1
EXHIBIT 4
NOVACARE EMPLOYEE SERVICES, INC.
1997 STOCK OPTION PLAN, AS AMENDED AND
RESTATED EFFECTIVE DECEMBER 8, 1998
1. Purposes of Plan. The purposes of this Plan, which shall be known as
the 1997 Stock Option Plan and is hereinafter referred to as the "Plan", are (i)
to provide incentives for key employees of NovaCare Employee Services, Inc. (the
"Company") and its subsidiary or parent corporations (within the respective
meanings of Section 424(f) and 424(e) of the Internal Revenue Code of 1986, as
amended (the "Code"), and referred to herein as "Subsidiary" and "Parent",
respectively) by encouraging their ownership of the common stock, $.01 par
value, of the Company (the "Stock") and (ii) to aid the Company in retaining
such key employees, upon whose efforts the Company's success and future growth
depends, and attracting other such employees.
2. Administration. The Plan shall be administered by the Board of
Directors, which may delegate authority to administer the Plan to the
Compensation Committee of the Board of Directors ("Committee"), as hereinafter
provided. For purposes of administration, the Committee, subject to the terms of
the Plan, shall have plenary authority to establish such rules and regulations,
make such determinations and interpretations, and take such other administrative
actions as it deems necessary or advisable. All determinations and
interpretations made by the Committee shall be final, conclusive and binding on
all persons, including Optionees (as hereinafter defined) and their legal
representatives and beneficiaries.
The Committee shall be appointed from time to time by the Board of
Directors and shall consist of not fewer than two of its members. All members of
the Committee shall be
2
directors who are "Non-Employee Directors" as that term is defined in 17 C.F.R.
Section 240.16b-3(b)(3)(i). The Board of Directors shall designate one of the
members of the Committee as its Chairman. The Committee shall hold its meetings
at such times and places as it may determine. A majority of its members shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing and
signed by all members shall be as effective as if it had been made by a majority
vote at a meeting duly called and held. The Committee may appoint a secretary
(who need not be a member of the Committee). No member of the Committee shall be
liable for any act or omission with respect to his service on the Committee, if
he acts in good faith and in a manner he reasonably believes to be in or not
opposed to the best interests of the Company. Service on the Committee shall
constitute service as a director of the Company for all purposes.
3. Stock Available for Options. There shall be available for options
under the Plan a total of 3,125,000 shares of Stock, subject to any adjustments
which may be made pursuant to Section 5(f). Shares of Stock used for purposes of
the Plan may be either authorized and unissued shares or previously issued
shares held in the treasury of the Company, or both. Shares of Stock covered by
options which have terminated or expired prior to exercise shall be available
for further options hereunder. The maximum number of options which may be
granted to any person under the Plan during any fiscal year of the Company shall
not exceed 200,000 shares.
4. Eligibility. Options under the Plan may be granted to key employees
of the Company or any Subsidiary or Parent, including officers or directors of
the Company or any Subsidiary or Parent. Options may be granted to eligible
employees whether or not they hold or have held options previously granted under
the Plan or otherwise granted or assumed by the
2
3
Company. In selecting employees for options, the Committee may take into
consideration any factors it may deem relevant, including its estimate of the
employee's present and potential contributions to the success of the Company and
its Subsidiaries. Service as a director or officer of the Company or any Parent
or Subsidiary shall be considered employment for purposes of the Plan. In the
event the Company becomes obligated to grant options, through the assumption of,
or in substitution for, outstanding awards previously granted by an acquired
company or a company with which the Company combines, options may be granted to
a non-continuing director of such acquired or combining company who does not
become an employee or director of the Company or any Subsidiary or Parent.
5. Terms and Conditions of Options. The Committee shall, in its
discretion, prescribed the terms and conditions of the options to be granted
hereunder, which terms and conditions need not be the same in each case, subject
to the following:
(a) Option Price. Except in the case of an option granted in assumption
of or substitution for an outstanding award of a company acquired by the Company
or with which the Company combines, the price at which each share of Stock
covered by an option granted under the Plan may be purchased shall be determined
by the Committee and shall not be less than the market value per share of Stock
on the date of grant of an option as determined pursuant to Section 5(c). The
date of the grant of an option shall be the date specified by the Committee in
its grant of the option.
