<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Children's Comprehensive Services, Inc.
---------------------------------------
(Exact name of registrant as specified in its charter)
Tennessee
---------
(State or other jurisdiction of incorporation or organization)
62-1240866
----------
(I.R.S. employer identification no.)
3401 West End Avenue, Suite 500
Nashville, Tennessee 37203-1070
-------------------------------
(Address of principal executive offices)
Children's Comprehensive Services, Inc.
Employee Stock Purchase Plan
----------------------------
(Full title of the plan)
Donald B. Whitfield
Vice President Finance and
Chief Financial Officer
3401 West End Avenue, Suite 500
Nashville, Tennessee 37203-1070
-------------------------------
(Name and address of agent for service)
(615) 383-0376
--------------
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=============================================================================================================
Proposed Maximum Proposed Maximum
Title Of Securities To Amount To Be Offering Price Per Aggregate Offering Amount Of
Be Registered Registered Share Price Registration Fee
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock and 350,000 $11.04 $3,864,000 $1,075
associated Rights
=============================================================================================================
</TABLE>
* Estimated solely for the purpose of determining the amount of the registration
fee. Such estimates have been calculated in accordance with Rule 457(c) and (h)
under the Securities Act of 1933, as amended, and are based on the average of
the high and low price per share of the Registrant's Common Stock as reported on
the Nasdaq National Market on December 16, 1998.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by Children's Comprehensive Services,
Inc. (the "Registrant") with the Securities and Exchange Commission (the
"Commission") pursuant to the Securities Exchange Act of 1934 (the "Exchange
Act") are hereby incorporated by reference as of their respective dates:
(1) Annual Report on Form 10-K for the fiscal year ended
June 30, 1998;
(2) Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1998;
(3) Current Report on Form 8-K, filed August 14, 1998;
(4) Current Report on Form 8-K, filed September 24, 1998, as
amended by Amendment No. 1 to Form 8-K, filed November 20,
1998;
(5) Current Report on Form 8-K, filed November 25, 1998;
(6) Current Report on Form 8-K, filed December 16, 1998;
(7) Registration Statement on Form 8-A, filed November 25, 1998,
registering Common Stock Purchase Rights; and
(8) The description of the Registrant's Common Stock contained in
the Registration Statement on Form 10 dated August 28, 1987 as
amended or updated pursuant to the Exchange Act.
All documents filed by the Registrant pursuant to Section 13(a), 13(c),
14, and 15(d) of the Exchange Act after the date hereof and prior to the filing
of a post-effective amendment to this Registration Statement which indicates
that all securities offered hereby have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing of such
documents. Any statements contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or replaced for
purposes hereof to the extent that a statement contained herein (or in any other
subsequently filed document which also is incorporated or deemed to be
incorporated by reference herein) modifies or replaces such statement. Any
statement so modified or replaced shall not be deemed, except as so modified or
replaced, to constitute a part hereof.
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<PAGE> 3
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
The Tennessee Business Corporation Act ("TBCA") provides that a
corporation may indemnify any director or officer against liability incurred in
connection with a proceeding if (i) the director or officer acted in good faith,
(ii) the director or officer reasonably believed, in the case of conduct in his
or her official capacity with the corporation, that such conduct was in the
corporation's best interest, or, in all other cases, that his or her conduct was
not opposed to the best interest of the corporation, and (iii) in connection
with any criminal proceeding, the director of officer had no reasonable cause to
believe that his or her conduct was unlawful. In actions brought by or in the
right of the corporation, however, the TBCA provides that no indemnification may
be made if such director or officer is adjudged to be liable to the corporation.
Similarly, the TBCA prohibits indemnification in connection with any proceeding
charging improper personal benefit to a director or officer if such director or
officer is adjudged liable on the basis that a personal benefit was improperly
received. In cases where the director or officer is wholly successful, on the
merits or otherwise, in the defense of any proceeding instigated because of his
or her status as a director or officer of a corporation, the TBCA mandates that
the corporation indemnify the director or officer against reasonable expenses
incurred in the proceeding. Notwithstanding the foregoing, the TBCA provides
that a court of competent jurisdiction, upon application, may order that a
director or officer be indemnified for reasonable expenses if, in consideration
of all relevant circumstances, the court determines that such individual is
fairly and reasonably entitled to indemnification, whether or not the standard
of conduct set forth above was met.
