-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VaTi/9axraruMm3cYcReSS3lwUJqkppmYfAsnJb8asvTkRMj0SowdUp5l1q92dSI K0wNIQkZYw6bxRGjSRHQ1A== 0000950150-97-001035.txt : 19970710 0000950150-97-001035.hdr.sgml : 19970710 ACCESSION NUMBER: 0000950150-97-001035 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19970709 EFFECTIVENESS DATE: 19970709 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUMMIT CARE CORP CENTRAL INDEX KEY: 0000875192 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 953656297 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-30967 FILM NUMBER: 97638191 BUSINESS ADDRESS: STREET 1: 2600 W MAGNOLIA BLVD CITY: BURBANK STATE: CA ZIP: 91505-3031 BUSINESS PHONE: 8189724035 MAIL ADDRESS: STREET 1: 2600 W MAGNOLIA BLVD CITY: BURBANK STATE: CA ZIP: 91505-3031 S-8 1 FORM S-8 1 As filed with the Securities and Exchange Commission on July 9, 1997 Registration Statement No. 333- ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- FORM S-8 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 --------------- SUMMIT CARE CORPORATION (Exact Name of Issuer as Specified in Its Charter) CALIFORNIA 95-3656297 (State of Incorporation) (I.R.S. Employer Identification Number) 2600 WEST MAGNOLIA BLVD. BURBANK, CALIFORNIA 91505 (Address of Principal Executive Offices) (Zip Code) SUMMIT CARE CORPORATION STOCK OPTION PLAN (Full Title of the Plan) DERWIN L. WILLIAMS Senior Vice President - Finance Summit Care Corporation 22613 Old Canal Road Yorba Linda, California 92887 (Name and Address of Agent For Service) (714) 279-1450 (Telephone Number, Including Area Code, of Agent for Service) --------------- With a copy to: PETER F. ZIEGLER, ESQ. Gibson, Dunn & Crutcher LLP 333 South Grand Avenue Los Angeles, California 90071 (213) 229-7000
================================================================================================================================ CALCULATION OF REGISTRATION FEE ================================================================================================================================ Proposed Maximum Title of Securities Proposed Maximum Offering Aggregate Offering Amount of to be Registered Amount to be Registered Price Per Share (1) Price(1) Registration Fee(1) - -------------------------------------------------------------------------------------------------------------------------------- Common Stock, no par value 1,400,000 $13 9/16 $18,987,500 $5,753.79 - --------------------------------------------------------------------------------------------------------------------------------
(1) Estimated solely for purpose of calculating the registration fee pursuant to Rule 457(h) on the basis of the average of the high and low prices of the Common Stock of Summit Care Corporation as reported on the NASDAQ National Market on July 7, 1997. 2 EXPLANATORY NOTE Summit Care Corporation, a California corporation (the "Company") adopted the Summit Care Corporation Stock Option Plan (as amended, the "Plan") in 1992. The shares of the common stock of the Company, no par value per share (the "Common Stock"), reserved for issuance upon the exercise of options awarded pursuant to the Plan have not been registered under the Securities Act of 1933, as amended (the "Act"). However, the Company has awarded options under the Plan, and certain of these options have been exercised pursuant to a valid exemption from the registration requirements of the Act, resulting in the sale by the Company of restricted shares of Common Stock. This Registration Statement is intended to register the following for issuance by the Company: 1. 1,020,000 shares of the Company which may be issued by the Company pursuant to the exercise of outstanding options previously awarded under the Plan; and 2. 344,000 shares of Common Stock which may be issued by the Company pursuant to the exercise of options that may be subsequently awarded under the Plan. Also, this Registration Statement, and the reoffer prospectus included herein, is intended to register the following for reoffer and/or resale: 1. 36,000 restricted shares of Common Stock which have been issued by the Company upon the exercise of options granted under the Plan pursuant to a valid exemption from the registration requirements of the Act; and 2. Shares of Common Stock that may be acquired in the future under the Plan by persons who may be considered affiliates of the Company as defined by Rule 405 under the Act. The materials constituting the reoffer prospectus have been prepared pursuant to Part I of Form S-3, in accordance with General Instruction C to Form S-8. 3 REOFFER PROSPECTUS SUMMIT CARE CORPORATION COMMON STOCK (NO PAR VALUE) UP TO 1,400,000 SHARES This Prospectus relates to up to 1,400,000 shares of Common Stock, no par value ("Common Stock"), of Summit Care Corporation (the "Company") which have previously been issued or may in the future be issued pursuant to the exercise of options awarded to date under the Company's Stock Option Plan (as amended, the "Plan") to, and which may be offered for resale from time to time by, certain employees of the Company and its subsidiaries named in Annex 1 hereto (the "Selling Shareholders"). The Company will not receive any of the proceeds from the sale of the Common Stock offered hereby (hereinafter, the "Securities"). The Company will pay all of the expenses associated with the registration of the Securities and this Prospectus. The Selling Shareholders will pay the other costs, if any, associated with any sale of the Securities. The Common Stock is quoted on the NASDAQ National Market under the symbol "SUMC." On July 8, 1997, the last reported sale price per share of the Common Stock, as quoted on the NASDAQ National Market, was $13 3/4. ---------------------------- 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. ---------------------------- The date of this Prospectus is July 9, 1997. 1 4 AVAILABLE INFORMATION The Company has filed a Registration Statement on Form S-8 (the "Registration Statement") with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), covering the securities (i) covered by this Prospectus, (ii) issuable upon the exercise of options previously awarded under the Plan, and (iii) issuable upon the exercise of options which may be subsequently awarded under the Plan. This Prospectus omits certain information and exhibits included in the Registration Statement, copies of which may be obtained upon payment of a fee prescribed by the Commission or may be examined free of charge at the principal office of the Commission in Washington, D.C. 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 with the Commission by the Company can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the Commission located at 500 West Madison Street, Room 1400, Chicago, Illinois 60606 and at the Jacob K. Javits Federal Building, 75 Park Place, New York, New York 10278. Copies of such material can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. INCORPORATION BY REFERENCE The following documents of the Registrant heretofore filed with the Securities and Exchange Commission are hereby incorporated in this Registration Statement by reference: (1) The Company's Annual Report on Form 10-K for the year ended June 30, 1996, as filed on September 6, 1996 with the Security and Exchange Commission pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended; (2) The description of the Company's Common Stock contained in the Company's Registration Statement on Form 8-A, No. 0-19411, as filed with the Securities and Exchange Commission on July 17, 1991, and any amendment or report filed with the Commission for the purpose of updating such description of Common Stock; (3) The Company's Quarterly Report on Form 10-Q for the period ended September 30, 1996, as filed with the Securities and Exchange Commission on November 8, 1996; (4) The Company's Quarterly Report on Form 10-Q for the period ended December 31, 1996, as filed with the Securities and Exchange Commission on February 13, 1997; and (5) The Company's Quarterly Report on Form 10-Q for the period ended March 31, 1997, as filed with the Securities and Exchange Commission on May 14, 1997. All reports and other documents subsequently filed by the Registrant pursuant to Sections 13(a) and 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended, prior to the filing of a post-effective amendment which indicates that all securities offered hereunder have been sold or which deregisters all such securities then remaining unsold shall be deemed to be 2 5 incorporated by reference in this Registration Statement and to be a part hereof from the date of filing of such reports and documents. RISK FACTORS Governmental Regulation The Company's business is regulated by the federal government and by various state and local authorities in California, Texas and Arizona. Each of the Company's centers and its pharmacy is licensed or certified by the state in which it is located and its state licenses and certifications must be renewed annually. The Company's centers and its pharmacies are also subject to federal licensure and/or certification laws. The Company's skilled nursing care and assisted living centers are subject to periodic