section Twelve hereof. Such benefits shall be paid
at the time and in the manner specified in Section Twelve of the Plan.
B. DETERMINATION OF DISABILITY. The Administrative Committee shall
determine whether a Participant has suffered a Total and Permanent Disability
and its determination in that respect shall be binding upon the Participant. In
making its determination, the Administrative Committee may (i) require the
Participant to submit to medical examinations by doctors selected by the
Administrative Committee or (ii) rely upon a determination that the Participant
is entitled to disability benefits payable under Title II of the Social Security
Act, 42 U.S.C. 301 et. seq., or similar subsequent section, as evidenced by a
certificate of Social Security Insurance Award. The provisions of this Section
Eight shall be uniformly and consistently applied to all Participants.
SECTION 9.
RETIREMENT BENEFITS
-------------------
If a Participant is employed by a Participating Company on his
Retirement Date, his Company Contribution Account shall fully vest at that time.
If the Participant continues in a Participating Company's employ after his
Retirement Date, he shall continue to be eligible to reduce his Compensation
under the Plan and to share in the allocations of Company Matching Contributions
under the Plan until his actual retirement. Upon retirement on or after
attaining his Retirement Date, a Participant shall be entitled to receive
benefits equal to the total amount in his Accounts in the Plan as determined in
accordance with the provisions of Paragraph A of Section Twelve hereof. Such
benefits shall be paid at the time and in the manner specified in Section Twelve
of the Plan.
SECTION 10.
DEATH BENEFITS
--------------
A. DEATH BENEFITS. Upon the death of a Participant who is employed by a
Participating Company at the time of his death, such deceased Participant's
Company Contribution Account shall fully vest, and his Beneficiary shall be
entitled to receive benefits equal to the total amount in the deceased
Participant's Accounts in the Plan as determined in accordance with the
provisions of Paragraph A of Section Twelve hereof. Upon the death of a
Participant who is not employed by a Participating Company at the time of his
death, such deceased Participant's Beneficiary shall be entitled to receive
benefits equal to the vested amount in the deceased Participant's Accounts in
the Plan as determined in accordance with the provisions of Paragraph A of
Section Eleven. In either event, such benefits shall be paid at the time and in
the manner specified in Section Twelve of the Plan.
B. DESIGNATION OF BENEFICIARIES. Each Participant may designate one or
more Beneficiaries and contingent Beneficiaries by delivering a written
designation thereof over his signature to the Administrative Committee. A
Participant may designate different Beneficiaries at any time by delivering a
new written designation over his signature to the Administrative
14
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Committee. Any such designation shall become effective only upon its receipt by
the Administrative Committee. The last effective designation received by the
Administrative Committee shall supersede all prior designations. A designation
of a Beneficiary shall be effective only if the designated Beneficiary survives
the Participant.
C. FAILURE OF PARTICIPANT TO DESIGNATE. If a Participant fails to
designate a Beneficiary, or if no designated Beneficiary survives the
Participant, the Participant shall be deemed to have designated the following
Beneficiaries (if then living) in the following order of priority: (1) his
spouse, (2) his children, including adopted children and stepchildren, in equal
shares, (3) his parents, in equal shares, and (4) his estate.
D. BENEFICIARIES' RIGHTS. Whenever the rights of a Participant are
stated or limited in the Plan, his Beneficiaries shall be bound thereby.
SECTION 11.
EMPLOYMENT TERMINATION BENEFITS
-------------------------------
A. VESTING UPON TERMINATION OF EMPLOYMENT. In the event of the
Termination of Employment of a Participant, such Participant shall be entitled
to receive (i) one hundred percent (100%) of the amount in his Salary Reduction
Contribution Account, (ii) one hundred percent (100%) of the amount in the
deferral account component of his Predecessor Account and (iii) the following
percentage of the amount in his Company Contribution Account, based upon the
number of his Years of Service prior to such Termination of Employment, as
follows:
Years of Service Percentage
---------------- ----------
Less than 3 years None
3 years 20%
4 years 40%
5 years 60%
6 years 80%
7 or more years 100%
Such Participant's interest in the matching account component of his Predecessor
Account shall become vested in accordance with Section 2.7 of the Prior Plan as
in effect on December 31, 1991. Such benefits shall be paid at the time and in
the manner set forth in Section Twelve of the Plan.
