<PAGE> 1
As filed with the Securities and Exchange Commission on December 5, 1997
REGISTRATION NO. 333-________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
---------------------------
HEALTHCARE RECOVERIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 61-1141758
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1400 WATTERSON TOWER
LOUISVILLE, KENTUCKY 40218
(Address, including zip code, of registrant's principal executive offices)
HEALTHCARE RECOVERIES, INC. EMPLOYEE STOCK PURCHASE PLAN
(Full title of plan)
PATRICK B. MCGINNIS
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
1400 WATTERSON TOWER
LOUISVILLE, KENTUCKY 40218
(502) 454-1340
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
COPIES TO:
WILLIAM R. SPALDING DOUGLAS R. SHARPS
KING & SPALDING EXECUTIVE VICE PRESIDENT
191 PEACHTREE STREET - FINANCE AND ADMINISTRATION,
ATLANTA, GEORGIA 30303-1763 CHIEF FINANCIAL OFFICER AND SECRETARY
(404) 572-4600 HEALTHCARE RECOVERIES, INC.
1400 WATTERSON TOWER
LOUISVILLE, KENTUCKY 40218
(502) 454-1340
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
======================================================================================================================
Proposed Maximum Proposed Maximum
Amount to Offering Price Per Aggregate Offering Amount of
Title of Securities to be Registered be Registered Share(1) Price(1) Registration Fee
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.001 per share........ 300,000 $20.375 $6,112,500 $1,803.19
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee
pursuant to Rule 457(h) on the basis of the high and low prices of
Common Stock of Healthcare Recoveries, Inc. on December 3, 1997.
================================================================================
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
The following documents previously filed by the Registrant with the
Securities and Exchange Commission (the "Commission") are incorporated by
reference in this Registration Statement:
(a) The Prospectus, which forms a part of the Registrant's
Registration Statement on Form S-1 (File No. 333-23287);
(b) Quarterly Reports on Form 10-Q for the quarters ended June
30, 1997 and September 30, 1997; and
(c) The description of Registrant's common stock, par value $.001
per share ("Common Stock"), contained in the Registration Statement on
Form 8-A, filed on May 20, 1997.
All documents filed by the Registrant subsequent to the date of this
Registration Statement pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act and prior to the filing of a post-effective amendment which
indicates that all securities offered hereunder have been sold or which
deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference in this Registration Statement and to be a part of
this Registration Statement from the date of filing of such documents.
Item 4. Description of Securities.
Inapplicable.
Item 5. Interests of Named Experts and Counsel.
Inapplicable.
Item 6. Indemnification of Directors and Officers.
The following summary is qualified in its entirety by reference to the
complete text of the statute, the Registrant's Amended and Restated Certificate
of Incorporation (the "Certificate of Incorporation"), and the Registrant's
Amended and Restated Bylaws (the "Bylaws").
Under Section 145 of the Delaware General Corporation Law, a corporation
may indemnify a director, officer, employee or agent of the corporation (or
other entity if such person is serving in such capacity at the corporation's
request) against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him if he acted
in good faith and in a manner he reasonably believed to be in, or not opposed
to, the best interests of the corporation and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. In the case of an action brought by or in the right of the
corporation, the corporation may indemnify a director, officer, employee or
agent of the corporation (or other entity if such person is serving in such
capacity at the corporation's request) against expenses (including attorneys'
fees) actually and reasonably incurred by him if he acted in good faith and in
a manner he reasonably believed to be in, or not opposed to, the best interests
of the corporation, except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the corporation unless a court determines that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnification for such
expenses as the court shall deem proper. Expenses (including attorneys' fees)
incurred by an officer or director in
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<PAGE> 3
defending any civil, criminal, administrative or investigative action, suit or
proceeding may be paid by the corporation in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on behalf
of such director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation.
The Registrant's Certificate of Incorporation provides that no director
shall be personally liable for monetary damages to the Registrant or its
stockholders for any breach of fiduciary duty, except to the extent provided by
applicable law (i) for any breach of the director's duty of loyalty to the
Registrant or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which such director derived an improper personal benefit. The
Registrant's Certificate of Incorporation further provides that the Registrant
will indemnify, to the fullest extent authorized or permitted and in the manner
provided by law, any person made, or threatened to be made, a party to any
action, suit, or proceeding (whether civil, criminal, or otherwise) by reason of
the fact that he or she or a person of whom he or she is the legal
representative is or was a director or officer of the Registrant or by reason of
the fact that such director or officer, at the request of the Registrant, is or
was serving any other corporation, partnership, joint venture, trust, employee
benefit plan, or other enterprise, in any capacity.
