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As filed with the Securities and Exchange Commission on March 6, 2000.
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3 AND FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CONTINENTAL CHOICE CARE, INC.
-----------------------------
(Exact Name of Registrant as Specified in its Charter)
New Jersey 22-327636
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
35 Airport Road, Morristown, New Jersey 07960
(Address of Principal Executive Offices) (Zip Code)
CONTINENTAL CHOICE CARE, INC.
1994 Long-Term Incentive Award Plan, 1997 Equity Incentive Plan and
1994 Directors' Stock Option Plan
(Full Title of the Plan)
Steven L. Trenk, 35 Airport Road, Morristown, New Jersey 07960
(Name and Address of Agent for Service)
(973) 898-9666
(Telephone Number, Including Area code, of Agent For Service)
Approximate date of commencement of proposed sale to the public: Upon
exercise of the options granted under the 1994 Long-Term Incentive Award Plan,
1997 Equity Incentive Plan and 1994 Directors' Stock Option Plan, but in no
event prior to the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
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If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. /X/
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=============================================================================================================================
Title of securities to be Amount to be Proposed maximum Proposed maximum Amount of Registration
registered registered (1) offering price per aggregate offering Fee (2)
share price
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 1,750,000 $9.1875 $16,078,125 $4,245
no par value
=============================================================================================================================
</TABLE>
(1) The aggregate amount of securities registered hereunder is 1,750,000 shares
of Common Stock. Pursuant to Rule 416 promulgated under the Securities Act of
1933, as amended, this Registration Statement covers such additional shares of
Common Stock to be offered or issued to prevent dilution as a result of future
stock splits, stock dividends or similar transactions.
(2) The fee with respect to these shares has been calculated pursuant to
paragraphs (h) and (c) of Rule 457 upon the basis of $9.1875, the average of the
high and low selling price of the Registrant's Common Stock on March 3, 2000 as
reported on the NASDAQ SmallCap Market.
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PROSPECTUS
(Form S-3)
CONTINENTAL CHOICE CARE, INC.
1,750,000 Shares
Common Stock (no par value)
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Continental Choice Care, Inc.
1994 Long-Term Incentive Award Plan, 1997 Equity Incentive Plan
and 1994 Directors' Stock Option Plan
This Prospectus is being used in connection with the offering from time
to time by certain shareholders (the "Selling Shareholders") of Continental
Choice Care, Inc. (the "Company") or their successors in interest of shares of
the Common Stock (no par value) of the Company ("Common Stock") which have been
issued under, or may be acquired upon the exercise of, stock options pursuant to
the Company's 1994 Long-Term Incentive Award Plan, 1997 Equity Incentive Plan
and 1994 Directors' Stock Option Plan (collectively the "Plans").
The Common Stock may be sold from time to time by the Selling
Shareholders or by their pledgees, donees, transferees or other successors in
interest. Such sales may be made in the over-the-counter market or otherwise at
prices and at terms then prevailing or at prices related to the then current
market price, or in negotiated transactions. The Common Stock may be sold by one
or more of the following: (a) block trades in which the broker or dealer so
engaged will attempt to sell the shares as agent but may position and resell
portions of the block as principal to facilitate the transaction; (b) purchases
by a broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this Prospectus; (c) an exchange distribution in accordance
with the rules of such exchange; and (d) ordinary brokerage transactions and
transactions in which the broker solicits purchases. In effecting sales, brokers
or dealers engaged by the Selling Shareholders may arrange for other brokers or
dealers to participate. Brokers or dealers will receive commissions or discounts
from Selling Shareholders in amounts to be negotiated immediately prior to the
sale. Such brokers or dealers and any other participating brokers or dealers may
be deemed to be "underwriters" within the meaning of the Securities Act of 1933,
as amended (the "Securities Act") in connection with such sales. In addition,
any securities covered by this Prospectus which qualify for sale pursuant to
Rule 144 may be sold under Rule 144 rather than pursuant to this Prospectus. The
Company will not receive any of the proceeds from the sale of these shares,
although it has paid the expenses of preparing this Prospectus and the related
Registration Statement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
The closing sale price of the Company's Common Stock on March 3, 2000
as reported by the NASDAQ SmallCap Market was $10.50.
The date of this Prospectus is March 6, 2000.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN AS CONTAINED HEREIN, IN CONNECTION WITH THE OFFER
MADE IN THE PROSPECTUS, AND ANY INFORMATION OR REPRESENTATION NOT CONTAINED
HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
- - -------
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a Registration Statement under the Securities Act, with respect
to the securities offered by this Prospectus. This Prospectus does not contain
all of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. Additional information concerning the securities offered hereby is
to be found in the Registration Statement including various exhibits thereto,
which may be inspected at the Commission's office in Washington, D.C.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information filed by
the Company can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and the Commission's regional offices located at Seven World Trade
Center, Suite 1300, New York, New York 10048; and copies of such material can be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates.
The Common Stock of the Company is listed for quotation on the NASD's
SmallCap Market and is traded under the Symbol "CCCI". Reports, proxy statements
and other information filed by the Company can be inspected at the offices of
the NASD, 1735 "K" Street, N.W., Washington, D.C. 20006.
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DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the Commission (File No. 0-245424)
pursuant to the Exchange Act are incorporated herein by reference:
1. The Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998;
2. Amendment to the Registrant's Annual Report on Form 10-KSB40/A for
the fiscal year ended December 31, 1998;
3. The Registrant's Form 8-K filed on February 19, 1999;
4. The Registrant's Quarterly Report on Form 10-QSB (for the quarterly
period ended March 31, 1999) filed on May 17, 1999;
5. The Registrant's Form 8-K filed on May 28, 1999;
6. The Registrant's Quarterly Report on Form 10-QSB (for the quarterly
period ended June 30, 1999) filed on August 16, 1999;
7. The Registrant's Quarterly Report on Form 10-QSB (for the quarterly
period ended September 30, 1999) filed on November 12,, 1999; and
8. The Registrant's Form 8-K filed on October 1, 1999;
All documents subsequently filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of this
offering shall be deemed to be incorporated by reference in this Prospectus and
to be a part of this Prospectus from the date of filing thereof.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of that person, a copy of
all documents incorporated by reference into the Registration Statement of which
this Prospectus is a part, other than exhibits to those documents (unless such
exhibits are specifically incorporated by reference into such documents).
Requests for such documents should be directed to Steven L. Trenk, President,
Continental Choice Care, Inc., 35 Airport Road, Morristown, New Jersey 07960,
telephone (973) 898-9666.
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THE COMPANY
Recent Developments
Dry Cleaning. In April 1998, the Company established a subsidiary,
United Dry Cleaning, LLC ("United"), for the purpose of acquiring and operating
dry cleaning facilities in the Phoenix, Arizona area. During 1998, United
acquired substantially all of the assets of four Arizona dry cleaning businesses
comprising an aggregate of 11 locations, including cleaning plants and drop
stores. In addition, United opened two dry cleaning stores not related to these
transactions which were subsequently closed. In July 1999, United sold back
substantially all of the assets of two dry cleaning stores it had acquired to
the original seller. In consideration of the transaction, the original seller
released a promissory note for $70,000 plus accrued interest United had issued
in connection with the original purchase.
In September 1999, United sold back substantially all of the assets of
one additional dry cleaning store it had acquired. In consideration of the
transaction, the original seller released the promissory note that United had
issued in connection with the original transaction. At the time of the sale
back, the note had a balance of $92,854 plus accrued interest. In addition,
United closed two more dry cleaning locations the store it had acquired in 1998.
An additional two stores acquired in 1998 were closed in October, 1999. The
Company recognized a net loss from sale of businesses of $427,665 in 1999, which
included a write-off of net goodwill of $423,199 related to these transactions.
