<PAGE>
As filed with the Securities and Exchange Commission on May 31, 1996.
Registration No. 33-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
GRANCARE, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
CALIFORNIA 95-4299210
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
ONE RAVINIA DRIVE, SUITE 1500, ATLANTA, GEORGIA 30346
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
1996 OUTSIDE DIRECTORS STOCK INCENTIVE PLAN
- --------------------------------------------------------------------------------
(Full Title of the Plan)
EVRETT W. BENTON, ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
GRANCARE, INC.
ONE RAVINIA DRIVE, SUITE 1500
ATLANTA, GEORGIA 30346
- --------------------------------------------------------------------------------
(Name and Address of Agent for Service)
(770) 393-0199
- --------------------------------------------------------------------------------
(Telephone Number, Including Area Code, of Agent for Service)
COPY TO:
RICHARD H. MILLER, ESQ.
POWELL, GOLDSTEIN, FRAZER & MURPHY
191 PEACHTREE STREET, N.E.
SIXTEENTH FLOOR
ATLANTA, GEORGIA 30303
(404) 572-6600
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered(1) Share(2) Price(2) Fee(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 250,000 $18.00 $4,500,000 $1,552
no par value shares ----- --------- -----
</TABLE>
(1) Representing shares of the Registrant's Common Stock, no par value per
share (the "Common Stock"), to be issued by the Registrant in connection with
the Registrant's 1996 Outside Directors Stock Incentive Plan (the "Plan") or
upon the exercise of stock options granted thereunder. This Registration
Statement also covers such indeterminable number of additional shares as may
become issuable to prevent dilution in the event of stock splits, stock
dividends or similar transactions pursuant to the terms of the Plan.
(2) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457(h)(1) based upon the closing price of the Common Stock on
the New York Stock Exchange as reported on May 24, 1996.
-2-
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part I of the
instructions to the Registration Statement on Form S-8 will be sent or given to
employees of the Registrant selected to participate in the Plan as required by
Rule 428(b)(1) promulgated under the Securities Act of 1933, as amended (the
"Securities Act").
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange Commission
(the "Commission") are incorporated herein by reference:
(1) The Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 (File No. 1-19571).
(2) The Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1996 (File No. 1-19571).
(3) The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A filed pursuant to
Section 12 of the Securities Act of 1934, as amended (the "Exchange
Act") on October 8, 1991 (File No. 1-19571).
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a post-
effective amendment indicating that all securities offered hereby have been sold
or that deregisters all such securities then remaining unsold, shall be deemed
to be incorporated by reference in the registration statement and to be a part
hereof from the date of filing of such documents.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Restated Articles of Incorporation of the Registrant contain a
provision that limits the personal liability of the Registrant's directors for
monetary damages in an action brought by or in right of the Registrant for
breach of a director's duties to the Registrant and its shareholders. Such
provision does not limit the liability of the Registrant's directors for acts or
omissions that involve intentional misconduct or a knowing, culpable violation
of law, for acts or omissions that a director believes to be contrary to the
best interest of the Registrant or its shareholders or that involve the absence
of good faith on the part of the director; for any transaction from which a
director derived an improper personal benefit; for acts or omissions that show a
reckless disregard for the director's duty to the Registrant or its shareholders
in circumstances under which the director was aware, or should have been aware,
in the ordinary course of performing a director's duty, of a risk of serious
injury to the Registrant or its shareholders; for acts or omissions that
constitute an unexcused pattern of inattention that amounts to an abdication of
a director's duty to the Registrant or its shareholders; under Section 310 of
the California General Corporation Law (which involves liability for a director
having a material financial interest in a corporate transaction); or under
Section 316 of the California General Corporation Law (which imposes liability
on directors who approve certain improper distributions to shareholders or
approve certain improper loans or guarantees to any director or officer).
<PAGE>
The Registrant's Bylaws permit the Registrant to indemnify its officers
and directors to the full extent permitted by Section 317 of the California
General Corporation Law and applicable law. Section 317 of the California
General Corporation Law makes provisions for the indemnification of officers,
directors and other corporate agents in terms sufficiently broad to indemnify
such persons, under certain circumstances, for liabilities (including
reimbursement of expenses incurred) arising under the Securities Act. The
Registrant has entered into agreements with certain of its directors and
officers whereby it has agreed to indemnify such persons against certain
liabilities.