B. COUNTING YEARS OF SERVICE. For purposes of this Section Eleven, all
Years of Service (whether or not continuous) shall be taken into account, except
Years of Service which are disregarded as follows:
(i) In the case of any Participant who has a One-Year Break in
Service, Years of Service before such break shall not be taken into account
until such Participant has completed a Year of Service after such break.
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(ii) In the case of any Participant who has no vested amount
in his Accounts in the Plan, Years of Service before any period of consecutive
One-Year Breaks in Service shall not be taken into account if the number of
consecutive One-Year Breaks in Service equals or exceeds the greater of (a) five
(5) or (b) the aggregate number of Years of Service before such break. Such
aggregate number of Years of Service before such break shall be deemed not to
include any Years of Service not required to be taken into account under this
Paragraph B by reason of any prior breaks in service.
(iii) In the case of any Participant who has five (5)
consecutive One-Year Breaks in Service, Years of Service after such break shall
not be taken into account for purposes of determining the vested amount in his
Company Contribution Account which accrued prior to such break.
C. FORFEITURE OF NON-VESTED AMOUNT. The excess of (i) the amount in the
Company Contribution Account of a Participant whose Termination of Employment
has occurred, over (ii) the vested amount in such Company Contribution Account
as determined in accordance with the vesting schedule set forth in Paragraph A
of this Section Eleven (such difference being referred to herein as the
"Non-Vested Amount") shall be forfeited upon the earlier of (i) the
Participant's receipt of a distribution of his total vested Accounts under the
Plan or (ii) his incurring his second (2nd) consecutive One-Year Break in
Service following his Termination of Employment.
If a Participant who has received a distribution of his total vested
Accounts under the Plan (i) is rehired by a Participating Company and performs
more than five hundred (500) Hours of Service in any Plan Year before incurring
five (5) consecutive One-Year Breaks in Service and (ii) repays the full amount
of his prior distribution within five (5) years of the date on which he is
rehired by the Participating Company, any previously forfeited Non-Vested Amount
shall be restored to his Company Contribution Account, and he shall continue to
earn future Years of Service for purposes of determining the vested amount in
such Account without regard to his cessation of employment. The funds needed to
restore such a Participant's Non-Vested Amount shall be drawn first from any
Account balances forfeited under the provisions of this Paragraph C or under the
provisions of Paragraph D of Section Twelve during the Plan Year in which such
restoration is required. If such sources are not sufficient to fully restore the
previously forfeited Non-Vested Amount to the Participant's Company Contribution
Account, the Participating Company which rehired such Employee shall make a
special contribution to the rabbi trust to fund the remainder of the amount
needed.
SECTION 12.
PAYMENT OF BENEFITS
-------------------
A. RETIREMENT, DISABILITY AND DEATH BENEFITS. The Administrative
Committee shall make distribution of the benefits payable to a Participant (or,
if applicable, his Beneficiary), pursuant to Paragraph C of this Section Twelve,
upon such Participant's retirement on or after attaining his Retirement Date or
after sustaining a Total and Permanent Disability or upon such Participant's
death while employed by a Participating Company. The amount of such distribution
shall be based upon the balance in such Participant's Accounts as of the
Valuation Date coincident with or immediately preceding such distribution,
supplemented, where
16
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applicable, by an amount representing any amounts withheld from such
Participant's Compensation under Paragraph A of Section Seven subsequent to such
Valuation Date.
B. EMPLOYMENT TERMINATION BENEFITS. The Administrative Committee shall
make an employment termination benefit distribution to a Participant who has
incurred a Termination of Employment. The amount of such distribution shall be
based upon the vested amount (as provided in Paragraph A of Section Eleven) in
his Company Contribution Account and the total amount in his Salary Reduction
Contribution Account and his Predecessor Account as of the Valuation Date
coincident with or immediately preceding the date on which the distribution is
made, supplemented, where applicable, by an amount representing any amounts
withheld from such Participant's Compensation under Paragraph A of Section Seven
subsequent to such Valuation Date.