The Registrant's Bylaws provide that no person shall be liable to the
Registrant for any loss or damage suffered by it on account of any action taken
or omitted to be taken by such person as a director, officer, employee or agent
of the Registrant in good faith, if such person (a) exercised or used the same
degree of care and skill as a prudent person would have exercised or used under
the circumstances in the conduct of such person's own affairs, or (b) took or
omitted to take such action in reliance upon advice of counsel for the
Registrant or upon statements made or information furnished by officers or
employees of the Registrant which such person had reasonable grounds to believe.
The Registrant's Bylaws further provide that the Registrant shall
indemnify any person who was or is a party or is threatened to be made a party
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 Registrant) by reason of the fact that such person is or was a
director or officer of the Registrant, or is or was serving at the request of
the Registrant as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the Registrant (or such other
corporation or organization), and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The Registrant may choose to indemnify an employee or agent of the Registrant
under the Bylaws in the same manner set forth above. In the case of an action
brought by or in the right of the corporation, Registrant shall indemnify a
director or officer, and may indemnify an employee or agent of the Registrant,
against expenses (including attorney's fees) actually and reasonably incurred by
such person in connection with the defense or settlement of such action or suit
if such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interest of the Registrant and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person is adjudged to be liable for negligence or
misconduct in performance of his or her duty to the Registrant unless a court
determines that in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity.
The Registrant maintains directors and officers liability insurance.
Such insurance has a deductible of $500,000 for claims arising out of securities
law, a deductible of $200,000 for all other types of claims and an annual per
occurrence and aggregate cap on coverage of $10 million.
Item 7. Exemption From Registration Claimed.
Inapplicable.
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<PAGE> 4
Item 8. Exhibits.
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
4.1 Amended and Restated Certificate of Incorporation of Registrant
(incorporated by reference to Exhibit 3.1 of Registrant's
Registration Statement on Form S-1, Registration No. 333-23287).
4.2 Amended and Restated By-Laws of Registrant (incorporated by
reference to Exhibit 3.2 of Registrant's Registration Statement
on Form S-1, Registration No. 333-23287).
4.3 Specimen Stock Certificate (incorporated by reference to Exhibit
4.1 of Registrant's Registration Statement on Form S-1, File No.
333-23287).
5.1 Opinion of King & Spalding regarding legality of shares being
registered.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of King & Spalding (contained in the opinion filed as
Exhibit 5.1).
99.1 Healthcare Recoveries, Inc. Employee Stock Purchase Plan.
</TABLE>
Item 9. Undertakings.
The undersigned Registrant hereby undertakes:
(a)(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. 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
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.
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<PAGE> 5
(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) 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 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in 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 of 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> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Healthcare
Recoveries, Inc. 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 Louisville, Commonwealth of Kentucky, on this
10th day of October, 1997.
HEALTHCARE RECOVERIES, INC.
By: /s/ Patrick B. McGinnis
--------------------------------------
Patrick B. McGinnis
Chairman and Chief Executive officer
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<PAGE> 7
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capabilities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Patrick B. McGinnis Chairman, October 10, 1997
- --------------------------- Chief Executive
Patrick B. McGinnis Officer, and Director
/s/ Douglas R. Sharps Executive Vice October 8, 1997
- --------------------------- President -- Finance
Douglas R. Sharps and Administration,
Chief Financial
Officer and Secretary
/s/ William C. Ballard, Jr. Director October 20, 1997
- ---------------------------
William C. Ballard, Jr.