ITEM 8. EXHIBITS.
The following exhibits are filed with or incorporated by reference into
this Registration Statement pursuant to Item 601 of Regulation S-K.
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
4.1 Restated Articles of Incorporation (1)
4.2 Form of Certificate of Amendment of Articles of
Incorporation (2)
4.3 Bylaws, as amended. (3)
4.4 Form of Warrant for the purchase of shares of Common
Stock (1)
4.5 Indenture from GranCare, Inc. to First Fidelity Trust
Company, New York, as Trustee, dated as of January 29,
1993. (4)
4.6 Form of GranCare, Inc.'s 6-1/2% Convertible Subordinated
Debentures due 2003. (4)
4.7 Form of GranCare, Inc.'s 9-3/8% Senior Subordinated Notes
due 2005. (5)
4.8 Indenture from GranCare, Inc. to Marine Midland Bank, New
York, as Trustee, dated as of September 15, 1995. (5)
5 Opinion of Evrett W. Benton with respect to the securities
being registered.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
10 Form of Registrant's 1996 Outside Directors Stock
Incentive Plan.
23.1 Consent of Evrett W. Benton (included in Exhibit 5).
23.2 Consent of Ernst & Young LLP, independent auditors.
23.3 Consent of KPMG Peat Marwick LLP, independent auditors.
24 Power of Attorney (see signature pages to this Registration
Statement).
</TABLE>
_________________________
(1) Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (File No. 33-42595), as amended, which was declared effective on
October 31, 1991.
(2) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1991.
(3) Incorporated by reference to the Registrant's Quarterly Report on Form 10-
Q for the quarterly period ended September 30, 1994.
(4) Incorporated by reference to the Registrant's Registration Statement on
Form S-3 (File No. 33-56076), as amended, which was declared effective on
January 22, 1993.
(5) Incorporated by reference to the Registrant's Quarterly Report on Form 10-
Q for the quarterly period ended September 30, 1995.
ITEM 9. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(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;
II-3
<PAGE>
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3 or Form S-8 and
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(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 hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that
is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
II-4
<PAGE>
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 Atlanta, Georgia, on the 31st day of May, 1996.
GRANCARE, INC.
By: /s/ GENE E. BURLESON
--------------------
Gene E. Burleson
President and Chief Executive Officer
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Evrett W. Benton and M. Henry Day, and either of
them, as his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitutes, may lawfully do or cause to be done by virtue hereof.
II-5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ GENE E. BURLESON Chairman of the Board, May 31, 1996
- --------------------
Gene E. Burleson President, Chief Executive
Officer and Director
(Principal Executive Officer)
/s/ JERRY A. SCHNEIDER Executive Vice President May 31, 1996
- ----------------------
Jerry A. Schneider and Chief Financial Officer
(Principal Financial and
Accounting Officer)
Vice Chairman of the Board May ____, 1996
- -------------------------
William G. Petty, Jr. and Director
/s/ CHARLES M. BLALACK Director May 31, 1996
- -----------------------
Charles M. Blalack
/s/ ANTOINETTE HUBENETTE, M.D. Director May 31, 1996
- ------------------------------
Antoinette Hubenette, M.D.
/s/ JOEL S. KANTER Director May 31, 1996
- -------------------
Joel S. Kanter
/s/ RONALD G. KENNY Director May 31, 1996
- -------------------
Ronald G. Kenny
/s/ ROBERT L. PARKER Director May 31, 1996
- --------------------
Robert L. Parker
/s/ EDWARD V. REGAN Director May 31, 1996
- -------------------
Edward V. Regan
/s/ GARY U. ROLLE Director May 31, 1996
- -----------------
Gary U. Rolle
</TABLE>
22671455
II-6
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
4.1 Restated Articles of Incorporation (1)
4.2 Form of Certificate of Amendment of Articles of
Incorporation (2)
4.3 Bylaws, as amended. (3)
4.4 Form of Warrant for the purchase of shares of
Common Stock (1)
4.5 Indenture from GranCare, Inc. to First Fidelity
Trust Company, New York, as Trustee, dated as
of January 29, 1993. (4)
4.6 Form of GranCare, Inc.'s 6-1/2% Convertible
Subordinated Debentures due 2003. (4)
4.7 Form of GranCare, Inc.'s 9-3/8% Senior
Subordinated Notes due 2005. (5)
4.8 Indenture from GranCare, Inc. to Marine
Midland Bank, New York, as Trustee, dated as
of September 15, 1995. (5)
5 Opinion of Evrett W. Benton with respect to
the securities being registered.