In the event that a distribution is made pursuant to this Paragraph B
to a Participant who, at the time of such distribution, is not one hundred
percent (100%) vested in the amount in his Company Contribution Account, the
following rules shall apply:
(i) ESTABLISHMENT OF SEPARATE LEDGER ACCOUNT. The
Administrative Committee shall establish a separate ledger account (hereinafter
referred to as the "Separate Account") for such Participant as of the time of
such distribution. The balance in such Participant's Company Contribution
Account immediately following such distribution shall be transferred to this
Separate Account and shall constitute the initial balance of this Separate
Account. For this purpose, all references to a Participant's "Company
Contribution Account" in the Plan shall be deemed applicable to such
Participant's Separate Account.
(ii) SUBSEQUENT PAYMENTS. In the event that after such
distribution the former Employee is rehired by a Participating Company but then
again incurs a Termination of Employment at a time when such Participant is less
than one hundred percent (100%) vested in his Separate Account, then the
nonforfeitable portion of such Participant's Separate Account for purposes of
Paragraph A of Section Eleven shall be an amount equal to:
(A) The vesting percentage set forth in Paragraph A of Section
Eleven applicable to such Participant at the time of such subsequent
distribution, Multiplied by:
(B) The sum of the present balance in the Separate Account
plus the sum of all prior distribution amounts,
Less:
-----
The sum of all prior distribution amounts.
C. DISTRIBUTION OF BENEFITS. Upon a Participant's retirement on or
after attaining his Retirement Date or after sustaining a Total and Permanent
Disability, his death, or his Termination of Employment, the Participating
Company which employed such Participant at such time shall pay such Participant
(or, if applicable, his Beneficiary) the benefits payable to him under Paragraph
A or B of this Section Twelve in one lump sum payment as soon as
administratively feasible after such event. However, if at least sixty (60) days
prior to his retirement, death or Termination of Employment, the Participant
made an irrevocable election to
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receive his benefits under the Plan in the form of installment payments, such
distribution shall instead be made in the form of installment payments. If a
Participant elects distribution in the form of installment payments, he shall
further designate the period of time (not to exceed twenty (20) years) over
which the installment payments are to be made and whether such installment
payments are to be made on a monthly, quarterly, semi-annual or annual basis.
During the period such installment payments are being made, the remaining
balances in the Participant's vested Accounts shall continue to be credited with
earnings or losses in accordance with the provisions of Section Six of the Plan.
If a Participant dies after having made an election to receive his distribution
in the form of installment payments but before the receipt of all of the
installment payments payable thereunder, the remaining installment payments
shall be paid to his Beneficiary for the remaining duration of the elected
installment period unless the Participant has provided in such installment
election for a different form of payment to his Beneficiary in the event of the
death of the Participant, in which event such different form of payment shall be
made to the Participant's Beneficiary. If a Participant dies after having
elected to receive his distribution in the form of installment payments but
prior to receipt of any installment payments payable thereunder, the benefits
payable under Paragraph A or B of this Section Twelve to such Participant's
Beneficiary shall be paid in one lump sum payment as soon as administratively
feasible following such Participant's death.
The computation of the amount of any lump sum payment or the amount of
any installment payment shall be made by reference to the balances of the
Participant's vested Accounts as of the date of the distribution. A
Participating Company making any distribution hereunder shall withhold from the
distribution any applicable payroll taxes or required income taxes.