inspection by governmental and other authorities to assure continued compliance with various standards established for continued licensing under state law and certification under Medicare and Medicaid programs. The failure to obtain or renew any required regulatory approvals or licenses could materially and adversely affect the Company's ability to receive Medicare and Medicaid payments, could prevent the expansion of the Company or could prevent it from offering its existing services, any of which could adversely affect the Company's business or results of operations. Regulatory and licensing requirements are subject to change, and there can be no assurance that the Company will be able to maintain all necessary licenses or that it will not incur substantial costs in doing so. The Company is subject to federal and state laws prohibiting certain direct and indirect payments between health care providers that are intended, among other things, to induce or encourage the referral of patients to, or other recommendation of, a particular provider of products or services. In addition, certain federal and state laws have recently been enacted to prohibit physician self-referrals for certain "designated health services" rendered to patients by a physician who has an ownership interest or other financial relationship with the provider. The Company contracts with physicians for medical directors' services and such physicians refer patients to the Company's centers from time to time. Accordingly, these prohibitions could, among other things, require the Company to modify its contractual arrangements with its medical directors or prohibit these physicians from referring patients to the Company. Dependence on Reimbursement by Third-Party Payors A substantial portion of the Company's revenues are derived from government-sponsored health care programs, such as Medicare and Medicaid, and from managed care organizations. Typically, services provided to Medicare, managed care and private pay patients are reimbursed at a higher rate than services provided to Medicaid patients. Accordingly, changes in the mix of revenue sources of the Company among Medicaid, Medicare, managed care organizations and private payors can significantly affect the revenues and profitability of the Company. There can be no assurance that the Company will continue to attract and retain sufficient Medicare, managed care and private pay patients to maintain its quality mix. Governmental and certain third-party payors employ cost-containment measures designed to limit payments made to health care providers such as the Company. Those measures include the adoption of initial and continuing recipient eligibility criteria that may limit payment for services, the adoption of coverage criteria that limit the services that will be reimbursed and the establishment of payment ceilings that set the maximum reimbursement that a provider may receive for services. Furthermore, government reimbursement programs are subject to statutory and regulatory changes, administrative rulings, government funding restrictions and, in the case of the Medicare program, retrospective adjustments, all of which may materially decrease the rate of reimbursement to the Company for its services. There can be no assurance that payments under governmental and certain third-party payor programs will remain at levels comparable to present 3 6 levels or will, in the future, be sufficient to cover the costs allocable to patients eligible for reimbursement pursuant to such programs. In addition, cost increases which occur without corresponding increases in reimbursement would adversely affect the Company's business and results of operations. The Company's operations could also be materially and adversely affected by regulation developments by governmental payors such as mandatory increases in the scope and quality of care for skilled nursing care patients or revisions in program certification standards, unless such developments are accompanied by corresponding rate increases. In attempts to limit federal and state budget deficits, there have been, and the Company expects that there may continue to be, a number of proposals to limit Medicare and Medicaid reimbursement for health care services. For example, through its 1994 budget the federal government has placed a freeze on increasing "routine service costs" at nursing facilities for cost reporting periods beginning in the Company's 1995 fiscal year and has placed limits on any exceptions that may be granted to the reimbursement rate freeze The federal government subsequently lifted the reimbursement rate freeze for cost reporting periods beginning in the Company's 1997 fiscal year. The Company cannot predict whether other such proposals will be adopted in the future or, if adopted and implemented, what effect, if any, such proposals will have on the Company. The Company's centers that participate in applicable state Medicaid programs are subject to risk of changes in Medicaid reimbursement and payment delays resulting from budgetary shortfalls of state Medicaid programs. The Company received approximately 10% of its revenues during the six months ended December 31, 1996 from Medi-Cal, the California Medicaid program ("Medi-Cal"). The Company has experienced, and may in the future experience, delays in payment and in rate increases by Medi-Cal. The Company may also experience delays in payment and in rate increases by other governmental and third-party payors. Given the percentage of the Company's revenues derived from Medi-Cal and other governmental payors, there can be no assurance that rate freezes or future delays in payments from Medi-Cal or other governmental and third-party payors will not have a material adverse effect on the Company. Effect of Health Care Reform Proposals In recent years, an increasing number of legislative proposals have been introduced in Congress and various state legislatures that would affect major reforms of the health care system. Among the proposals under consideration are insurance market reforms to increase the availability of group health insurance to small businesses, requirements that all businesses offer health insurance coverage to their employees, the provision of federal tax credits to individuals for the purchase of health insurance and the creation of a single government health insurance plan that would cover all citizens. In addition, the Clinton administration has promulgated proposals including cutbacks to certain Medicare and Medicaid programs and has proposed steps to permit greater flexibility in the administration of Medicaid. In California, the Department of Health Services has established plans to enroll many Medi-Cal recipients in managed care plans. These plans have the option of covering long-term care in addition to other services, which could materially and adversely affect the Company's revenue. Changes in the reimbursement levels under Medicare or Medicaid and changes in applicable government regulations could materially and adversely affect the Company's results of operations. It is uncertain at this time what health care reform legislation will ultimately be enacted and implemented or whether other changes in the administration or interpretation of the governmental health care programs will occur. There can be no assurance that future health care legislation or other changes in the administration or interpretation of governmental health care programs, if enacted, will not have a material adverse effect on the results of operations of the Company. 4 7 Dependence on Key Management and Qualified Nursing and Clinical Personnel The Company's continued success will depend in part upon the management services of William C. Scott, Chairman of the Board and Chief Executive Officer of the Company. Although the Board of Directors has authorized an employment agreement for Mr. Scott, the Company and Mr. Scott have not entered into any employment agreement or any other agreement that restricts Mr. Scott's ability to compete with the Company following the termination of his employment. The loss of Mr. Scott's services or his employment by a competitor of the Company following the termination of his services could have a material adverse effect on the Company. Historically, the health care industry, generally, and to a lesser extent the Company, have operated with a shortage of licensed nursing personnel, and the Company has faced difficulties recruiting qualified clinical personnel for certain facilities in Texas. Any shortage in nursing personnel could require the Company to pay higher salaries and make greater use of higher cost temporary nursing personnel. There can be no assurance that the Company will continue to be able to attract and retain sufficient qualified personnel. A lack of such personnel could limit the Company's ability to expand and might result in reduced patient days or require the Company to admit patients requiring lower levels of care, any or all of which could materially and adversely affect the Company's results of operations. Limited Geographic Diversity All but one of the Company's centers are located in California and Texas. As a part