10 Form of Registrant's 1996 Outside Directors
Stock Incentive Plan.
23.1 Consent of Evrett W. Benton (included in
Exhibit 5).
23.2 Consent of Ernst & Young LLP, independent
auditors.
23.3 Consent of KPMG Peat Marwick LLP, independent auditors.
</TABLE>
II-7
<PAGE>
24 Power of Attorney (see signature pages to this
Registration Statement).
_________________________
(1) Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (File No. 33-42595), as amended, which was declared effective on
October 31, 1991.
(2) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1991.
(3) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 1994.
(4) Incorporated by reference to the Registrant's Registration Statement on
Form S-3 (File No. 33-56076), as amended, which was declared effective on
January 22, 1993.
(5) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 1995.
22671455
II-8
<PAGE>
EXHIBIT 5
May 30, 1996
GranCare, Inc.
One Ravinia Drive
Suite 1500
Atlanta, Georgia 30346
Re: Registration Statement on Form S-8 for
1996 Outside Directors Stock Incentive Plan
Ladies and Gentlemen:
I have served as General Counsel for GranCare, Inc., a California
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended, pursuant to a Registration Statement on Form
S-8 (the "Registration Statement") of an aggregate of 250,000 shares (the
"Shares") of common stock, no par value, of the Company, to be offered and sold
by the Company pursuant to the GranCare, Inc. 1996 Outside Directors Stock
Incentive Plan (the "Plan").
I have examined and am familiar with originals or copies (certified,
photostatic or otherwise identified to my satisfaction) of such documents,
corporate records and other instruments relating to the incorporation of the
Company and the adoption of the Plan as I have deemed necessary and advisable.
In all such examinations, I have assumed the genuineness of all signatures
on all originals and copies of documents I have examined, the authenticity of
all documents submitted to me as originals and the conformity to original
documents of all certified, conformed or photostatic copies. As to questions of
fact material and relevant to my opinion, I have relied upon certificates or
representations of Company officials and of appropriate state, local and federal
officials.
I express no opinion as to matters under or involving laws other than the
laws of the State of California.
<PAGE>
GranCare, Inc.
May 30, 1996
Page 2
Based upon and subject to the foregoing and having regard for such legal
considerations as I have deemed relevant, it is my opinion that:
1. The Shares have been duly authorized; and
2. Upon the issuance and delivery of the Shares upon receipt of lawful
consideration therefor pursuant to the Plan, such Shares will be
validly issued, fully paid and non-assessable.
I hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement.
Very truly yours,
Evrett W. Benton
Executive Vice President
and General Counsel
22671458
<PAGE>
EXHIBIT 10
GRANCARE, INC.
1996 OUTSIDE DIRECTORS STOCK INCENTIVE PLAN
THIS PLAN is made effective as of January 1, 1996 by GRANCARE, INC., a
California corporation (hereinafter called the "Company");
INTRODUCTION
The Company is adopting the GranCare, Inc. 1996 Outside Directors
Stock Incentive Plan (the "Plan") to provide non-employee directors with Common
Stock of the Company and an opportunity to acquire a greater interest in the
Company through the issuance of stock options. The Board of Directors of the
Company believes this Plan will promote personal interest in the welfare of the
Company by, and provide incentive to, the individuals who are primarily
responsible both for the regular operations of and for shaping and carrying out
the long term plans of the Company, thus facilitating the continued growth and
financial success of the Company.
<PAGE>
GRANCARE, INC.
