<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 2
TO
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
VITALINK PHARMACY SERVICES, INC.
---------------------------------
(Exact name of registrant as specified in its charter)
Delaware 37-0903482
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1250 East Diehl Road, Suite 208
Naperville, Illinois 60563
- - ------------------------------- ------
(Address of Principal Executive (Zip Code)
Office)
AMENDED AND RESTATED
VITALINK PHARMACY SERVICES, INC.
1996 LONG-TERM INCENTIVE PLAN
-----------------------------
(Full title of the plan)
Robert W. Horner, III, Esq.
Secretary
One Ravinia Drive, Suite 1240
Atlanta, Georgia 30346
----------------------
(Name and address of agent for service)
(770) 677-7915
--------------
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- - ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
Title of securities to Amount to be Proposed maximum Proposed maximum Amount of
be registered registered offering price per aggregate offering registration fee
unit (1) price
<S> <C> <C> <C> <C>
Common Stock, 1,000,000 shares $22.50 $22,500,000 $6,637.50
par value of $.01 per
share
- - ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
</TABLE>
<PAGE> 2
(1) Estimated pursuant to Rule 457 solely for the purpose of calculating the
registration fee. Estimate based on the average of the high and low share prices
of the Registrant's Common Stock on February 17, 1998, as reported on the New
York Stock Exchange.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
This Amendment to the Registration Statement relates to the amendment
to the Vitalink Pharmacy Services, Inc. 1996 Long-Term Incentive Plan (the
"Plan") to increase by 1,000,000 the number of common stock authorized to be
issued thereunder. The Plan provides that the aggregate number of shares of
common stock subject to Stock Options, Stock Appreciation Rights, Performance
Share Awards or Restricted Stock Awards under the Plan may not exceed 1,493,900
shares. The contents of the Registrant's Registration Statement on Form S-8,
Registration Number 033-75310, filed with the Securities and Exchange Commission
on February 15, 1994, and the Registrant's Post-Effective Amendment No. 1 to the
Registration Statement on Form S-8, Registration Number 033-75310, filed with
the Securities and Exchange Commission on January 14, 1997, are hereby
incorporated by reference hereto.
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by the Registrant with the Securities and
Exchange Commission are hereby incorporated by reference herein: the contents of
Registrant's Annual Report and Form 10-K (File No. 001-12729) as amended on Form
10-K/A (File No. 001-12729) for fiscal year ended May 31, 1997 containing
audited financial statements for the fiscal year ended May 31, 1997, Forms 10-Q
(File No.001-12729) for the fiscal quarters ended August 31, 1997 and November
30, 1997, the Registration Statement on Form S-3 (Registration No. 333-38281)
containing the Registrant's latest prospectus filed pursuant to Rule 424(b)
under the Securities Act of 1933, and the description of the Registrant's
Registration Statement on Form 8-A (Registration No. 000-19820) filed pursuant
to Section 12(b) of the Exchange Act of 1934 on January 29, 1992 (as amended on
March 3, 1992).
All documents subsequently filed by the Registrant with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), prior to the filing of a post-effective
amendment which indicated 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 a 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 which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
2
<PAGE> 3
ITEM 8. EXHIBITS.
*4 Amended and Restated Vitalink Pharmacy Services, Inc. 1996 Long-Term
Incentive Plan.
*5.1 Opinion of Robert W. Horner III, Esq. regarding legality of share to
be offered.
23.1 Consent of Robert W. Horner III (included in Exhibit 5.1).
*23.2 Consent of Arthur Andersen LLP.
24 Powers of Attorney (Incorporated by reference to Exhibits 24.1, 24.2,
24.3, 24.4, 24.5 and 24.6 to the Registrant's Registration Statement
on Form S-8 filed on January 23, 1998, File No. 333-44809)
* Filed herewith
SIGNATURES
The Registrant
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 Atlanta, State of Georgia, on this 20th day of
February, 1998.
VITALINK PHARMACY SERVICES, INC.
By: /s/Robert W. Horner III
---------------------------------
Robert W. Horner III
Senior Vice President, Secretary and
General Counsel
3
<PAGE> 4
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 2 to this Registration Statement has been signed by
the following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
President and Chief Operating February 20, 1998
* Officer
- - ----------------------------
Donna L. DeNardo
Senior Vice President, Chief February 20, 1998
* Financial Officer and Treasurer
- - ----------------------------
Scott T. Macomber
Director February 20, 1998
*
- - ----------------------------
Stewart Bainum, Jr.
Director February 20, 1998
*
- - ----------------------------
Joseph R. Buckley
Director February 20, 1998
*
- - ----------------------------
James A. MacCutcheon
Director February 20, 1998
*
- - ----------------------------
James H. Rempe
</TABLE>
* By: /s/ Robert W. Horner III
--------------------------
Robert W. Horner III
Attorney-in-Fact
4
<PAGE> 5
EXHIBIT INDEX
EXHIBIT EXHIBIT DESCRIPTION
NUMBER
- - ------
*4 Amended and Restated Vitalink Pharmacy Services, Inc. 1996 Long-Term
Incentive Plan.