Notwithstanding the foregoing, the distribution of the benefits
attributable to that portion of the Participant's Company Stock Account and
Company Contribution Account held in the form of Company Stock shall be made (i)
in cash if the aggregate number of shares in such accounts is fifty (50) or
less, or (ii) in cash or Company Stock or both if the aggregate number of shares
in such accounts is more than fifty (50). Prior to making a distribution of
benefits, the Administrative Committee shall advise the Participant (or, if
applicable, his Beneficiary) in writing of the right to demand that that portion
of the Participant's Company Stock Account and Company Contribution Account held
in the form of Company Stock be distributed solely in Company Stock, if such
accounts contain in the aggregate greater than fifty (50) shares. If the
Participant (or, if applicable, his Beneficiary) fails to make such demand in
writing within ninety (90) days after receipt of such written notice, the
Administrative Committee shall direct the Trustee to make distribution of that
portion of the Participant's Company Stock Account and Company Contribution
Account held in Company Stock in such form as the Administrative Committee, in
its sole discretion, shall determine.
If a Participant (or, if applicable, his Beneficiary) demands that that
portion of the Participant's Company Stock Account and Company Contribution
Account held in the form of Company Stock be distributed solely in Company
Stock, and if such accounts contain in the aggregate greater than fifty (50)
shares, the distribution of such applicable portion of his Company Stock Account
and Company Contribution Account held in the form of Company Stock shall be made
entirely in whole shares or other units of Company Stock. Any cash balance in
the Participant's Company Stock Account shall be used to acquire for
distribution the
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maximum number of whole shares or other units of Company Stock at the then fair
market value. Any fractional unit of the unexpended balance shall be distributed
in cash. If Company Stock is not available for purchase by the Trustee, then the
Trustee shall hold such balance until Company Stock is acquired and then make
such distribution. If the Trustee is unable to purchase the Company Stock
required for distribution, it shall make distribution in cash within one (1)
year after the date the distribution was to be made, except in the case of a
retirement distribution, which shall be made within sixty (60) days after the
close of the Plan Year in which the Participant's retirement occurs.
D. BENEFITS OF PERSONS WHO CANNOT BE LOCATED. If the Administrative
Committee determines in good faith that a Participant or Beneficiary entitled to
receive a benefit payment hereunder cannot be located, the Administrative
Committee shall nevertheless give written notice to such person of the fact that
such benefit payment is payable to him under the Plan. Such written notice shall
be given by United States mail to the person entitled to the benefit payment
(according to the records of the Plan) at the last known address of such person.
In addition, the Administrative Committee shall use such other means as are
reasonably available to it in order to ascertain the location of such person. If
such Participant or Beneficiary makes no claim for such benefit payment before
the earlier of (i) a period of two (2) years after the giving of such written
notice or (ii) the termination of the Plan, then the Administrative Committee
shall declare a forfeiture of the benefits otherwise payable to such person,
provided such person has not yet been located.
E. DISTRIBUTION FOR MINOR BENEFICIARY. In the event a distribution is
to be made to a minor, then the Administrative Committee may, in its sole
discretion, direct that such distribution be paid to the legal guardian, or if
none, to a parent of such Beneficiary or a responsible adult with whom the
Beneficiary maintains his residence, or to the custodian for such Beneficiary
under the Uniform Gift to Minors Act or Gift to Minors Act, if such is permitted
by the laws of the state in which said Beneficiary resides. Such a payment to
the legal guardian or parent of a minor Beneficiary shall fully discharge the
Participating Company and Plan from further liability on account thereof.
SECTION 13.
BENEFIT CLAIMS PROCEDURE
------------------------
A. CLAIMS FOR BENEFITS. Any claim for benefits under the Plan shall be
made in writing to the Administrative Committee. If such claim for benefits is
wholly or partially denied, the Administrative Committee shall, within ninety
(90) days after receipt of the claim, notify the Participant or Beneficiary of
the denial of the claim. Such notice of denial shall (i) be in writing, (ii) be
written in a manner calculated to be understood by the Participant or
Beneficiary, and (iii) contain (a) the specific reason or reasons for denial of
the claim, (b) a specific reference to the pertinent Plan provisions upon which
the denial is based, (c) a description of any additional material or information
necessary to perfect the claim, along with an explanation of why such material
or information is necessary, and (d) an explanation of the claim review
procedure as set forth in this Section Thirteen.