1996 OUTSIDE DIRECTORS STOCK INCENTIVE PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1 DEFINITIONS............................. 1
SECTION 2 ADMINISTRATION.......................... 3
SECTION 3 ELIGIBILITY............................. 4
SECTION 4 SHARES SUBJECT TO PLAN.................. 4
SECTION 5 STOCK AWARDS............................ 4
SECTION 6 STOCK OPTION AWARDS..................... 5
SECTION 7 TERM OF PLAN............................ 7
SECTION 8 INDEMNIFICATION OF COMMITTEE............ 8
SECTION 9 AMENDMENT AND TERMINATION OF THE PLAN... 8
SECTION 10 ADJUSTMENT IN SHARES OF COMMON STOCK... 8
SECTION 11 RIGHTS AS A STOCKHOLDER................ 9
SECTION 12 GOVERNING LAW.......................... 9
</TABLE>
-i-
<PAGE>
SECTION 1 DEFINITIONS
Wherever used herein, the masculine pronoun shall be deemed to include the
feminine, and the singular to include the plural, unless the context clearly
indicates otherwise, and the following words and phrases shall, when used
herein, have the meanings set forth below:
1.1 "Affiliate" means (a) an entity that directly or through one or more
---------
intermediaries is controlled by the Company, and (b) any entity in which the
Company has a significant equity interest, as determined by the Company.
1.2 "Board of Directors" means the Board of Directors of the Company.
------------------
1.3 "Change of Control" means the first to occur of the following events:
-----------------
(a) any person (as defined in Section 3(a)(9) of the Exchange Act and
as used in Sections 13(d) and 14(d) thereof), excluding the Company, any
Subsidiary and any employee benefit plan sponsored or maintained by the
Company or any Subsidiary (including any trustee of such plan acting as
trustee) (the Company, all Subsidiaries, and such employee benefit plans
(and trustees acting as trustees) being hereafter referred to as the
"Company Group"), but including a `group' as defined in Section 13(d)(3) of
the Exchange Act (a "Person"), becomes the beneficial owner of shares of
the Company having at least thirty percent (30%) of the total number of
votes that may be cast for the election of directors of the Company (the
"Voting Shares"); provided that no Change of Control will occur as a result
of an acquisition of stock by the Company Group which increases,
proportionately, the stock representing the voting power of the Company
beneficially owned by such person or group above thirty percent (30%) of
the voting power of the Company, and provided further that if such person
or group acquires beneficial ownership of stock representing more than
thirty percent (30%) of the voting power of the Company by reason of share
purchases by the Company Group, and after such share purchases by the
Company Group acquires any additional shares representing voting power of
the Company, then a Change of Control shall occur;
(b) the shareholders of the Company shall approve any merger or other
business combination of the Company, sale of the Company's assets or
combination of the foregoing transactions (a "Transaction") other than a
Transaction involving only the Company and one or more of its Subsidiaries,
or a Transaction immediately following which the shareholders of the
Company immediately prior to the Transaction continue to have a majority of
the voting power in the resulting entity excluding for this purpose any
shareholder owning directly or indirectly more than ten percent (10%) of
the shares of the other company involved in the merger; or
(c) within any 24-month period, the persons who were directors of the
Company immediately before the beginning of such period (the "Incumbent
Directors") shall cease (for any reason other than death) to constitute at
least a majority of the Board of Directors or the board of directors of any
successor to the Company, provided that any director who was not
-1-
<PAGE>
a director as of the effective date of this Plan shall be deemed to be an
Incumbent Director if such director was elected to the Board of Directors
by, or on the recommendation of or with the approval of, at least two-
thirds of the directors who then qualified as Incumbent Directors either
actually or by prior operation of this Subsection (c); and provided further
that any director elected to the Board of Directors to avoid or settle a
threatened or actual proxy contest shall in no event be deemed to be an
Incumbent Director.
1.4 "Code" means the Internal Revenue Code of 1986, as amended.
----
1.5 "Committee" means the Management Compensation Committee of the Board
---------
of Directors.
1.6 "Common Stock" means common stock of the Company.
------------
1.7 "Director" means a member of the Board of Directors.
--------
1.8 "Disability" means a condition described in Code Section 22(e)(3), as
----------
amended from time to time. In the event of a dispute, the determination of
Disability shall be made by the Committee and shall be supported by advice of a
physician competent in the area to which such Disability relates.
1.9 "Eligible Director" means a Director who is not an Employee.
-----------------
1.10 "Employee" means any person who is employed by the Company or an
--------
Affiliate for purposes of the Federal Insurance Contributions Act and any
consultant retained to provide services (other than in the capacity of a
director) to the Company or an Affiliate.
1.11 "Exchange Act" means the Securities Exchange Act of 1934, as amended
------------
from time to time.