/s/ Jill L. Force Director October 10, 1997
- ---------------------------
Jill L. Force
/s/ John H. Newman Director October 20, 1997
- ---------------------------
John H. Newman
/s/ Elaine J. Robinson Director October 10, 1997
- ---------------------------
Elaine J. Robinson
/s/ Chris B. Van Arsdel Director October 20, 1997
- ---------------------------
Chris B. Van Arsdel
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<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description Page
- ------- ----------- ----
<S> <C> <C>
4.1 Amended and Restated Certificate of Incorporation
of Registrant (incorporated by reference to Exhibit
3.1 of Registrant's Registration Statement on Form S-1,
Registration No. 333-23287). --
4.2 Amended and Restated By-Laws of Registrant
(incorporated by reference to Exhibit 3.2 of Registrant's
Registration Statement on Form S-1, Registration
No. 333-23287). --
4.3 Specimen Stock Certificate (incorporated by reference
to Exhibit 4.1 of Registrant's Registration Statement
on Form S-1, File No. 333-23287). --
5.1 Opinion of King & Spalding regarding legality of
shares being registered. --
23.1 Consent of Coopers & Lybrand L.L.P. --
23.2 Consent of King & Spalding (contained in the opinion
filed as Exhibit 5.1). --
99.1 Healthcare Recoveries, Inc. Employee Stock Purchase Plan. --
</TABLE>
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<PAGE> 1
EXHIBIT 5.1
December 5, 1997
Healthcare Recoveries, Inc.
1400 Waterson Tower
Louisville, Kentucky 40218
Ladies and Gentlemen:
We have acted as counsel to Healthcare Recoveries, Inc., a Delaware
corporation ("HRI"), in connection with the registration of 300,000 shares (the
"Shares") of HRI common stock, par value $.001 per share, pursuant to a Form
S-8 Registration Statement (the "Registration Statement") filed with the
Securities and Exchange Commission on December 5, 1997. We understand that
the Shares will be issued pursuant to the Healthcare Recoveries, Inc. Employee
Stock Purchase Plan (the "Employee Stock Purchase Plan").
In so acting, we have examined and relied upon the accuracy of original,
certified, conformed or photographic copies of the Registration Statement, and
such records, other agreements, certificates and other documents as we have
deemed necessary or appropriate to enable us to render the opinion set forth
below. In all such examinations, we have assumed the genuineness of signatures
on original documents and the conformity to such original documents of all
copies submitted to us as certified, conformed or photographic copies and, as to
certificates of public officials, we have assumed the same to have been
properly given and to be accurate.
Based upon the foregoing and subject to the limitations and qualifications
set forth below, we are of the opinion that the Shares have been duly
authorized and, when issued in accordance with the terms of the Employee Stock
Purchase Plan, will be validly issued, fully paid and nonassessable.
The foregoing opinion is subject to the following limitations and
qualifications:
We are members of the Bar of the State of Georgia and, accordingly, do not
purport to be experts on or to express any opinion herein concerning any law
other than the laws of the State of Georgia, the corporate laws of the State of
Delaware, and the federal laws of the United States.
This opinion has been furnished to you at your request and no other person
or entity shall be entitled to rely upon this opinion without our prior written
consent. We consent to the inclusion of this opinion in the Registration
Statement. This opinion is given as of this date, and we assume no
<PAGE> 2
Medaphis Corporation
December 5, 1997
Page 2
obligation to advise you after this date of facts or circumstances that come to
our attention or changes in law that occur which could affect the opinions
contained in this letter.
Very truly yours,
KING & SPALDING
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement of
Healthcare Recoveries, Inc. (the "Company") on Form S-8, of our report dated
February 28, 1997, except for Note 10 as to which the date is May 21, 1997, on
our audits of the balance sheet of the Company as of December 31, 1996 and 1995
and the related statements of income, changes in stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1996, which
report is included in the Company's prospectus which forms a part of the
Company's registration statement on Form S-1 (File No. 333-23287) filed with
the Securities and Exchange Commission pursuant to the Securities Act of 1933.
Coopers & Lybrand L.L.P.
Louisville, Kentucky
December 5, 1997
<PAGE> 1
EXHIBIT 99.1
HEALTHCARE RECOVERIES, INC.
EMPLOYEE STOCK PURCHASE PLAN
<PAGE> 2
TABLE OF CONTENTS
HEALTHCARE RECOVERIES, INC.
EMPLOYEE STOCK PURCHASE PLAN
1. Purpose.............................................................. 1
2. Definitions.......................................................... 1
3. Eligibility and Participation........................................ 2
4. Payroll Deductions................................................... 3
5. Withdrawals and Other Terminations of Participation.................. 3
6. Grant of Option and Option Exercise Price............................ 4
7. Stock Subject to Plan................................................ 5
8. Administration and Indemnification of Committee...................... 6
9. Administration Fees.................................................. 6
10. Transferability...................................................... 6
11. Adjustments Upon Changes in Capitalization........................... 7
12. General Restriction.................................................. 7
13. Amendment or Termination............................................. 7
14. Notices.............................................................. 7
15. No Contract.......................................................... 7
16. Headings and Construction............................................ 8
17. Section 16 Compliance................................................ 8
18. Approval of Stockholders............................................. 8
<PAGE> 3
HEALTHCARE RECOVERIES, INC.