*5.1 Opinion of Robert W. Horner III, Esq. regarding legality of share to
be offered.
23.1 Consent of Robert W. Horner III (included in Exhibit 5.1).
*23.2 Consent of Arthur Andersen LLP.
24 Powers of Attorney (Incorporated by reference to Exhibits 24.1, 24.2,
24.3, 24.4, 24.5 and 24.6 to the Registrant's Registration Statement
on Form S-8 filed on January 23, 1998, File No. 333-44809)
* Filed herewith
5
<PAGE> 1
EXHIBIT 4
AMENDED AND RESTATED
VITALINK PHARMACY SERVICES, INC.
1996 LONG-TERM INCENTIVE PLAN
SECTION ONE
DESIGNATION AND PURPOSE OF PLAN
The purpose of the Amended and Restated Vitalink Pharmacy Services,
Inc. 1996 Long-Term Incentive Plan (the "Plan") is to increase the ownership of
Company Stock by those officers, non-employee directors, professional staff and
other key employees who are mainly responsible for the continued growth and
development and financial success of Vitalink Pharmacy Services, Inc. (the
"Company") and its subsidiaries. Such stock ownership gives such employees and
non-employee directors a proprietary interest in the Company which induces them
to continue in its employ and/or aligns their interests with the interests of
the Company's stockholders. The Plan also enables the Company to attract and
retain such employees and non-employee directors and reward them for the
continued profitable performance of Vitalink Pharmacy Services, Inc.
SECTION TWO
DEFINITIONS
The following definitions are applicable herein:
A. "Award" -Individually or collectively, Options, Stock Appreciation
Rights, Performance Shares or Restricted Stock granted hereunder.
B. "Award Period" -the period of time during which a Stock Appreciation
Right which has not been granted pursuant to an Option may be exercised. The
Award Period shall be set forth in the document issuing the Stock Appreciation
Right to the selected Eligible Participant.
C. "Board" -the Board of Directors of the Company.
D. "Book Value" -the book value of a share of Stock determined in
accordance with the Company's regular accounting practices as of the last
business day of the month immediately preceding the month in which a Stock
Appreciation Right is exercised as provided in Section Nine D.
E. "Code" -the Internal Revenue Code of 1986, as amended. Reference in
the Plan to any section of the Code shall be deemed to include any amendments or
successor provisions to such section and any regulations promulgated thereunder.
6
<PAGE> 2
F. "Committee" -the Committee appointed to administer the Plan pursuant
to Section Four.
G. "Company" -Vitalink Pharmacy Services, Inc., including any present
or future "subsidiary corporation" as such term is defined in Section 424(f) of
the 1986 Internal Revenue Code, as amended.
H. "Covered Employee" -an individual described in Section 162(m)(3) of
the Code.
I. "Date of Grant" -the date on which the granting of an Award is
authorized by the Committee or such later date as may be specified by the
Committee in such authorization.
J. "Eligible Participant" -any person employed by the Company or a
Subsidiary on a regularly scheduled basis who satisfies all of the requirements
of Section Six or any non-employee director of the Company (a non-employee
director shall include those directors of the Company who are not otherwise
employees of the Company or a Subsidiary).
K. "Exercise Period" -the period or periods during which a Stock
Appreciation Right is exercisable as described in Section Nine B.
L. "Fair Market Value" -the fair market value of the Stock as
determined in accordance with Section Eight D.
M. "Incentive Stock Option" -an incentive stock option within the
meaning of Section 422 of the Code.
N. "Option" or "Stock Option" -either a nonqualified stock option or an
Incentive Stock Option granted under Section Eight. It also means any Option
which remains after a Participant has exercised his Option with respect to part
of the shares covered by a Stock Option Agreement as described in Section Eight
B.
O. "Option Period" or "Option Periods" -the period or periods during
which an Option is exercisable as described in Section Eight E.
P. "Option Price" -the price, expressed on a per shares basis, for
which the Company Stock can be acquired by the holder of an Option pursuant to
the exercise of such Option.
Q. "Participant" -an Eligible Employee of the Company or a Subsidiary
who has been granted an Option, a Stock Appreciation Right, a Performance Share
Award or a Restricted Stock Award under this Plan.
R. "Performance Share" -an Award granted under Section Ten.
S. "Restricted Stock" -An Award granted under Section Seven.
7
<PAGE> 3
T. "Stock" and "Company Stock" -the common stock of the Company.
U. "Stock Appreciation Right" -an Award granted under Section Nine.
V. "Subsidiary" -any corporation of which fifty percent (50%) or more
of its outstanding voting stock or voting power is beneficially owned, directly
or indirectly, by the Company.
W. "Ten Percent Shareholder" -a Participant who, at the Date of Grant,
owns directly or indirectly (within the meaning of Section 424(d) of the
Internal Revenue Code) stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or a subsidiary
thereof.
X. Wherever appropriate, words used in this Plan in the singular may
mean the plural, the plural may mean the singular and the masculine may mean the
feminine.