1.12 "Fair Market Value" means, with respect to a share of Common Stock,
-----------------
(a) if the Common Stock is not at the time listed or admitted to
trading on any national securities exchange but is traded on the Nasdaq
Stock Market, the closing selling price per share on the date in question,
as such price is reported by the National Association of Securities Dealers
through the Nasdaq Stock Market or any successor system. If there is no
reported closing selling price for the Common Stock on the date in
question, then the closing selling price on the last preceding date for
which such quotation exists shall be determinative of Fair Market Value.
(b) if the Common Stock is at the time listed or admitted to trading
on any national securities exchange , the closing selling price per share
on the date in question on the securities exchange determined by the
Committee to be the primary market for the Common Stock, as such price is
officially quoted in the composite tape of transactions on such exchange.
If there is no reported sale of Common Stock on such exchange on the date
in question, the Fair
-2-
<PAGE>
Market Value shall be the closing selling price on the exchange on the last
preceding date for which such quotation exists.
1.13 "Plan" means this GranCare, Inc. 1996 Outside Directors Stock
----
Incentive Plan.
1.14 "Stock Award" means a grant of shares of Common Stock pursuant to the
-----------
provisions of Section 5 of the Plan.
1.15 "Stock Incentives" means, collectively, Stock Options and Stock
----------------
Awards.
1.16 "Stock Option" means a non-qualified stock option issued under the
------------
Plan.
1.17 "Subsidiary" means any corporation (other than the Company) in an
----------
unbroken chain of corporations beginning with the Company if, with respect to
Incentive Stock Options, at the time of the granting of the Option, each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.
1.18 "Tender Offer" means a Change of Control of the Company effected
------------
through the following transaction:
(a) the occurrence of the event described in Section 1.3(a) hereof
pursuant to a tender or exchange offer made directly to the Company's
shareholders which the Board of Directors does not recommend such
shareholders to accept; and
(b) more than fifty percent (50%) of the acquired securities are
accepted from holders other than the officers and Directors of the Company
subject to the short-swing profit restrictions of Section 16 of the
Exchange Act.
1.19 "Tender Offer Price" means the greater of (a) the Fair Market Value
------------------
per share of Common Stock on the date the Stock Option is surrendered to the
Company in connection with the Tender Offer or (b) the highest reported price
per share of Common Stock paid in effecting such Tender Offer.
1.20 "Valuation Date" means the first date in April on which the New York
--------------
Stock Exchange is open for trading.
SECTION 2 ADMINISTRATION
2.1 Delegation to Committee. The Plan shall be administered by the
-----------------------
Committee.
2.2 Committee Actions. The Committee shall select one of its members as
-----------------
chairman, and shall hold meetings at such times and places as it may determine.
Acts approved by the majority of
-3-
<PAGE>
the Committee in a meeting at which a quorum is present or acts reduced to or
approved in writing by a majority of the members of the Committee shall be the
valid acts of the Committee. A quorum shall be present at any meeting of the
Committee that a majority of the Committee members attend.
2.3 Finality. The Committee shall have the authority in its sole
--------
discretion to interpret the Plan, to make all other determinations and to take
all other actions it deems necessary or advisable for the implementation and
administration of the Plan, except to the extent such powers are herein reserved
by the Board of Directors. Notwithstanding the foregoing, neither the Committee
nor the Board of Directors shall exercise any discretionary functions with
respect to grants under the Plan. All actions of the Board of Directors and the
Committee shall be final, conclusive, and binding. No member of the Board of
Directors or the Committee shall be liable for any action taken or decision made
in good faith relating to the Plan.
SECTION 3 ELIGIBILITY
Directors who are not Employees shall be eligible to receive Common Stock
under the Plan on the terms and subject to the restrictions hereinafter set
forth.
SECTION 4 SHARES SUBJECT TO PLAN
Subject to adjustment in accordance with Section 10, 250,000 shares of
Common Stock (the "Maximum Plan Shares") are hereby reserved exclusively for
issuance pursuant to Stock Incentives. At no time shall the Company have
outstanding Stock Options subject to Section 16 of the Exchange Act and shares
of Common Stock issued in respect of Stock Incentives in excess of the Maximum
Plan Shares; for this purpose, the outstanding Stock Options and shares of
Common Stock issued in respect of Stock Incentives shall be computed in
accordance with Rule 16b-3(a)(1) as promulgated under the Exchange Act. To the
extent permitted by Rule 16b-3(a)(1) as promulgated under the Exchange Act, the
shares of Common Stock attributable to the nonvested, unpaid, unexercised,
unconverted or otherwise unsettled portion of any Stock Option that is forfeited
or canceled or expires or terminates for any reason without becoming vested,
paid, exercised, converted or otherwise settled in full shall again be available
for purposes of the Plan.