of its strategy, the Company intends to continue to expand operations in those states. There can be no assurance, however, that the regulatory environment or the reimbursement rates paid under Medi-Cal or the Medicaid program in Texas will not change. Such changes could materially and adversely affect the Company. In addition, the Company's concentration of operations increases the risk that any adverse economic, regulatory or other developments that may occur in these two states may materially and adversely impact the Company. Competition The Company operates in a highly competitive industry. The Company's skilled nursing care and assisted living centers are located in communities that also are served by similar centers operated by others. Some competing centers provide services not offered by the Company and some are operated by entities having greater financial and other resources than the Company. In addition, some are operated by non-profit organizations or government agencies supported by endowments, charitable contributions, tax revenues and other sources not available to the Company. Furthermore, cost containment efforts, which encourage more efficient utilization of acute care hospital services, have resulted in decreased hospital occupancy in recent years. As a result, a significant number of acute care hospitals have converted portions of their facilities to other purposes, including specialty and sub-acute units. In California, Texas and Arizona a certificate of need is no longer required in order to build or expand a nursing center, which is another factor increasing competition. The Company's pharmacies also operate in a highly competitive environment and competes with regional and local pharmacies, medical supply companies and pharmacies operated by large long-term care chains. The Company may also encounter competition in acquiring or developing new centers. Liability and Insurance The Company's services subject it to liability risk. Malpractice claims may be asserted against the Company if its services are alleged to have resulted in patient injury or other adverse effects, the risk of which is greater for higher acuity patients, such as those treated by the Company's specialty and sub-acute services, than for traditional long-term care patients. The 5 8 Company has from time to time been subject to such malpractice claims and other litigation in the ordinary course of its business. While the Company believes that the ultimate resolution of all pending legal proceedings will not have a material adverse effect on the Company's business or financial condition, there can be no assurance that future claims will not have a material adverse effect on the Company's business or financial condition. The Company's current general and professional liability policy has limits of $9,000,000 per occurrence and $9,500,000 in the aggregate. Although the Company has not been subject to any judgments or settlements in excess of its coverage limits, there can be no assurance that claims for damages in excess of its coverage limits will not arise in the future. Volatility of Stock Price The market for the Common Stock and the stock of other health care companies has been volatile. The trading price of the Common Stock could be subject to wide fluctuations resulting from quarter-to-quarter variations in operating results, news announcements, legislative developments, trading volume, general market trends and other factors. SELLING SHAREHOLDERS The table attached as Annex I hereto sets forth, as of the date of this Prospectus or a subsequent date if amended or supplemented, (a) the name of each Selling Shareholder and his or her relationship to the Company; (b) the number of shares of Common Stock each Selling Shareholder beneficially owns (assuming that all options to acquire shares are exercisable within 60 days, although options actually vest over five years); and (c) the number of Securities offered pursuant to this Prospectus by each Selling Shareholder. The information contained in Annex I may be amended or supplemented from time to time. USE OF PROCEEDS The Company will not receive any of the proceeds from the sale of the Securities offered hereby. PLAN OF DISTRIBUTION Sales of the Securities offered hereby may be made on the NASDAQ National Market or the over-the-counter market or otherwise at prices and on terms then prevailing or at prices related to the then current market price, or in negotiated transactions. The Securities may be sold in (a) 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, (b) transactions in which a broker or dealer acts as principal and resells the Securities 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 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 in connection with such sales and any discounts and commissions received by them and any profit realized by them on the resale of the Securities may be deemed to be underwriting discounts and commissions under the Securities Act. The amount of Securities to be reoffered or resold by means of this Prospectus by any individual shareholder, and any person with whom such shareholder is acting in consent for the purpose of selling Securities, may not exceed, during any three-month period, the greater of (i) one percent of the shares of Common Stock outstanding as shown by the most recent report of 6 9 statement published by the Company or (ii) the average weekly reported volume of trading in shares of Common Stock reported through the NASDAQ National Market during the four calendar weeks preceding the date of the reoffer or resale. There is no assurance that any of the Selling Shareholders will offer for sale or sell any or all of the Securities covered by this Prospectus. LEGAL MATTERS Certain legal matters will be passed upon for the Company by Gibson, Dunn & Crutcher LLP, Los Angeles, California. EXPERTS The consolidated financial statements of Summit Care Corporation appearing in Summit Care Corporation's Annual Report on Form 10-K for the year ended June 30, 1996 have been audited by Ernst & Young, LLP, independent auditors, as set forth in their report thereon included therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING SHAREHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF ANY OFFER TO BUY, COMMON STOCK BY ANYONE IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. 7 10 ANNEX I
Selling Shareholder* Shares To Be Offered Hereby -------------------- --------------------------- Neal Maslan 600 Jesse Martinez 13,500 Judy Marolda 5,000 Melodye Stok 5,500 Rochelle Krugler 1,200 Frank Tamba 7,000 Victoria MacKemy 3,200 ------- 36,000 =======
- ---------------- * In addition, certain unnamed shareholders who are not affiliates of the Company, as defined by Rule 405 under the Act, may also sell shares of Common Stock pursuant to this Prospectus, provided that each such shareholder holds less than 1,000 shares. A-1 11 PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE. The following documents of the Registrant heretofore filed with the Securities and Exchange Commission are hereby incorporated in this Registration Statement by reference: (1) The Company's Annual Report on Form 10-K for the year ended June 30, 1996, as filed on September 6, 1996 with the Security and Exchange Commission pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended; (2) The description of the Company's Common Stock contained in the Company's Registration Statement on Form 8-A, No. 0-19411, as filed with the Securities and Exchange Commission on July 17, 1991, and any amendment or report filed with the Commission for the purpose of updating such description of Common Stock; (3) The Company's Quarterly Report on Form 10-Q for the period ended September 30, 1996, as filed with the Securities and Exchange Commission on November 8, 1996; (4) The Company's Quarterly Report on Form 10-Q for the period ended December 31, 1996, as filed with the Securities and Exchange Commission on February 13, 1997; and (5) The Company's Quarterly Report on Form 10-Q for the period ended March 31, 1997, as filed with the Securities and Exchange Commission on May 14, 1997. All reports and other documents subsequently filed by the Registrant pursuant to Sections 13(a) and 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended, prior to the filing of a post-effective amendment which indicates that all securities offered hereunder have been sold or which deregisters all such 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 of such reports and documents. ITEM 4. DESCRIPTION OF SECURITIES. Not applicable. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not applicable. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. As allowed by the California General Corporation Law, the Company's Articles of Incorporation provide that the liability of the directors of the Company for monetary damages II-1 12 shall be eliminated to the fullest extent permissible under California law. This is intended to eliminate the personal liability of a director for monetary damages in an action brought by or in the right of the Company for breach of a director's duties to the Company or its shareholders except for liability: (i) for acts or omissions that involve intentional misconduct or a knowing and culpable violation of law; (ii) for acts or omissions that a director believes to be contrary to the best interests of the Company or its shareholders or that involve the absence of good faith on the part of the director; (iii) for any transaction from which a director derived an improper personal benefit; (iv) for acts or omissions that show a reckless disregard for the director's duty to the Company or its shareholders in circumstances in which the director was aware, or should have been aware, in the ordinary course of performing a director's duties, of a risk of serious injury to the Company or its shareholders; (v) for acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the director's duty to the Company or its shareholders; (vi) with respect to certain transactions or the approval of transactions in which a director has a material financial interest; and (vii) expressly imposed by statute, for approval of certain improper distributions to shareholders of certain loans or guarantees. This provision does not limit or eliminate the rights of the Company or any shareholder to seek non-monetary relief such as an injunction or rescission in the event of a breach of a director's duty of care. The Company's Bylaws permit it to indemnify its directors and officers to the full extent permitted by law. In addition, the Company's Articles of Incorporation expressly authorize the use of indemnification agreements, and the Company has entered into separate indemnification agreements with each of its directors and its executive officers. These agreements require the Company to indemnify its officers and directors to the full extent permitted by law, including circumstances in which indemnification would otherwise be discretionary. Among other things, the agreements require the Company to indemnify directors and officers against certain liabilities that may arise by reason of their status or service as directors and officers and to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. The securities to be offered for resale by means of this Prospectus were originally issued by the Company in reliance upon the exemption from the registration requirements of the Securities Act provided by Section 4(2) of the Securities Act. Such securities were issued to certain employees in transactions not involving public offerings. ITEM 8. EXHIBITS. 4.1 Summit Care Corporation Stock Option Plan, as amended (including amendments). 4.2 Form of Summit Care Corporation Stock Option Agreement (incorporated by reference to Exhibit 10.2 to the Registrant's Form S-1 Registration Statement No. 33-40778, filed with the Securities and Exchange Commission on May 23, 1991) 4.3 Amended and Restated Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant's Form II-2 13 S-1 Registration Statement No. 33-40778, filed with the Securities and Exchange Commission on May 23, 1991) 4.4 Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.3 to Amendment No. 2 to the Registrant's Form S-1 Registration Statement No. 33-40778, filed with the Securities and Exchange Commission on July 3, 1991) 5.1 Opinion of Gibson, Dunn & Crutcher LLP 23.1 Consent of Ernst & Young, LLP 23.2 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5.1) 24.1 Power of Attorney (included on page II-5 of this Registration Statement) ITEM 9. UNDERTAKINGS. (a) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement; (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the II-3 14 Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-4 15 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Burbank, California, on this 30th day of June, 1997. SUMMIT CARE CORPORATION By /s/ WILLIAM C. SCOTT --------------------------- William C. Scott Chairman of the Board and Chief Executive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints WILLIAM C. SCOTT and DERWIN L. WILLIAMS, or either of them, his or her attorneys-in-fact and agents, with full power of substitution, for him or her in any and all capacities, to sign any amendments to this Registration Statement, including post-effective amendments, and to file the same, with exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, and hereby ratifying and confirming all that said attorneys-in-fact, or their substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ WILLIAM C. SCOTT Chairman of the Board, June 30, 1997 - --------------------------- Chief Executive Officer William C. Scott and Director (Principal Executive Officer) /s/ DERWIN L. WILLIAMS Senior Vice President-Finance June 30, 1997 - --------------------------- (Principal Financial Officer) Derwin L. Williams /s/ DONALD J. AMARAL Director June 30, 1997 - --------------------------- Donald J. Amaral /s/ JOHN A. BRENDE Director June 30, 1997 - --------------------------- John A. Brende /s/ WILLIAM J. CASEY Director June 30, 1997 - --------------------------- William J. Casey /s/ KEITH B. PITTS Director June 30, 1997 - --------------------------- Keith B. Pitts /s/ GARY L. MASSIMINO Director June 30, 1997 - --------------------------- Gary L. Massimino
II-5 16 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION. ----------- ------------ 4.1 Summit Care Corporation Stock Option Plan, as amended (including amendments). 4.2 Form of Summit Care Corporation Stock Option Agreement (incorporated by reference to Exhibit 10.2 to the Registrant's Form S-1 Registration Statement No. 33-40778, filed with the Securities and Exchange Commission on May 23, 1991) 4.3 Amended and Restated Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant's Form S-1 Registration Statement No. 33-40778, filed with the Securities and Exchange Commission on May 23, 1991) 4.4 Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.3 to Amendment No. 2 to the Registrant's Form S-1 Registration Statement No. 33-40778, filed with the Securities and Exchange Commission on July 3, 1991) 5.1 Opinion of Gibson, Dunn & Crutcher LLP 23.1 Consent of Ernst & Young, LLP 23.2 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5.1) 24.1 Power of Attorney (included on page II-5 of this Registration Statement) EX-4.1 2 SUMMIT CARE CORPORATION STOCK OPTION PLAN 1 Exhibit 4.1 SUMMIT CARE CORPORATION STOCK OPTION PLAN 2 TABLE OF CONTENTS
Page ---- 1. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 3. Shares Subject to the Plan . . . . . . . . . . . . . . . . . . . 2 4. Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 5. Granting of Options . . . . . . . . . . . . . . . . . . . . . . . 2 6. Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . 3 6.1 Number of Shares; Type of Option . . . . . . . . . . . . . . 3 6.2 Exercise Period . . . . . . . . . . . . . . . . . . . . . . 3 6.3 Option Price . . . . . . . . . . . . . . . . . . . . . . . . 4 6.4 Investment Representation . . . . . . . . . . . . . . . . . 4 6.5 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . 5 7. Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 8. Financial Information . . . . . . . . . . . . . . . . . . . . . . 5 9. Exercise of Option . . . . . . . . . . . . . . . . . . . . . . . 5 10. Payment of Option Price . . . . . . . . . . . . . . . . . . . . . 6 11. Not Transferable . . . . . . . . . . . . . . . . . . . . . . . . 6 12. Adjustments in Outstanding Options . . . . . . . . . . . . . . . 7 13. Acceleration Events . . . . . . . . . . . . . . . . . . . . . . . 7 14. Disqualifying Dispositions . . . . . . . . . . . . . . . . . . . 8 15. No Rights as a Shareholder . . . . . . . . . . . . . . . . . . . 8 16. No Right to Continued Employment . . . . . . . . . . . . . . . . 8 17. Compliance With Laws and Regulations . . . . . . . . . . . . . . 8 18. Administration . . . . . . . . . . . . . . . . . . . . . . . . . 9 19. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . 10 20. Amendment and Discontinuance . . . . . . . . . . . . . . . . . . 10 21. Term of the Plan . . . . . . . . . . . . . . . . . . . . . . . . 10