SECTION THREE
EFFECTIVE DATE, DURATION AND STOCKHOLDER APPROVAL
A. Effective Date and Stockholder Approval. Subject to the approval of
the Plan by a majority of the outstanding shares of Stock voted at the 1996
Annual Meeting of Stockholders, the Plan shall be effective as of February 26,
1997.
B. Period for Grant of Awards. Awards may be made as provided herein
for a period of ten (10) years after February 26, 1997.
SECTION FOUR
ADMINISTRATION
A. Appointment of Committee. The Board of Directors shall maintain a
Compensation Committee which shall consist of not less than two (2) members of
such Board of Directors and which members shall be Non-Employee Directors as
defined in Rule 16b-3 under the Securities and Exchange Act of 1934, as amended
(or such greater number of members which may be required by said Rule 16b-3) and
Outside Directors as defined in Treas. Reg. ss. 1.162-27(e) as promulgated by
the Internal Revenue Service. In addition, such Board of Directors shall
designate a member of the Committee to act as Chairman of the Committee, and
such Board of Directors may remove any member of the Committee at any time and
appoint any director to fill any vacancy on the Committee.
B. Committee Meetings. The Committee shall hold its meeting at such
times and places as specified by the Committee Chairman. A majority of the
Committee shall constitute a quorum. All actions of the Committee shall be taken
by all of the members of the meeting duly called by its Chairman; provided,
however, any action taken by a written document signed by a majority of the
members of the Committee shall be as effective as action taken by the Committee
at a meeting duly called and held.
8
<PAGE> 4
C. Committee Powers. Subject to the provisions of this Plan, the
Committee shall have full authority in its discretion to (i) designate the
Participants to whom Awards shall be granted, (ii) determine the number of
shares to be made available under each such Award, (iii) determine the period or
periods in which the Participant may exercise such Award (iv) determine the date
when such Award expires, (v) determine the price for Stock under such Award, and
(vi) determine the grounds for forfeiture of an Award. The Committee shall have
all powers necessary to administer the Plan in accordance with its terms,
including the power to interpret this Plan and resolve all questions arising
thereunder. The Committee may prescribe such rules and regulations for
administering this Plan as the Committee deems appropriate.
SECTION FIVE
GRANT OF AWARDS AND
LIMITATION OF NUMBER OF SHARES SUBJECT TO AWARD
The Committee may, from time to time, grant Awards to one or more
Eligible Participants, provided that (i) subject to any adjustment pursuant to
Section Eleven, the aggregate number of shares of Stock subject to Stock
Options, Stock Appreciation Rights, Performance Share Awards or Restricted Stock
Awards under this Plan may not exceed 1,493,900 shares; (ii) to the extent that
a Stock Option, Stock Appreciation Right, Performance Share Award or Restricted
Stock Award lapses or the rights of the Participant to whom it was granted
terminate, expire or are cancelled for any other reason, in whole or in part,
shares of Stock (or remaining shares) subject to such Award shall again be
available for the grant of an Award under the Plan; and (iii) Shares delivered
by the Company under the Plan may be authorized and unissued Stock, Stock held
in the treasury of the Company or Stock purchased on the open market (including
private purchases) in accordance with applicable securities laws. In determining
the size of Awards, the Committee shall take into account the responsibility
level, performance, potential, and cash compensation level of a Participant, and
the Fair Market Value of the Stock at the time of Awards, as well as such other
considerations it deems appropriate.
SECTION SIX
ELIGIBILITY
Key employees of the Company and its Subsidiaries who, in the opinion
of the Committee, are mainly responsible for the continued growth and
development and financial success of the business of the Company or one or more
of its Subsidiaries, and non-employee directors of the Company, shall be
eligible to be granted Awards under the Plan. Subject to the provisions of the
Plan, the Committee may from time to time select from such Eligible Participants
those to whom Awards shall be granted and determine the nature and amount of
each Award. No employee of the Company or its Subsidiaries shall have any right
to be granted an Award under this Plan.
9
<PAGE> 5
SECTION SEVEN
RESTRICTED STOCK AWARDS
A. Grants of Shares of Restricted Stock. An Award made pursuant to this
Section Seven shall be granted in the form of shares of Stock, restricted as
provided in this Section Seven. Shares of the Restricted Stock shall be issued
to the Participant without the payment of consideration by the Participant. The
shares of Restricted Stock shall be issued in the name of the Participant and
shall bear a restrictive legend prohibiting sale, transfer, pledge or
hypothecation of the shares of Restricted Stock until the expiration of the
restriction period.
The Committee may also impose such other restrictions and conditions on
the shares of Restricted Stock as it deems appropriate.
B. Restriction Period. At the time a Restricted Stock Award is made,
the Committee may establish a restriction period applicable to such Award which
shall not be more than ten (10) years. Each Restricted Stock Award may have a
different restriction period, at the discretion of the Committee. In addition to
or in lieu of a restriction period, the Committee may establish a performance
goal which must be achieved as a condition to the retention of the Restricted
Stock. The performance goal may be based on the attainment of specified types of
performance measurement criteria, which may differ as to various Participants or
classes or categories of Participants. Such criteria may include, without
limitation, the attainment of certain performance levels by the individual
Participant, the Company, a department or division of the Company and/or a group
or class of participants. Any such performance goals, together with the ranges
of Restricted Stock Awards for which the Participants may be eligible shall be
set from time to time by the Committee and shall be timely communicated to the
Eligible Participants in advance of the commencement of the performance of
services to which such performance goals relate. The total number of shares of
Restricted Stock which may be granted to any single Covered Employee under this
Plan during any calendar year shall be limited to 100,000.
