<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
HIE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
HIE, INC.
1850 Parkway Place, Suite 1100
Marietta, Georgia 30067
(770) 423-8450
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 17, 1999
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
of HIE, Inc. ("HIE" or the "Company"), which will be held at the Company's
corporate office building, 1850 Parkway Place, Suite 320, Marietta, Georgia
30067, on Monday, May 17, 1999, at 11:00 a.m., Atlanta time, for the following
purposes:
(1) To elect three Class I directors to serve for three-year
terms, one Class II director to serve a one-year term and one Class III
director to serve a two-year term, and in each case, until their
successors are elected and qualified;
(2) To approve the amendment and restatement of the HIE Stock
Option Plan I to, among other things, increase the number of shares
reserved for issuance under such plan by 500,000 shares;
(3) To approve the amendment and restatement of the HIE
Non-Employee Director Stock Option Plan to, among other things,
increase the number of shares reserved for issuance under such plan by
250,000 shares;
(4) To approve the amendment and restatement of the HIE
Employee Stock Purchase Plan to, among other things, increase the
number of shares reserved for issuance under such plan by 200,000; and
(5) To transact any and all other business as may properly
come before the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 8,
1999, as the record date for determination of shareholders entitled to notice
of, and to vote at, the annual meeting or any adjournment thereof. Whether or
not you expect to attend the meeting, please complete, date and sign the
enclosed proxy card and return it in the envelope which has been provided. In
the event you attend the annual meeting, you may revoke your proxy and vote your
shares in person.
I look forward to welcoming you at the meeting.
By Order of the Board of Directors
/s/ J. Edward Pearson, Jr.
J. Edward Pearson, Jr.
Secretary
Marietta, Georgia
April 7, 1999
<PAGE> 3
HIE, INC.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 17, 1999
The Board of Directors of HIE, Inc., a Georgia corporation ("HIE" or
the "Company"), is furnishing this Proxy Statement to the holders of its common
stock, par value $.01 per share, together with associated preferred stock
purchase rights (the "Common Stock"), in connection with the solicitation of
proxies for use at the Annual Meeting of Shareholders (the "Annual Meeting") to
be held at 11:00 a.m., Atlanta time, on Monday, May 17, 1999 and at any and all
adjournments thereof.
At the Annual Meeting, shareholders will be requested to act upon the
matters set forth in this Proxy Statement. If you are not present at the
meeting, your shares can be voted only when represented by proxy. The shares
represented by your proxy will be voted in accordance with your instructions if
the proxy is properly signed and returned to the Company before the Annual
Meeting. If no directions are specified, the shares will be voted (i) FOR the
election of the director nominees, (ii) FOR approval of the amendment and
restatement of the HIE, Inc. Stock Option Plan I, (iii) FOR approval of the
amendment and restatement of the HIE, Inc. Non-Employee Director Stock Option
Plan, (iv) FOR approval of the amendment and restatement of the HIE, Inc.
Employee Stock Purchase Plan, and (v) in accordance with the discretion of the
named proxies on other matters properly brought before the Annual Meeting. A
proxy may be revoked, prior to its exercise, by executing and delivering a later
dated proxy card, by delivering written notice of the revocation of the proxy to
the Secretary of the Company prior to the Annual Meeting, or by attending and
voting at the Annual Meeting. Attendance at the Annual Meeting, in and of
itself, will not constitute a revocation of a proxy.
The Company will bear the expenses of preparing, printing and mailing
this Proxy Statement and soliciting the proxies sought hereby. In addition to
the use of the mails, proxies may be solicited by officers, directors and
employees of the Company, who will not receive additional compensation therefor,
in person or by telephone or facsimile transmission. The Company has retained
D.F. King & Co., Inc. to assist in the solicitation of proxies for a fee of
$3,500, plus expenses. The Company also will request brokerage firms, banks,
nominees, custodians and fiduciaries to forward proxy materials to the
beneficial owners of shares of Common Stock as of March 8, 1999 and will provide
reimbursement for the cost of forwarding the proxy materials in accordance with
customary practice. Your cooperation in promptly signing and returning the
enclosed proxy card will help to avoid additional expense.
The mailing address of the principal executive offices of the Company
is 1850 Parkway Place, Suite 1100, Marietta, Georgia 30067, and the telephone
number is (770) 423-8450.
This Proxy Statement and the enclosed proxy card are first being mailed
to shareholders on or about April 7, 1999. A copy of the Company's 1998 Annual
Report to Shareholders is being mailed with this Proxy Statement.
<PAGE> 4
QUORUM AND VOTING REQUIREMENTS
The close of business on March 8, 1999 has been fixed as the record
date for the determination of shareholders of the Company entitled to notice of
and to vote at the Annual Meeting. On that date, the Company had outstanding
25,303,458 shares of its Common Stock. Each share of Common Stock entitles the
holder to one vote on each matter properly coming before the meeting.
The presence of the holders of a majority of the outstanding shares
entitled to vote whether present in person or by proxy at the Annual Meeting
will constitute a quorum. Abstentions will be treated as present for purposes of
determining a quorum. Shares held by a broker as nominee (i.e., in "street
name") that are represented by proxies at the Annual Meeting, but that the
broker fails to vote on one or more matters as a result of incomplete
instructions from a beneficial owner of the shares ("broker non-votes"), will
also be treated as present for quorum purposes.
With regard to the election of directors, votes may be cast for or
votes may be withheld from each nominee. Abstentions may not be specified with
respect to the election of directors. Under Georgia law, assuming a quorum is
present, directors are elected by a plurality of the votes cast. Accordingly,
the withholding of authority by a shareholder (including broker non-votes) will
not be counted in computing a plurality and thus will have no effect on the
results of the election of such nominees.
With regard to the approval of the amendments and restatements of the
plans, votes may be cast for or against such proposals, or shareholders may
abstain from voting thereon. Under the Company's by-laws, assuming a quorum is
present, each such proposal would be approved if the votes cast favoring the
proposal exceed the votes cast opposing the proposal. However, to comply with
Nasdaq shareholder approval requirements, the approval of the amendments and
restatements of the plans requires the affirmative vote of a majority of the
total votes cast on each proposal in person or by proxy. As a result,
abstentions will have the effect of a vote against such proposals, but the
failure of a shareholder to submit a proxy or attend the Annual Meeting,
including broker non-votes, will have no effect on the outcome of these
proposals.
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I. ELECTION OF DIRECTORS
The Board of Directors is currently comprised of eleven directors in
three classes serving staggered terms. The Board has nominated and recommends
for election as director the five nominees as set forth below. Each nominee
currently serves as a director of the Company.
On June 8, 1998, the Board of Directors increased the number of
directors constituting the Board from nine to eleven members, and Messrs. Mark
D. Shary and Scott A. Jones were appointed to fill the newly created positions.
The Georgia Business Corporation Code requires that when the number of directors
on a staggered board is increased and newly created directorships are filled by
the board, the terms of the additional directors expire at the next shareholders
meeting at which directors are elected. Accordingly Messrs. Jones and Shary are
being nominated for election as Class II and III directors, respectively, at the
Annual Meeting.