In the third quarter of 1999, the Company formed an additional
subsidiary to operate dry cleaning services to hotels and institutional,
industrial and other commercial users of dry cleaning services. Thereafter,
under the terms of a Stock Purchase Agreement dated November 16, 1999, the
Company sold the stock of United in consideration of $10,000 and the assumption
of certain liabilities, including certain liabilities due to the Company to UDC
Acquisition Corp., an Arizona corporation. The majority of the outstanding
common stock of UDC Acquisition Corp. is owned by Jeffrey Trenk, the brother of
Steven L. Trenk and the son of Alvin S. Trenk. Steven L, Trenk is the President
and Chief Operating Officer of the Company and Alvin S. Trenk is the Chairman
and Chief Executive Officer of the Company.
Telecommunications. At the annual meeting of the Company's shareholders
on June 30, 1999, the shareholders approved, among others, an Agreement and Plan
of Merger ("Merger Agreement") dated as of February 5, 1999. The Merger
Agreement provided for the merger of TelaLink Network, Ltd., a Delaware
corporation with and into Quorum Communications, Inc., a Delaware corporation
and wholly-owned subsidiary of the Company, and other related matters. TelaLink
was formed primarily for the purpose of acquiring, operating and expanding the
services provided by rural local exchange carriers. At the time the Merger
Agreement was approved by the Company's shareholders, TelaLink and its
subsidiary provided telephone service to approximately 1,550 customers.
On September 21, 1999 the Company terminated the Merger Agreement. As
of the date of the termination, the Company was due approximately $1,100,000 on
loans to TelaLink Network, Ltd. and had made a down payment of $915,000 on the
proposed $30,000,000 purchase of 95% of the common stock of Pine Tree Telephone
and Telegraph Company, a Maine corporation ("Pinetree").
4
<PAGE>
The Company decided to terminate the Merger Agreement upon determining
that financing for the proposed transactions would not be available on terms
acceptable to the Company. On January 19, 2000, Country Roads Communications,
Inc. acquired the Company's rights to acquire TelaLink and the PineTree stock
and certain other rights and obligations of the Company related to the proposed
transactions. The consideration payable by Country Roads Communications, Inc.
was approximately $2,065,000, of which approximately $1,465,000 was paid in the
form of cash and the remainder of which was paid by delivery of a promissory
note in the principal amount of $500,000 maturing in January, 2005. The
promissory note bears interest at the rate of 6.5% per annum payable in annual
installments, subject to discount for early payment in full. No assurance can be
given that the promissory note will be paid in whole or part or that any payment
will be timely.
Company Background
Prior Business. The Company was incorporated as a New Jersey
corporation in 1993. Until October 1997, the Company was engaged primarily in
the dialysis treatment business. The Company and its subsidiaries provided
equipment, services and supplies to individuals in their homes and other
residential alternative sites, including prisons and nursing homes and provided
acute care dialysis placement services. The Company also owned and operated a
center to train individual patients in the self-administration of peritoneal
dialysis treatments. Until January 1998, the Company was also engaged in
providing consulting and administrative services to customers (the "Consulting
Customers") that provide dialysis treatments to patients at and from in-center
facilities owned and operated by the customers. The Company also established an
eighty (80%) percent owned subsidiary, Renal Management, Inc. ("RMI"), to engage
in renal disease and nephrology practice management. From inception, RMI engaged
primarily in forming a network of healthcare providers, exploring financing
alternatives and marketing its business. RMI did not conduct any substantive
business nor enter into any agreements with customers. In December 1998, the
Company sold its interest in RMI to Renal Disease Management, Inc. in exchange
for shares of that company's common stock.
FORWARD LOOKING STATEMENTS
When used in this Prospectus, the words "may," "will," "intend,"
"anticipate," "believe," "project," "estimate," "expect" or similar terms
referenced are intended to identify "forward-looking statements" within the
meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act,
and the Private Securities Litigation Reform Act of 1995. They are typically
used where certain factors may cause actual results to be materially different
from the future outcome expressed or implied by such statements. Prospective
investors are cautioned that any forward-looking statements are not guarantees
of future performance and are subject to risks and uncertainties. Actual results
may differ materially from those included within the forward-looking statements
as a result of various factors.
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RISK FACTORS
All prospective investors should carefully consider, among other
things, the following factors before purchasing any securities offered hereby:
Shares Under Stock Option Plans. The Company has reserved 3,000,000
shares of its Common Stock for issuance upon the exercise of stock options or
similar awards which may be granted pursuant to the Company's 1994 Long-Term
Incentive Award Plan (300,000 shares reserved), 1994 Directors' Stock Option
Plan (200,000 shares reserved), and 1997 Equity Incentive Plan (2,500,000 shares
reserved). At the date hereof, options to purchase an aggregate of approximately
1,445,000 shares have been issued under the Plans. Exercise of outstanding stock
options, and stock options which have may be granted in the future, will reduce
the percentage of Common Stock held by the public stockholders. Further, the
terms on which the Company could obtain additional capital during the life of
the stock options may be adversely affected, and it should be expected that the
holders of the stock options will exercise them at a time when the Company would
be able to obtain equity capital on terms more favorable than those provided for
by the stock options.
Proceeds of the Offering. The Company will not receive any of the
proceeds of this offering. All of the proceeds of this offering will be received
by individual employees, officers, directors and others who choose to exercise
options ("Selling Security Holders"). However, the Company will receive the
consideration necessary for the exercise of outstanding options issued under the
Plan, if and when such options are exercised. See "Use of Proceeds."
Possible Future Sales of Shares by the Selling Security Holders.
Subject to the restrictions described under "Risk Factors -- Possible Resales
Under Rule 144" and applicable law, Selling Security Holders could cause the
sale of any or all the shares of Common Stock they own upon the effectiveness of
the Registration Statement of which this Prospectus forms a part and their
individual inclusion in the Registration Statement. The Selling Security Holders
may determine to sell shares of Common Stock from time to time for any reason.
Although the Company can make no prediction as to the effect, if any, that sales
of shares of Common Stock owned by Selling Security Holders would have on the
market price prevailing from time to time, sales of substantial amounts of
Common Stock, or the availability of such shares for sale in the public market,
could adversely affect prevailing market prices of Common Stock.
Possible Resales Under Rule 144. Shares of Common Stock that have not
been registered under the Securities Act and which are currently outstanding or
issuable upon exercise of outstanding stock options or warrants may, under
certain circumstances, be available for public sale by means of ordinary
brokerage transactions in the open market pursuant to Rule 144, promulgated
under the Act, subject to certain limitations. In general, under Rule 144, a
person (or persons whose shares are aggregated) who has satisfied a one-year
holding period may, under certain circumstances, sell within any three (3) month
period a number of securities which does not exceed the greater of one (1%)
percent of the then outstanding shares of Common Stock or the average weekly
trading volume of the class during the four calendar weeks prior to such sale.
Rule 144 also permits, under certain circumstances, the sale of securities,
without any limitation, by a person who is not an affiliate of the Company and
who has satisfied a two (2) year holding period. Any substantial sale of Common
Stock pursuant to Rule 144 may have an adverse effect on the market price of the
Shares or the competent securities.
6
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Shares Eligible for Future Sale. There are 3,267,500 shares of Common
Stock currently outstanding. To the extent they are not held by "affiliates,"
the shares of Common Stock offered hereby are eligible for sale in the public
market. Shares held by affiliates can be sold upon amendment to this document.
Although the Company can make no prediction as to the effect, if any, that sales
of the shares of Common Stock referred to above would have on the market price
prevailing from time to time, sales of substantial amounts of Common Stock, or
the availability of such shares for sale in the public market could adversely
affect prevailing prices of the Common Stock.