C. Forfeiture or Payout of Award. In the event a Participant ceases
employment during a restriction period, or in the event performance goals
attributable to a Restricted Stock Award are not achieved, subject to the terms
of each particular Restricted Stock Award, and subject to discretionary action
by the Committee as set forth below in Section Thirteen, a Restricted Stock
Award is subject to forfeiture of the shares of stock which had not previously
been removed from restriction under the terms of the Award.
Any shares of Restricted Stock which are forfeited will be transferred
to the Company.
Upon completion of the restriction period and satisfaction of any
performance-goal criteria, all restrictions upon the Award will expire and new
certificates representing the Award will be issued without the restrictive
legend described in Section Seven A. As a condition precedent to receipt of the
new certificates, the Participant (or the designated beneficiary or personal
representative of the Participant) will agree to make payment to the Company in
the amount of any taxes, payable by the Participant, which are required to be
withheld with respect to such shares of Stock.
10
<PAGE> 6
SECTION EIGHT
STOCK OPTIONS
A. Grant of Option. One or more Options may be granted to any Eligible
Participant; provided that only Eligible Participants who are employees of the
Company or a Subsidiary may be granted Incentive Stock Options. Upon the grant
of an Option to an Employee, the Committee shall specify whether the Option is
intended to constitute a non-qualified stock option or an Incentive Stock
Option. The total number of shares of Stock subject to Options which may be
granted to any single Covered Employee under this Plan during any calendar year
shall be limited to 100,000.
B. Stock Option Agreement. Each Option granted under the Plan shall be
evidenced by a written "Stock Option Agreement" between the Company and the
Participant containing such terms and conditions as the Committee determines,
including, without limitation, provisions to qualify Incentive Stock Options as
such under Section 422 of the Code. Such agreements shall incorporate the
provisions of this Plan by reference. The date of granting an Option is the date
specified in the written Stock Option Agreement which is signed by the
Participant and the Company.
C. Determination of Option Price. The Option price for Stock shall be
not less than 100% of the fair market value of the Stock on the date of grant.
Notwithstanding the foregoing, in the case of an Option which is designed to
qualify as an Incentive Stock Option (as defined in Section 422 of the Code)
which is granted to a Ten Percent Shareholder, the Option Price shall not be
less than 110% of such fair market value.
D. Determination of Fair Market Value. The fair market value of the
Stock on the date of granting an Option shall be the mean of the high and low
prices at which the Stock was sold on the market on such date. In the event no
such sales of Stock occurred on such date, the fair market value of the Stock
shall be determined by the Committee in accordance with applicable Regulations
of the Internal Revenue Service.
E. Term of Option. The term of an Option may vary within the
Committee's discretion; provided, however, that the term of an Option shall not
exceed ten (10) years from the date of granting the Option to the Participant,
and, to this end, all Options granted pursuant to this Plan must provide that
each such Option cannot be exercised after the expiration of ten (10) years from
the date each such Option is granted. Notwithstanding the foregoing, in the case
of any Option which is designed to qualify as an Incentive Stock Option (as
defined in Section 422 of the Code) which is granted to a Ten Percent
Shareholder, the term of such Option may not exceed five (5) years from the date
of grant of such Option.
F. Limitation on Exercise of Option. The Committee may limit an Option
by restricting its exercise in whole or in part for specified periods.
G. Method of Exercising an Option. Subject to the terms of a particular
Option, a Participant may exercise it in whole or in part by written notice to
the Secretary of the Company
11
<PAGE> 7
stating in such written notice the number of shares of Stock such Participant
elects to purchase under his Option.
H. No Obligation to Exercise Option. A Participant is under no
obligation to exercise an Option or any part thereof.
I. Payment for Option Stock. Stock purchased pursuant to an Option
shall be paid in full at the time of purchase. Payment may be made (a) in cash,
(b) with the approval of the Committee, by delivery to the Company of shares of
Stock having an aggregate fair market value equal to the exercise price, or (c)
a combination of (a) and (b). Payment may also be made, in the discretion of the
Committee, by delivery (including by facsimile transmission) to the Company or
its designated agent of an executed irrevocable Option exercise form together
with irrevocable instructions to a broker-dealer to sell (or margin) a
sufficient portion of the shares and deliver the sale (or margin loan) proceeds
directly to the Company to pay for the exercise price. Upon receipt of payment
and subject to paragraph J of this Section Eight, the Company shall, without
transfer or issue tax to the Participant or other person entitled to exercise
the Option, deliver to the Participant (or other person entitled to exercise the
Option) a certificate or certificates for such shares.