According to the Registrant's Restated Charter, to the fullest extent
permitted by applicable law, no director of the Company shall be personally
liable to the Company or its shareholders for monetary damages for any breach of
fiduciary duty as a director, provided, however, that a director shall be so
liable, to the extent provided by applicable law, (i) for breach of the
director's duty of loyalty to the Company or its shareholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of laws, or (iii) pursuant to Section 48-8-304 of the TBCA when and if
enacted.
With respect to any threatened, pending or completed action, suit or
proceeding (whether civil, criminal, administrative or investigative), other
than an action by or in the right of the Company, the Company's Bylaws require
the Company to indemnify any person who was (or is) made (or threatened to be
made) a party to such an action, suit or proceeding by reason of the fact that
such person is or was a director, officer, employee or agent of the Company (or
is or was serving
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<PAGE> 4
in such capacity for another entity at the request of the Company).
Indemnification must be provided for amounts actually and reasonably incurred by
such person in connection with the action, suit or proceeding to the extent the
amounts incurred represent expenses (including attorneys' fees), judgments,
fines or amounts paid in settlement, but only if and to the extent the person to
be indemnified acted in good faith and in a manner he or she reasonably believed
to be in (or not opposed to) the best interests of the Company (and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his or her conduct was unlawful).
With respect to any action or suit by or in the right of the Company,
the Bylaws require indemnification similar to that described above (with the
same good faith and reasonable belief limitations) for expenses (including
attorneys' fees) actually and reasonably incurred by the person in connection
with the defense or settlement of the action or suit, except that no
indemnification shall be provided with respect to any matter as to which such
person is adjudged to be liable for negligence or misconduct in the performance
of his or her duty to the Company unless, and only to the extent that, the court
in which such action or suit was brought determines upon application that,
despite the adjudication of liability, but in view of all the circumstances of
the case, such person fairly and reasonably is entitled to indemnity for those
expenses that the court deems proper.
If and to the extent a person to be indemnified under the provisions
described in the preceding paragraphs is successful on the merits or otherwise
in defense of the relevant action, suit or proceeding, the indemnification
described above will be provided, notwithstanding any limitations that would
otherwise apply. However, in no case will indemnification be provided in a
specific case (unless ordered by a court) unless and until such indemnification
is specifically authorized after a determination that the person to be
indemnified met the applicable standard of conduct, which determination shall be
made either by a majority vote of a quorum of those directors of the Company who
are not parties to the relevant action, suit or proceeding or, if such a quorum
is not obtainable (or even if obtainable, a quorum of disinterested directors so
directs), by independent legal counsel in a written opinion or by the
shareholders of the Company.
The Bylaws permit the Company to pay any amounts representing expenses
incurred by any person to be indemnified by the Company under the provisions
described above in advance of the final disposition of the relevant action, suit
or proceeding, if and to the extent such advance payment is specifically
authorized by the Board of Directors on a case by case basis, upon receipt of an
undertaking by or on behalf of the person to be indemnified to repay such
amounts unless it shall ultimately be determined that such person is entitled to
indemnification by the Company for such expenses.
The Bylaws also authorize the Board of Directors of the Company to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Company (or is or was serving in
such capacity for another entity at the request of the Company) against any
liability asserted against and incurred by such person in such capacity, whether
or not the Company would have the power to indemnify such person against such
liability under the indemnification provisions of the Bylaws.
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<PAGE> 5
The Registrant has in effect a directors' and officers' liability
insurance policy which provides coverage for its directors and officers. Under
this policy, the insurer agrees to pay, subject to certain exclusions, for any
claim made against a director or officer for a wrongful act by such director or
officer, but only if and to the extent such director or officer becomes legally
obligated to pay such claim. Under the policy, the insurer also agrees to pay,
in certain cases, for the defense of any claim made against a director or
officer for a wrongful act by such director or officer.
Item 7. Exemption From Registration Claimed
Not applicable.
Item 8. Exhibits
Exhibit 4.1 Children's Comprehensive Services, Inc. Employee
Stock Purchase Plan
Exhibit 5.1 Opinion of Bass, Berry & Sims PLC
Exhibit 23.1 Consent of Bass, Berry & Sims PLC (included in
Exhibit 5.1)
Exhibit 23.2 Consent of Ernst & Young, LLP
Exhibit 24.1 Power of Attorney (included on signature page to
this Registration Statement)
Item 9. Undertakings.