The Board of Directors has no reason to believe that any of the
nominees for director will not be available to stand for election as a director.
However, should any of such nominees become unable to serve, the proxies may be
voted for a substitute nominee or nominees, or to allow the vacancy created
thereby to remain open until filled by the Board, or to reduce the size of the
full Board in the discretion of those persons named as proxies in the form of
proxy.
The following is a brief description of the principal occupation and
business experience during the last five years, directorships of publicly-held
companies presently held by each director nominee and certain other information
for each of the five director nominees and for each of the other six directors
whose terms will continue after the 1999 Annual Meeting.
CLASS I NOMINEES FOR THE TERM EXPIRING IN 2002
William J. Gresham, Jr., age 56, has served as a director of HIE since
June 1995. He has been a consultant to Gresham Real Estate Advisors, Inc., a
real estate management and brokerage firm, since 1992 and previously was a
consultant to the Landmark Group, a real estate management and development firm,
from 1990 to 1992. From 1987 to 1990, he served as Chairman of the Board of City
Group, Inc., a real estate development firm, and also served as President of
that company from 1989 to 1992. Mr. Gresham is also a director of Riverside
Bank.
Charles R. Hatcher, Jr., M.D., age 68, has served as a director of HIE
since June 1995. Dr. Hatcher has served as an advisor to the University
President and the Board of Trustees of Emory University and Director Emeritus of
the Robert W. Woodruff Health Sciences Center of Emory University since 1996. He
has been a physician since 1962, and until his retirement during 1996, had
served as Director and Vice President for Health Affairs at the Robert W.
Woodruff Health Sciences Center since 1984 and Professor of Surgery at the Emory
University School of Medicine since 1971. Dr. Hatcher is also a director of Life
of the South Corporation.
Donald W. Weber, age 62, has served as a director of HIE since January
1995. Mr. Weber was President and Chief Executive Officer of Viewstar
Entertainment Services, Inc., a distributor of satellite entertainment systems,
from August 1993 until November 1997, when he sold that company and became a
private investor. From 1991 to August 1993, he was a
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consultant and private investor, and from 1987 to 1991, he served as President
and Chief Executive Officer of Contel Corporation, a telecommunications
supplier, which was sold in 1991 to GTE Corp. Mr. Weber is also a director of
Powertel, Inc. and Pegasus Communications, Inc.
CLASS II NOMINEE FOR THE TERM EXPIRING IN 2000
Scott A. Jones, age 38, has served as a director of HIE since June
1998. Since July 1996, Mr. Jones has served as Chief Executive Officer and
Chairman of Escient LLC, a company involved in the convergence of consumer
electronics, the Internet and computer technology. He previously served as
Chairman and Chief Scientist/Founding Scientist of Boston Technology, Inc.
("Boston Technology"), a provider of voice and Internet messaging systems and
services, from 1986 to December 1992. In addition, he served as a director of
Boston Technology from 1986 to 1993 and as a consultant to Boston Technology
from December 1992 until it was acquired by Comverse Technology, Inc. in January
1998. Mr. Jones has been the principal in Threshold Technologies, Inc., a
consulting firm, since April 1993 and King AirCharters, Inc., a private charter
company, since April 1994. Mr. Jones also serves as a director of Art Technology
Group, Hanover Communications, the First Internet Bank of Indiana and Monument
Advisors.
CLASS III NOMINEE FOR THE TERM EXPIRING IN 2001
Mark D. Shary, age 38, has served as a director of HIE since June 1998
and as Senior Vice President-Commercial Business since February 1999. He
previously served as Senior Vice President-Product Planning of HIE from May 1998
through January 1999 and as Chief Financial Officer, Treasurer and Secretary of
HIE from May 1998 until November 1998. Mr. Shary joined HIE when HIE acquired
HUBLink, Inc., an integration software tool company ("HUBLink"), in May 1998,
where he had served as Chief Executive Officer since founding that company in
1992. From 1982 until 1992, Mr. Shary served in a number of executive and staff
capacities at Ernst & Young LLP, an accounting firm, including Senior Manager
from 1989 to 1992.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ITS FIVE
NOMINEES AS DIRECTORS.
CLASS II DIRECTORS CONTINUING IN OFFICE UNTIL 2000
Joseph G. Bleser, age 53, has served as a director of HIE since October
1997. Mr. Bleser has been an independent financial consultant since retiring
from HIE in June 1998, and he currently serves as a consultant to HIE. Prior to
that time, he had served as Executive Vice President of HIE from October 1997 to
June 1998, Chief Financial Officer from March 1995 to May 1998 and as Treasurer
and Secretary from August 1995 to May 1998. He was Vice President -- Finance of
HIE from August 1995 to October 1997. Prior to joining HIE, Mr. Bleser served as
Executive Vice President, Chief Financial Officer and Treasurer of Allegiant
Physician Services, Inc., a physician practice management company, from May 1993
until March 1995. He was previously employed by HBO & Company ("HBOC"), a
healthcare information company and a predecessor company of McKesson HBOC, Inc.,
as Senior Vice President-Finance, Treasurer, Assistant Secretary and Chief
Financial Officer from 1992 to 1993 and as Vice President, Controller and Chief
Accounting Officer from 1983 to 1992.
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J. Terry Dewberry, age 55, has served as a director of HIE since June
1995 and prior thereto from June 1994 to January 1995. Mr. Dewberry also served
as Vice President of HIE from June 1994 to January 1995. Mr. Dewberry was a
director of Healthdyne, Inc. ("Healthdyne"), a provider of specialized
obstetrical home healthcare services and a predecessor company of Matria
Healthcare, Inc. ("Matria"), from 1981 until March 1996 and served as Vice
Chairman of Healthdyne from 1992 until March 1996, when he retired. From 1987
until 1992, Mr. Dewberry was President and Chief Operating Officer of Healthdyne
and was Executive Vice President of Healthdyne from 1984 to 1987. Mr. Dewberry
is also a director of Respironics, Inc.
Carl E. Sanders, age 73, has served as a director of HIE since June
1994. He is engaged in the private practice of law as Chairman of Troutman
Sanders LLP, an Atlanta, Georgia law firm. Mr. Sanders is a director of First
Union Corporation of Georgia, Learning Technologies, Ltd., World Access, Inc.,
Carmike Cinemas, Inc., Matria, Metromedia International Group, Inc. and Norrell
Corporation.
CLASS III DIRECTORS CONTINUING IN OFFICE UNTIL 2001
John W. Lawless, age 55, has served as a director of HIE since February
1998 and from January 1995 to May 1997. Mr. Lawless was a director of Inforum,
Inc., a healthcare information company, from 1989 to March 1993. He was Chairman
of Inforum, Inc. from 1991 to March 1993, when that company was merged with
Medstat Group, a healthcare information services company. He served on the board
of directors of Medstat Group from April 1993 to January 1994. Mr. Lawless was a
co-founder of HBOC in 1974 and retired as President and director of HBOC in
1987. From 1988 until the present Mr. Lawless has been a private investor and
management consultant.