J. Delivery of Stock to Participant. The Company shall undertake and
follow all necessary procedures to make prompt delivery of the number of shares
of Stock which the Participant elects to purchase upon exercise of an Option
granted under this Plan. Such delivery, however, may be postponed, at the sole
discretion of the Company, to enable the Company to comply with any applicable
procedures, regulations or listing requirements of any government agency, stock
exchange or regulatory authority.
K. Failure to Accept Delivery of Stock. If a Participant refuses to pay
for Stock which he has elected to purchase under his Option, in accordance with
the terms of payment, which had previously been agreed upon, his Option shall
thereupon, at the sole discretion of the Committee, terminate, and such funds
previously paid for unissued Stock shall be refunded. Stock which has been
previously issued to the Participant and been fully paid for shall remain the
property of the Participant and shall be unaffected by such termination.
L. Non-Transferability of Options. During the lifetime of a
Participant, an Incentive Stock Option granted to him may be exercised only by
him. It may not be sold, assigned, pledged or otherwise transferred except by
will or by the laws of descent and distribution. In the case of Options which
are not Incentive Stock Options, the Committee may impose such restrictions on
transferability, if any, as it may in its sole discretion determine.
M. Purchase for Investment
(a) Written Agreement by Participants. Unless a registration
statement under the Securities Act of 1933 is then in effect with
respect to the Stock a Participant receives upon exercise of his
Option, a Participant shall acquire the Stock he receives upon exercise
of his Option for investment and not for resale or distribution and he
shall
12
<PAGE> 8
furnish the Company with a written statement to that effect when he
exercises his Option and a reference to such investment warranty shall
be inscribed on the Stock certificate(s).
(b) Registration Requirement. Each Option shall be subject to
the requirement that, if at any time the Board determines that the
listing, registration or qualification of the shares subject to the
Option upon any securities exchange or under any state or Federal law
is necessary or desirable as a condition of, or in connection with, the
issuance of shares thereunder, the Option may not be exercised in whole
or in part unless such listing, registration or qualification shall
have been effected or obtained (and the same shall have been free of
any conditions not acceptable to the Board).
N. Special Limitations on Exercise of Incentive Stock Options. The
aggregate fair market value (determined at the time the Incentive Stock Option
is granted) of the Stock with respect to which any Incentive Stock Option is
first exercisable during any calendar year shall not exceed $100,000.
SECTION NINE
STOCK APPRECIATION RIGHTS
A. Grant of Stock Appreciation Rights. Stock Appreciation Rights may be
granted under the Plan in conjunction with an Option either at the time of grant
or by amendment or may be separately awarded. Stock Appreciation Rights shall be
subject to such terms and conditions not inconsistent with the Plan as the
Committee shall impose. However, the total number of Stock Appreciation Rights
which may be granted to a single Covered Employee under this Plan during any
calendar year shall be limited to 100,000.
B. Right to Exercise; Exercise Period. A Stock Appreciation Right
issued pursuant to an Option shall be exercisable to the extent the Option is
exercisable. A Stock Appreciation Right issued independent of an Option shall be
exercisable pursuant to such terms and conditions established in the grant.
C. Automatic Redemption of Unexercised Stock Appreciation Rights. If on
the last day of the Option Period, in the case of a Stock Appreciation Right
granted pursuant to an Option, or the specified Award Period, in the case of a
Stock Appreciation Right issued independent of an Option, the Participant has
not exercised such Stock Appreciation Right, then such Stock Appreciation Right
shall be automatically redeemed by the Company for an amount equal to the
payment that would otherwise have been made to the Participant if the
Participant had chosen to exercise the Stock Appreciation Right on the last day
of the Option Period or the specified Award Period, as the case may be.
D. Rights Upon Exercise. An exercisable Stock Appreciation Right
granted pursuant to an Option shall entitle the Participant to surrender
unexercised the Option or any portion thereof to which the Stock Appreciation
Right is attached, and to receive in exchange for the Stock Appreciation Right a
payment (in cash or Stock or a combination thereof as described below) equal to
the Fair Market Value of one share of Stock at the date of exercise minus the
13
<PAGE> 9
Option Price times the number of shares called for by the Stock Appreciation
Right (or portion thereof) which is so exercised. With respect to the issuance
of Stock Appreciation Rights which are not granted pursuant to an Option, the
Committee shall specify upon the Date of Grant of the Stock Appreciation Right
whether the Stock Appreciation Right is a "regular" Stock Appreciation Right or
a "book value" Stock Appreciation Right. Upon the exercise of a regular Stock
Appreciation Right, the Participant will receive a payment equal to the Fair
Market Value of one share of Stock at the date of exercise minus the Fair Market
Value of one share of Stock as of the Date of Grant of the Stock Appreciation
Right times the number of shares called for by the Stock Appreciation Right (or
portion thereof) which is so exercised. Upon the exercise of a book value Stock
Appreciation Right, the Participant will receive a payment equal to the Book
Value of one share of Stock at the date of exercise minus the Book Value of one
share of Stock as of the Date of Grant of the Stock Appreciation Right times the
number of shares called for by the Stock Appreciation Right (or portion thereof)
which is so exercised.