Potential Delisting of Securities. The Nasdaq Stock Market, Inc.
("Nasdaq") previously delisted the Company's securities from trading on its
National Market System and permitted the Company's securities to trade on the
Nasdaq SmallCap Market. In the event the Company is determined to be a "public
shell" or otherwise fails to qualify for continued listing on Nasdaq, its
securities could cease to be traded on the Nasdaq SmallCap Market. The term
"public shell" generally includes a company whose securities are publicly traded
but which conducts no substantial operating business. No assurance can be given
that Nasdaq will not determine that the Company constitutes a "public shell." In
the event the Company's securities are delisted, the Company may reapply to have
its securities relisted for trading. However, it is the position of Nasdaq that
the Company will have to meet the original listing requirements for trading, as
opposed to the continuing listing requirements for trading, under which the
Company's securities currently trade. The original listing requirements are more
stringent than those for continued listing under both current and proposed
Nasdaq listing requirements.
NASDAQ SmallCap Market; Volatility of Price; Limited Public Market.
Although currently the Common Stock is listed on the NASDAQ SmallCap Market,
there can be no assurance that a regular trading market for the securities will
be sustained, or that the market price of such securities will not decline. The
trading price of the Common Stock could be subject to wide fluctuations in
response to quarterly variations in the Company's operating results,
announcements by the Company or others, developments affecting the Company, and
other events or factors. In addition, the stock market has experienced extreme
price and volume fluctuations in recent years. These fluctuations have had a
substantial effect on the market price for many companies, often unrelated to
the operating performance of such companies and may adversely affect the market
price of the Common Stock.
Investment Company Act Considerations. The Investment Company act of
1940, as amended ("1940 Act"), requires the registration of, and imposes various
substantive restrictions on, certain companies that engage primarily, or propose
to engage primarily, in the business of investing, reinvesting, or trading in
securities, or that fail certain statistical tests regarding the composition of
assets and sources of income, and are not primarily engaged in businesses other
than investing, holding, owning or trading securities. The Company engages in
businesses other than investing, reinvesting, owning, holding or trading in
securities. However, the Company invests its funds, and will be required to
7
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invest any proceeds it receives upon exercise of outstanding securities, in a
manner so as to avoid becoming subject to the registration requirements of the
1940 Act. Such investments result in the Company obtaining lower yields on the
funds invested than might be available in the securities market generally. If
the Company were required to register as an investment company under the 1940
Act, it would become subject to substantial regulation with respect to its
capital structure, management, operations, transactions with affiliates, and
other matters.
Dependence on Existing Management and Key Personnel. The success of the
Company is substantially dependent on the efforts and abilities of Alvin S.
Trenk, the Chairman of the Board of Directors and the Chief Operating Officer,
and Steven L. Trenk, its President. Decisions concerning the Company's future
direction, its business and its management are and will continue to be made or
significantly influenced by these individuals. The Company has entered into
employment agreements with both Alvin S. Trenk and Steven L. Trenk. The loss or
interruption of their continued services would have a materially adverse effect
on the Company's business operations and prospects. Additionally, the Company's
operations may be materially adversely affected if it is unable to obtain and
retain qualified personnel.
Control by Current Stockholders, Officers and Directors. Management and
affiliates of the Company currently beneficially own (including shares they have
the right to acquire) approximately 54.8% of the outstanding Common Stock. These
persons are and will continue to be able to exercise control over the election
of the Company's directors and the appointment of officers, increase the
authorized capital, dissolve, merge or engage the Company in other fundamental
corporate transactions. Certain change in control provisions found in the
employment agreements of Steven L. Trenk and Alvin S. Trenk may have the effect
of discouraging, delaying or preventing a change in control of the Company.
Dividend Policy. The Company has never declared or paid a dividend on
its Common Stock, and management expects that a substantial portion of the
Company's future earnings will be retained for expansion or development of the
Company's business. The decision to pay dividends, if any, in the future is
within the discretion of the Board of Directors and will depend upon the
Company's earnings, capital requirements, financial condition and other relevant
factors such as contractual obligations. Management, therefore, does not
contemplate that the Company will pay dividends on the Common Stock in the
foreseeable future.
Possible Adverse Effect of "Penny Stock" Rules in Liquidity for the
Company's Securities. If the Company's securities are not listed on the Nasdaq
SmallCap market or certain other national securities exchanges and the price
thereof falls below $5.00, then subsequent purchases of such securities will be
subject to the requirements of the penny stock rules absent the availability of
another exemption. The Commission has adopted rules that regulate broker-dealer
practices in connection with transactions in "penny stocks." Penny stocks
generally are equity securities with a price of less than $5.00 (other than
securities listed on certain national securities exchanges or designated for
quotation on the Nasdaq system). The penny stock rules require a broker-dealer
to (i) deliver a standardized risk disclosure document required by the SEC, (ii)
provide the customer with (a) current bid and offer quotations for the penny
stock, (b) the compensation of the broker-dealer and its salesperson in the
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transaction, and (c) monthly account statements showing the market value of each
penny stock held in the customer's account, (iii) make a special written
determination that the penny stock is a suitable investment for the purchaser,
and (iv) receive the purchaser's written agreement to the transaction. These
disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for a stock that becomes subject to the penny
stock rules. If the Company's securities become subject to the penny stock
rules, stockholders may find it more difficult to sell their securities. If the
Company's securities were subject to the existing or proposed regulations on
penny stocks, the market liquidity for the Company's securities could be
severely and adversely affected by limits on the ability of broker-dealers to
sell the Company's securities and the ability of Selling Shareholders in this
offering to sell their securities in the secondary market.
Potential Conflicts of Interest. The Company has entered into various
transactions with certain of its directors and principal shareholders and their
affiliates which could result in potential conflicts of interest. The Company
believes that all of such transactions and arrangements were fair and reasonable
to the Company and were on terms no less favorable than could have been obtained
from unaffiliated third parties. There can be no assurance, however, that future
transactions or arrangements between the Company and its affiliates, if any,
will continue to be advantageous to the Company, that conflicts of interest will
not arise with respect thereto, or that if conflicts do arise, they will be
resolved in a manner favorable to the Company. Any such future transactions will
be on terms no less favorable to the Company than could be obtained from
unaffiliated parties and will be approved by a majority of the independent and
disinterested members of the Board of Directors, outside the presence of any
interested directors and, to the extent deemed appropriate by the Board of
Directors, the Company will obtain shareholder approval or fairness opinions in
connection with any such transaction.
Limitation on Directors' Liabilities under New Jersey Law. Pursuant to
the Company's Certificate of Incorporation and under New Jersey law, directors
of the Company are not liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty, except for liability in connection with a
breach of duty of loyalty, for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, for dividend
payments or stock repurchases illegal under New Jersey law or any transaction in
which a director has derived an improper personal benefit.
Indemnification of Directors under New Jersey Law. Pursuant to both the
Company's Certificate of Incorporation and New Jersey law, the Company's
officers and directors are indemnified by the Company for monetary damages for
breach of fiduciary duty, except for liability which arises in connection with
(i) a breach of duty or loyalty, (ii) acts or omissions not made in good faith
or which involve intentional misconduct or a knowing violation of law, (iii) for
dividend payments or stock repurchases illegal under New Jersey law, or (iv) any
transaction in which the officer or director derived an improper personal
benefit. The Company's Certificate of Incorporation does not have any effect on
the availability of equitable remedies (such as an injunction or rescissions)
for breach of fiduciary duty. However, as a practical matter, equitable remedies
may not be available in particular circumstances. The Company has arranged for
director and officer liability coverage to commence upon the closing of this
offering.