Robert I. Murrie, age 53, has served as a director and the President
and Chief Executive Officer of HIE since October 1997. He was President of
Healthcare Communications, Inc., a wholly-owned subsidiary of HIE, from April
1997 to October 1997 and served as a Client Partner of HIE (a senior sales
executive position) from January 1996 to April 1997. Prior to joining HIE, Mr.
Murrie served as President and Chief Executive Officer of Nurse on Call, a
managed care service company, from 1992 to December 1995 and held several senior
executive positions at HBOC from 1985 to 1992, including President and Chief
Executive Officer of Healthquest, Inc., a healthcare information company and a
wholly-owned subsidiary of HBOC, from 1988 to 1992.
Parker H. Petit, age 59, has served as Chairman of the Board of
Directors of HIE since its formation in June 1994. He has also served as
Chairman of the Board of Directors of Matria, a provider of women's health
services, cardiovascular and respiratory disease management services,
infertility practice management, and diabetes supplies and services, since March
1996. Mr. Petit was the founder of Healthdyne and acted as its Chairman of the
Board and Chief Executive Officer from 1970 until Healthdyne and Tokos Medical
Corporation (Delaware) merged with and into Matria in March 1996. Mr. Petit also
serves as a director of Norrell Corporation, ASA Holdings, Inc., Intelligent
Systems, Inc. and Logility, Inc.
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II. APPROVAL OF THE AMENDMENT AND RESTATEMENT
OF HIE STOCK OPTION PLAN I
The Board of Directors has approved and adopted the amendment and
restatement of the HIE, Inc. Stock Option Plan I ("Plan I"). The Company will
furnish to shareholders without charge a copy of Plan I upon request. Any
request for a copy of Plan I should be in writing addressed to: J. Edward
Pearson, Jr., Secretary, HIE, Inc., 1850 Parkway Place, Suite 1100, Marietta,
Georgia 30067. The following summary is qualified in its entirety by reference
to the complete text of Plan I.
Principal Features of Plan I
The primary purpose of Plan I is to promote the interests of the
Company and its shareholders in attracting, retaining and stimulating the
performance of officers, key employees, consultants and advisors. The Company
may grant either incentive stock options or nonqualified stock options under
Plan I. Incentive stock options are intended to be treated as such within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"). Nonqualified stock options are, in general, options which do not have
the special income tax advantages associated with incentive stock options.
The major provisions of Plan I are as follows:
Administration. Plan I is administered by the Stock Option Committee
appointed by the Board. The Stock Option Committee determines which eligible
participants will be granted options, the number of shares of Common Stock
subject to an option granted to any participant, whether the option is an
incentive stock option or nonqualified stock option, and the other terms and
conditions governing the option (including the vesting schedule applicable to
the option).
Eligibility. Key employees, officers, consultants and advisors of the
Company and its subsidiaries are eligible to receive options under Plan I.
However, directors who are not employees of the Company or its subsidiaries are
not eligible to participate in Plan I. As of December 31, 1998, approximately
172 employees and 25 consultants were eligible to participate in Plan I.
Exercise Price. The exercise price of all options shall be determined
by the Stock Option Committee at the time of grant but shall not be less than
the fair market value of the Common Stock on the date of grant.
Term of Options. The term of each option will be as determined by the
Stock Option Committee but will in no event be greater than ten years from the
date of grant. An option will terminate upon an optionee's termination of
employment for serious misconduct (a "Terminating Event"). Upon an optionee's
death while an employee of the Company or a subsidiary or within 60 days of the
termination of such employee's employment (other than with respect to a
Terminating Event), an option will terminate one year from the date of death or
upon the expiration of the option, whichever is earlier. Upon the termination of
an optionee's employment because of permanent disability or, in the case of a
nonqualified stock option, retirement, an
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option will terminate one year after the date of termination or retirement, as
applicable, or upon the expiration of the option, whichever is earlier. Upon an
optionee's termination of employment other than by death, permanent disability,
or, in the case of a nonqualified stock option, retirement, and other than in
connection with a Terminating Event, an option will terminate sixty days after
the date of termination or upon the expiration of the option, whichever is
earlier. In addition, upon an optionee's termination of employment by
retirement, an incentive stock option will terminate sixty days after the date
of termination or upon the expiration of the option, whichever is earlier.
Payment. Payment for stock purchased on the exercise of a stock option
must be made in full at the time the option is exercised in cash or in shares of
Common Stock having a fair market value at the time of exercise equal to the
aggregate exercise price.
Nontransferability. No stock options granted under Plan I are
transferable by the optionee other than by will or by the laws of descent and
distribution, and each option is exercisable, during the lifetime of the
optionee, only by the optionee.
Description of Proposed Amendments
Increase In Shares Available for Issuance. Plan I currently provides
that the maximum number of shares of Common Stock which may be issued under Plan
I is 1,019,783 shares. The amendment would increase this amount by 500,000
shares to 1,519,783 shares.
Administration. Plan I currently provides that the Stock Option
Committee administering Plan I have certain attributes which were formerly
required by rules promulgated under Section 16 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). In connection with recent amendments to
Section 16, the Board of Directors has proposed to delete from Plan I the
requirement of Stock Option Committee members being "disinterested" directors,
which is now irrelevant in light of the revisions to Section 16.
Eligibility. Plan I currently provides that options may be granted to
officers and key employees of the Company or any of its subsidiaries as well as
consultants and advisors to the Company. The amendment would provide that all
employees of the Company and its subsidiaries as well as consultants or advisors
would be eligible for grants of options under Plan I.
Payment. Plan I currently provides that the payment of the exercise
price for options granted under Plan I must be in cash or in the form of shares
of Common Stock having a fair market value at the time of exercise equal to the
aggregate exercise price. The amendment would provide that such payment may
also, in the sole discretion of the Stock Option Committee, be payable through
the use of a broker-assisted cashless exercise procedure.
Limited Transferability. Plan I currently provides that neither
incentive stock options, nor nonqualified stock options granted under Plan I may
be transferred by an optionee. The amendment would provide that, with respect to
nonqualified stock options only, the Stock
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Option Committee may, in its sole discretion, provide for limited
transferability by optionees to family members or trusts for estate planning
purposes.
Federal Income Tax Consequences
There will be no federal income tax consequences to either the optionee
or the Company on the grant of an option under Plan I. On the exercise of a
nonqualified stock option, the optionee will recognize taxable ordinary income
equal to the difference between the exercise price of the shares and the fair
market value of the shares on the exercise date. The Company will be entitled to
a tax deduction in an amount equal to the optionee's taxable ordinary income.
Upon disposition of the stock by the optionee, he will recognize long-term or
short-term capital gain or loss, as the case may be, equal to the difference
between the amount realized on such disposition and his basis for the stock,
which will include the amount previously recognized by him as ordinary income.