The value of any Stock to be received upon exercise of a Stock
Appreciation Right shall be the Fair Market Value of the Stock on such date of
exercise. To the extent that a Stock Appreciation Right issued pursuant to an
Option is exercised, such Option shall be deemed to have been exercised, and
shall not be deemed to have lapsed.
E. Transferability. The Committee may impose such restrictions on
transferability of Stock Appreciation Rights, if any, as it may in its sole
discretion determine.
SECTION TEN
PERFORMANCE SHARES
A. Grant of Performance Share Units. Awards made pursuant to this
Section Ten shall be granted in the form of Performance Shares, subject to such
terms and conditions not inconsistent with the Plan as the Committee shall
impose. Performance Shares shall be issued to the Participant without the
payment of consideration by the Participant. Awards shall be based on the
attainment of specified types and combinations of performance measurement
criteria, which may differ as to various Participants or classes or categories
of Participants. Such criteria may include, without limitation, the attainment
of certain performance levels by the individual Participant, the Company, a
department or division of the Company and/or a group or class of Participants.
Such criteria, together with the ranges of Performance Shares from which
employees may be eligible, shall be set from time to time by the Committee and
shall be communicated to the Eligible Participants. The total number of
Performance Shares which may be granted to any single Covered Employee under
this Plan during any calendar year shall be limited to 100,000.
B. Performance Period. The measuring period to establish the
performance criteria set forth in a Performance Share Award shall be determined
by the Committee. A Performance Share Award may initially provide, or the
Committee may at any time thereafter, but no more frequently than once in any
six (6) month period, amend it to provide, for waiver or reduction of the
measuring period and, if appropriate, for adjustment of the performance criteria
set forth in
14
<PAGE> 10
the Performance Share Award, upon the occurrence of events determined by the
Committee in its sole discretion to justify such waiver, reduction or
adjustment.
C. Form of Payment. Upon the completion of the applicable measuring
period, a determination shall be made by the Committee in accordance with the
Award as to the number of shares of Stock to be awarded to the Participant. The
appropriate number of shares of Stock shall thereupon be issued to the
Participant in accordance with the Award in satisfaction of such Performance
Share Award.
SECTION ELEVEN
CHANGES IN CAPITAL STRUCTURE OR SHARES
In the event any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering, or extraordinary dividend or divestiture
(including a spin-off), or any other change in the capital structure or shares
of the Company, the Committee shall make adjustments, determined by the
Committee in its discretion to be appropriate, as to the number and kind of
securities subject to this Plan and specified in Section Five of this Plan and
as to the number and kind of securities covered by each outstanding Award and,
where applicable, the price per share thereunder; provided, however, that with
respect to Incentive Stock Options, such adjustments shall be made in accordance
with Section 424(h) of the Code unless the Committee determines otherwise.
SECTION TWELVE
CORPORATE REORGANIZATION OR DISSOLUTION
A. Discontinuation of the Plan. The Plan shall be discontinued in the
event of the dissolution or liquidation of the Company or in the event of a
Reorganization (as hereinafter defined) in which the Company is not the
surviving or acquiring company, or in which the Company is or becomes a
wholly-owned subsidiary of another company after the effective date of the
Reorganization and no plan or agreement respecting the Reorganization is
established which specifically provides for the continuation of the Plan and the
change, conversion, or exchange of the stock relating to existing Awards under
this Plan for securities of another corporation. Upon the dissolution of the
Plan in connection with an event described in this Paragraph A, all Awards shall
become fully vested and all outstanding Options and Stock Appreciation Rights
shall become immediately exercisable by the holder thereof. Any Options or Stock
Appreciation Rights granted under the Plan may be terminated as of a date fixed
by the Committee, provided that no less than fifteen (15) days written notice of
the date so fixed shall be given to each Participant and each such Participant
shall have the right during such period to exercise all or any portion of such
Options or Stock Appreciation Rights. Any Stock Appreciation Rights not so
exercised shall be redeemed.
B. Continuation of the Plan Upon a Reorganization. In the event of a
Reorganization (as hereinafter defined) (i) in which the Company is not the
surviving or acquiring company, or in which the Company is or becomes a
wholly-owned subsidiary of another company after the effective date of the
Reorganization, and (ii) with respect to which
15
<PAGE> 11
there is a reorganization agreement which undertakes to continue the Plan and to
provide for the change, conversion or exchange of the Stock attributable to
outstanding Awards for securities of another corporation, then the Plan shall
continue and the Committee shall adjust the shares under such outstanding Awards
(and shall adjust the shares remaining under the Plan which are then to be
available for the grant of additional Awards under the Plan, if the
reorganization agreement makes specific provisions therefor), in a manner not
inconsistent with the provisions of the reorganization agreement and this Plan
for the adjustment, change, conversion or exchange of such Awards.
The term "Reorganization" as used in this Section Twelve shall mean any
statutory merger, statutory consolidation, sale of all or substantially all of
the assets of the Company, or sale, pursuant to an agreement with the Company,
of securities of the Company pursuant to which the Company is or becomes a
wholly-owned subsidiary of another company after the effective date of the
Reorganization.