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Authorization and Discretionary Issuance of Preferred Stock. The
Company's Certificate of Incorporation authorizes the issuance of "blank check"
preferred stock with such designations, rights and preferences as may be
determined from time to time by the Board of Directors. Accordingly, the Board
of Directors is empowered, without stockholder approval, to issue preferred
stock with dividends, liquidation, conversion, voting or other rights which
could adversely affect the relative voting power or other rights of the holders
of the Company's Common Stock. In the event of issuance, the preferred stock
could be used, under certain circumstances, as a method of discouraging,
delaying or preventing a change in control of the Company, which could have the
effect of discouraging bids for the Company and thereby prevent stockholders
from receiving the maximum value for their shares. Although the Company has no
present intention to issue any shares of its preferred stock, there can be no
assurance that the Company will not do so in the future.
USE OF PROCEEDS
The shares which may be sold under this Prospectus will be sold for the
respective accounts of each of the Selling Stockholders. Accordingly, the
Company will not realize any proceeds from the sale of the shares, except that
the Company will derive net proceeds of approximately $2,548,594 if all of the
options currently outstanding are exercised for cash, and not on a cashless
basis. Such funds will be available to the Company for working capital and
general corporate purposes. No assurance can be given, however, as to when or if
any or all of the options will be exercised. All expenses of the registration of
the Shares will be paid for by the Company. See "Selling Shareholders" and "Plan
of Distribution."
SELLING SHAREHOLDERS
This prospectus relates to up to 1,750,000 shares of common stock of
the Company which may be offered for resale by officers, directors and employees
of the Company. The Company expects that certain of its "affiliates" will choose
to reoffer common stock received pursuant to employee stock option plans in the
future. To date, no affiliates of the Company have exercised outstanding
options. The Company does not currently know which of its affiliates will
exercise outstanding options or future options to acquire common stock. Further,
the Company does not currently know which of such affiliates may choose to sell
the common stock acquired on exercise of options, the amount of common stock to
be sold pursuant to this reoffer prospectus, if any, or the timing of any such
sales. As the identities and amount of securities to be sold become known to the
Company, the Company will supplement this reoffer prospectus with that
information.
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PLAN OF DISTRIBUTION
The securities covered by this Prospectus (the "Securities") may be
sold from time to time by the Selling Security Holders, or by pledgees,
transferees or other successors in interest, on NASDAQ SmallCap Market (or such
other exchange on which the Securities are listed at the time of sale), at
prices and at terms then prevailing or at prices related to the then current
market price, or in privately negotiated transactions. The Securities may be
sold by various methods, including, but not limited to one or more of the
following; (a) directly in a privately negotiated transaction; (b) a block trade
in which the broker or dealer so engaged will attempt to sell the Securities as
agent but may position and resell a portion of the block as principal to
facilitate the transaction; (c) purchased by a broker or dealer as principal and
resale by such broker or dealer for its own account pursuant to this Prospectus;
(d) an exchange transaction in accordance with the rules of such exchange; and
(e) ordinary brokers transactions and transactions in which the broker solicits
purchasers. In effecting sales, brokers or dealers engaged by the Selling
Security Holders may arrange for other brokers or dealers to participate.
Alternatively, the Selling Security Holders may from time to time offer the
Securities through underwriters, dealers or agents who may receive compensation
in the form of underwriting discounts, concessions or commissions from the
Selling Security Holders and/or the purchasers of Securities for whom they may
act as agents. In addition any of the Securities which qualify for sale pursuant
to Rule 144 under the Securities Act, or otherwise pursuant to an applicable
exemption under the Securities Act, may be sold other than pursuant to this
Prospectus.
The Selling Security Holders and any such underwriters, dealers or
agents that participate in the distribution of Securities may be deemed to be
underwriters, and any profit on the sale of the Securities by them and any
discounts, commissions or concessions received by them may be deemed to be
underwriting discounts and commissions under the Securities Act. The Securities
may be sold from time to time in one or more transactions at a fixed offering
price, which may be changed, or at varying prices determined at the time of sale
or at negotiated prices. Such prices will be determined by the Selling Security
Holders or by an agreement between the Selling Security Holders and underwriters
or dealers. Brokers or dealers acting in connection with the sale of the
Securities contemplated by this Prospectus may receive fees or commissions in
connection therewith.
At the time a particular offer of Securities is made, to the extent
required, a supplement to this Prospectus will be distributed which will
identify and set forth the aggregate amount of Securities being offered and the
terms of the offering, including the name or names of any underwriters, dealers
or agents, the purchase price paid by any underwriter for Securities purchased
from the Selling Security Holders, any discounts, commissions and other items
constituting compensation from the Selling Security Holders and/or the Company
and any discounts, commissions or concessions allowed or re-allowed or paid to
dealers, including the proposed selling price to the public. Such supplement to
this Prospectus and, if necessary, a post-effective amendment to the
Registration Statement of which this Prospectus is a part, will be filed with
the Commission to reflect the disclosure of additional information with respect
to the distribution of the Securities. The Company will pay all of the expenses
incident to the registration and certain other expenses related to this offering
with respect to Securities, other than underwriting commissions and discounts,
normal commission expenses and brokerage fees, applicable transfer taxes and
attorney's fees of Selling Security Holders' counsel.
11
<PAGE>
Upon the Company's being notified by any Selling Stockholder that any
material arrangement has been entered into with a broker-dealer for the sale of
Securities through a cross or block trade, a supplemental prospectus will be
filed under Rule 424(c) under the Securities Act, setting forth the name of the
participating broker-dealer(s), the number of shares involved, the price at
which such shares were sold by the Selling Stockholder, the commissions paid or
discounts or concessions allowed by the Selling Shareholder to such
broker-dealer(s), and where applicable, that such broker-dealer(s) did not
conduct any investigation to verify the information set out in this Prospectus.
Any Securities covered by this Prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under that Rule rather
than pursuant to this Prospectus.
The Selling Security Holders have entered into indemnification
agreements with the Company pursuant to which the Company will be indemnified
against failure by the Selling Security Holders to deliver a Prospectus if
required, as well as against certain civil liabilities, including liabilities
under the Securities Act or the Exchange Act, incurred in connection with any
untrue (or alleged untrue) statement of a material fact or omission of a
material fact in this Registration Statement to the extent such liability
relates to information supplied by the Selling Security Holder for inclusion in
the Registration Statement or Prospectus.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the Securities may not enter bids to
purchase, purchase or engage in similar trading or market making activities with
respect to the Securities for a period commencing nine business days prior to
the commencement of such distribution and ending with the completion of such
distribution. In addition, and without limiting the foregoing, the Selling
Security Holders and any person participating in the distribution of the
Securities will be subject to applicable provisions of the Exchange Act and the
rules and regulations thereunder, including without limitation Regulation M,
which provisions may limit the timing of purchases and sales of the Securities
by the Selling Security Holders. All of the foregoing may affect the
marketability of the Securities.
In order to comply with certain states' securities laws, if applicable,
the Securities will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In certain states the Securities may not be sold
unless the Securities have been registered or qualified for sale in such state,
or unless an exemption from registration or qualification is available and is
obtained.
There can be no assurance that the Selling Security Holders will sell
any or all of the Securities offered by them hereby.