(b) Option Period. The period for exercise of an option shall in no
event be more than ten years from the date of grant. Options may, in the
discretion of the Committee, be made exercisable in installments during the
option period. Any shares not purchased on any
3
4
applicable installment date may be purchased thereafter at any time before the
expiration of the option period.
(c) Exercise of Options. In order to exercise an option, the holder
thereof (the "Optionee") shall deliver to the Company written notice specifying
the number of shares of Stock to be purchased, together with cash or a certified
or bank cashier's check payable to the order of the Company in the full amount
of the purchase price therefor; provided that, for the purpose of assisting an
Optionee to exercise an option, the Company may make loans to the Optionee or
guarantee loans made by third parties to the Optionee, on such terms and
conditions as the Board of Directors may authorize; and provided further that
such purchase price may be paid in shares of Stock owned by the Optionee having
a market value on the date of exercise equal to the aggregate purchase price, or
in a combination of cash and Stock. For purposes of the Plan, the market value
per share of Stock shall be the last sale price regular way on the date of
reference, or, in case no sale takes place on such date, the average of the
closing high bid and low asked prices regular way, in either case on the
principal national securities exchange on which the Stock is listed or admitted
to trading, or if the Stock is not listed or admitted to trading on any national
securities exchange, the last sale price reported on the National Market System
or the Small Cap Market of the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") on such date, whichever is applicable, or
if there are no such prices reported on NASDAQ on such date, as furnished to the
Committee by any New York Stock Exchange member selected from time to time by
the Committee for such purpose. If there is no bid or asked price reported on
any such date, the market value shall be determined by the Committee in
accordance with the regulations promulgated under Section 2031 of the Code, or
by any other appropriate method selected by the Committee. If the Optionee so
requests, shares
4
5
of Stock purchased upon exercise of an option may be issued in the name of the
Optionee or another person. An Optionee shall have none of the rights of a
stockholder until the shares of Stock are issued to him. An option may not be
exercised for less than ten shares of Stock, or the number of shares of Stock
remaining subject to such option, whichever is smaller.
(d) Effect of Termination of Employment. An option may not be exercised
after the Optionee has ceased to be in the full-time employ of the Company or
any Subsidiary or Parent, except in the following circumstances:
(i) If the Optionee's employment is terminated by action of
his employer, or by reason of disability or retirement under any
retirement plan maintained by the Company or any Subsidiary or Parent,
the option may be exercised by the Optionee within three months after
such termination, but only as to any shares exercisable on the date the
Optionee's employment so terminates;
(ii) In the event of the death of the Optionee during the
three month period after termination of employment covered by (i)
above, the person or persons to whom his rights are transferred by will
or the laws of descent and distribution shall have a period of one year
from the date of his death to exercise any options which were
exercisable by the Optionee at the time of his death;
(iii) In the event of the death of the Optionee while
employed, the option shall thereupon become exercisable in full, and
the person or persons to whom the Optionee's rights are transferred by
will or the laws of descent and distribution shal1
5
6
have a period of one year from the date of the Optionee's death to
exercise such option. The provisions of the foregoing sentence shall
apply to any outstanding options which are incentive stock options to
the extent permitted by Section 422(d) of the Code and such outstanding
options in excess thereof shall, immediately upon the occurrence of the
event described in the foregoing sentence, be treated for all purposes
of the plan as nonstatutory stock options and shall be immediately
exercisable as such as provided in the foregoing sentence.
(iv) If the Optionee is not an employee or director of the
Company or any Subsidiary or Parent and is a non-continuing director of
a company acquired by the Company or with which the Company has
combined and the Company has become obligated to grant options to such
Optionee as a result of such acquisition or combination.
In no event shall any option be exercisable more than ten years from
the date of grant thereof. Nothing in the Plan or in any option granted pursuant
to the Plan (in the absence of an express provision to the contrary) shall
confer on any individual any right to continue in the employ of the Company or
any Subsidiary or Parent or interfere in any way with the right of the Company
to terminate his employment at any time.
(e) Transferability of Options. During the lifetime of an Optionee,
options held by such Optionee may not be transferred otherwise than by will or
by the laws of descent and distribution without the written consent of the
Committee, except that nonstatutory options
6
7
may be transferred to members of such Optionee's immediate family, trusts for
the benefit of such Optionee or such family members or charitable organizations
under Section 501(c)(3) of the Code, subject to continuing compliance by the
Optionee with the terms and conditions of the option, including, but not limited
to, continued employment.