C. Adjustments and Determinations. Adjustments and determinations under
this Section Twelve shall be made by the Committee, whose decisions as to what
adjustments or determinations shall be made, and the extent thereof, shall be
final, binding and conclusive.
D. Change in Control.
1. Regardless of any other provision in the Plan to the
contrary, if, while any Awards remain outstanding under the Plan, a
"Change in Control" of the Company (as defined in this Section 12)
shall occur, (1) all Options and freestanding SARs granted under the
Plan that are outstanding at the time of such Change in Control shall
become immediately vested and exercisable in full; (2) with respect to
Awards granted with respect to Performance Shares, all Performance
Periods outstanding at the time of such Change in Control shall be
deemed to have been completed, the maximum level of performance set
forth under the respective Performance Shares shall be deemed to have
been attained and each such outstanding Award granted to each
Participant for all outstanding Performance Periods shall become
payable to each Participant; and (3) all restrictions with respect to
shares of Restricted Stock or any other Awards not described in (1) and
(2) above shall lapse, and such shares or other Awards shall be fully
vested and nonforfeitable.
2. For purposes of this Section 12, a Change in Control of the
Company shall occur upon the happening of the earliest to occur of the
following:
(i) any "person" as such term is used in Sections
13(d) and 14(d) of the Securities and Exchange Act of 1934, as
amended (other than (1) the Company, (2) any trustee or other
fiduciary holding securities under an employee benefit plan of
the Company, or (3) any corporations owned, directly or
indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of Stock
(each an "excluded person")) becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of
16
<PAGE> 12
securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding voting
securities;
(ii) the stockholders of the Company approve a plan
of merger, consolidation, complete liquidation of the Company
or an agreement for the sale or disposition by the Company of
all or substantially all of the Company's stock and/or assets,
or accept a tender offer for substantially all of the
Company's stock (or any transaction having a similar effect).
3. In the event of a merger, consolidation, or sale or
disposition of substantially all of the Company's assets or stock, a
Participant shall be paid the value of his/her Awards (e.g., for all
shares subject to option, the excess of the greater of fair market
value of the Company's stock on the date of consummation of such sale
or purchase price of the Company's stock pursuant to such sale, over
the exercise price of such option) in cash (the "Cash Payment") by the
Company (or, if not by the Company, by the successor entity) as of the
consummation of such sale or disposition.
4. In the event of a Change in Control as defined under
Section 280G of the Code, if the vesting of Awards and/or payment of
Awards under this Plan and/or payments of amounts under any other
agreement with or plan of the Company (in the aggregate the "Total
Payments") subject all or any part of the Total Payments to the tax
(the "Excise Tax") imposed by Section 4999 of the Code (or any similar
tax that may hereafter be imposed) the Company shall pay to the
Participant in cash an additional amount (the "Additional Payment")
such that the net amount retained by the Participant, after deduction
of any Excise Tax imposed upon the Total Payments and any federal,
state and local income tax and Excise Tax upon the Additional Payment
provided for by this Section 12.D., and any employment tax (including
FICA and FUTA), shall be equal to the amount of Total Payments prior to
such taxes. Such Additional Payment shall be made by the Company to the
Participant as soon as practical following the date of the Cash Payment
(or, if there is no Cash Payment, the date such payment would otherwise
be made), but in no event beyond thirty (30) days from such date.
The determination of whether any of the Total Payments to a Participant
will be subject to the Excise Tax, the calculation of Parachute Value under
Section 280G of the Code of the Total Payments, and calculation of the
Additional Payment, shall be made by a Certified Public Accounting firm jointly
agreed to by the Company and the Participant.
SECTION THIRTEEN
RETIREMENT AND DISABILITY
The Committee may, in its discretion, waive the forfeiture,
termination, or lapse of an Award in the event of retirement or disability of a
Participant (each as determined by the Committee, in its discretion). Exercise
of such discretion by the Committee in any individual case, however, shall not
be deemed to require, or to establish a precedent suggesting, such exercise in
any other case.
17
<PAGE> 13
SECTION FOURTEEN
MISCELLANEOUS PROVISIONS
A. Nontransferability. The Committee may impose such restrictions on
the transferability of an Award, if any, as it may in its sole discretion
determine.
B. No Employment Right. Neither this Plan nor any action taken
hereunder shall be construed as giving any right to be retained as an officer or
employee of the Company or any of its Subsidiaries.
C. Tax Withholding. Either the Company or a Subsidiary, as appropriate,
shall have the right to deduct from all Awards paid in cash any federal, state
or local taxes as it deems to be required by law to be withheld with respect to
such cash payments. In the case of Awards paid in Stock, the employee or other
person receiving such Stock may be required to pay to the Company or a
Subsidiary, as appropriate, the amount of any such taxes which the Company or
Subsidiary is required to withhold with respect to such Stock. At the request of
a Participant, or as required by law, such sums as may be required for the
payment of any estimated or accrued income tax liability may be withheld and
paid over to the governmental entity entitled to receive the same. The Committee
may from time to time establish procedures for withholding of Stock.