-i- 3 SUMMIT CARE CORPORATION STOCK OPTION PLAN 1. PURPOSE The purpose of the Summit Care Corporation Stock Option Plan are to help Summit Care Corporation to attract, motivate and retain outstanding personnel and directors, to promote more effectively the business and financial goals of the Company and its shareholders, and to unify the interests of key employees and shareholders through increased employee stock ownership. This is a "tandem" plan providing for both "incentive stock options" and "nonstatutory" (or "nonqualified") stock options. 2. DEFINITIONS For purposes of this Plan: 2.1 "BOARD" means the Board of Directors of Summit Care Corporation. 2.2 "CODE" means the Internal Revenue Code of 1986, as amended. 2.3 "COMMITTEE" means the Summit Care Corporation Stock Option Plan Committee appointed pursuant to Section 18.1 of this Plan. 2.4 "COMPANY" means Summit Care Corporation, a California corporation. 2.5 "DIRECTOR" means any person who is a member of the Board but who is not an Employee. 2.6 "EMPLOYEE" means any employee of the Company, any Parent Corporation or any Subsidiary Corporation. 2.7 "INCENTIVE STOCK OPTIONS" means an Option which is intended to qualify as an "incentive stock option" within the meaning of Code Section 422. 2.8 "NONSTATUTORY OPTION" means an Option which is not intended to qualify as an Incentive Stock Option. 2.9 "OPTION" means an option granted under this Plan to purchase shares of Stock. An "Option" may be either an Incentive Stock Option or a Nonstatutory Option. 2.10 "PARENT Corporation" shall have the meaning set forth in Code Section 424(e). 4 2.11 "PARTICIPANT" means a person to whom an Option is granted under this Plan. 2.12 "STOCK" means the Common Stock of the Company. Unless the context expressly indicates otherwise, "shares" means shares of Stock. 2.13 "SUBSIDIARY CORPORATION" shall have the meaning set forth in Code Section 424(f). 3. SHARES SUBJECT TO THE PLAN Options may be granted under this Plan to acquire an aggregate of 250,000 shares of Stock, subject to adjustment as provided in Section 12 of this Plan. If an Option terminates, expires or is cancelled with respect to any share, new Options may thereafter be granted with respect to such share. 4. ELIGIBILITY Any key employee and any Director of the Company or a Subsidiary Corporation (other than a member of the Committee or an Employee or Director who owns Stock possessing more than ten percent of the total combined voting power of the Company, its parent or subsidiary corporation) shall be eligible to become a Participant and to acquire an Option to purchase Stock. Notwithstanding the foregoing, a Director shall not become a Participant unless Options may be granted to the Director either with the express concurrence of the California Department of Corporations or through an exemption from the application of the qualification provisions of the California Corporate Securities Law. Options may be granted to prospective employees of the Company, so long as such Options are conditioned on the Participant commencing employment with the Company and continuing such employment for such time period as the Committee shall determine. Additional Options may be granted to a Participant while such Participant continues as an Employee or Director. The Committee may exclude otherwise eligible persons. 5. GRANTING OF OPTIONS The Committee shall, from time to time and in its absolute discretion exercised to achieve the purposes of this Plan, determine which Employees are key Employees and which eligible persons shall become Participants. Options granted to Employees may be Incentive Stock Options or Nonstatutory Options, as determined by the Committee in its absolute discretion provided that Options granted to Directors shall be Nonstatutory Options. The Committee also shall determine the number of share of Stock to be subject to each Option and the price, terms and conditions, consistent with this Plan, of each Option. -2- 5 Notwithstanding the foregoing, the following amount shall not exceed $100,000: the aggregate fair market value (determined on the date an option is granted) of stock of the Company, any Parent Corporation and any Subsidiary Corporation for which an Employee is granted incentive stock options (within the meaning of Code Section 422(b) under all plans of the Company, any Parent Corporation and any Subsidiary Corporation and which incentive stock options are exercisable for the first time by such Employee during any calendar year. 6. OPTION AGREEMENT Each Option shall be evidenced by a written Stock Option Agreement in a form approved by the Committee. Each Stock Option Agreement shall be executed by the Company and by the Participant receiving the Option. Each Option shall be subject to the following terms and conditions and to such other terms and conditions as the Committee may deem appropriate: 6.1 NUMBER OF SHARES; TYPE OF OPTION Each Stock Option Agreement shall specify the number of shares of Stock which are subject to the Option and whether the Options is an Incentive Stock Options or a Nonstatutory Option. 6.2 EXERCISE PERIOD No option shall be exercisable until the expiration of one year from the date of its grant. Each Stock Option Agreement shall specify the time period during which the Option may be exercised, which shall not exceed ten years from the date of grant. If an optionee ceases to be an Employee or a Director for any reason other than death or permanent disability, the right to exercise the option shall expire 90 days after the cessation, but only to the extent that it was exercisable at such date and in no event after its stated expiration date. If a Participant ceases to be an Employee or a Director because of a permanent disability, the Participant may exercise the Participant's Option within one year of the date he or she ceases to be an Employee but only to the extent that it was exercisable at such date and in no event after its stated expiration date. If a Participant dies while an Employee or a Director or within three months after ceasing to be an Employee or a Director because of a permanent disability, the Participant's Option may be exercised at any time with respect to the entire number of shares remaining under Option, but in no event after its stated expiration date. -3- 6 For this purpose, "PERMANENT DISABILITY" means a permanent and total disability within the meaning of Code Section 22(e)(3). In the event of an optionee's death, options may be exercised within the period and to the extent described above by the optionee's estate or any person who acquired the right to exercise the option by bequest or inheritance or by reason of the death of the Participant. Options may also expire under Section 13.4 of this Plan. Subject to the foregoing provisions of this Section 6.2, Options shall be exercisable at such times and in such installments (which may be cumulative) as the Committee shall provide in each Stock Option Agreement. The Committee may, after an Option is granted and on such terms and conditions as it considers appropriate, accelerate the times at which the Option may be exercised. 6.3 OPTION PRICE The price of the shares subject to each Option shall be determined by the Committee and set forth in the Stock Options Agreement, provided that: (a) in the case of a Nonstatutory Option, the price per share shall not be less than 85% of the fair market value of a share on the day the Option is granted; and (b) in the case of an Incentive Stock Option, the price per share shall not be less than the fair market value of a share on the day the Option is granted. For purposes of this Plan, the fair market value of a share shall be determined as follows: if Stock is traded on a stock exchange or in the NASDAQ National Market System ("NASDAQ/NMS"), the fair market value of a share on a particular date shall be the mean between the highest and lowest quoted selling prices per share of Stock on such exchange or NASDAQ/NMS on that date. If Stock is otherwise traded in the over-the-counter market, the fair market value of a share on a particular date shall be the mean between the closing bid and asked quotations per share of Stock on that date. If Stock is not traded on a stock exchange NASDAQ/NMS or in the over-the-counter market or, if traded, there are no transactions on that date, the fair market value shall be determined in good faith by the Committee by applying the rules and principles of valuation set forth in Section 20.2031-2 of the Treasury Regulations (concerning the valuation of stocks and bonds for purposes of Code Section 2031). 6.4 Investment Representation Each Stock Option Agreement shall contain a provision that the Participant represents to the Committee that the Option -4- 7 and the shares to be acquired upon exercise of the Option will be acquired for investment and not for resale or with a view to the distribution thereof. Making such representation shall be a condition precedent to the grant of any Option. 6.5 PAYMENT OF TAXES Each Stock Option Agreement shall contain a provision requiring the Participant to make any arrangements determined by the Committee to be necessary to insure that the Participant provides to the Company sufficient cash to enable the Company, any Parent Corporation or Subsidiary Corporation to satisfy its federal and state tax withholding obligations, if any, resulting from the exercise of an Option, a disposition described in Section 14 of this Plan or from the termination or partial termination of any restriction applicable to any share of Stock acquired pursuant to the exercise of an Option. Upon exercise of a Nonstatutory Option, the Participant may, in lieu of direct payment of such taxes, direct the Company to withhold from the shares to be issued the number of shares (based on the market value of the Stock at the date of exercise determined in accordance with Section 6.3 of this Plan) that would satisfy the tax withholding amount due. 7. LEGENDS In connection with the exercise of Options by persons who could be considered to be "affiliates" as that term is defined in the Rules and Regulations under the Securities Ace of 1933, the Company may, in order to insure that resales are made in compliance with that Act, imprint a legend on certificates representing shares acquired on the exercise of Options to the effect that the shares may not be resold in the absence of compliance with the applicable restrictions or a determination that no restriction are applicable. Any stock certificate evidencing shares of Stock issued pursuant to the exercise of an Option shall bear such other legends as the Committee, in the exercise of reasonable discretion, shall require, including a legend regarding the Participant's duties under Section 14 of this Plan. 8. FINANCIAL INFORMATION The Company shall provide to each Participant who does not hold Stock the same financial information that the Company provides to the holders of Stock, and at the same time. 9. EXERCISE OF OPTION Subject to the provisions of Section 6 of this Plan, Options shall become exercisable in the manner designated in the -5- 8 Stock Option Agreement or, in the absence of such designation, as follows:
Percentage From To Exercisable ---- -- ----------- Date of Grant Day prior to 1st anniversary 0% 1st Anniversary Day prior to 2nd anniversary 20% 2nd Anniversary Day prior to 3rd anniversary 40% 3rd Anniversary Day prior to 4th anniversary 60% 4th Anniversary Day prior to 5th anniversary 80% 5th Anniversary Expiration of Option 100%
To exercise an Option, the Participant shall give written notice to the Secretary of the Company specifying the number of shares to be purchased upon exercise. The notice shall be effective only if accompanied by (a) payment in full (as provided in Section 10 of this Plan) for the shares being purchased and (b) such other documents as the Committee in the exercise of its reasonable discretion may require. For example, the Committee may, but need not, require the Participant to deliver a signed election under Code Section 83(b). The Committee may provide in the Stock Option Agreement that Stock acquired by exercise of an Option shall be issued only at specified intervals, provided that the first such issuance date occurs within 12 months after the Option first becomes exercisable and, if the Option remains exercisable for more than 12 months, subsequent issuance dates occur not less frequently than annually. 10. PAYMENT OF OPTION PRICE The price of the shares transferred to a Participant pursuant to the exercise of an Option shall be paid to the Company at the time of exercise. Payment may be made, at the election of the Participant, in cash, or with previously acquired Stock having a fair market value which together with the cash is equal to such price. In the discretion of the Committee, payment may also be made in whole or in part by a Participant's promissory note, which shall contain such terms and conditions as the Committee shall determine in its discretion at the time of exercise. 11. NOT TRANSFERABLE An Option shall be exercisable only by the Participant who received it. No Option shall be transferrable, other than by Will or the laws of descent and distribution. No interest of any Participant under this Plan shall be subject to attachment, execution, garnishment, sequestration, the laws of bankruptcy or any other legal or equitable process. During the lifetime of a -6- 9 Participant, an Option shall be exercisable only by the Participant who received it, except as otherwise provided in Section 6.2 of this Plan. 12. ADJUSTMENTS IN OUTSTANDING OPTIONS If an "Adjustment Change" (as defined below) occurs, the number and class of shares which thereafter may be acquired under this Plan and the number and class of shares subject to outstanding Options and the exercise price of each such share shall be appropriately adjusted consistent with such change in such manner as the Committee may deem equitable to prevent substantial dilution or enlargement of the rights granted to, or available for, Participants. Any such adjustment shall be final and binding on each Participant. For purposes of this Section 12, and "ADJUSTMENT CHANGE" means any change in the Stock by reason of any stock dividend, recapitalization, split-up, combination or exchange of shares, or by reason of any similar change affecting the Stock (but not the issuance of additional shares or options to acquire shares of Stock or the Company's repurchase of its shares). 13. ACCELERATION EVENTS 13.1 Nothing in this Plan shall in any way prohibit the Company from merging with or into or consolidating into another corporation, or from selling or transferring any, all or substantially all of its assets, or from distributing its assets to its shareholders in liquidation or otherwise, or from dissolving and terminating its corporate existence. Any such event (other than a merger or consolidation in which the Company is the surviving corporation and under the terms of which the shares of Stock outstanding immediately prior to the merger remain outstanding and unchanged or a distribution that is not a liquidating distribution) shall be deemed an "ACCELERATION EVENT" for purposes of this Section 13. 13.2 The Committee shall notify the Participant of the terms and conditions of the Acceleration Event not less than 20 days prior to its effective date. Each Participant shall have the right, during the ten-day period immediately preceding the effective date of an Acceleration Event, to exercise an Option (and, upon such exercise, to obtain delivery of the shares so acquired without regard to any provision in the Stock Option Agreement authorized by the last sentence of Section 9 of this Plan), whether or not the Option is then otherwise exercisable, except to the extent that any agreement or undertaking of any party to any such merger, consolidation or sale or transfer of assets, or any plan pursuant to which such dissolution is effected, may make specific provision with respect to the assumption of or substitution for the Option. -7- 10 13.3 To the extent that the Participant's right to exercise an Option is accelerated pursuant to this Section 13, the exercise shall be contingent upon the consummation of the Acceleration Event. The Committee shall promptly notify the Participants if an Acceleration Event is delayed or abandoned. If the Acceleration Event is abandoned, the Participant may rescind any exercise of an Option during the 20-day exercise period with respect to shares as to which the right to execute the Option was not accelerated by the anticipated Acceleration Event. 13.4 Unless terminated earlier pursuant to Section 20 or 21 of this Plan, this Plan shall terminate, and each unexpired Option shall expire, at 5:00 p.m. on the say immediately prior to the effective date of the Acceleration Event. 14. DISQUALIFYING DISPOSITION All Stock Option Agreements for Incentive Stock Options shall provide that if the Participant makes a "disposition," within the meaning of Code Section 424(c), of any shares issued upon exercise of an Incentive Stock Option within two years after the date the Incentive Stock Option is granted or within one year after shares are issued to the Participant pursuant to the exercise of the Incentive Stock Option, the Participant shall notify the Committee within ten days of the disposition. The Committee may cause an appropriate legend to be affixed to any stock certificates for such shares to enable it to receive notice of the disposition. 15. NO RIGHTS AS A SHAREHOLDER No Participant shall have any rights as a shareholder with respect to any shares subject to Options prior to the date of issuance to him or her of a certificate for such shares. 16. NO RIGHT TO CONTINUED EMPLOYMENT Neither this Plan nor any Option granted under this Plan shall confer upon any Participant or any other person any right to continued employment by the Company, any Parent Corporation or any Subsidiary, nor shall it interfere in any way with the right of his or her employer to terminate his or her employment at any time. 17. COMPLIANCE WITH LAWS AND REGULATIONS This Plan, the grant and exercise of Options under this Plan and the obligations of the Company to sell and deliver shares under Options shall be subject to all applicable federal and state laws, rules and regulations and to any approvals by any government or regulatory agency as may be required. The Company shall not be required to issue or deliver any certificate for shares of Stock either (a) prior to (1) the listing of such shares on any stock exchange on which the Stock may then be listed and (2) the com- -8- 11 pletion of any registration or qualification of such shares which is required under any federal or state law, or any ruling or regulation of any government body, and which the Company shall, in its sole discretion, determine to be necessary or advisable or (b) until exemptions from such registration and qualification requirements are established to the reasonable satisfaction of the Company and its counsel. 18. ADMINISTRATION 18.1 The Board shall appoint a Stock Option Plan Committee to administer this Plan. Members of the Committee shall serve without compensation for their services as members, but all expenses and liabilities they incur in connection with the administration of the Plan shall be borne by the Company. If the Board does not appoint a Committee, the Board shall administer the Plan and shall have the powers and duties granted to the Committee in this Plan. 18.2 The Committee shall act by a majority of its members by vote in a meeting or by written instrument signed by a majority of its members. 