A. The 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, as amended (the "Securities Act");
(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;
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<PAGE> 6
(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 with or furnished to
the Commission by the Registrant pursuant to Section 13 or 15(d) of the Exchange
Act that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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 Registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or 15(d) of the Exchange Act that is
incorporated by reference in this 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 may be permitted to directors, officers, and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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<PAGE> 7
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 Nashville, State of Tennessee, on the 22nd
day of December, 1998.
Children's Comprehensive Services, Inc.
By:
/s/ William J Ballard
---------------------------------------
William J Ballard
Chairman and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, each person whose signature appears
below hereby constitutes and appoints William J Ballard and Donald B. Whitfield,
and each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place, and
stead, in any and all capacities, to sign any and all amendments to this
Registration Statement, and to file the same, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents 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, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ William J Ballard Chairman, Chief Executive December 22, 1998
---------------------------- Officer and Director
William J Ballard
/s/ Amy S. Harrison President and Director December 22, 1998
----------------------------
Amy S. Harrison
</TABLE>
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<TABLE>
<S> <C> <C>
/s/ Martha A. Petrey Executive Vice President December 22, 1998
---------------------------- and Director
Martha A. Petrey, Ph.D.
/s/ Stephen H. Norris Executive Vice President December 22, 1998
----------------------------
Stephen H. Norris
/s/ H. Neil Campbell Executive Vice President December 22, 1998
----------------------------
H. Neil Campbell
/s/ Donald B. Whitfield Vice President Finance and December 22, 1998
---------------------------- Chief Financial Officer
Donald B. Whitfield
/s/ John C. Edmunds Vice President, Secretary December 22, 1998
---------------------------- and Treasurer
John C. Edmunds
</TABLE>
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<TABLE>
<S> <C> <C>
---------------------------- Director ---------------
Thomas B. Clark
/s/ Joseph A. Fernandez, Ed.D. Director December 22, 1998
----------------------------
Joseph A. Fernandez, Ed.D.
/s/ David L. Warnock Director December 22, 1998
----------------------------
David L. Warnock
</TABLE>
9
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
Exhibit 4.1 Children's Comprehensive Services, Inc. Employee Stock
Purchase Plan
Exhibit 5.1 Opinion of Bass, Berry & Sims PLC
Exhibit 23.1 Consent of Bass, Berry & Sims PLC (included in
Exhibit 5.1)
Exhibit 23.2 Consent of Ernst & Young, LLP
Exhibit 24.1 Power of Attorney (included on signature page to this
Registration Statement)
</TABLE>
10
<PAGE> 1
EXHIBIT 4.1
CHILDREN'S COMPREHENSIVE SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
INTRODUCTION
1.1 Establishment of Plan.
Children's Comprehensive Services, Inc., a Tennessee corporation
("CCS") with principal offices located in Nashville, Tennessee, adopts the
following employee stock purchase plan for its eligible employees, effective on
January 1, 1999. This Plan shall be known as the Children's Comprehensive
Services, Inc. Employee Stock Purchase Plan.
1.2 Purpose.
The purpose of this Plan is to provide an opportunity for eligible
employees of the Employer to become stockholders of CCS. It is believed that
broad-based employee participation in the ownership of the business will help to
achieve the unity of purpose conducive to the continued growth of the Employer
and to the mutual benefit of its employees and shareholders.
1.3 Qualification.
This Plan is intended to be an employee stock purchase plan which
qualifies for favorable Federal income tax treatment under Section 423 of the
Code.
1.4 Rule 16b-3 Compliance.
This Plan is intended to comply with Rule 16b-3 under the Securities
Exchange Act of 1934, and should be interpreted in accordance therewith.
ARTICLE II
DEFINITIONS
As used herein, the following words and phrases shall have the meanings
specified below:
2.1 Board of Directors. The Board of Directors of CCS.
2.2 Closing Market Price. The last sale price of the Stock as reported
in the Nasdaq National Market System (or other over-the-counter market or an
exchange, if applicable) on the date specified; or if no sales occurred on such
day, at the mean between the closing "bid" and "asked" prices on such day; but
if there should be any material alteration in the present system of
<PAGE> 2
reporting sales prices of such Stock, or if such Stock should no longer be
listed on Nasdaq's National Market System (or other over-the-counter market or
an exchange), the market value of the Stock as of a particular date shall be
determined in such a method as shall be specified by the Plan Administrator.