SECTION 5 STOCK AWARDS
5.1 Effective as of the annual meeting of the Board of Directors occurring
in 1996, and as of each annual meeting thereafter through the annual meeting of
the Board of Directors occurring in 1998, each Eligible Director shall be issued
a Stock Award for 800 shares of Common Stock.
5.2 Effective as of the annual meeting of the Board of Directors occurring
in 1999, and each annual meeting thereafter, each Eligible Director shall be
issued a Stock Award for a number of shares of Common Stock equal to the result,
rounded up to the nearest whole number, obtained by
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dividing $12,000 by the Fair Market Value of a share of Common Stock as of the
Valuation Date occurring during the most recent year of recalculation. For
purposes of the immediately preceding sentence, the term "year of recalculation"
means the year 1999 and each third year thereafter.
SECTION 6 STOCK OPTION AWARDS
6.1 As of the date of the initial election or appointment of an individual
as an Eligible Director, such Director shall be granted a Stock Option to
purchase 10,000 shares of Common Stock upon the terms and conditions of this
Section 6.
6.2 On the date of each annual meeting of the shareholders of the Company,
beginning with the 1996 annual meeting, each individual who is at that time
serving as an Eligible Director, whether or not such individual is standing for
re-election as a member of the Board of Directors at that particular meeting,
shall be granted a Stock Option to purchase 6,000 shares of Common Stock upon
the terms and conditions of this Section 6, provided such individual has served
as a member of the Board of Directors for at least six (6) months, until the
Director has received grants of Stock Options under this Plan and grants of
stock options under the Automatic Stock Grant Program under the GranCare, Inc.
1994 Stock Option/Stock Issuance Plan, collectively, covering a total of 22,000
shares of Common Stock.
6.3 On the date of each annual meeting of the shareholders of the Company,
beginning with the annual meeting following the annual meeting on which an
Eligible Director has received grants for the maximum number of shares of Common
Stock pursuant to Section 6.2 hereof, each such individual who is at that time
serving as an Eligible Director, whether or not such individual is standing for
re-election as a member of the Board of Directors at that particular meeting,
shall be granted a Stock Option to purchase 2,000 shares of Common Stock upon
the terms and conditions of this Section 6, provided such individual has served
as a member of the Board of Directors for at least six (6) months.
6.4 The exercise price per share of Common Stock of each Stock Option
grant made under this Section 6 shall be equal to one hundred percent (100%) of
the Fair Market Value per share of Common Stock on the grant date.
6.5 Each Stock Option grant under this Section 6 shall have a maximum term
of ten (10) years measured from the grant date.
6.6 Each Stock Option granted under this Section 6 shall be exercisable to
the extent vested. Each Stock Option shall vest in a series of six (6) equal
and successive semi-annual installments over the Director's period of continued
service as a member of the Board of Directors, with the first such installment
to vest upon the Director's completion of six (6) months of service as a member
of the Board of Directors measured from the grant date.
6.7 The exercise price shall become immediately due upon exercise of a
Stock Option and shall be payable in one of the alternative forms specified
below:
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(a) full payment in cash or check made payable to the Company's order,
(b) full payment in shares of Common Stock held for the requisite
period necessary to avoid a charge to the Company's earnings for financial
reporting purposes and valued at Fair Market Value on the date on which the
Stock Option is exercised,
(c) full payment in a combination of the alternatives set forth in
Subsection (a) and (b) hereof,
(d) full payment through a broker-dealer sale and remittance procedure
pursuant to which the optionee shall provide concurrent irrevocable written
instructions (i) to a Company-designated brokerage firm to effect the
immediate sale of the purchased shares and remit to the Company, out of the
sale proceeds available on the settlement date, sufficient funds to cover
the aggregate exercise price payable for the purchased shares and (ii) to
the Company to deliver the certificates for the purchased shares directly
to such brokerage firm in order to complete the sale transaction.
6.8 During the lifetime of the optionee, the Stock Option grant, together
with the limited stock appreciation right pertaining to such option described in
Section 6.11 below, shall be exercisable only by the optionee and shall not be
assignable or transferable other than a transfer of the Stock Option effected by
will or be the laws of descent and distribution following the optionee's death.