18.3 If Stock is registered under Section 12 of the Securities Exchange Act of 1934, as amended, no Option shall be granted to any person subject to Section 16(a) of that Act unless all of the Committee's members are Disinterested Persons (as defined below). For purposes of this paragraph, "DISINTERESTED PERSON" means an individual who, at the time of the grant of an Option (or any other action by the Committee or the Board with respect to any person subject to Section 16(a) of the Act), is not eligible, and has not been eligible for at least one year prior to such action, to participate in the Plan or any other plan of the Company, any Parent Corporation or any Subsidiary Corporation which plan entitles such individual to acquire Stock, Stock Options or stock appreciation rights with respect to Stock. 18.4 The Committee shall administer this Plan in accordance with its provisions and shall interpret this Plan, prescribe, amend and rescind any rules and regulations necessary or appropriate for the administration of this Plan and make such other determinations and take such other action as it deems necessary or advisable, except as otherwise expressly reserved to the Board in this Plan. Without limiting the generality of the preceding sentence, the Committee may, in its discretion, determine that for Option purposes a Participant remains an Employee during all or any portion of a leave of absence approved by the Company. Any interpretation, determination, or other action made or taken by the Committee shall be final and binding upon all Participants. 18.5 The Committee members, the directors, the officers of the Company and the employees of the Company shall not -9- 12 be under any duty to provide to any Participant tax or legal advice concerning any Option or any other matter. 18.6 No member of Committee and no officer of the Company shall be personally liable for any action, determination or interpretation made in good faith with respect to this Plan or any Option, and all such persons shall be fully protected by the Company, to the full extent that the Company is permitted to provide such protection, in respect to any such action, determination or interpretation. 19. EFFECTIVE DATE This Plan shall be effective as of July 1, 1991. 20. AMENDMENT AND DISCONTINUANCE The Board may from time to time amend, suspend or discontinue this Plan; provided that without approval of the shareholders of the Company no action of the Company shall (a) increase the number of shares reserved for Options pursuant to Section 3 or this Plan (b) permit the granting of any Option at a price less than that determined in accordance with Section 6.3 of this Plan, or (c) permit the granting of Options which expire beyond the periods provided for in Section 6.2 of this Plan. Without the written consent of a Participant, no amendment or suspension of this Plan shall alter or impair any Option previously granted to such Participant pursuant to this Plan. 21. TERMS OF THE PLAN Unless terminated earlier pursuant to Section 13.4 or 20 of this Plan, this Plan shall expire of, and no further Options shall be granted pursuant to this Plan on or after, June 30, 2010. EXECUTED at Burbank, California SUMMIT CARE CORPORATION By ______________________________ Its __________________________ -10- 13 Amendment to Summit Care Corporation Stock Option Plan The following constitute amendments to the Summit Care Corporation "Stock Option Plan (the "Plan"): 1. The following is substituted for the first sentence of Section 18.1 of the Plan: "The Board shall appoint a Stock Option Committee consisting of two or more directors of the Company to administer this Plan." 2. Section 18.3 of the Plan is amended to read, in its entirety, as follows: 18.3 If Stock is registered under Section 12 of the Securities Exchange Act of 1934, as amended (the "Act"), no director of the Company shall be appointed to, or serve on, the Committee unless he or she shall be an "disinterested person" within the meaning of Rule 16b-3 under the Act as presently in effect or hereinafter amended. No options may be granted to a Committee member during his or her tenure on the Committee. 3. The date "June 30, 2010" appearing at the end of Section 21 of this Plan is deleted and the date "June 30, 2001" is substituted in its place. Except as specifically set forth above, this Amendment does not in any way alter or affect the terms and conditions of the Plan, which remain in full force and effect. The foregoing amendments were adopted by the Board of Directors and sole shareholder of Summit Care Corporation on March 9, 1992. EXECUTED at Burbank, California Dated: March 9, 1992 SUMMIT CARE CORPORATION By ------------------------------ Its --------------------------- 14 AMENDMENT NO. 2 TO SUMMIT CARE CORPORATION STOCK OPTION PLAN The Board of Directors of Summit Care Corporation (the "Company") has adopted this Amendment No. 2 to the Stock Option Plan of the Company, subject to ratification and approval by the shareholders of the Company at the next annual meeting of shareholders. Capitalized terms not otherwise defined herein shall have meanings given such terms in the Stock Option Plan. RECITALS A. The Stock Option Plan of the Company dated July 1, 1991, as amended by that certain Amendment to Summit Care Corporation Stock Option Plan dated March 9, 1992 (the "Plan"), currently authorizes options to be granted under the Plan to acquire an aggregate of 250,000 share of Stock of the Company. B. The Board of Directors of the Company desires to amend the Plan to authorize options to acquire additional shares of Stock. C. The Board also desires to amend the Plan to provide for the grant of a specified number of options each year to each director of the Company who is not also an employee of the Company (each, a "Nonemployee Director"). IN WITNESS WHEREOF, the Plan is hereby amended as follows, subject to the receipt of shareholder approval of this Amendment No. 2, as described in Section 5, below. 1. INCREASE IN SHARES AVAILABLE UNDER PLAN. In order to increase the number of shares of Stock issuable under Options granted under the Plan, Section 3 of the Plan is hereby amended in its entirety to read as follows: "Options may be granted under this Plan to acquire an aggregate of 350,000 shares of Stock, subject to adjustment as provided in Section 12 of the Plan. If an Option terminates, expires or is canceled with respect to any share, new Options may thereafter be granted with respect to such share." 2. NONEMPLOYEE DIRECTOR OPTIONS. In order to provide for the grant of Options to purchase shares of Stock to Nonemployee Directors, a new Section 22 is hereby added to the Plan, which shall read in its entirety as follows: "22. Nonemployee Director Options (a) Each year, on the date of the annual meeting of shareholders of the Company, or any adjournment thereof, at which directors of the Company are elected (the "Date of Grant"), each Nonemployee Director shall automatically be granted an option (a "Nonemployee Director Option") to purchase 2,500 shares of Stock. Each person who becomes a Nonemployee Director after the Effective Date (as defined in Section 5 of this Amendment No. 2) but prior to the first Date of Grant shall automatically be granted upon the date he or she becomes a Nonemployee Director, a Nonemployee Director Option to purchase 2,500 shares of Stock. 15 (b) If, on any date upon which Nonemployee Director Options are to be automatically granted pursuant to this Section 22, the number of shares of Stock remaining available for option under this Plan is insufficient for the grant to each Nonemployee Director of a Nonemployee Director Option to purchase the entire number of shares of Stock specified in this Section 22, then a Nonemployee Director Option to purchase a proportionate amount of such available number of shares of Stock (rounded to the nearest whole share) shall be granted to each Nonemployee Director on such date. (c) Subject to Section 13 of the Plan, Nonemployee Director Options granted under this Plan shall not be exercisable until the first anniversary of the Date of Grant of such Nonemployee Director Option and thereafter shall become exercisable to purchase shares of Stock pursuant to the schedule for vesting set forth in Section 9 of the Plan, provided, however, that each Nonemployee Director Option shall expire ten years after the Date of Grant of such Nonemployee Director Option. (d) Each Nonemployee Director Option shall have an exercise price equal to the aggregate Fair Market Value of the shares of Stock on the Date of Grant of such option. (e) The "Fair Market Value" of a share of Stock on any date (the "Determination Date") for the purposes of this Section 22 shall be equal to the closing price per share of Stock on the business day immediately preceding the Determination Date, as reported in The Wall Street Journal, Western Edition, or, if no closing price was so reported for such immediately preceding business day, the closing pice for the next preceding business day for which a closing price was so reported, or, if no closing price was so reported for any of the 30 business days immediately preceding the Determination Date, the average of the high bid and low asked prices per share of Stock on the business day immediately preceding the Determination Date in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such other system then in use, or, if the shares of Stock were not quoted by any such organization on such immediately preceding business day, the average of the closing bid and asked prices on such day as furnished by a professional market maker making a market in the shares of Stock selected by the Board. (f) Payment of the exercise price of any Nonemployee Director Option granted under this Plan and the optionee's tax withholding obligation, if any, with respect to such Nonemployee Stock Option shall be made in accordance with Section 6.5 and Section 10 of the Plan; provided, however, that payment of the exercise price may not be made by promissory note. (g) This Section 22 shall not be amended more than once every six months, other than to comport with changes in the Internal Revenue Code, and the Employee Retirement Income Security Act, or the rules thereunder. (h) Each Nonemployee Director Option shall be evidenced by a written Stock Option Agreement in a form approved by the Committee not inconsistent with the provisions of this Section 22. (i) Nonemployee Director Options are not intended to qualify as Incentive Stock Options." 