2.3 Code. The Internal Revenue Code of 1986, as amended from time to
time.
2.4 Commencement Date. The first day of each Option period. The first
Commencement Date shall be January 1, 1999.
2.5 Contribution Account. As set forth in Article V, the account
established on behalf of a Participant to which shall be credited the amount of
the Participant's contribution.
2.6 Effective Date. January 1, 1999.
2.7 Employee. Each employee of an Employer except:
(i) any employee whose customary employment is twenty (20) hours
per week or less, or
(ii) any employee whose customary employment is for not more than
five months in any calendar year.
2.8 Employer. CCS and any corporation which is a Subsidiary of CCS
(except for a Subsidiary which by resolution of the Board of Directors is
expressly not authorized to become a participating Employer). The term
"Employer" shall include any corporation into which an Employer may be merged or
consolidated or to which all or substantially all of its assets may be
transferred, provided such corporation does not affirmatively disavow this Plan.
2.9 Exercise Date. The last trading date of each Option Period on the
Nasdaq National Market System.
2.10 Exercise Price. The price per share of the Stock to be charged to
Participants at the Exercise Date, as determined in Section 6.3.
2.11 Five-Percent Shareholder. An Employee who owns five percent (5%)
or more of the total combined voting power or value of all classes of stock of
CCS or any Subsidiary thereof. In determining this five percent test, shares of
stock which the Employee may purchase under outstanding options, warrants or
other convertible securities, as well as stock attributed to the Employee from
members of his family or otherwise under Section 424(d) of the Code, shall be
treated as stock owned by the Employee in the numerator, but shares of stock
which may be issued under options, warrants or other convertible securities
shall not be counted in the total of outstanding shares in the denominator.
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<PAGE> 3
2.12 Grant Date. The first trading date of each Option Period on the
Nasdaq National Market System (or other over-the-counter market or an exchange,
if applicable).
2.13 Nasdaq. The National Association of Securities Dealers Automated
Quotation System.
2.14 Option Period. Successive periods of three (3) months (i)
commencing on January 1 and ending on March 31; (ii) commencing on April 1 and
ending on June 30; (iii) commencing on July 1 and ending on September 30; and
(iv) commencing on October 1 and ending on December 31.
2.15 Participant. Any Employee of an Employer who has met the
conditions for eligibility as provided in Article IV and who has elected to
participate in the Plan.
2.16 Plan. Children's Comprehensive Services, Inc. Employee Stock
Purchase Plan.
2.17 Plan Administrator. The committee composed of one or more
individuals to whom authority is delegated by the Board of Directors to
administer the Plan. The initial committee shall be the Compensation Committee
of the Board of Directors.
2.18 Stock. Those shares of common stock, par value $.01 per share, of
CCS which are reserved pursuant to Section 6.1 for issuance upon the exercise of
options granted under this Plan.
2.19 Subsidiary. Any corporation in an unbroken chain of corporations
beginning with CCS each of which (other than the last corporation in the chain)
owns stock possessing fifty percent (50%) or more of the combined voting power
of all classes of stock in one of the other corporations in such chain.
ARTICLE III
SHAREHOLDER APPROVAL
3.1 Shareholder Approval Required.
Without the approval of the shareholders of CCS, no amendment to this
Plan shall increase the number of shares reserved under the Plan, other than as
provided in Section 10.3. Approval by shareholders must comply with applicable
provisions of the corporate charter and bylaws of CCS and with Tennessee law
prescribing the method and degree of shareholder approval required for issuance
of corporate stock or options.
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ARTICLE IV
ELIGIBILITY AND PARTICIPATION
4.1 Conditions.
Each Employee shall become eligible to become a Participant for each
Option Period on its Commencement Date if such Employee has been employed by the
Employer for a continuous period at least six (6) months prior to the
Commencement Date. No Employee who is a Five-Percent Shareholder shall be
eligible to participate in the Plan. Notwithstanding anything to the contrary
contained herein, no individual who is not an Employee shall be granted an
option to purchase Stock under the Plan.