(f) Adjustments for Change in Stock Subject to Plan and Other Events.
In the event of a reorganization, recapitalization, stock split, stock dividend,
combination of shares, merger, consolidation, rights offering, or any other
change in the corporate structure or shares of the Company, the Committee shall
make such adjustments, if any, as it deems appropriate in the number and kind of
shares subject to the Plan, in the number and kind of shares covered by
outstanding options, or in the option price per share, or both.
In connection with any merger or consolidation in which the Company is
not the surviving corporation or any sale or transfer by the Company of all or
substantially all of its assets or any tender offer or exchange offer for or the
acquisition, directly or indirectly, by any person or group of all or a majority
of the then outstanding voting securities of the Company, all outstanding
options granted to any Optionee on or before February 28, 1997 or to a director
during the period of his directorship at any time before or after February 28,
1997 shall become exercisable in full, notwithstanding any other provision of
the Plan or of any such outstanding options granted thereunder, on and after (i)
the fifteenth day prior to the effective date of such merger, consolidation,
sale, transfer, acquisition or change in control or (ii) the date of
commencement of such tender offer or exchange offer, as the case may be. The
Committee may, in its sole discretion determine that certain other options
granted after February 28, 1997 shall become exercisable in full under such
circumstances determined by the Committee. The provisions of this paragraph
shall apply to any outstanding options which are incentive stock
7
8
options to the extent permitted by Section 422(d) of the Code and such
outstanding options in excess thereof shall, immediately upon the occurrence of
the event described in clause (i) or (ii) of the foregoing sentence, be treated
for all purposes of the Plan as nonstatutory stock options and shall be
immediately exercisable as such as provided in the foregoing sentence.
Notwithstanding the foregoing, in no event shall any option be exercisable after
the date of termination of the exercise period of such option specified in
Sections 5(b)and 5(d).
(g) Registration, Listing and Qualification of Shares of Stock. Each
option shall be subject to the requirement that if at any time the Board of
Directors shall determine that the registration, listing or qualification of the
shares of Stock covered thereby upon any securities exchange or under any
federal or state law, or the consent or approval of any governmental regulatory
body is necessary or desirable as a condition of, or in connection with, the
granting of such option or the purchase of shares of Stock thereunder, no such
option may be exercised unless and until such registration, listing,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board of Directors. The Company may require
that any person exercising an option shall make such representations and
agreements and furnish such information as it deems appropriate to assure
compliance with the foregoing or any other applicable legal requirement.
(h) Other Terms and Conditions. The Committee may impose such other
terms and conditions, not inconsistent with the terms hereof, on the grant or
exercise of options, as it deems advisable.
6. Provisions Applicable to Incentive Stock Options. The Committee may,
in its discretion, grant options under the Plan to eligible employees which
constitute "incentive stock options" (within the meaning of Section 422(d) of
the Code), provided, however, that the
8
9
aggregate fair market value of the Stock with respect to which incentive stock
options are exercisable for the first time by the Optionee during any calendar
year shall not exceed the limitation set forth in Section 422(d) of the Code,
and provided further that Section 5(d)(ii) hereof shall not apply to any
incentive stock option.
7. Amendment and Termination. Unless the Plan shall theretofore have
been terminated as hereinafter provided, the Plan shall terminate on, and no
option shall be granted hereunder after, February 27, 2007; provided, however,
that the Board of Directors may at any time prior to that date terminate the
Plan. The Board of Directors may at any time amend the Plan. No termination or
amendment of the Plan may, without the consent of an Optionee, adversely affect
the rights of such Optionee under any option held by such Optionee.
8. Effectiveness of Plan. The Plan will not be made effective unless
approved by a majority of the votes cast by the stockholders of the Company at a
meeting of stockholders duly called and held for such purpose or pursuant to a
written consent signed by the holders of a majority of the Stock, and no option
granted hereunder shall be exercisable prior to such approval.
9. Other Actions. Nothing contained in the Plan shall be construed to
limit the authority of the Company to exercise its corporate rights and powers,
including but not by way of limitation, the right of the Company to grant or
assume options for proper corporate purposes other than under the Plan with
respect to any employee or other person, firm, corporation or association.
9