Generally, if an optionee exercises an incentive stock option and does
not dispose of the shares within two years from the date of grant and one year
from the date of exercise, the optionee will recognize no income on exercise of
the option, the entire gain, if any, realized upon disposition will be taxable
to the optionee as long-term capital gain, and the Company will not be entitled
to any deduction. If, however, an optionee disposes of shares prior to the
expiration of the holding periods described above, the optionee will generally
realize ordinary income in an amount equal to the difference between the
exercise price and the fair market value of the shares on the date of exercise
and the Company will be entitled to a deduction equal to the amount recognized
as ordinary income by the holder. Any appreciation accruing between the date of
exercise and the date the option shares are disposed will be treated as a
capital gain (long-term or short-term depending on how long the optionee held
the shares prior to disposition) and the Company will not be entitled to any
further deductions for federal income tax purposes. If the amount realized by
the optionee is less than the value of the shares upon exercise, then the amount
of ordinary income and the corresponding Company deduction will be equal to the
excess, if any, of the amount realized over the option price.
Additional Information Regarding New Plan Benefits
Awards under Plan I are based upon the Company's performance.
Accordingly, future awards ("new plan benefits") under Plan I are not
determinable at this time. See "Executive Compensation and Other Information --
Summary of Cash and Certain Other Compensation," "-- Stock Option Grants and
Related Information" and "-- Report of the Compensation and Stock Option
Committees" for detailed information on stock incentive awards and exercises of
such awards by certain executive officers under the Company's stock option plans
during the most recent fiscal year.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT AND
RESTATEMENT OF PLAN I.
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III. APPROVAL OF THE AMENDMENT AND RESTATEMENT
OF HIE NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
The Board of Directors has approved and adopted the amendment and
restatement of the HIE, Inc. Non-Employee Director Stock Option Plan (the
"Director Plan"). The Company will furnish to shareholders without charge a copy
of the Director Plan upon request. Any request for a copy of the Director Plan
should be in writing addressed to: J. Edward Pearson, Jr., Secretary, HIE, Inc.,
1850 Parkway Place, Suite 1100, Marietta, Georgia 30067. The following summary
is qualified in its entirety by reference to the complete text of the Director
Plan.
Principal Features of the Director Plan
The primary purpose of the Director Plan is to promote the interests of
the Company and its shareholders in obtaining and maintaining the services of
knowledgeable and independent directors on the Company's Board of Directors, to
provide an additional incentive for such directors to serve on the Board and to
give them a greater interest as shareholders in the success of the Company. The
Company may grant nonqualified stock options under the Director Plan.
The major provisions of the Director Plan are as follows:
Eligibility. Each director of the Company who is not otherwise an
employee of the Company or any subsidiary of the Company (a "Non-Employee
Director") is eligible to receive options under the Director Plan. As of March
31, 1998, nine directors were eligible to participate in the Director Plan.
Formula Grant. Under the Director Plan, an initial option to purchase
20,000 shares of the Common Stock is granted to each new Non-Employee Director.
The Director Plan also provides for an automatic annual grant to each
Non-Employee Director of an additional option to 2,000 purchase shares of Common
Stock on the date of each annual meeting of shareholders of the Company,
provided that such individual has been a Non-Employee Director for the six
months preceding such annual meeting.
Exercise Price. The exercise price for options granted pursuant to the
Director Plan is 100% of the fair market value of the Common Stock on the date
of grant.
Time and Manner of Exercise. The right to purchase Common Stock
pursuant to an option granted under the Director Plan vests and becomes
exercisable at the rate of 25% per year beginning on the first anniversary of
the date of grant. Upon the terms and conditions set forth in the Director Plan,
options become immediately exercisable in full upon certain change in control
events involving the Company.
Term of Options. Each option terminates five years from the date of
grant. Options also terminate no later than thirty (30) days from the date
service on the Board is discontinued, except that, in the event of death, the
option will terminate no later than six months following the date of death.
Stock options will terminate no later than thirty (30) days from the date a
director becomes an employee of the Company or any of its subsidiaries.
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Payment. Payment for stock purchased on the exercise of a stock option
must be made in full at the time the option is exercised in cash.
Termination and Changes to the Director Plan. The Board of Directors
may suspend, terminate or amend the Director Plan from time to time in any
manner; provided that no such action without the approval of the shareholders of
the Company may increase the number of shares subject to the Director Plan
(except as contemplated by the express terms of the Director Plan) or any option
previously granted, extend the maximum period during which options may be
exercised or materially increase the benefits of the Director Plan.
Description of Proposed Amendments
Increase in Shares Available for Issuance. The Director Plan currently
provides that the maximum number of shares of Common Stock which may be issued
under the Director Plan is 250,000. The amendment would increase this number to
500,000 shares.
Increases in Annual Option Grants. The Director Plan currently provides
for the automatic annual grant to a Non-Employee Director of an additional
option to purchase 2,000 shares of Common Stock on the date of each annual
meeting of shareholders of the Company, provided that such individual has been a
Non-Employee Director for the preceding six months. The amendment would increase
the shares underlying the annual option grant to Non-Employee Directors to 5,000
shares.
Payment. The Director Plan currently provides that the payment of the
exercise price for options granted under the Director Plan must be in cash. The
amendment would provide that such payment may also (i) take the form of shares
of Common Stock having a fair market value at the time of exercise equal to the
aggregate exercise price or (ii) in the sole discretion of the Board, be payable
through the use of a broker-assisted cashless exercise procedure.
Limited Transferability. The Director Plan currently provides that the
options granted under the Director Plan may not be transferred other than upon
the death of the optionee. The amendment would provide that the Board may, in
its sole discretion, provide for limited transferability by optionees to family
members or trusts for estate planning purposes.
Federal Income Tax Consequences
There will be no federal income tax consequences to either the
Non-Employee Director or the Company upon the grant of an option under the
Director Plan. Upon the exercise of an option, however, the Non-Employee
Director will realize taxable income at ordinary income rates to the extent that
the value of the Common Stock on the date of exercise exceeds the option price,
and the Company will receive a corresponding tax deduction.
Additional Information Regarding New Plan Benefits
Subject to shareholder approval of the amendments to the Director Plan,
an option to purchase up to 5,000 shares of Common Stock is expected to be
granted to each of the five
10
<PAGE> 13
continuing directors who are Non-Employee Directors on May 17, 1999. Each of
the four Non-Employee Director nominees who is re-elected at the Annual
Meeting will also receive an option to purchase up to 5,000 shares of Common
Stock. The exercise price of such options will be the fair market value of the
Common Stock on May 17, 1999.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT AND
RESTATEMENT OF THE DIRECTOR PLAN.
11
<PAGE> 14
IV. APPROVAL OF AMENDMENT AND RESTATEMENT OF HIE EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors has approved and adopted the amendment and
restatement of the HIE, Inc. Employee Stock Purchase Plan (the "Purchase Plan").
The Company will furnish to shareholders without charge a copy of the Purchase
Plan upon request. Any request for a copy of the Purchase Plan should be in
writing addressed to: J. Edward Pearson, Jr., Secretary, HIE, Inc., 1850 Parkway
Place, Suite 1100, Marietta, Georgia 30067. The following summary is qualified
in its entirety by reference to the complete text of the Purchase Plan.
Principal Features of the Purchase Plan
The primary purpose of the Purchase Plan is to encourage stock
ownership by all eligible employees of the Company and its subsidiaries (as
defined in Section 424(f) of the Code) in order to increase their interest in
the success of the Company and to encourage them to remain in the employ of the
Company and its subsidiaries. The Company intends that the Purchase Plan
constitute an "employee stock purchase plan" within the meaning of Section 423
of the Code.