4.2 Application for Participation.
Each Employee who becomes eligible to participate shall be furnished a
summary of the Plan and an enrollment form. If such Employee elects to
participate hereunder, Employee shall complete such form and file it with
Employer no later than fifteen (15) days prior to the next Commencement Date or,
in the case of the first Commencement Date, no later than December 15, 1998. The
completed enrollment form shall indicate the amount of Employee contribution
authorized by the Employee. If no new enrollment form is filed by a Participant
in advance of any Option Period after the initial Option Period, that
Participant shall be deemed to have elected to continue to participate with the
same contribution previously elected (subject to the limit of fifteen percent
(15%) of base pay specified in Section 5.1). If any Employee does not elect to
participate in any given Option Period, such Employee may elect to participate
on any future Commencement Date so long as such Employee continues to meet the
eligibility requirements.
4.3 Date of Participation.
All Employees who elect to participate shall be enrolled in the Plan
commencing with the first pay date after the Commencement Date following their
submission of the enrollment form. Upon becoming a Participant, the Participant
shall be bound by the terms of this Plan, including any amendments whenever
made.
4.4 Acquisition or Creation of Subsidiary.
If the stock of a corporation is acquired by CCS or another Employer so
that the acquired corporation becomes a Subsidiary, or if a Subsidiary is
created, the Subsidiary in either case shall automatically become an Employer
and its Employees shall become eligible to participate in the Plan on the first
Commencement Date after the acquisition or creation of the Subsidiary, as the
case may be. In the case of an acquisition, credit shall be given to Employees
of the acquired Subsidiary for service with such corporation prior to the
acquisition for purposes of satisfying the requirement of Section 4.1 of six (6)
months continuous employment. Notwithstanding the
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<PAGE> 5
foregoing, the Board of Directors may by appropriate resolutions (i) provide
that the acquired or newly created Subsidiary shall not be a participating
Employer, (ii) specify that the acquired or newly created Subsidiary will become
a participating Employer on a date other than the first Commencement Date after
the acquisition or creation, or (iii) attach any condition whatsoever (including
denial of credit for prior service) to eligibility of the employees of the
acquired or newly created Subsidiary.
ARTICLE V
CONTRIBUTION ACCOUNT
5.1 Employee Contributions.
The enrollment form signed by each Participant shall authorize the
Employer to deduct from the Participant's compensation an after-tax amount in an
exact number of dollars during each payroll period not less than ten dollars
($10.00) for a bi-weekly payroll period, not less than Twenty Dollars ($20.00)
for a monthly payroll period, nor more than an amount which is fifteen percent
(15%) of the Participant's base pay on the Commencement Date. The dollar amount
deducted each payday shall be credited to the Participant's Contribution
Account. Participant contributions will not be permitted to commence at any time
during the Option Period other than on a Commencement Date. No interest will
accrue on any contributions or on the balance in a Participant's Contribution
Account.
5.2 Modification of Contribution Rate.
No change shall be permitted in a Participant's amount of withholding
except upon a Commencement Date, and then only if the Participant files a new
enrollment form with the Employer at least fifteen (15) days in advance of the
Commencement Date designating the desired withholding rate. Notwithstanding the
foregoing, a Participant may notify the Employer at any time that the
Participant wishes to discontinue the Participant's contributions (except during
the last 15 days of the Option Period). This notice shall be in writing and on
such forms as provided by the Employer and shall become effective as of a date
provided on the form not more than thirty (30) days following its receipt by the
Employer. The Participant shall become eligible to recommence contributions on
the next Commencement Date.
5.3 Withdrawal of Contributions.
A Participant may elect to withdraw the balance of his Contribution
Account at any time during the Option Period prior to the Exercise Date (except
during the last 15 days of the Option Period). The option granted to a
Participant shall be canceled upon his withdrawal of the balance in his
Contribution Account. This election to withdraw must be in writing on such forms
as may be provided by the Employer. If contributions are withdrawn in this
manner, further contributions
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<PAGE> 6
during that Option Period will be discontinued in the same manner as provided in
Section 5.2, and the Participant shall become eligible to recommence
contributions on the next Commencement Date.
ARTICLE VI
ISSUANCE AND EXERCISE OF OPTIONS
6.1 Reserved Shares of Stock.
CCS shall reserve Three Hundred and Fifty Thousand (350,000) shares of
Stock for issuance upon exercise of the options granted under this Plan.
6.2 Issuance of Options.
On the Grant Date each Participant shall be deemed to receive an option
to purchase Stock with the number of shares and Exercise Price determined as
provided in this Article VI, subject to the maximum limit specified in Section
6.6(a). All such options shall be automatically exercised on the following
Exercise Date, except for options which are canceled when a Participant
withdraws the balance of his Contribution Account or which are otherwise
terminated under the provisions of this Plan.