6.9 (a) Upon the date a Director ceases to serve as a member of the Board
of Directors for any reason (other than death or Disability), any
outstanding Stock Options granted pursuant to this Section 6 shall to the
extent that such Stock Options are not then vested, expire and become
unexercisable. Each such Director shall have a six (6)-month period
following the date of such cessation of service as a member of the Board of
Directors in which to exercise each such Stock Option for any or all of the
shares of Common Stock subject thereto in which the optionee is vested at
the time of such cessation of service as a member of the Board of
Directors. Upon the expiration of such six (6)-month period, the Stock
Options held by such individual shall expire and become unexercisable.
(b) Upon the death of an optionee within the six (6)-month period
described in Subsection (a) hereof, any Stock Options then held by the
optionee may be exercised, to the extent that the optionee could have
exercised such Stock Options immediately before death, by the personal
representative of the optionee's estate or by the person or persons to whom
the option is transferred pursuant to the optionee's will or in accordance
with the laws of descent and distribution. The right to exercise each such
Stock Option shall lapse upon the expiration of the twelve (12)-month
period measured from the date of the optionee's death, whereupon such Stock
Options shall expire and become unexercisable.
(c) Upon the death or Disability of a Director while serving as a
member of the Board of Directors, all Stock Options held by such Director
shall immediately vest in full and the Director (or the representative of
the Director's estate or the person or persons to whom
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the Stock Option is transferred upon the Director's death) shall have a
twelve (12)-month period following the date of the Director's cessation of
service as a member of the Board of Directors in which to exercise such
Stock Options for any or all of the shares of Common Stock then subject
thereto. Upon the expiration of such twelve (12)-month period, such Stock
Options shall expire and become unexercisable.
(d) In no event shall any grant under this Section 6 remain
exercisable after the expiration date of the ten (10)-year option term.
Upon the expiration of the applicable post-service exercise period under
Subsections (a) through (c) of this Section or (if earlier) upon the
expiration of the ten (10)-year option term, the Stock Options granted
under this Section 6 shall expire and become unexercisable.
6.10 Each Stock Option shall be represented by a Stock Option Agreement
specifying the date of grant, the number of shares of Common Stock covered
thereby, the exercise price and the applicable provisions of this Section 6.
6.11 Upon the occurrence of a Change of Control, all Stock Options granted
under this Section 6 then held by Directors shall be and become fully vested and
exercisable, notwithstanding the provisions of Section 6.6 to the contrary.
6.12 In the event a Change of Control is effected pursuant to a Tender
Offer, each outstanding Stock Option shall be cancelled and the Company shall
pay to each optionee an amount equal to the excess of (1) the Tender Offer Price
multiplied by the number of shares of Common Stock for which the Stock Option
has not yet been exercised over (2) the aggregate exercise price payable for
such shares of Common Stock. Such cash distribution shall be paid within five
(5) days following the cancellation of the Stock Option. Neither the approval
of the Committee nor the consent of the Board of Directors shall be required in
connection with such Stock Option cancellation and cash distribution. The
shares of Common Stock subject to each Stock Option surrendered in connection
with the Tender Offer shall not be available for subsequent issuance under the
Plan.
6.13 The Stock Options granted under this Section 6 shall in no way affect
the right of the Company to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
SECTION 7 TERM OF PLAN
The Plan shall be effective on the date hereof and shall continue to
be effective until ten (10) years following the earlier of the effective date of
the Plan or the date the stockholders approve the Plan, unless sooner terminated
by the Board of Directors pursuant to Section 9 hereof. The Company shall
submit the Plan to its stockholders for approval within twelve (12) months of
the adoption of the Plan by the Board of Directors.
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SECTION 8 INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification that the members
of the Committee may have, each member of the Committee shall be indemnified by
the Company against the reasonable expenses, including attorneys' fees, actually
and necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which it may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any Option granted thereunder, and against all amounts paid by it in
settlement thereof (provided the settlement has received the prior approval of
the Company) or paid by it in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in the action, suit or proceeding that the Committee member is liable
for negligence or misconduct in the performance of his or her duties; provided
that promptly after institution of the action, suit or proceeding the Committee
member shall in writing offer the Company the opportunity, at its own expense,
to handle and defend such matter. Upon the delivery to the Committee member of
written notice of assumption by the Company of the defense of such matter, the
Company will not be responsible to the Committee member for any further fees and
disbursements relating to the defense of such matter, including fees and
disbursements of counsel.