MAJOR PROVISIONS OF THE PURCHASE PLAN
The major provisions of the Purchase Plan are as follows:
Administration. The Purchase Plan is administered by an Employee Stock
Purchase Plan Committee (the "Purchase Plan Committee") appointed by the Board
of Directors and consisting of three (or such other number as may be required by
Rule 16b-3 of the Exchange Act) of its members. The interpretation and
construction by the Purchase Plan Committee of any provision of the Purchase
Plan shall be final and binding on all employees, eligible employees,
participants and on any person making a claim based on the rights, if any, of
any such persons under the Purchase Plan.
Eligibility. All employees of the Company, and such of its subsidiaries
as are designated by the Purchase Plan Committee are eligible to participate in
the Purchase Plan, other than (i) employees whose customary employment is 20
hours or less per calendar week or is not more than five months in any calendar
year and (ii) employees who would own stock immediately after the grant of an
option under the Purchase Plan that possesses 5% or more of the total combined
voting power or value of all classes of stock of the Company or any of its
subsidiaries. As of December 31, 1998, approximately 172 employees were eligible
to participate in the Purchase Plan.
Operation of the Purchase Plan. Under the Purchase Plan, the Company
conducts a series of offerings of its authorized but unissued shares of Common
Stock each of which commences on the first business day of each calendar quarter
and terminates on the last business day of such quarter (an "Offering Period").
The initial Offering Period may commence during a calendar quarter at the
discretion of the Purchase Plan Committee. An eligible employee who elects to
become a participant in the Purchase Plan must sign an authorization form
pursuant to which payroll deductions to purchase Common Stock are made. The
authorization must specify
12
<PAGE> 15
the amount of payroll deduction to be made from the employee's compensation and
such amount (i) may not be less than 2% of the participant's compensation as
paid on each payday or $25 per pay period, whichever is less, and (ii) may not
exceed 10% of the participant's compensation as paid on each payday.
Compensation for this purpose means a participant's base annual hourly wages,
stated salary and sales commissions paid by the Company or any of its
subsidiaries and does not include any other form of compensation, such as
overtime, profit sharing, bonuses, miscellaneous reimbursements and
contributions by the Company or any of its subsidiaries to any employee benefit
plan. Payroll deductions are held by the Company in a non-interest bearing
account as part of the Company's general assets (subject to all liens and
encumbrances, if any, that attach to such assets either in the normal course of
business or by agreement of the Company) and participants may not make any
separate cash payment or contribution to such account.
At the beginning of each Offering Period each participant is granted,
by operation of the Purchase Plan, an option to purchase shares of Common Stock,
which option will not exceed 2,000 shares and will expire, to the extent it is
unexercised, on the termination date of that Offering Period. No participant may
be granted an option under the Purchase Plan if the option will permit his
rights to purchase stock under all employee stock purchase plans of the Company
and any of its subsidiaries to accrue at a rate that exceeds $25,000 in the fair
market value of such stock for each calendar year or portion of such year in
which the option would be outstanding. If the number of shares available for
purchase under the Purchase Plan is insufficient to grant each participant an
option to purchase up to 2,000 shares of Common Stock and the Purchase Plan
Committee determines nevertheless to allow an offering during the Offering
Period, each participant will be granted an option, by operation of the Purchase
Plan, to purchase the number of available shares of stock that is equal to the
total number of available shares divided by the number of participants.
Unless a participant files an amended authorization before the
termination date of an Offering Period in which an option granted to him under
the Purchase Plan will expire, the option will be exercised automatically on
such termination date for the purchase of as many full shares of Common Stock
subject to the option as the accumulated payroll deductions credited to his
account as of that date will purchase at the option price for such stock. The
participant may file an amended authorization before the termination date of an
Offering Period to elect, as of such termination date, (i) to withdraw in cash
all of the accumulated payroll deductions credited to his account as of that
date or (ii) to exercise his option for a specified number of full shares which
is not less than five but is less than the number of full shares of Common Stock
that the accumulated payroll deductions credited to his account will purchase
and to withdraw the balance of the accumulated payroll deductions as of such
date after giving effect to such partial exercise. If the accumulated payroll
deductions credited to the account of a participant who exercises an option in
full exceed the amount needed to purchase the full number of shares for which
the option was granted, the excess will be paid to the participant as soon as
practicable following the termination date of the Offering Period, except that
any excess resulting solely from the failure to purchase a fractional share of
Common Stock will be carried forward without interest in the participant's
account unless the participant has terminated his participation in the
13
<PAGE> 16
Purchase Plan. Participants will receive a report on the number of shares of
Common Stock purchased and the purchase price thereof following the termination
of each Offering Period.
Exercise Price. The exercise price for options granted under the
Purchase Plan will be the lower of 85% of the fair market value per share of
Common Stock on either the first business day of the Offering Period or the last
business day of the Offering Period.
Withdrawal and Termination. A participant may withdraw the accumulated
payroll deduction credited to his account under the Purchase Plan at any time
before the termination date of an Offering Period by filing an amended
authorization with the Purchase Plan Committee. Upon termination of a
participant's employment by the Company or any of its subsidiaries for any
reason, including retirement or death, the participant will immediately cease to
be a participant on the date of such termination. Any option that has been
granted under the Purchase Plan will expire immediately as of such date and may
not be exercised, and the accumulated payroll deductions credited to the
participant's account will be returned without interest to him, or in the case
of death, to his designated beneficiary.
Nontransferability. Neither the accumulated payroll deductions credited
to a participant's account nor any right to the exercise of an option or to
receive stock under the Purchase Plan may be assigned, encumbered, alienated,
transferred, pledged or otherwise disposed of in any way by the participant or
by any other person during his lifetime, and any attempt to do so may be treated
by the Purchase Plan Committee as an election to withdraw funds accumulated
under the Purchase Plan.
Amendment or Termination of the Purchase Plan. The Purchase Plan may be
amended by the Company's Board of Directors from time to time to the extent that
the Board deems necessary or appropriate in light of, and consistent with,
Section 423 of the Code, provided that no amendment may be made without
shareholder approval that would (i) increase the number of shares of Common
Stock available for the granting of options under the Purchase Plan, (ii)
decrease the minimum option price for the exercise of options granted under the
Purchase Plan, (iii) permit payroll deductions in excess of 10% of a
participant's compensation, or (iv) change the class of employees eligible for
stock options under the Purchase Plan or the requirements as to eligibility for
participation in the Purchase Plan. The Board of Directors may terminate the
Purchase Plan or the granting of options under the Purchase Plan at any time,
but the Board does not have the right to modify, cancel or amend any outstanding
options granted under the Purchase Plan before such termination unless the
participant consents in writing to such modification, amendment or cancellation.
Description of Proposed Amendments
The only amendments to the Purchase Plan are (i) an increase in the
number of shares of Common Stock available under the Purchase Plan from 200,000
to 400,000 shares and (ii) the removal of provisions regarding Section 16
compliance which are now irrelevant in light of amendments to Section 16.