6.3 Determination of Exercise Price.
The Exercise Price of the options granted under this Plan for any
Option Period shall be the lesser of
(i) eighty-five percent (85%) of the Closing Market Price of the
Stock on the Exercise Date;
(ii) eighty-five percent (85%) of the Closing Market Price of the
Stock on the Grant Date.
6.4 Purchase of Stock.
On an Exercise Date, all options shall be automatically exercised,
except that the options of a Participant who has terminated employment pursuant
to Section 7.1 or who has withdrawn all his contribution shall expire. The
Contribution Account of each Participant shall be used to purchase the maximum
number of shares of Stock (including fractional shares) determined by dividing
the Exercise Price into the balance of the Participant's Contribution Account.
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<PAGE> 7
6.5 Terms of Options.
Options granted under this Plan shall be subject to such amendment or
modification as the Employer shall deem necessary to comply with any applicable
law or regulation, including but not limited to Section 423 of the Code, and
shall contain such other provisions as the Employer shall from time to time
approve and deem necessary.
6.6 Limitations on Options.
The options granted hereunder are subject to the following limitations:
(a) No Participant shall be permitted to purchase during any
calendar year Stock under this Plan (and any other plan of the Employer
or Subsidiary which is qualified under Section 423 of the Code) having
a market value in excess of $25,000 (as determined on the Grant Date
for the Option Period during which each such share of Stock is
purchased).
(b) No option may be granted to a Participant if the Participant
immediately after the option is granted would be a Five-Percent
Shareholder.
(c) No Participant may assign, transfer or otherwise alienate
any options granted to him under this Plan, otherwise than by will or
the laws of descent and distribution, and such options must be
exercised during the Participant's lifetime only by the Participant.
6.7 Pro-Rata Reduction of Optioned Stock.
If the total number of shares of Stock to be purchased under option by
all Participants on an Exercise Date exceeds the number of shares of Stock
remaining authorized for issuance under Section 6.1, a pro-rata allocation of
the shares of Stock available for issuance will be made among Participants in
proportion to their respective Contribution Account balances on the Exercise
Date, and any money remaining in the Contribution Accounts shall be returned to
the Participants.
6.8 State Securities Laws.
Notwithstanding anything to the contrary contained herein, the Company
shall not be obligated to issue shares of Stock to any Participant if to do so
would violate any State securities law applicable to the sale of Stock to such
Participant. In the event that the Company refrains from issuing shares of Stock
to any Participant in reliance on this Section, the Company shall return to such
Participant the amount in such Participant's Contribution Account that would
otherwise have been applied to the purchase of Stock.
7
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ARTICLE VII
TERMINATION OF PARTICIPATION
7.1 Termination of Employment.
Any Employee whose employment with the Employer is terminated during
the Option Period prior to the Exercise Date for any reason except death,
disability or retirement at or after age 65 shall cease being a Participant
immediately. The balance of that Participant's Contribution Account shall be
paid to such Participant as soon as practical after his termination. The option
granted to such Participant shall be null and void.
7.2 Death.
If a Participant should die while employed by the Employer, no further
contributions on behalf of the deceased Participant shall be made. The legal
representative of the deceased Participant may elect to withdraw the balance in
said Participant's Contribution Account by notifying the Employer in writing
prior to the Exercise Date in the Option Period during which the Participant
died. In the event no election to withdraw is made prior to the Exercise Date,
the balance accumulated in the deceased Participant's Contribution Account shall
be used to purchase shares of Stock in accordance with Section 6.4. Any money
remaining which is insufficient to purchase a whole share shall be paid to the
legal representative.
7.3 Retirement.
If a Participant shall retire from the employment of the Employer at or
after attaining age 65, no further contributions on behalf of the retired
Participant shall be made. The Participant may elect to withdraw the balance in
his Contribution Account by notifying the Employer in writing prior to the
Exercise Date in the Option Period during which the Participant retired. In the
event no election to withdraw is made prior to the Exercise Date, the balance
accumulated in the retired Participant's Contribution Account shall be used to
purchase shares of Stock in accordance with Section 6.4, and any money remaining
which is insufficient to purchase a whole share shall be paid to the retired
Participant.