12
<PAGE>
PART II
-------
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 3 (FORM S-8): DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the Commission (File No. 0-245424)
pursuant to the Exchange Act are incorporated herein by reference:
1. The Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998;
2. Amendment to the Registrant's Annual Report on Form 10-KSB40/A for
the fiscal year ended December 31, 1998;
3. The Registrant's Form 8-K filed on February 19, 1999;
9. The Registrant's Quarterly Report on Form 10-QSB (for the quarterly
period ended March 31, 1999) filed on May 17, 1999;
10. The Registrant's Form 8-K filed on May 28, 1999;
11. The Registrant's Quarterly Report on Form 10-QSB (for the quarterly
period ended June 30, 1999) filed on August 16, 1999;
12. The Registrant's Quarterly Report on Form 10-QSB (for the quarterly
period ended September 30, 1999) filed on November 12,, 1999; and
13. The Registrant's Form 8-K filed on October 1, 1999;
All documents subsequently filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of this
offering shall be deemed to be incorporated by reference in this Prospectus and
to be a part of this Prospectus from the date of filing thereof.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute part of this Prospectus.
ITEM 4 (FORM S-8): DESCRIPTION OF SECURITIES
Not Applicable.
<PAGE>
ITEM 5 (FORM S-8): INTERESTS OF NAMED EXPERTS AND COUNSEL
The consolidated financial statements for the years ended December 31,
1998 and 1997, incorporated by reference in this Registration Statement have
been audited by Arthur Andersen, LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of such firm as experts in giving said report.
The legality of the Common Stock to be offered hereby has been passed
upon for the Company by Reed Smith Shaw & McClay LLP, One Riverfront Plaza,
Newark, New Jersey 07102. Jeff Ellentuck, Esq., Counsel to the firm, holds
options to acquire shares of the Company's common stock.
ITEM 6 (FORM S-8) AND ITEM 15 (FORM S-3): INDEMNIFICATION OF DIRECTORS AND
OFFICERS
Section 14A:3-5(2) of the Business Corporation Act of the State of New
Jersey (the "Business Corporation Act") provides, in general, that a corporation
shall have the power to indemnify a corporate agent against his expenses and
liabilities in connection with any proceeding involving the corporate agent by
reason of his being or having been such a corporate agent, other than a
proceeding by or in the right of the corporation, if (a) such corporate agent
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation; and (b) with respect to any
criminal proceeding, such corporate agent had no reasonable cause to believe his
conduct was unlawful. The termination of any proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent,
shall not of itself create a presumption that such corporate agent did not meet
the applicable standards of conduct set forth in paragraphs (a) and (b) above.
Section 14A:3-5(3) of the Business Corporation Act provides, in
general, that a corporation shall have power to indemnify a corporate agent
against his expenses in connection with any proceeding by or in the right of the
corporation to procure a judgment in its favor which involves the corporate
agent by reason of his being or having been such corporate agent, if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation. However, in such proceeding no
indemnification shall be provided in respect of any claim, issue or matter as to
which such corporate agent shall have been adjudged to be liable to the
corporation, unless and only to the extent that the Superior Court or the court
in which such proceeding was brought shall determine upon application that
despite the adjudication of liability, but in view of all circumstances of the
case, such corporate agent is fairly and reasonably entitled to indemnity for
such expenses as the Superior Court or such other court shall deem proper.
Section 14A:3-5(4) of the Business Corporation Act provides, in
general, that a corporation shall indemnify a corporate agent against expenses
to the extent that such corporate agent has been successful on the merits or
otherwise in any proceeding referred to in subsections 14A:3-5(2) and 14A:3-5(3)
or in defense of any claim, issue or matter therein.
2
<PAGE>
Section 14A:3-5(9) of the Business Corporation Act provides, in
general, that a corporation shall have power to purchase and maintain insurance
on behalf of any corporate agent against any expenses incurred in any proceeding
and any liabilities asserted against him by reason of his being or having been a
corporate agent, whether or not the corporation would have the power to
indemnify him against such expenses and liabilities under the provision of this
section.
The Business Corporation Act also provides that a corporation's
certificate of incorporation may provide that a director or officer shall not be
personally liable, or shall be liable only to the extent therein provided, to
the corporation or its shareholders for damages for breach of any duty owed to
the corporation or its shareholder, except that such provision shall not relieve
a director from liability for any breach of duty based upon an act or omission
(a) in breach of such person's duty of loyalty to the corporation or its
shareholders, (b) not in good faith or involving a knowing violation of law or
(c) resulting in receipt by such person of an improper personal benefit.
The Company's by-laws and Certificate of Incorporation provide that the
Company will indemnify its officers, directors, employees and agents to the
fullest extent permitted by the Business Corporation Act.
The Company's Certificate of Incorporation eliminates the personal
liability of the directors to the fullest extent permitted by the Business
Corporation Law.
In addition to such other rights of indemnification as they may have as
directors or as members of the committee (the "Committee") administering the
Company's 1944 Long-Term Incentive Awared Plan and the 1997 Equity Incentive
Plan (the "Plans"), under the terms of the Plans the members of the Committee
shall be indemnified by the Company against the reasonable expenses, including
attorney's 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 they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plans or any option
granted thereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them 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 such action, suit or proceeding that such Board member is liable for
negligence or misconduct in the performance of his duties.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act") may be permitted to directors,
officers or persons controlling the Company pursuant to the foregoing
provisions, the Company has been informed that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.
3
<PAGE>
ITEM 7 (FORM S-8): EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8 (FORM S-8) AND ITEM 17 (FORMS-3): EXHIBITS
Number Description
- - ------ -----------
3.1 Registrant's Certificate of Incorporation(1)
3.2 Registrant's By-Laws(1)
4.1 Registrant's 1994 Long-Term Incentive Plan(1)
4.2 Registrant's 1997 Equity Incentive Plan
4.3 Registrant's Directors' Stock Option Plan (1)
5.1 Opinion of Reed Smith Shaw & McClay LLP
23.1 Consent of Arthur Anderson, L.L.P.
23.2 Consent of Reed Smith Shaw & McClay LLP (included in Exhibit 5.1)
24 Power of Attorney
(1) Incorporated by reference to the Registrant's Form SB-2 Registration
Statement No. 33-78288 declared effective July 20, 1994.
ITEM 9: UNDERTAKINGS
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
4
<PAGE>
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
5
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
February 15, 1999 included in Continental Choice Care, Inc.'s Form 10-KSB/A for
the year ended December 31, 1998 and to all references to our Firm included in
this registration statement.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
March 6, 2000
6
<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-8and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Morristown, New Jersey, on March 6, 2000.
CONTINENTAL CHOICE CARE, INC.
By: /s/ Steven L. Trenk
--------------------------------
Steven L. Trenk, President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Steven L. Trenk and Alvin S. Trenk
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 to this Registration Statement on
Form S-8, and to file the same, with all exhibit thereto, and any other
documents in connection therewith, with the Commission, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement on Form S-8 has been signed by the following persons in the capacities
and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- - --------- ----- ----
<S> <C> <C>
/s/ Steven L. Trenk
- - ------------------------ President, Chief Operating Officer and Director March 6, 2000
Steven L. Trenk
/s/ Alvin S. Trenk
- - ------------------------ Chairman of the Board March 6, 2000
Alvin S. Trenk
/s/ Mark N. Raab
- - ------------------------ Chief Financial Officer & Treasurer March 6, 2000
Mark N. Raab
/s/ Martin G. Jacobs
- - ------------------------ Director March 6, 2000
Martin G. Jacobs, M.D.
/s/ Jeffrey Mendell
- - ------------------------ Director March 6, 2000
Jeffrey Mendell
/s/ Stanley B. Amsterdam
- - ------------------------ Director March 6, 2000
Stanley B. Amsterdam
</TABLE>
7
<PAGE>
Exhibit 4.2
CONTINENTAL CHOICE CARE, INC.