14
<PAGE> 17
Federal Income Tax Consequences
The Purchase Plan is intended to qualify as an "employee stock purchase
plan" under Section 423 of the Code. The amounts withheld from a participant's
pay under the Purchase Plan will constitute ordinary income to the participant
for federal income tax purposes in the year in which such amounts would
otherwise have been paid. However, a participant does not recognize any income
for federal income tax purposes either on the grant of an option or upon its
exercise. Taxable income will not be recognized until there is a sale or other
disposition of the stock acquired under the Purchase Plan or in the event the
participant dies while still owning the purchased shares.
If the participant sells or otherwise disposes of any stock acquired
under the Purchase Plan (other than in a transfer by reason of death) within a
period of two years from the beginning of the Offering Period in which he
purchased the stock, an amount equal to the difference between what he paid for
the stock and the fair market value of the stock on the date of the termination
of such Offering Period will be treated as ordinary income to the participant
for federal income tax purposes in the taxable year in which the disposition
took place. The difference between the amount realized upon such disposition of
the stock and its fair market value on the date of termination of the Offering
Period in which it was acquired will be short-term or long-term capital gain or
loss, depending upon the participant's holding period.
If the participant disposes of any stock acquired under the Purchase
Plan more than two years after the beginning of the Offering Period in which it
was acquired, he must include as ordinary income in the year of such disposition
an amount equal to the lesser of (i) the excess of the fair market value of the
stock at the time of disposition over the price the participant paid for such
stock or (ii) 15% of the fair market value of the stock on the date that the
Offering Period in which he acquired the stock began. Any remaining gain on the
disposition will be taxed as long-term capital gain.
If a participant holds shares acquired under the Purchase Plan at the
time of his death, ordinary income equal to the amount of ordinary income the
decedent would have realized if he had sold such shares for their fair market
value at the time of death after holding them for the two-year period will be
includable in the decedent's income for the tax year ending with his death. A
subsequent sale or exchange of such shares by the participant's estate or the
person receiving such shares by reason of his death will result in capital gain
or loss. No income tax deduction ordinarily will be allowed to the Company with
respect to the grant or exercise of any option under the Purchase Plan or the
disposition of any stock acquired by exercise of any such option and held for
two years. However, if the shares are disposed of by the participant within two
years after the beginning of the Offering Period in which he purchased the
stock, the Company will receive an income tax deduction in the taxable year of
such disposition in an amount equal to the amount constituting ordinary income
to such participant.
Additional Information Regarding New Plan Benefits
Future issuances pursuant to the Purchase Plan are not determinable at
this time.
15
<PAGE> 18
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT AND
RESTATEMENT OF THE PURCHASE PLAN.
16
<PAGE> 19
ADDITIONAL INFORMATION
MEETINGS OF THE BOARD AND BOARD COMMITTEES
The business of the Company is managed by or under the direction of the
Board of Directors. During the fiscal year ended December 31, 1998, the Board of
Directors held six meetings and took action by unanimous written consent in lieu
of a meeting once. Each of the directors attended at least 75% of the aggregate
of (i) the total meetings of the Board of Directors, and (ii) the total number
of meetings held by all committees of the Board on which he served, during the
periods that he served.
The Company has four standing committees: (i) an Executive Committee,
(ii) a Compensation Committee, (iii) a Stock Option Committee and (iv) an Audit
Committee.
The Executive Committee has the authority to exercise the full powers
of the Board of Directors, except as otherwise provided by law or the Company's
Articles of Incorporation or By-laws. The present members of the Executive
Committee are Messrs. Petit, Murrie, Sanders and Weber. The Executive Committee
took action by unanimous written consent in lieu of a meeting once during 1998.
The Compensation Committee is responsible for establishing and
administering the policies which govern the compensation of the Company's
executive officers and key employees. The Compensation Committee consists of
Messrs. Petit and Weber and Dr. Hatcher. The Compensation Committee met once
during 1998.
The Stock Option Committee is responsible for administering the
Company's stock option plans as provided for in such plans. The members of the
Stock Option Committee are Messrs. Petit and Gresham and Dr. Hatcher. The Stock
Option Committee met four times and took action by unanimous written consent in
lieu of a meeting once during 1998.
The function of the Audit Committee is to (i) select and engage
independent auditors to audit the books, records and accounts of the Company,
(ii) approve the scope of such audits set by the auditors, (iii) establish
policy in connection with internal audit programs of the Company, and (iv)
perform such other duties as the Board may from time to time prescribe. Messrs.
Weber and Dewberry and Dr. Hatcher are the current members of the Audit
Committee. The Audit Committee met twice during 1998.
DIRECTOR COMPENSATION
During the fiscal year ended December 31, 1998, the Company paid all
directors who are not employees of the Company, except the Chairman of the Board
of Directors, a quarterly retainer of $2,500, plus $500 for each meeting of the
Board which they attend and $250 for each committee meeting or telephonic
meeting. During the fiscal year ended December 31, 1998, in lieu of the
compensation paid to non-employee directors, the Company paid the Chairman of
the Board a quarterly fee of $12,500 for his services and reimbursed him for
business expenses of
17
<PAGE> 20
$12,961. Directors who are employees of the Company receive no additional
compensation for serving on the Board of Directors.
All Non-Employee Directors are also entitled to receive options to
purchase Common Stock under the Director Plan and to receive their retainer fee
in shares of Common Stock equivalent in market value to the retainer fee on the
date the retainer fee is payable. Under the current terms of the Director Plan,
new directors received an initial option to purchase up to 20,000 shares of
Common Stock. In addition, each Non-Employee Director was granted an additional
option to purchase up to 2,000 shares of Common Stock following such director's
reelection at an annual meeting of shareholders of the Company, provided that
such individual was a Non-Employee Director for the preceding six months. The
purchase price for the options granted under the Director Plan was equal to the
fair market value on the date of grant. See "Proposal III -- Approval of the
Amendment and Restatement of HIE Non-Employee Director Stock Option Plan"
regarding proposed amendments to the Director Plan.
18
<PAGE> 21
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as to the Common
Stock beneficially owned as of January 31, 1999 by (i) each of HIE's directors
and nominees, (ii) each Named Executive Officer (as hereinafter defined), and
(iii) all directors and executive officers as a group. No person is believed by
HIE to own beneficially more than five percent of the outstanding shares of the
Common Stock.
Under the rules of the Securities and Exchange Commission (the
"Commission"), a person is deemed to be a beneficial owner of a security if he
or she has or shares the power to vote or to direct the voting of such security,
or the power to dispose or to direct the disposition of such security. A person
is also deemed to be a beneficial owner of any securities which that person has
the right to acquire within 60 days, as well as any securities owned by such
person's spouse, children or relatives living in the same house. Accordingly,
more than one person may be deemed to be a beneficial owner of the same
securities. Unless otherwise indicated in a footnote, each person listed below
possesses sole voting and investment power with respect to the shares indicated
as beneficially owned by him.