7.4 Disability.
If a Participant should terminate employment with the Employer on
account of disability, as determined by reference to the definition of
"disability" in the Employer's long-term disability plan, no further
contributions on behalf of the disabled Participant shall be made. The
Participant may elect to withdraw the balance in his Contribution Account by
notifying the Employer in writing prior to the Exercise Date in the Option
Period during which the Participant became disabled. In the event no election to
withdraw is made prior to the Exercise Date, the balance accumulated in the
disabled Participant's Contribution Account shall be used to purchase shares
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of Stock in accordance with Section 6.4, and any money remaining which is
insufficient to purchase a whole share shall be paid to the disabled
Participant.
ARTICLE VIII
OWNERSHIP OF STOCK
8.1 Stock Certificates.
Stock purchased through exercise of the options granted hereunder shall
be uncertificated. However, certificates will be issued as soon as practical at
the written request of the Participant, in the name of the Participant, jointly
in the name of the Participant and a member of the Participant's family, or to
the Participant as custodian for the Participant's child under the applicable
jurisdiction's Gifts to Minors Act.
8.2 Premature Sale of Stock.
If a Participant (or former Participant) sells or otherwise disposes of
any shares of Stock obtained under this Plan
(i) prior to two (2) years after the Grant Date of the option
under which such shares were obtained; or
(ii) prior to one (1) year after the Exercise Date on which such
shares were obtained,
that Participant (or former Participant) must notify the Employer immediately in
writing concerning such disposition.
8.3 Restrictions on Sale. Participants may not sell, transfer, or
otherwise dispose of any shares of Stock obtained under this Plan until the
earlier of (i) one year from the Exercise Date for such shares of Stock or (ii)
Participant's termination of employment with Employer for any reason, including
death, retirement or disability. In the event that a Participant requests the
issuance of a certificate pursuant to Section 8.1, such certificate will contain
the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE WERE ISSUED
PURSUANT TO THE CHILDREN'S COMPREHENSIVE SERVICES, INC. EMPLOYEE STOCK
PURCHASE PLAN (THE "PLAN") AND MAY NOT BE SOLD, TRANSFERRED, OR
OTHERWISE DISPOSED OF BY THE HOLDER HEREOF UNTIL THE EARLIER OF (i) ONE
YEAR FROM THE EXERCISE DATE (AS SUCH TERM IS DEFINED IN THE PLAN) OR
(ii) THE HOLDER'S TERMINATION OF EMPLOYMENT WITH EMPLOYER (AS SUCH TERM
IS
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DEFINED IN THE PLAN) FOR ANY REASON, INCLUDING DEATH, RETIREMENT OR
DISABILITY.
ARTICLE IX
ADMINISTRATION AND AMENDMENT
9.1 Administration.
The Plan Administrator shall (i) administer the Plan and keep records
of the Contribution Account balance of each Participant, (ii) interpret the
Plan, and (iii) determine all questions arising as to eligibility to
participate, amount of contributions permitted, determination of the Exercise
Price, and all other matters of administration. The Plan Administrator shall
have such duties, powers and discretionary authority as may be necessary to
discharge the foregoing duties, and may delegate any or all of the foregoing
duties to any individual or individuals (including officers or other Employees
who are Participants). The Board of Directors shall have the right at any time
and without notice to remove or replace any individual or committee of
individuals serving as Plan Administrator. All determinations by the Plan
Administrator shall be conclusive and binding on all persons. Any rules,
regulations, or procedures that may be necessary for the proper administration
or functioning of this Plan that are not covered in this Plan document shall be
promulgated and adopted by the Plan Administrator.
9.2 Amendment.
The Board of Directors of the Employer may at any time amend the Plan
in any respect, including termination of the Plan, without notice to
Participants. If the Plan is terminated, all options outstanding at the time of
termination shall become null and void and the balance in each Participant's
Contribution Account shall be paid to that Participant. Notwithstanding the
foregoing, no amendment of the Plan as described in Section 3.1 shall become
effective until and unless such amendment is approved by the shareholders of
CCS.
ARTICLE X
MISCELLANEOUS
10.1 Expenses.
The Employer will pay all expenses of administering this Plan that may
rise in connection with the Plan.
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10.2 No Contract of Employment.
Nothing in this Plan shall be construed to constitute a contract of
employment between an Employer and any Employee or to be an inducement for the
employment of any Employee. Nothing contained in this Plan shall be deemed to
give any Employee the right to be retained in the service of an Employer or to
interfere with the right of an Employer to discharge any Employee at any time,
with or without cause, regardless of the effect which such discharge may have
upon him as a Participant of the Plan.