SECTION 9 AMENDMENT AND TERMINATION OF THE PLAN
With respect to provisions of the Plan relating to eligibility and to
the amount, price and timing of the issuance of Common Stock, the Plan may not
be amended by the Board of Directors more than once every six months, other than
to conform it with changes in the Code, the Employee Retirement Income Security
Act of 1974, or any rules under either of the foregoing. Except as otherwise
provided in this Section, the Board of Directors at any time may amend or
terminate the Plan without shareholder approval; provided, however, that the
Board of Directors may condition any amendment on the approval of the
shareholders of the Company if such approval is necessary or advisable with
respect to tax, securities or other applicable laws to which the Company, this
Plan, or Directors are subject. No amendment or termination of the Plan shall
adversely affect the rights of an optionee without his consent with respect to
Common Stock previously acquired or Stock Options previously granted under the
Plan.
SECTION 10 ADJUSTMENT IN SHARES OF COMMON STOCK
If (i) the number of shares of Common Stock shall be increased or
reduced by a change in par value, split-up, stock split, reverse stock split,
reclassification, merger, consolidation, distribution of stock dividends or
similar capital adjustments, or (ii) the Company engages in a transaction for
which the Committee determines an adjustment is appropriate, then the Committee
may make an adjustment in the number and kind of shares of Common Stock
available under the Plan, the number (including any maximum number of shares)
and kind of shares for which grants are to be subsequently made to each Eligible
Director, the number and kind of shares subject to outstanding Stock Options,
the exercise price of outstanding Stock Options and the number and kind of
shares of Common Stock
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issuable pursuant to the provisions of the Plan, consistent with the effect of
the change on existing shareholders of the Company. Such adjustments to the
outstanding Stock Options are to be effected in a manner which shall preclude
the enlargement or dilution of rights and benefits under such Stock Options. The
adjustments determined by the Committee shall be final, binding and conclusive.
SECTION 11 RIGHTS AS A STOCKHOLDER
An optionee shall have no rights as a stockholder with respect to any
shares of Common Stock issuable under the Plan until the date of the issuance of
a stock certificate to him for the Common Stock. No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the date the stock certificate is issued, except as otherwise provided in the
Plan.
SECTION 12 GOVERNING LAW
The laws of the State of California shall govern this Plan.
IN WITNESS WHEREOF, the Company has caused the Plan to be executed as
of the day and year first above written.
GRANCARE, INC.
By:______________________________________
Title:___________________________________
ATTEST:
______________________________
Title:________________________
[CORPORATE SEAL]
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EXHIBIT 23.2
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in this Registration Statement
(Form S-8 dated May 30, 1996) pertaining to the GranCare, Inc. 1996 Outside
Directors Stock incentive Plan of our report dated February 27, 1996, with
respect to the consolidated financial statements and schedule of GranCare, Inc.
included in its Annual Report (Form 10-K) for the year ended December 31, 1995,
filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Atlanta, Georgia
May 28, 1996
<PAGE>
[LETTERHEAD PEAT MARWICK LLP]
EXHIBIT 23.3
CONSENT OF KPMG PEAT MARWICK LLP, INDEPENDENT AUDITORS
The Board of Directors
Evergreen Healthcare, Inc.:
We consent to incorporation by reference in the Registration Statement of
GranCare, Inc. on Form S-8 of our report dated August 17, 1995, with respect to
the consolidated balance sheet of Evergreen Healthcare, Inc. and subsidiaries as
of December 31, 1994 and the related consolidated statements of operations,
stockholders' equity and cash flows for the year ended December 31, 1994 and the
six-month period ended December 31, 1993, and the related combined statements of
operations partners' equity and cash flows of Evergreen Healthcare LTD., L.P.,
Predecessor to Evergreen Healthcare, Inc., for the six-month period ended June
30, 1993, which report is incorporated by reference in the Annual Report on Form
10-K of GranCare, Inc. for the year ended December 31, 1995 dated March 29,
1996.
/s/ KMPG PEAT MARWICK LLP
Indianapolis, Indiana
May 28, 1996