<TABLE>
<CAPTION>
PERCENTAGE
NAME NUMBER OF SHARES OF CLASS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Parker H. Petit (1)................................. 295,011 1.2%
Robert I. Murrie (2)................................ 111,367 *
J. Edward Pearson, Jr. (3).......................... 62,500 *
Carolyn R. Jolley (4)............................... 36,475 *
George T. Schwend................................... 20,885 *
James L. Oakes, Jr. (5)............................. 41,346 *
Joseph G. Bleser (6)................................ 225,796 *
J. Terry Dewberry (7)............................... 125,026 *
William J. Gresham, Jr. (8)......................... 40,000 *
Charles R. Hatcher, Jr., M.D. (8)................... 36,500 *
Scott A. Jones...................................... 570,999 2.3
John W. Lawless (9)................................. 140,528 *
Carl E. Sanders (8)................................. 113,850 *
Mark D. Shary....................................... 545,583 2.2
Donald W. Weber (7)................................. 26,500 *
All directors and executive officers as a
group (14 individuals) (10).................... 2,330,135 9.0
</TABLE>
- ----------
19
<PAGE> 22
* Indicates less than 1%
(1) Includes 47,500 shares of Common Stock held by Petit Investments
Limited Partnership, 10,000 shares of Common Stock held by the Petit
Grantor Trust and 16,500 shares of Common Stock that may be acquired by
Mr. Petit upon exercise of stock options exercisable within 60 days of
January 31, 1999.
(2) Includes 96,701 shares of Common Stock that may be acquired by Mr.
Murrie upon exercise of stock options exercisable within 60 days of
January 31, 1999.
(3) Includes 60,000 shares of Common Stock that may be acquired by Mr.
Pearson upon exercise of stock options exercisable within 60 days of
January 31, 1999.
(4) Includes 35,093 shares of Common Stock that may be acquired by Ms.
Jolley upon exercise of stock options exercisable within 60 days of
January 31, 1999.
(5) Includes 36,780 shares of Common Stock that may be acquired by Mr.
Oakes upon exercise of stock options exercisable within 60 days of
January 31, 1999.
(6) Includes 208,202 shares of Common Stock that may be acquired by Mr.
Bleser upon exercise of stock options exercisable within 60 days of
January 31, 1999.
(7) Includes 16,500 shares of Common Stock that may be acquired upon
exercise of stock options exercisable within 60 days of January 31,
1999.
(8) Includes 26,500 shares of Common Stock that may be acquired upon
exercise of stock options exercisable within 60 days of January 31,
1999.
(9) Includes 6,667 shares of Common Stock that may be acquired by Mr.
Lawless upon exercise of stock options exercisable within 60 days of
January 31, 1999.
(10) Includes 535,663 shares of Common Stock that may be acquired by
executive officers and directors upon exercise of stock options
exercisable within 60 days of January 31, 1999.
20
<PAGE> 23
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Exchange Act, that might incorporate future filings, including this Proxy
Statement, in whole or in part, the Report on Repricing of Options, the Report
of the Compensation and Stock Option Committees and the Performance Graph shall
not be incorporated by reference into any such filings.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth certain information concerning the
compensation of the Company's Chief Executive Officer, the three highest-paid
executive officers (other than the Chief Executive Officer) of the Company whose
cash compensation exceeded $100,000 during the fiscal year ended December 31,
1998 and the two highest-paid individuals whose cash compensation exceeded
$100,000 during the fiscal year ended December 31, 1998 but who were not serving
as executive officers of the Company at the end of the 1998 fiscal year (such
six individuals, collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------------------- ---------------
ANNUAL COMPENSATION AWARDS
---------------------------- ---------------
SECURITIES ALL OTHER
UNDERLYING COMPEN-
SALARY BONUS OPTIONS SATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)(1)
- ------------------------------------------ ------------ -------------- ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Robert I. Murrie....................... 1998 $237,000 $85,000 (2) 365,250 (3) $ 5,000
President and Chief Executive Officer 1997(4) 157,795 -- (5) 260,000 --
J. Edward Pearson, Jr.................. 1998(6) 155,000 10,493 (7) 100,000 --
Senior Vice President - Finance,
Chief Financial Officer, Treasurer
and Secretary
Carolyn R. Jolley...................... 1998 150,000 55,000 (2) 64,732 (3) 4,250
Senior Vice President - Client 1997 (8) 100,000 -- (5) 74,700 --
Services
Mark D. Shary.......................... 1998 (9) 142,969 (10) -- -- 1,851
Senior Vice President - Commercial
Business
James L. Oakes, Jr..................... 1998(11) 150,000 52,500 (2) 12,443 (3) 3,750
Former Senior Vice President - 1997 (8) 73,333 -- (5) 61,250 --
Integration Services
George T. Schwend...................... 1998(12) 133,654 -- 55,830 (3) 3,000
Former Senior Vice President - Sales 1997 (8) 125,000 50,000 (5) 85,000 --
and Marketing
</TABLE>
- ----------
21
<PAGE> 24
(1) The amounts shown in this column represent employer contributions under
the Company's 401(k) plan.
(2) Includes sales commissions and/or bonuses relating to 1998 performance
paid in 1999.
(3) Includes options that were repriced on February 3, 1998. See "-- Stock
Option Grants and Related Information" and "-- Report on Repricing of
Options."
(4) Mr. Murrie has served as President and Chief Executive Officer of the
Company since October 21, 1997.
(5) Includes sales commissions and/or bonuses relating to 1997 performance
paid in 1998. In 1997, sales commissions and/or bonuses relating to
1996 performance were paid as follows: Mr. Murrie, $33,699; Ms.
Jolley, $15,000; Mr. Schwend, $32,500; and Mr. Oakes, $76,659.
(6) Mr. Pearson has served as Senior Vice President -- Finance, Chief
Financial Officer, Secretary and Treasurer since December 1, 1998.
(7) Includes sales commissions and/or bonuses relating to 1998 performance
paid in 1998 and 1999.
(8) Ms. Jolley and Messrs. Schwend and Oakes were appointed as executive
officers of the Company on October 27, 1997.
(9) Mr. Shary has served as an executive officer of the Company since May
1998.
(10) Mr. Shary's salary includes compensation paid to him by HUBLink prior
to the merger.
(11) Mr. Oakes ceased to be an employee of the Company on December 31, 1998.
(12) Mr. Schwend ceased to be an employee of the Company on October 31,
1998.