10.3 Adjustment Upon Changes in Stock.
The aggregate number of shares of Stock reserved for purchase under the
Plan as provided in Section 6.1, and the calculation of the Exercise Price as
provided in Section 6.3, shall be adjusted by the Plan Administrator (subject to
direction by the Board of Directors) in an equitable manner to reflect changes
in the capitalization of CCS, including, but not limited to, such changes as
result from merger, consolidation, reorganization, recapitalization, stock
dividend, dividend in property other than cash, stock split, combination of
shares, exchange of shares and change in corporate structure. If any adjustment
under this Section 10.3 would create a fractional share of Stock or a right to
acquire a fractional share of Stock, such fractional share shall be disregarded
and the number of shares available under the Plan and the number of shares
covered under any options granted pursuant to the Plan shall be the next lower
number of shares, rounding all fractions downward.
10.4 Employer's Rights.
The rights and powers of any Employer shall not be affected in any way
by its participation in this Plan, including but not limited to the right or
power of any Employer to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or any part of its business or
assets.
10.5 Limit on Liability.
No liability whatever shall attach to or be incurred by any past,
present or future shareholders, officers or directors, as such, of CCS or any
Employer, under or by reason of any of the terms, conditions or agreements
contained in this Plan or implied therefore, and any and all liabilities of any
and all rights and claims against CCS, an Employer, or any shareholder, officer
or director as such, whether arising at common law or in equity or created by
statute or constitution or otherwise, pertaining to this Plan, are hereby
expressly waived and released by every Participant as a part of the
consideration for any benefits under this plan; provided, however, no waiver
shall occur, solely by reason of this Section 10.5, of any right which is not
susceptible to advance waiver under applicable law.
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10.6 Gender and Number.
For the purposes of the Plan, unless the contrary is clearly indicated,
the use of the masculine gender shall include the feminine, and the singular
number shall include the plural and vice versa.
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IN WITNESS WHEREOF, the Employer has adopted this Plan effective
January 1, 1999.
Date: , 1998 CHILDREN'S COMPREHENSIVE SERVICES,
-------------- INC.
By:
--------------------------------
Title:
-----------------------------
13
<PAGE> 1
EXHIBIT 5.1
B A S S, B E R R Y & S I M S P L C
A PROFESSIONAL LIMITED LIABILITY COMPANY
ATTORNEYS AT LAW
2700 FIRST AMERICAN CENTER 1700 RIVERVIEW TOWER
NASHVILLE, TENNESSEE 37238-2700 POST OFFICE BOX 1509
TELEPHONE (615) 742-6200 KNOXVILLE, TENNESSEE 37901-1509
TELECOPIER (615) 742-6293 TELEPHONE (423) 521-6200
TELECOPIER (423) 521-6234
December 22, 1998
Children's Comprehensive Services, Inc.
3401 West End Avenue, Suite 500
Nashville, Tennessee 37203-1070
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as your counsel in the preparation of a Registration
Statement on Form S-8 (the "Registration Statement") relating to the Company's
Employee Stock Purchase Plan (the "Plan") filed by you with the Securities and
Exchange Commission covering 350,000 shares (the "Shares") of common stock, par
value $.01 per share, issuable pursuant to the Plan.
In so acting, we have examined and relied upon such records, documents,
and other instruments as in our judgment are necessary or appropriate in order
to express the opinions hereinafter set forth and have assumed the genuineness
of all signatures, the authenticity of all documents submitted to us as
originals, and the conformity to original documents of all documents submitted
to us as certified or photostatic copies.
Based on the foregoing, we are of the opinion that the Shares, when
issued pursuant to and in accordance with the Plan, will be validly issued,
fully paid, and nonassessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Bass, Berry & Sims PLC
<PAGE> 1
Exhibit 23.2
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement on
Form S-8 pertaining to the Employee Stock Purchase Plan of Children's
Comprehensive Services, Inc., of our report dated August 19, 1998, except for
Note R, as to which the date is September 17, 1998, with respect to the
consolidated financial statements and schedule of Children's Comprehensive
Services, Inc. and subsidiaries included in its Annual Report (Form 10-K) for
the year ended June 30, 1998, filed with the Securities and Exchange Commission.
Ernst & Young LLP
Nashville, Tennessee
December 21, 1998