EMPLOYEE STOCK PURCHASE PLAN
1. Purpose. The purpose of the Healthcare Recoveries, Inc.
Employee Stock Purchase Plan (the "Plan") is to provide employees of Healthcare
Recoveries, Inc., a Delaware corporation (the "Company"), with an opportunity
to acquire an interest in the Company through the purchase of Common Stock of
the Company ("Common Stock"). The Company intends the Plan to qualify as an
employee stock purchase plan under Section 423 of the Internal Revenue Code of
1986, as amended. Accordingly, the provisions of the Plan shall be construed
so as to extend and limit participation in a manner consistent with the
requirements of Section 423. Subject to the condition set forth in Paragraph
18, this Plan shall be effective as of May 28, 1997.
2. Definitions.
(a) "Board of Directors" means the board of directors
of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
(c) "Compensation" means salary and wages paid to an Eligible
Employee by the Company or a Subsidiary, including commissions and
bonuses, but excluding income attributable to the exercise of stock
options, and awards and other forms of remuneration.
(d) Contribution Account" means the bookkeeping account
established on behalf of a Participant to which shall be credited the
amount of the Participant's payroll deductions and from which shall
be debited all funds used to purchase Common Stock for the Participant
under the Plan.
(e) "Eligible Employee" means any Employee of the Company or
a Subsidiary excluding:
(1) any Employee who is a part-time employee unless
such employee is customarily employed for more than twenty
(20) hours per week; or
(2) any Employee who would own (immediately after
the grant of an option under the Plan and applying the
rules of Code Section 424(d) in determining stock
ownership) shares, and/or hold outstanding options to
purchase shares, possessing five percent (5%) or more of
the total combined voting power or value of all classes of
shares of the Company or of any Parent or Subsidiary.
(f) "Employee" means any person who is employed by the
Company or a Subsidiary for purposes of the Federal Insurance
Contributions Act.
(g) "Enrollment Period" means the period commencing on each
January 1 and ending on the next succeeding December 31; provided
however, that for the year including the date of the separation of the
Company from Medaphis Corporation, the Enrollment
<PAGE> 4
Period shall commence on the date of such separation and shall end on the next
succeeding December 31.
(h) "Entry Date" means January 1st of each calendar year; provided
however, that for the year including the date of the separation of the Company
from Medaphis Corporation, the Entry Date shall be the date of such separation.
(i) "Parent" means a corporation, if any, having the relationship
to the Company described in Section 424(e) of the Code.
(j) "Participant" means an Employee who participates in the Plan
pursuant to Paragraph 3.
(k) "Purchase Period" means each six-month period ending December
31 and June 30 during an Enrollment Period; provided however, that for the year
including the date of the separation of the Company from Medaphis Corporation,
the Purchase Period shall commence on the date of such separation and shall end
on the final day of the Enrollment Period that includes the date of such
separation.
(l) "Subsidiary" means any corporation having the relationship to
the Company described in Section 424(f) of the Code and which the Board of
Directors, or its designee, has designated as eligible to participate in the
Plan.
3. Eligibility and Participation.
(a) Any person who is an Eligible Employee on an Entry Date shall
be eligible to become a Participant in the Plan beginning on that Entry Date and
shall become a Participant as of that Entry Date by completing an authorization
form provided by the Company, in the form and containing such terms and
conditions as the Company from time to time may determine (the "Authorization
Form"), and filing it with the Company by the date required by the Company.
(b) Any person who first becomes an Eligible Employee during an
Enrollment Period shall be eligible to become a Participant in the Plan as of
the first day of the Purchase Period beginning after the date on which that
person became an Eligible Employee and shall become a Participant as of such
date by completing an Authorization Form and filing it with the Company by the
date required by the Company.
(c) A person shall cease to be a Participant upon the earliest
to occur of:
(1) the date the Participant ceases to be an Eligible
Employee, for any reason;
(2) the first day of the Purchase Period beginning after
the date on which the Participant ceases payroll deductions under the
Plan pursuant to Paragraph 4; or
2
<PAGE> 5
(3) the date of a withdrawal from the Plan by the Participant
under Paragraph 5.