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B. REQUEST FOR REVIEW OF DENIAL. Within sixty (60) days after the
receipt by a Participant or Beneficiary of a written notice of denial of the
claim, or such later time as shall be deemed reasonable taking into account the
nature of the benefit subject to the claim and any other attendant
circumstances, the Participant or Beneficiary may file a written request with
the Administrative Committee that it conduct a full and fair review of the
denial of the claim for benefits.
C. DECISION ON REVIEW OF DENIAL. The Administrative Committee shall
deliver to the Participant or Beneficiary a written decision on the claim within
sixty (60) days after the receipt of the aforesaid request for review. Such
decision shall (i) be written in a manner calculated to be understood by the
Participant or Beneficiary, (ii) include the specific reason or reasons for the
decision, and (iii) contain a specific reference to the pertinent Plan
provisions upon which the decision is based.
SECTION 14.
INALIENABILITY OF BENEFITS
--------------------------
The right of any Participant or Beneficiary to any benefit or payment
under the Plan shall not be subject to voluntary or involuntary transfer,
alienation, or assignment, and, to the fullest extent permitted by law, shall
not be subject to attachment, execution, garnishment, sequestration, or other
legal or equitable process. In the event a Participant or Beneficiary who is
receiving or is entitled to receive benefits under the Plan attempts to assign,
transfer or dispose of such right, or if an attempt is made to subject said
right to such process, such assignment, transfer or disposition shall be null
and void.
SECTION 15.
AMENDMENT OF THE PLAN
---------------------
The Sponsoring Company may amend the Plan at any time, and from time to
time, pursuant to written resolutions of the Board of Directors of the
Sponsoring Company. No such amendment, however, shall have the effect of
reducing any then nonforfeitable percentage of benefits of any Participant as
computed in accordance with the vesting schedule under Paragraph A of Section
Eleven of the Plan. Notwithstanding the foregoing provisions of this Plan, the
Sponsoring Company may provide for distribution of some or all of the Accounts
established in connection with the Plan if the Sponsoring Company's chief legal
officer renders a written opinion that such distribution is required to enable
the Plan to qualify for exemption from the requirements of Parts 2-4 of Title I
of ERISA or as otherwise required by applicable law.
SECTION 16.
PERMANENCY OF THE PLAN
----------------------
Each Participating Company reserves the right to terminate the Plan
with respect to such Participating Company, and the Sponsoring Company reserves
the right to terminate the Plan with respect to all the Participating Companies.
20
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<PAGE> 24
If the Board of Directors of a Participating Company determines to
terminate the Plan completely with respect to such Participating Company, the
Plan shall be terminated with respect to such Participating Company as of the
date specified in certified copies of resolutions of such Board of Directors of
the Participating Company delivered to the Administrative Committee. If the
Board of Directors of the Sponsoring Company determines to terminate the Plan
completely with respect to all the Participating Companies, the Plan shall be
terminated with respect to all the Participating Companies as of the date
specified in certified copies of resolutions of the Board of Directors of the
Sponsoring Company delivered to the Administrative Committee. Upon such
termination or partial termination of the Plan, after payment of all expenses
and proportional adjustment of the Accounts of the Participants affected by such
termination to reflect expenses, profits or losses, and allocations of any
previously unallocated amounts to the date of termination, the Participants
affected by such termination shall be entitled to receive the amount then
credited to their respective Accounts in the Plan. The Administrative Committee
shall make payment of such amounts in cash.
Upon the termination or partial termination of the Plan, the right of
each Participant affected by such termination to the amount credited to his
Accounts at such time shall be nonforfeitable without reference to any formal
action on the part of the Administrative Committee or the Participating Company
employing such Participant.
SECTION 17.
STATUS OF EMPLOYMENT RELATIONS
------------------------------
The adoption and maintenance of the Plan shall not be deemed to
constitute a contract between any Participating Company and its Employees or to
be consideration for, or an inducement or condition of, the employment of any
person. Nothing herein contained shall be deemed (i) to give to any Employee the
right to be retained in the employ of a Participating Company; (ii) to affect
the right of a Participating Company to discipline or discharge any Employee at
any time; (iii) to give a Participating Company the right to require any
Employee to remain in its employ; or (iv) to affect any Employee's right to
terminate his employment at any time.