3. AMENDMENTS TO THE PLAN TO INTEGRATE NONEMPLOYEE DIRECTOR OPTIONS INTO EXISTING PLAN. In order to integrate the Nonemployee Director Options into the Plan, the following additional amendments to the Plan are hereby adopted: 2 16 (a) Section 4 of the Plan is hereby amended to read in its entirety as follows: "Any person, including any director of the Company, who is an Employee of the Company shall be eligible to become a Participant and to acquire Options to purchase Stock. Any director of the Company who is not an Employee (a "Nonemployee Director") shall automatically receive Nonemployee Director Options (as hereinafter defined) pursuant to Section 22 hereof, but shall not be eligible to receive any other Options to purchase Stock pursuant to the Plan. Sections 5, 6 (other than Section 6.2 and 6.5), 9 (other than the vesting schedule set forth in the first paragraph thereof), 14 and 16 shall not apply to Nonemployee Director Options granted pursuant to Section 22 of the Plan, but in all other respects the provisions of the Plan shall be applicable to Nonemployee Director Options granted pursuant, to Section 22 of the Plan. Options may be granted to prospective employees of the Company, so long as such Options are conditioned on the Participant commencing employment for such time period as the Committee shall determine. Additional Options may be granted to a Participant while such Participant continues as an Employee or Director. The Committee may exclude otherwise eligible persons." (b) Section 18.3 of the Plan is hereby amended to read in its entirety as follows: "If Stock is registered under Section 12 of the Securities Exchange Act of 1934, as amended (the "Act"), no director of the Company shall be appointed to, or serve, the Committee unless he or she shall be a "disinterested person" within the meaning of Rule 16b-3 under the Act as presently in effect or hereinafter amended. Except for Nonemployee Director Options issued pursuant to Section 22 of the Plan, no Options may be granted to a Committee member during his or her tenure on the Committee. 4. COMPLIANCE WITH RULE 16b-3. A new Section 23 is hereby added to the Plan, which shall read in its entirety as follows: "With respect to persons subject to Section 16 of the Securities Exchange Act of 1934, as amended (the "1934 Act"), transactions under this Plan are intended to comply with all applicable provisions of Rule 16(b)-3 or its successors under the 1934 Act. To the extent any provision of the Plan or any action by the Plan administrators fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Plan administrators." 5. EFFECTIVE DATE OF AMENDMENT. This Amendment No. 2 shall be effective as of December 9, 1994 (the "Effective Date"), the date upon which it was approved by the Board; provided, however, that no shares of Stock may be issued under this Plan upon exercise of Nonemployee Director Options issued after the Effective Date (and no such Nonemployee Director Options or other Options may be sold or transferred by the grantee thereof) until this Amendment No. 2 has been approved directly or indirectly, by the affirmative votes of the holders of a majority of the securities of the Company present, or represented, and entitled to vote at a meeting duly held in accordance with the laws of the State of California. Except as specifically set forth above, this Amendment No. 2 does not in any way alter or affect the terms and conditions of the Plan, which remain in full force and effect. 3 17 EXECUTED at Burbank, California DATED: , 1995 SUMMIT CARE CORPORATION By ______________________________ Its __________________________ 4 18 AMENDMENT NO. 3 TO SUMMIT CARE CORPORATION STOCK OPTION PLAN The Board of Directors of Summit Care Corporation (the "Company") has adopted this Amendment No. 3 to the Stock Option Plan of the Company, subject to ratification and approval by the shareholders of the Company at the next annual meeting of shareholders. Capitalized terms not otherwise defined herein shall have meanings given such terms in the Stock Option Plan. RECITALS A. The Stock Option Plan of the Company date July 1, 1991, as amended by that certain Amendment No. 2 to Summit Care Corporation Stock Option Plan dated December 9, 1994 (the "Plan"), currently authorizes options to be granted under the Plan to acquire an aggregate of 600,000 shares of Stock of the Company. B. The Board of Directors of the Company desires to amend the Plan to authorize options to acquire additional shares of Stock. IN WITNESS WHEREOF, the Plan is hereby amended as follows, subject to the receipt of shareholder approval of this Amendment No. 3, as described in Section 5, below. 1. INCREASE IN SHARES AVAILABLE UNDER PLAN. In order to increase the number of shares of Stock issuable under options granted under the Plan, Section 3 of the Plan is hereby amended in its entirety to read as follows: "Options may be granted under this Plan to acquire an aggregate of 1,400,000 shares of Stock, subject to adjustment as provided in Section 12 of the Plan. If an Option terminates, expires or is canceled with respect to any share, new Options may thereafter be granted with respect to such share." 2. EFFECTIVE DATE OF AMENDMENT. This Amendment No. 3 shall be effective as of December 8, 1995 (the "Effective Date"), provided, however, that no shares of Stock may be issued under this Plan (and no such Options may be sold or transferred by the grantee thereof) until this Amendment No. 3 has been approved, directly or indirectly, by the affirmative votes of the holders of a majority of the securities of the Company present, or represented, and entitled to vote at a meeting duly held in accordance with the laws of the State of California. Except as specifically set forth above, this Amendment No. 3 does not in any way alter or affect the terms and conditions of the Plan, which remain in full force and effect. EXECUTED at Burbank, California DATED: , 1995 SUMMIT CARE CORPORATION By ______________________________ Its _____________________________ EX-5.1 3 OPINION OF GIBSON, DUNN & CRUTCHER LLP 1 EXHIBIT 5.1 [LETTERHEAD OF GIBSON, DUNN & CRUTCHER LLP] July 8, 1997 (213) 229-7000 C 88483-00007 Summit Care Corporation 2600 West Magnolia Boulevard Burbank, California 91505 Re: Summit Care Corporation Stock Option Plan -- Registration Statement on Form S-8 Ladies and Gentlemen: As special counsel to Summit Care Corporation, a California corporation ("Summit Care"), we are familiar with the activities of Summit Care and its corporate records. We have participated in the preparation of the Registration Statement on Form S-8 (the "Registration Statement") being filed by Summit Care under the Securities Act of 1933, as amended, for the purpose of registering 1,400,000 shares of common stock, no par value, of Summit Care for issuance under the Stock Option Plan of Summit Care (the "Shares"). On the basis of our knowledge of Summit Care's activities and its corporate records, we are of the opinion that the Shares will be legally issued, fully paid and nonassessable when issued and paid for in accordance with the Plan. We hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement and to the reference to our opinion in the Registration Statement. Very truly yours, /s/ GIBSON, DUNN & CRUTCHER LLP EX-23.1 4 CONSENT OF ERNST & YOUNG, LLP 1 EXHIBIT 23.1 CONSENT OF ERNST & YOUNG LLP We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-XXXXX) pertaining to the Summit Care Corporation Stock Option Plan of our report dated August 19, 1996, with respect to the consolidated financial statements and schedule of Summit Care Corporation included in its Annual Report (Form 10-K) for the year ended June 30, 1996, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP Los Angeles, California June 13, 1997 -----END PRIVACY-ENHANCED MESSAGE-----