4. Payroll Deductions. A Participant may contribute to the Plan through
payroll deductions as follows:
(a) A Participant shall, on his Authorization Form, elect to have
payroll deductions made from his Compensation at a rate which, expressed as
a whole percentage, shall be at least one percent (1%) and not exceed
fifteen percent (15%) of his Compensation.
(b) Payroll deductions for a Participant shall be made during the
Enrollment Period for which the Authorization Form is effective and shall
continue until the effective date of an Employee's authorization to change
the rate of his payroll deductions or discontinue payroll deductions, or as
otherwise provided in Section 5.
(c) A Participant may change the rate of his payroll deductions
effective on the first day of any Purchase Period, provided the Employee
files with the Company an Authorization Form requesting such change by the
date required by the Company before the end of the current Purchase
Period.
(d) A Participant may discontinue payroll deductions any time after
the first day of the payroll period coinciding with or immediately
following the Company's processing any Authorization Form on behalf of the
Participant. If upon cessation of payroll deductions, a Participant has
cash credited to his Contribution Account which he has not elected to
withdraw pursuant to Paragraph 5, he shall remain a Participant in the Plan
until the end of the then current Purchase Period.
(e) All payroll deductions made for a Participant shall be credited
to his Contribution Account under the Plan and will be used for the
purchase of Common Stock pursuant to Section 6 hereof. All payroll
deductions made for a Participant under the Plan shall be commingled with
the general assets of the Company and no separate fund shall be established
for each such Participant. Participants' Contribution Accounts are solely
for bookkeeping purposes and the Company shall not be obligated to pay
Participants interest on Contribution Account balances.
(f) A Participant may not make any separate cash payments or other
contributions to his Contribution Account in a manner other than through
payroll deductions as set forth in this Paragraph 4.
5. Withdrawals and Other Terminations Of Participation.
(a) A Participant may elect to cease participating in the Plan and
to withdraw the balance of the cash credited to his Contribution Account
under the Plan by giving written notice to the Company prior to the date
specified by the Company before the end of the current Purchase Period. A
Participant who receives a withdrawal of the cash balance of his
3
<PAGE> 6
Contribution Account under the Plan shall not be entitled to participate in the
Plan until the next Entry Date.
(b) The Company shall pay the cash balance of a Participant's Contribution
Account to the Participant as soon as administratively feasible following (i)
the date of processing of the withdrawal request or (ii) the date a person
otherwise ceases to be a Participant pursuant to Paragraph 3(c), clauses, (1)
and (2), as applicable (the events described in this subparagraph being
referred to collectively as a "Termination Event").
(c) Upon the occurrence of a Termination Event, the Participant's
outstanding options under Paragraph 6 of the Plan to purchase shares of Common
Stock shall immediately terminate.
(d) Upon the occurrence of a Termination Event, no further payroll
deductions will be made from the Participant's Compensation.
6. Grant of Option and Option Exercise Price.
(a) As of the beginning of each Purchase Period during each Enrollment
Period, a Participant is granted an option to purchase that whole number of
shares of Common Stock as does not exceed in value the result of dividing up to
15% of the Participant's Compensation for that Purchase Period by the lesser of
(i) eighty-five (85%) of the fair market value of the Common Stock on the first
business day of the Purchase Period, or (ii) eighty-five (85%) of the fair
market value of the Common Stock on the last business day of the Purchase
Period.
(b) On the last business day of each Purchase Period during an Enrollment
Period, each Participant will be deemed to have exercised his option to the
extent of the funds then held in the Participant's Contribution Account and
such funds will be applied to the purchase of whole shares of Common Stock;
provided, however, the number of shares purchased for a Participant shall not
be less than 1 share. The price of each share of Common Stock to be purchased
with a Participant's Contribution Account during a Purchase Period shall be the
lesser of eighty-five percent (85%) of the fair market value of one share of
Common Stock on the first business day of the Purchase Period and (ii)
eight-five (85%) of the fair market value of one share of Common Stock on the
last day of the Purchase Period. Any funds remaining after the application of
a Participant's Contribution Account to the purchase of shares of Common Stock
shall continue to be credited to the Participant's Contribution Account and
available for purchases of shares on the last business day of the next
succeeding Purchase Period.