1997 EQUITY INCENTIVE PLAN
-----------------------------
1. PURPOSE
-------
The purpose of this 1997 Equity Incentive Plan (the "Plan"), is to
advance the interests of Continental Choice Care, Inc. (the "Company") and its
subsidiaries by enhancing the ability of the Company to (i) attract and retain
employees and other persons or entities who are in a position to make
significant contributions to the success of the Company and its subsidiaries;
(ii) reward such persons for such contributions, and (iii) encourage such
persons or entities to take into account the long-term interest of the Company
through ownership of shares ("Shares") of the Company's common stock ("Stock").
The Plan is intended to accomplish these goals by enabling the Company
to grant awards ("Awards") in the form of Options, Stock Appreciation Rights
("SARs"), Restricted Stock or Deferred Stock, all as more fully described below.
2. ADMINISTRATION
--------------
The Plan will be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company (the "Board") and to the
extent deemed necessary or advisable by the Board, will be constituted to permit
the Plan to comply with Rule 16b-3 ("Rule 16b-3") promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
successor rule and to comply with the requirements for a compensation committee
composed of outside directors under Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"). The Committee will determine the recipients of
Awards, the times to which Awards will be made and the size and type or types of
Awards to be made to each recipient and will set forth in such Awards the terms,
conditions and limitations applicable to it. Awards may be made singly, in
combination or in tandem. The Committee will have full and exclusive power to
interpret the Plan, to adopt rules, regulations and guidelines relating to the
Plan, to grant waivers of Plan restrictions and to make all of the
determinations necessary for its administration. In its discretion, the Board of
Directors may elect to administer all or any aspects of the Plan and to perform
any of the duties or exercise any of the rights delegated or granted to the
Committee under the terms of the Plan and in such event all references to the
Committee contained herein shall mean the Board of Directors; provided, however,
that the Board may not make such election if the election by itself shall result
in the failure of the Plan to comply with Rule 16b-3 or Code Section 162(m).
Such determinations and actions of the Committee (or the Board as the case may
be), and all their determinations and actions of the Committee (or the Board as
the case may be) made or taken under authority granted by any provision of the
Plan, will be conclusive and binding on all parties. Nothing in this paragraph
shall be construed as limiting the power of the Committee or the Board to make
adjustments under Section 12 or to amend or terminate the Plan under Section 18.
3. EFFECTIVE DATE AND TERM OF PLAN
-------------------------------
The Plan will become effective on the date on which it is approved by
the stockholders of the Company. Grants and Awards under the Plan may be made
prior to that date, subject to such approval of the Plan.
8
<PAGE>
The Plan will terminate ten years after the effective date of the Plan,
subject to earlier termination of the Plan by the Board pursuant to Section 18.
No Award may be granted under the Plan after the termination date of the Plan,
but Awards previously granted may extend beyond that date.
4. SHARES SUBJECT TO THE PLAN
--------------------------
Subject to adjustment as provided in Section 12 below, (i) the maximum
aggregate number of Shares of Stock that may be delivered for all purposes under
the Plan shall be 1,250,000 and (ii) the maximum number of Shares of Stock
awarded to any Participant (as defined in Section 5 below) in any calendar year
under the Plan shall be (x) 125,000 Shares of Stock in the case of all
participants other than the Chairman and Chief Executive Office of the Company
and (y) 150,000 Shares of Stock in the case of the Chairman and Chief Executive
Officer of the Company. The maximum aggregate number of Shares of Stock which
may be issued under the Plan pursuant to the exercise of ISOs (as defined in
Section 7 below) shall be 1,250,000.
If any Award requiring exercise by the Participant for delivery of
Stock is canceled or terminates without having been exercised in full, or if any
Award payable in Stock or cash is satisfied in cash rather than Stock, the
number of Shares of Stock as to which such Award was not exercised or for which
cash was substituted will be available for future grants of Stock except that
Stock subject to an Option canceled upon the exercise of an SAR shall not again
be available for Awards under the Plan unless, and to the extent that, the SAR
is settled in cash. Likewise, if any Award payable in Stock or cash is satisfied
in Stock rather than cash, the amount of cash for which such Stock was
substituted will be available for future Awards of cash compensation. Shares of
Stock tendered by a Participant or withheld by the Company to pay the exercise
price of an Option or to satisfy the tax withholding obligations of the exercise
or vesting of an Award shall be available again for Awards under the Plan, but
only to Participants who are not subject to Section 16 of the Exchange Act.
Shares of Restricted Stock forfeited to the Company in accordance with the Plan
and the terms of the particular Award shall be available again for Awards under
the Plan unless the Participant has received the benefits of ownership (within
the applicable interpretation under Rule 16b-3), in which case such shares may
only be available for Awards to Participants who are not subject to Section 16
of the Exchange Act.
Stock delivered under the Plan may be either authorized but unissued
Stock or previously issued Stock acquired by the Company and held in treasury.
No fractional Shares of Stock will be delivered under the Plan and the Committee
shall determine the manner in which fractional shares value will be treated.
5. ELIGIBILITY AND PARTICIPATION
-----------------------------
Those eligible to receive Awards under the Plan ("Participants"), will
be persons in the employ of the Company or any of its subsidiaries ("Employees")
and other persons or entities who, in the opinion of the Committee, are in a
position to make a significant contribution to the success of the Company or its
subsidiaries, except that members of the Committee may not be a Participant
without ratification by the Board. A "subsidiary" for purposes of the Plan, will
be a corporation in which the Company owns, directly or indirectly, stock
possessing 50% or more of the total combined voting power of all classes of
stock, or any other entity, including partnerships, limited partnerships,
limited liability companies, or limited liability partnerships in which the
Company owns a majority of the equity interest or controls the voting power.
9
<PAGE>
6. DELEGATION OF AUTHORITY
-----------------------
The Committee may delegate to senior officers of the Company who are
also directors of the Company (including, without limitation, the Chief
Executive Officer and/or President) its duties under the plan subject to such
conditions and limitations as the Committee may prescribe, except that only the
Committee may designate and make grants, including, without limitation,
decisions on timing, amount and pricing of Awards, to Participants (i) who are
subject to Section 16 of the Exchange Act or any successor statute, or (ii)
whose compensation is covered by Section 162(m) of the Code.
7. OPTIONS
-------
(a) Nature of Options. An Option is an Award entitling the Participant to
purchase a specified number of Shares at a specified exercise price.
Both "incentive stock options", as defined in Section 422 of the Code
(referred to herein as an "ISO") and non-incentive stock options may be
granted under the Plan. ISOs may be awarded only to Employees.
(b) Exercise Price. The exercise price of each Option shall be determined
by the Committee, but shall not be less than fifty percent (50%) of the
Fair Market Value of a Share at the time the Option is granted, and in
the case of an ISO shall not be less than 100% (110% in the case of an
ISO granted to a ten-percent shareholder) of the Fair Market Value of a
share at the time the ISO is granted. For purposes of this Plan, "Fair
Market Value" shall mean, except as provided below, the average of the
high and low sale prices or, in case no such sale takes place on such
day, the average of the high bid and low asked prices, in either case
as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on an exchange
or, if the common stock is not then listed or admitted to trading on an
exchange, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the NASDAQ Stock Market or such
other system then in use, or, if on any such date the common stock is
not quoted by any such organization, the average of the high bid and
low asked prices as furnished by a professional market maker selected
by the Board of Directors making a market in the Stock. In the case of
ISOs, the term "Fair Market Value" shall have the same meaning as it
does in the provisions of the Code and the regulations thereunder
applicable to ISOs. In addition, options will not be exercisable unless
the shares subject thereto have been approved for listing on any
exchange or quotation system on which the common stock is then listed
or quoted. Subject to the conditions described above with respect to
the exercise price and listing of the common stock, the Committee may
at any time and from time to time accelerate the time at which all or
any part of the Option may be exercised. For purposes of this Plan,
"ten-percent shareholder" shall mean any Employee who at the time of
grant owns directly, or is deemed to own by reason of the attribution
rules set forth in Section 424(d) of the Code, Stock possessing more
than 10% of the total combined voting power of all classes of stock of
the Company or of any of its subsidiaries.