SECTION 18.
FUNDING
-------
No assets of the Participating Companies shall be set aside, earmarked
or placed in trust or escrow for the benefit of any Participant to fund any
obligation of any Participating Company which may exist under this Plan;
provided, however, that the Participating Companies may establish a grantor
trust to hold assets to secure their obligations to the Participants under this
Plan if the establishment of such a trust does not result in the Plan being
"funded" for purposes of the Internal Revenue Code. Except to the extent
provided through a grantor trust established under the provisions of the
preceding sentence, all payments to a Participant or Beneficiary under this Plan
shall be made out of the general revenue of the Participating Company which
employed the Participant to which such benefits were attributable, and the right
to such payments
21
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<PAGE> 25
by the Participant or Beneficiary shall be solely that of an unsecured general
creditor of the relevant Participating Company.
SECTION 19.
APPLICABLE LAW
--------------
The Plan shall be construed, regulated, interpreted and administered
under and in accordance with the laws of the State of Maryland, other than its
laws respecting choice of law, to the extent not preempted by ERISA.
SECTION 20.
ADOPTION OF PLAN BY AFFILIATED COMPANIES
----------------------------------------
Any Affiliated Company, whether or not presently existing, may, with
the approval of the Board of Directors of the Sponsoring Company, adopt the Plan
by means of appropriate corporate action of such Affiliated Company and by
executing such documents as the Board of Directors of the Sponsoring Company may
require in order for such Affiliated Company to become a party to any trust
established in connection with the Plan. Any such Affiliated Company which
adopts the Plan as provided above shall thereafter be included within the
meaning of the term "Participating Company" when used in the Plan.
22
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Exhibit 5
December 23, 1999
Manor Care, Inc.
333 North Summit Street
Toledo, Ohio 43604-2607
Re: Registration Statement on Form S-8 with respect to
100,000 shares of Common Stock, par value $.01 per share
--------------------------------------------------------
Ladies and Gentlemen:
This will refer to the preparation and filing by Manor Care,
Inc. (the "Company") with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"), of a
Registration Statement on Form S-8 (the "Registration Statement") relating to
the issuance by the Company of 100,000 shares of the Company's Common Stock, par
value $.01 per share (the "Shares"), pursuant to the Manor Care, Inc.
Nonqualified Retirement Savings and Investment Plan (the "Plan").
In my capacity as General Counsel of the Company, I am
familiar with the proceedings taken and proposed to be taken by the Company in
connection with the authorization, issuance and sale of the Shares, and for the
purposes of this opinion, have assumed such proceedings will be timely completed
in the manner presently proposed. In addition, I have made such legal and
factual examinations and inquiries, including an examination of originals or
copies certified or otherwise identified to my satisfaction of such documents,
corporate records and instruments, as I have deemed necessary or appropriate for
purposes of this opinion.
In my examination, I have assumed the genuineness of all
signatures, the authenticity of all documents submitted to me as originals and
the conformity to authentic original documents of all documents submitted to me
as copies.
Subject to the foregoing, it is my opinion that the Shares
have been duly authorized and, when issued and delivered pursuant to the Plan,
and when the Registration Statement shall have become effective, will be legally
issued and will be fully paid and nonassessable.
I consent to your filing this opinion as an exhibit to the
Registration Statement and to the reference to me contained under the heading
"Interests of Named Experts and Legal Counsel".
Very truly yours,
/s/R. Jeffrey Bixler
R. Jeffrey Bixler
Vice President, General
Counsel and Secretary
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<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the Manor Care, Inc. Nonqualified Retirement Savings and
Investment Plan of our report dated January 28, 1999, with respect to the
consolidated financial statements and schedule of Manor Care, Inc. (formerly
known as HCR Manor Care, Inc.) included in its Annual Report (Form 10-K) for the
year ended December 31, 1998, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Toledo, Ohio
December 20, 1999
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