(c) Notwithstanding the preceding subparagraphs or any provisions of the
Plan, no Participant shall be granted an option which permits his rights to
purchase shares under all employee stock purchase plans of the Company and its
Parent and Subsidiaries to accrue at a rate which exceeds $25,000 of the fair
market value of the shares (determined at the time the option is granted) for
each calendar year in which such stock option is outstanding at any time.
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<PAGE> 7
(d) For purposes of the preceding subparagraphs, the fair market
value of a share of Common Stock shall be determined as of each relevant date
as follows:
(1) if the Common Stock is traded on a national securities
exchange, the closing sale price on that date;
(2) if the Common Stock is not traded on any such exchange, the
closing sale price as reported by the NASDAQ Stock Market;
(3) if no such closing sale price information is available,
the average of the closing bid and asked prices as reported by the
NASDAQ Stock Market; or
(4) if there are no such closing bid and asked prices, the
average of the closing bid and asked prices as reported by any other
commercial service.
(e) All options granted during an Enrollment Period shall expire on
the last day of that Enrollment Period.
7. STOCK SUBJECT TO PLAN.
(a) The shares of Common Stock (the "Shares") to be sold to Participants
under the Plan may, at the election of the Company, be either treasury shares,
shares originally issued for such purpose or shares acquired on the open
market. The maximum number of Shares made available for sale under the Plan
shall be three hundred thousand (300,000), subject to adjustment upon changes
in capitalization of the Company as provided in Paragraph 11. If the total
number of Shares elected to be purchased under the Plan exceeds the number of
Shares then available under the Plan, the Company shall make a pro rata
allocation of the Shares available in as nearly a uniform manner as shall be
practicable and as it shall determine to be equitable.
(b) A Participant shall not have rights as a stockholder with respect to
any Shares covered by his option until the last day of the Purchase Period on
which the Shares are purchased. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
the Shares are purchased, except as otherwise provided in the Plan.
(c) Shares to be delivered to a Participant under the Plan will be
registered in the name of the Participant.
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<PAGE> 8
8. Administration and Indemnification of Committee.
(a) The Plan shall be administered by the Compensation
Committee of the Board of Directors (the "Committee"). Vacancies on the
Committee shall be filled by the Board of Directors. The Committee shall
hold meetings at such times and places as it may determine. Acts approved
by a majority of the Committee in a meeting at which a quorum is present,
or acts reduced to or approved in writing by a majority of the members of
the Committee, shall be the valid acts of the Committee.
(b) The Committee acting in its absolute discretion shall
exercise such power and take such action as expressly called for under the
Plan, and further, the Committee shall have the power to interpret the Plan
and (subject to Rule 16b-3 of the Securities Exchange Act of 1934 (the
"Exchange Act"), as amended) to take such other action (except to the
extent the right to take such action is expressly and exclusively reserved
for the Board of Directors or the Company's stockholders) in the
administration and operation of the Plan as the Committee deems equitable
under the circumstances, which action shall be binding on the Company, on
each affected Participant and on each other person directly or indirectly
affected by such action. No member of the Board of Directors or the
Committee shall be liable for any action or determination made in good
faith with respect to the Plan or any option granted under it.
(c) In addition to such other rights of indemnification that
they may have as directors of the Company or a member of the Committee, the
members of the Committee shall be indemnified by the Company against the
reasonable expenses, including attorney's fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding,
or in connection with any appeal therein, to which they or any of them may
be a party by reason of any action taken or failure to act under or in
connection with the Plan or any option granted thereunder, and against all
amounts paid by them in settlement thereof (provided the settlement is
approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any such action, suit or proceeding
except in relation to matters as to which it shall be adjudged in the
action, suit or proceeding that the Committee member is liable for
negligence or misconduct in the performance of his duties; provided that
within sixty (60) days after institution of the action, suit or proceeding
a Committee member shall in writing offer the Company the opportunity, at
its own expense, to handle and defend it.
9. Administration Fees. The Committee may charge Participants'
Contribution Accounts for reasonable administrative fees to defray the
administrative costs of the Plan, which shall in no event exceed the actual
administrative costs of the Plan.
10. Transferability. Neither payroll deductions credited to a
Participant's Contribution Account nor any rights with regard to the exercise
of an option or to receive shares under the Plan may be assigned, transferred,
pledged, or otherwise disposed of in any way by the Participant. Any attempted
assignment, transfer, pledge, or other disposition shall be without effect.