(c) Duration of Options. In no case shall an Option be exercisable more
than ten years (five years, in the case of an ISO granted to a
"ten-percent shareholder" as defined in (b) above) from the date the
Option was granted.
(d) Exercise of Options and Conditions. Options granted under any single
Award will become exercisable at such time or times, and on and subject
to such conditions, as the Committee may specify. The options may be
subject to such restrictions, conditions and forfeiture provisions as
the Committee may determine, including, but not limited to,
restrictions on transfer; continuous service with the Company or any of
its Subsidiaries; achievement of business objectives, and individual,
unit and Company performance. The Committee may at any time and from
time to time accelerate the time at which all or any part of the Option
may be exercised.
10
<PAGE>
(e) Payment for and Delivery of Stock. Full payment for Shares purchased
will be made at the time of the exercise of the Option, in whole or in
part. Payment of the purchase price will be made in cash or in such
other form as the Committee may approve, including, without limitation,
delivery of Shares of Stock.
8. STOCK APPRECIATION RIGHTS
(a) Nature of Stock Appreciation Rights. A Stock Appreciation Right is an
Award entitling the recipient to receive payment, in cash and/or Stock,
determined in whole or in part by reference to appreciation in the
value of a Share. In general, an SAR entitles the recipient to receive,
with respect to each Share as to which the SAR is exercised, the excess
of the Fair Market Value of a Share on the date of exercise over the
Fair Market Value of a Share on the date the SAR was granted. However,
the Committee may provide at the time of grant that the amount the
recipient is entitled to receive will be adjusted upward or downward
under rules established by the Committee to take into account the
performance of the Shares in comparison with the performance of other
stocks or an index or indices of other stocks.
(b) Grant of SARs. SARs may be granted in tandem with, or independently of,
Options granted under the Plan. An SAR granted in tandem with an Option
which is not an ISO may be granted either at or after the time the
Option is granted. An SAR granted in tandem with an ISO may be granted
only at the time the Option is granted.
(c) Exercise of SARs. An SAR not granted in tandem with an Option will
become exercisable at such time or times, and on such conditions, as
the Committee may specify. An SAR granted in tandem with an Option will
be exercisable only at such times, and to the extent, that the related
Option is exercisable. An SAR granted in tandem with an ISO may be
exercised only when the market price of the Shares subject to the
Option exceeds the exercise price of such Option. The Committee may at
any time and from time to time accelerate the time at which all or part
of the SAR may be exercised. At the option of the Company, upon
exercise an SAR may be settled in cash, Stock or a combination of both.
9. RESTRICTED STOCK
----------------
A Restricted Stock Award entitles the recipient to acquire Shares,
subject to certain restrictions or conditions, for no cash consideration, if
permitted by applicable law, or for such other consideration as determined by
the Committee. The Award may be subject to such restrictions, conditions and
forfeiture provisions as the Committee may determine, including, but not limited
to, restrictions on transfer; continuous service with the Company or any of its
Subsidiaries; achievement of business objectives, and individual, unit and
Company performance. Subject to such restrictions, conditions and forfeiture
provisions as may be established by the Committee, any Participant receiving an
Award will have all the rights of a stockholder of the Company with respect to
Shares of Restricted Stock, including the right to vote the Shares and the right
to receive any dividends thereon.
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10. DEFERRED STOCK
--------------
A Deferred Stock Award entitles the recipient to receive Shares to be
delivered in the future. Delivery of the Shares will take place at such time or
times, and on such conditions, as the Committee may specify. The Committee may
at any time accelerate the time at which delivery of all or any part of the
Shares will take place. At the time any Deferred Stock Award is granted, the
Committee may provide that the Participant will receive an instrument evidencing
the Participant's right to future delivery of Deferred Stock.
11. TRANSFERS
---------
No Award (other than an outright Award in the form of Stock) may be
assigned, pledged or transferred other than by will or by the laws of descent
and distribution and during a Participant's lifetime will be exercisable only by
the Participant or, in the event of a Participant's incapacity, his or her
guardian or legal representative.
12. ADJUSTMENTS
-----------
(a) In the event of a stock dividend, stock split or combination of Shares,
recapitalization or other change in the Company"s capitalization, or
other distribution to common stockholders other than normal cash
dividends, after the effective date of the Plan, the Committee will
make any appropriate adjustments to the maximum number of Shares that
may be delivered under the Plan and to any Participant under Section 4
above.
(b) In any event referred to in paragraph (a), the Committee will also make
any appropriate adjustments to the number and kind of Shares of Stock
or securities subject to Awards then outstanding or subsequently
granted, any exercise prices relating to Awards and any other provision
of Awards affected by such change. The Committee may also make such
adjustments to take into account material changes in law or in
accounting practices or principles, mergers, consolidations,
acquisitions, dispositions or similar corporate transactions, or any
other event, if it is determined by the Committee that adjustments are
appropriate to avoid distortion in the operation of the Plan.
13. RIGHTS AS A STOCKHOLDER
-----------------------
Except as specifically provided by the Plan, the receipt of an Award
will not give a Participant rights as a stockholder; the Participant will obtain
such rights, subject to any limitations imposed by the Plan or the instrument
evidencing the Award, upon actual receipt of Shares.
14. CONDITIONS ON DELIVERY OF STOCK
-------------------------------
The Company will not be obligated to deliver any Shares pursuant to the
Plan or to remove any restrictions or legends from Shares previously delivered
under the Plan until (a) in the opinion of the Company's counsel, all applicable
federal and state laws and regulations have been complied with, (b) if the
outstanding Shares are at the time listed on any stock exchange, until the
Shares to be delivered have been listed or authorized to be listed on such
exchange upon official notice of notice of issuance, and (c) until all other
legal matters in connection with the issuance and delivery of such Shares have
been approved by the Company's counsel. If the sale of Shares has not been
registered under the Securities Act of 1933, as amended and qualified under the
appropriate "blue sky" laws, the Company may require, as a condition to exercise
of the Award, such representations and agreements as counsel for the Company may
consider appropriate to avoid violation of such Act and laws and may require
that the certificates evidencing such Shares bear an appropriate legend
restricting transfer.
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If an Award is exercised by the Participant"s legal representative, the
Company will be under no obligation to deliver shares pursuant to such exercise
until the Company is satisfied as to the authority of such representative.
15. TAX WITHHOLDING
---------------
The Company will have the right to deduct from any cash payment under
the Plan taxes that are required to be withheld and further to condition the
obligation to deliver or vest shares under this Plan upon the Participant's
paying the Company such amount as it may request to satisfy any liability for
applicable withholding taxes. The Committee may in its discretion permit
Participants to satisfy all or part of their withholding liability by delivery
of Shares with a Fair Market Value equal to such liability or by having the
Company withhold from Stock delivered upon exercise of an Award, Shares whose
Fair Market Value is equal to such liability.