D. Fractional Shares. Any fractional shares concerning Awards shall be
eliminated at the time of payment by rounding down for fractions of less than
one-half and rounding up for fractions of equal to or more than one-half. No
cash settlements shall be made with respect to fractional shares eliminated by
rounding.
E. Government and Other Regulations. The obligation of the Company to
make payment of Awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by any government agencies
as may be required. The Company shall be under no obligation to register under
the Securities Act of 1933, as amended ("Act"), any of the shares of Stock
issued, delivered or paid in settlement under the Plan. If Stock awarded under
the Plan may in certain circumstances be exempt from registration under the Act,
the Company may restrict its transfer in such manner as it deems advisable to
ensure such exempt status.
F. Severance. Subject to the provision of Paragraph B of this Section
Fourteen, in the event a Participant's employment with the Company terminates,
his rights under any Award which constitutes an Option or a Stock Appreciation
Right terminate one (1) month from the date of such termination of employment.
Such rights shall be exercisable only to the extent the Participant was entitled
to exercise such rights under the Award on the date of such termination of
employment.
G. Death. If a Participant dies prior to the full exercise of his
Option and/or Stock Appreciation Right, his Option to purchase Stock under such
Option and/or Stock Appreciation Right may be exercised to the extent, if any,
that Participant would be entitled to exercise it at the
18
<PAGE> 14
date of the death of the Participant by the person to whom the Option and/or
Stock Appreciation Right shall pass by will or by the laws of descent and
distribution within twelve (12) months of the death of the Participant or the
expiration of the term of the Option and/or Stock Appreciation Right whichever
date is sooner.
H. Limitation. In no event may an Option be exercised by anyone after
the expiration date provided for in Section Eight of the Plan.
I. Limits on Discretion. Anything in this Plan to the contrary
notwithstanding, if the Award so provides, the Committee shall not have any
discretion to increase the amount of compensation payable under the Award to the
extent such discretion would cause the Award to lose its qualification as
performance-based compensation for purposes of Section 162(m)(4)(c) of the Code
and the regulations thereunder.
J. Governing Law. All matters relating to the Plan or to Awards granted
hereunder shall be governed by the laws of the State of Maryland, without regard
to its principles of conflict of laws.
K. Titles and Headings. The titles and headings of the sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles and headings, shall control.
SECTION FIFTEEN
AMENDMENT OF PLAN
A. Discretion of the Board. The Board may at any time and from time to
time alter, amend, suspend or terminate the Plan in whole or in part, except (i)
any such action affecting Options granted or to be granted under this Plan which
are intended to qualify as Incentive Stock Options shall be subject to
stockholder approval to the extent such stockholder approval is required
pursuant to Section 422 of the Internal Revenue Code and (ii) no such action may
be taken without the consent of the Participant to whom any Award shall
theretofore have been granted, which adversely affects the rights of such
Participant concerning such Award, except as such termination or amendment of
the Plan is required by statute, or rules and regulations promulgated
thereunder.
B. Automatic Termination. This Plan shall terminate on February 26,
2007. Awards may be granted under this Plan at any time and from time to time
prior to the termination of the Plan. Any Award outstanding at the time the Plan
is terminated shall remain in effect until said Award is exercised or expires.
19
<PAGE> 1
EXHIBIT 5.1
February 20, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: AMENDED AND RESTATED VITALINK PHARMACY SERVICES, INC. 1996
LONG-TERM INCENTIVE PLAN POST-EFFECTIVE AMENDMENT NO. 2 TO THE
REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
I am Senior Vice President, Secretary and General Counsel of Vitalink
Pharmacy Services, Inc. (the "Company") and have acted for the Company in
connection with the preparation of the Company's Post-Effective Amendment No. 2
to the Registration Statement on Form S-8 filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended. The
Registration Statement covers an additional 1,000,000 shares of the Company's
Common Stock, $.01 par value, offered under the Amended and Restated Vitalink
Pharmacy Services, Inc. 1996 Long-Term Incentive Plan (the "Plan").
In connection with the rendering of the opinion set forth below, I have
reviewed the records of the Company, the minutes of the meetings of the
stockholders and directors of the Company and such other records and documents
as was necessary in my judgment to so render the following opinion:
Based on the foregoing, I am of the opinion that:
1. The Company is a corporation duly incorporated and existing under
the laws of the State of Delaware; and
2. The shares of Common Stock of the Company available for issuance
under the Plan, when issued and delivered pursuant to the Plan, will be duly
authorized, validly issued, fully paid and nonassessable.
I hereby consent to the filing of a copy of this opinion with the
Commission as an Exhibit to the Registration Statement referred to above.
Very truly yours,
/s/ Robert W. Horner, III
---------------------------
Robert W. Horner, III
Senior Vice President, Secretary
and General Counsel
20
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated June 27, 1997
included in Vitalink Pharmacy Services, Inc.'s (the "Company") 10-K/A for the
year ended May 31, 1997 and to all references to our Firm included in this
registration statement.
Washington, DC /s/ Arthur Andersen LLP
February 18, 1998 -------------------------