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11. Adjustments Upon Changes in Capitalization. The Committee will adjust
the total number of Shares and the purchase price, as determined under Paragraph
6, for any Shares available for sale under the Plan for any increase or decrease
in the number of outstanding shares of Common Stock resulting from a stock split
or a payment of a stick dividend on the shares of Common Stock, a subdivision or
combination of the shares of Common Stock, a reclassification of the shares of
Common Stock, a merger or consolidation of the Company or any other like changes
in the Common Stock or in its value. No fractional shares will be issued as a
result of any of these changes, and any fractional shares that result from a
change will be eliminated from the total number of Shares available for sale
under the Plan. All adjustments made by the Committee under this paragraph
shall be final, conclusive and binding on all Participants and, further, shall
not constitute an increase in the maximum number of Shares made available for
sale pursuant to Paragraph 7 of the Plan.
12. General Restriction. Notwithstanding anything contained herein to the
contrary, no purported exercise of any option granted pursuant to the Plan shall
be effective without the written approval of the Company, which may be withheld
to the extent that the exercise, either individually or in the aggregate
together with the exercise of the other previously exercised stock options
and/or offers and sales pursuant to any prior or contemplated offering of
securities, would, in the sole and absolute judgment of the Company, require the
filing of a registration statement with the United States Securities and
Exchange Commission or with the securities commission of any state. The Company
shall avail itself of any exemptions from registration contained in applicable
federal and state securities laws which are reasonably available to the Company
on terms which, in its sole and absolute discretion, it deems reasonable and not
unduly burdensome or costly. If an option cannot be exercised at the time it
would otherwise expire due to the restrictions contained in this Paragraph, the
exercise period for that option shall be extended for successive one-year
periods until that option can be exercised in accordance with this Paragraph.
Each Participant shall, prior to the exercise of an option, deliver to the
Company any reasonable request in order for the Company to be able to satisfy
itself that the Common Stock will be required in accordance with the terms of an
applicable exemption from the securities registration requirements or applicable
federal state securities laws.
13. Amendment or Termination. The Plan may be terminated or amended by
the Committee from time to time to the extent that the Committee deems necessary
or appropriate, except the Committee shall not amend the Plan, absent the
approval of the stockholders of the Company (a) to materially increase (within
the meaning of Rule 16b-3 of the Exchange Act) the benefits accruing to
Participants under the Plan (b) to materially increase (within the meaning of
Rule 16b-3 of the Exchange Act) the number of securities which may be issued
under the Plan, or (3) to materially modify (within the meaning of Rule 16b-3
of the Exchange Act) the requirements as to eligibility for participation in
the Plan.
14. Notices. All notices or other communications by a Participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the written form specified by the Company at the
location, or by the person, designated by the Company.
15. No Contract. The Plan shall not be deemed to constitute a contract
between the Company or any Subsidiary and any Employee or to be a consideration
or an inducement for the employment of any Employee. Nothing contained in the
Plan shall be deemed to give any Employee the right to be retained in the
service of the Company or any Subsidiary or to interfere with the right
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<PAGE> 10
of the Company or any Subsidiary to discharge any Employee at any time,
regardless of the effect such discharge shall have upon him as a Participant.
16. Headings and Construction. The headings to Paragraphs in the Plan
have been included for convenience of reference only. Where appropriate, the
masculine shall be deemed to include the feminine. The Plan shall be
interpreted and construed in accordance with the laws of the State of Delaware.
17. Section 16 Compliance. Any person who is an officer or director of
the Company for purposes of Section 16 of the Exchange Act is required to
comply with the requirements of Rule 16b-3 of the Exchange Act relating to
participant directed plans.
18. Approval of Stockholders. The Plan shall be submitted to the
stockholders of the Company for their approval within twelve (12) months after
the adoption of the Plan by the Board of Directors. The Plan is conditioned
upon the approval of the stockholders of the Company, and failure to receive
their approval shall render the Plan and all outstanding options issued
thereunder void and of no effect.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed as of
this 28 day of May, 1997.
HEALTHCARE RECOVERIES, INC.
By: Douglas R. Sharps
---------------------------------------
Title: Executive Vice President--
Finance and Administration,
Chief Financial Officer
and Secretary
-------------------------------------
ATTEST:
Dennis K. Burge
- ----------------------------------
Title: Executive Vice President--
Operations
----------------------------
[CORPORATE SEAL]
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