16. MERGERS, ETC.
-------------
In the event of a proposal, which is approved by the Board of
Directors, of any merger or consolidation involving the Company where the
Company is not the surviving entity, any sale of substantially all of the
Company's assets or any other transaction or series of related transactions as a
result of which a single person or several persons acting in concert own a
majority of the Company's then outstanding Stock (such merger, consolidation,
sale or other transaction being hereinafter referred to as a "Transaction"), all
outstanding Options and SARs shall become exercisable immediately before or
contemporaneously with the consummation of such transaction and each outstanding
share of Restricted Stock and each outstanding Deferred Stock Award shall
immediately become free of all restrictions and conditions upon consummation of
such transaction. Upon consummation of the Transaction, all outstanding Options
and SARs shall terminate and cease to be exercisable. There shall be excluded
from the foregoing any Transaction as a result of which the holders of Stock
prior to the Transaction retain or acquire securities constituting a majority of
the outstanding voting common stock of the acquiring or surviving corporation or
other entity. For purposes of this Section, voting common stock of the acquiring
or surviving corporation or other entity that is issuable upon conversion of
convertible securities or upon exercise of warrants or options shall be
considered outstanding, and all securities that vote in the election of
directors (other than solely as the result of a default in the making of any
dividend or other payment) shall be deemed to constitute that number of shares
of voting common stock which is equivalent to the number of such votes that may
be cast by the holders of such securities.
In lieu of the foregoing, if the Company will not be the surviving
corporation or entity, the Committee may, by vote of a majority of the members
of the Committee who are Continuing Directors (as defined below), arrange to
have such acquiring or surviving corporation or entity or an Affiliate (as
defined below) thereof grant to participants holding outstanding Awards
replacement Awards which, in the case of ISOs, satisfy, in the determination of
the Committee, the requirements of Section 424(a) of the Code.
The term "Continuing Director" shall mean any director of the Company
who (i) is not an Acquiring person or an Affiliate of an Acquiring Person and
(ii) either was (A) a member of the Board of Directors of the Company on the
date of adoption of this Plan or (B) nominated for his or her initial term of
office by a majority of the Continuing Directors in office at the time of such
nomination. The term "Acquiring Person" shall mean, with respect to any
Transaction, each Person who is a party to or a participant in such Transaction
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or who, as a result of such Transaction, would (together with other Persons
acting in concert) own a majority of the Company's outstanding Common Stock;
provided, however, that none of the Company, any wholly-owned subsidiary of the
Company, any employee benefit plan of the Company or any trustee in respect
thereof acting in such capacity shall, for purposes of this Section, be deemed
an "Acquiring Person." The term "Affiliate" with respect to any Person, shall
mean any other Person who is, or would be deemed to be an "affiliate" or an
"associate" of such Person within the respective meanings ascribed to such terms
in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended. The term "Person" shall mean a corporation,
association, partnership, joint venture, trust, organization, business,
individual or government or any governmental agency or political subdivision
thereof.
17. TERMINATION OF EMPLOYMENT
-------------------------
Subject to the discretion of the Committee as demonstrated in any
written agreement associated with an Award, the Committee may provide for
provisions similar to the following to be applicable to any Award to an Employee
if such grantee ceases to be an Employee after an Award:
(a) if termination of employment is voluntary or involuntary without
cause, the Participant may exercise each Option or SAR held by the Participant
within three months after such temination (but not after the expiration date of
the Option or SAR) to the extent of the number of Shares subject to the Option
or SAR as of the date of termination;
(b) if termination is for cause, all Options or SARs held by the
Participant shall be cancelled as of the date of termination;
(c) subject to the provisions of Section 17(d), if termination is (i)
by reason of retirement at a time when the Paricipant is entitled to the current
receipt of benefits under any retirement plan maintained by the Company or any
Subsidiary, or (ii) by reason of disablilty, each Option or SAR held by the
Participant may be exercised by the Participant at any time (but not after the
expiration date of the Option or SAR) (within one year of termination in the
case of ISO's) to the extent of the number of Shares subject to the Option or
SAR as of the date of termination;
(d) if termination is by reason of the death of the Participant, or if
the Participant dies after retirement or disability as referred to in Section
17(c), each Option or SAR held by the Participant may be exercised by the
Participant's estate, or by any person who acquires the right to exercise the
Option or SAR by reason of the Participant's death, at any time within a period
of three years after death (but not after the expiration date of the Option or
SAR) to the extent of the total number of shares subject to the Option or SAR as
of the date of termination; or
(e) if the Participant should die within three months after voluntary
termination of employment or involuntary termination without cause, as
contemplated in Section 17(a), each Option or SAR held by the Participant may be
exercised by the Participant's estate, or by any person who acquires the right
to exercise by reason of the Participant's death, at any time within a period of
one year after death (but not after the expiration date of the Option of SAR) to
the extent of the number of Shares subjecto to each outstanding Option or SAR as
of the date of termination.
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18. AMENDMENTS AND TERMINATION
--------------------------
The Committee will have the authority to make such amendments to any
terms and conditions applicable to outstanding Awards as are consistent with
this Plan provided that, except for adjustments under Section 12 hereof, no such
action will modify such Award in a manner adverse to the Participant without the
Participant's consent except as such modification is provided for or
contemplated in the terms of the Award.
The Board may amend, suspend or terminate the Plan except no such
action may be taken, without shareholder approval, which would effectuate any
change for which shareholder approval is required pursuant to Section 16 of the
Exchange Act.
19. MISCELLANEOUS
-------------
Each Award under this Plan shall be evidenced by a written instrument
containing such terms and conditions, not inconsistent with this Plan, as the
Committee shall approve.
The granting of an Award under this Plan in any year shall not give the
Grantee any right to similar grants in future years or any right to be retained
in the employ if the Company or any Subsidiary.
This Plan shall be governed by and construed in accordance with the
laws of the State of New Jersey.
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[LETTERHEAD OF REED SMITH SHAW & MCCLAY LLP]
March 6, 2000
Board of Directors
Continental Choice Care, Inc.
35 Airport Road
Morristown, New Jersey 07960
Re: Continental Choice Care, Inc. (the "Company")
Registration Statement on Form S-8 with Reoffer Prospectus on
Form S-3
Gentlemen:
This opinion is delivered to you in connection with the Registration
Statement on Form S-8 and Form S-3 (the "Registration Statement"), which will be
filed on or about March 6, 2000 by Continental Choice Care, Inc. (the
"Company"). The Regisstration Statement will be filed under the Securities Act
of 1933, as amended (the "Act") for registration under the Act of up to
1,750,000 shares (the "S-8 Shares") of Common Stock, no par value, of the
Company to be sold and issued by the Company pursuant to its 1994 Long-Term
Incentive Award Plan, 1997 Equity Incentive Plan and 1994 Directors'Stock Option
Plan (the "Plans"). The shares include, for resale only, such number of shares
(the "S-3 Shares") of Common Stock, no par value, of the Company issued pursuant
to the Plans as may hereafter be designated "Control Securities" by
post-effective amendment to the Registration Statement.
We are familiar with the Certificate of Incorporation, the corporate
minute book and the Bylaws of the Company, the Plans and the Registration
Statement. We have examined the proceedings taken and proposed to be taken in
connection with the issuance, sale and payment of consideration for the S-8
Shares; and the steps proposed to be taken in connection with the resale of S-3
Shares originally issued pursuant to the Plan. We have also examined such other
documents, records and certificates and made such further investigation as we
have deemed necessary for the purposes of this opinion.
Based upon and subject to the foregoing, we are of the opinion that
upon completion of the proceedings being taken or contemplated by us, as your
counsel, to be taken prior to the issuance of the S-8 Shares pursuant to the S-8
Prospectus contained in the Registration Statement, and to be taken prior to the
resale of the S-3 Shares pursuant to the S-3 Prospectus contained in the
Registration Statement, and upon completion of the proceedings being taken to
permit such transactions to be carried out in accordance with the securities
laws of the various states where required, the S-8 Shares, including the S-3
Shares, if any, will be legally issued, fully paid and nonassessable, and, when
resold in accordance with Rule 144(e) of the Securities Act of 1933, as amended,
and in the manner referred to in the Registration Statement will remain, legally
issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the reference to our firm in the Prospectus
under the caption "Legal Opinion and Experts."
Very truly yours,
REED SMITH SHAW & McCLAY LLP