22
<PAGE> 25
STOCK OPTION GRANTS AND RELATED INFORMATION
The following table sets forth information concerning stock option grants
during the fiscal year ended December 31, 1998 to the Named Executive Officers:
OPTIONS GRANTS IN LAST FISCAL YEAR
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF % OF VALUE AT ASSUMED ANNUAL
SECURITIES TOTAL RATES OF STOCK PRICE
UNDERLYING OPTIONS EXERCISE APPRECIATION FOR OPTION
OPTIONS GRANTED TO OR BASE TERM
GRANTED EMPLOYEES PRICE EXPIRATION ------------------------
NAME (#) (1) IN 1998 ($/SH) DATE 5% 10%
- ---------------------------- ------------ ------------- ------------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert I. Murrie......... 12,911 (2) 1.0 % $ 2.00 4/22/2002 $ 5,565 $ 11,984
11,935 (2) 1.0 2.00 10/21/2002 5,144 11,078
30,580 (2) 2.5 2.00 4/21/2003 16,897 37,339
135,220 (2) 10.9 2.00 10/20/2003 74,718 165,106
74,604 (2) 6.0 2.00 10/20/2003 41,223 91,093
100,000 (3) 8.1 2.625 10/19/2004 89,275 202,535
J. Edward Pearson, Jr.... 100,000 (3) 8.1 2.625 10/19/2004 89,275 202,535
Carolyn R. Jolley........ 9,877 (2) 0.8 2.00 4/22/2002 4,257 9,168
5,967 (2) 0.5 2.00 10/21/2002 2,572 5,539
23,888 (2) 1.9 2.00 10/26/2003 13,200 29,168
25,000 (3) 2.0 2.8125 12/9/2004 23,913 54,250
Mark D. Shary............ -- -- -- -- -- --
James L. Oakes, Jr....... 12,443 (2) 1.0 2.00 2/17/2003 6,876 15,193
George T. Schwend........ 8,951 (2) 0.7 2.00 10/21/2002 3,858 8,308
22,991 (2) 1.9 2.00 7/21/2003 12,704 28,072
23,888 (2) 1.9 2.00 10/26/2003 13,200 29,168
</TABLE>
- ----------
(1) Where dissolution or liquidation of the Company or any merger or combination
in which the Company is not a surviving corporation is involved, these options
will terminate, but the optionee will have the right, immediately prior to such
dissolution, liquidation, merger or combination, to exercise the option in whole
or in part, to the extent that it shall not have been exercised, without regard
to any vesting or installment exercise provisions.
(2) These options were repriced on February 3, 1998. See "-- Report on Repricing
of Options." The original options had a six year term. The repriced options have
the same expiration date and vesting schedule (i.e., three-year vesting schedule
from the date of grant of the original option) as the original options.
(3) These options vest in three equal annual installments beginning on the first
anniversary of the date of grant.
23
<PAGE> 26
The following table sets forth information concerning the exercise of
stock options by Named Executive Officers during 1998 and the value of
unexercised options held by the Named Executive Officers as of December 31,
1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS DECEMBER 31, 1998
AT DECEMBER 31, 1998 (#) ($)(1)
--------------------------- ---------------------------
SHARES
NAME ACQUIRED ON VALUE
EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------ ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert I. Murrie.................... -- $ -- 96,701 268,549 $ 302,191 $ 776,716
J. Edward Pearson, Jr............... -- -- 60,000 100,000 135,000 262,500
Carolyn R. Jolley................... -- -- 35,093 79,339 115,961 240,212
Mark D. Shary....................... -- -- -- -- -- --
James L. Oakes, Jr.................. -- -- 33,891 33,172 30,851 49,267
George T. Schwend................... 21,593 67,478 -- -- -- --
- ----------
</TABLE>
(1) Represents the excess of the fair market value of the Common Stock of
approximately $5.125 per share (the closing selling price of the Common
Stock as quoted on the Nasdaq National Market on December 31, 1998)
above the exercise price of the options.
REPORT ON REPRICING OF OPTIONS
On February 3, 1998, the Board of Directors of the Company approved a
plan pursuant to which certain outstanding options would be replaced, subject to
agreement of the option holder, with an option to purchase a lesser amount of
shares at a lower exercise price. The Board believes that repricing such options
was in the best interests of the Company and its shareholders. By lowering the
number of shares issuable under such repriced options, the Company increased the
number of shares available for future option grants as incentives for other
employees, consultants and advisors of the Company.
The Board offered the repricing option to certain officers who held
options to purchase at least 10,000 shares or options with an exercise price
greater than $4.00 per share. The number of shares available for future option
grants increased by an aggregate of 67,045 shares as a result of optionees who
accepted the repricing option. Options held by these optionees were replaced
with an option to purchase a lower number of shares, as determined by a formula,
at an exercise price of $2.00 per share (the fair market value per share of the
Common Stock on February 3,
24
<PAGE> 27
1998). The lower number of shares underlying the repriced options was
determined by dividing (i) the estimated inherent pretax profit in the
original higher-number and higher-priced stock option (assuming a 35%
compounded annual growth rate of the $2.00 fair market value per share of
the Common Stock over five years) divided by (ii) the inherent gain per
share computed using the exercise price of $2.00 per share.
The Company had never repriced options prior to February 3, 1998. The
following table sets forth certain information concerning the repricing of
stock options held by executive officers on February 3, 1998.
10-YEAR OPTION REPRICINGS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LENGTH OF
NEW ORIGINAL
NUMBER OF NUMBER OF TERM
SECURITIES SECURITIES REMAINING
UNDERLYING MARKET PRICE EXERCISE UNDERLYING AT DATE OF
OPTIONS OF STOCK AT PRICE AT OPTION NEW REPRICING
REPRICED OR TIME OF TIME OF REPRICED OR EXERCISE OR
AMENDED REPRICING REPRICING AMENDED PRICE AMENDMENT
NAME AND POSITION DATE (#) OR AMENDMENT OR AMENDMENT (#) ($) (MONTHS)
- ---------------------------- --------- ------------ ------------ ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert I. Murrie........... 2/3/1998 20,000 $ 2.00 $ 4.45 12,911 $ 2.00 52
President and Chief 2/3/1998 20,000 2.00 4.81 11,935 2.00 56
Executive Officer 2/3/1998 35,000 2.00 2.88 30,580 2.00 62
2/3/1998 145,000 2.00 2.47 135,220 2.00 68
2/3/1998 80,000 2.00 2.47 74,604 2.00 68
Carolyn R. Jolley.......... 2/3/1998 15,300 2.00 4.47 9,877 2.00 52
Senior Vice President - 2/3/1998 10,000 2.00 4.81 5,967 2.00 56
Client Services 2/3/1998 25,000 2.00 2.31 23,888 2.00 68
James L. Oakes, Jr......... 2/3/1998 25,000 2.00 5.50 12,443 2.00 60
George T. Schwend.......... 2/3/1998 15,000 2.00 4.81 8,951 2.00 52
2/3/1998 25,000 2.00 2.56 22,991 2.00 65
2/3/1998 25,000 2.00 2.31 23,888 2.00 68
</TABLE>
BOARD OF DIRECTORS
Parker H. Petit Scott A. Jones
Robert I. Murrie John W. Lawless
Joseph G. Bleser Carl E. Sanders
J. Terry Dewberry Mark D. Shary
William J. Gresham, Jr. Donald W. Weber
Charles R. Hatcher, Jr., M.D.
25
<PAGE> 28
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEES
Compensation Philosophy. The Compensation Committee of the Board of
Directors (the "Compensation Committee") and the Stock Option Committee of the
Board of Directors (the "Stock Option Committee" and, together with the
Compensation Committee, the "Committees") are responsible for the Company's
executive compensation policies and practices. The Committees believe that the
Company must pay competitively to attract and retain qualified executives. To
motivate executive personnel to perform at their full potential, the Committees
believe that a significant portion of compensation should be incentive-based. In
addition, the Committees believe it is important to reward not only individual
performance and achievement, but also to focus on overall corporate results.
This latter objective serves the dual purposes of encouraging teamwork among
executives and supporting the Company's objective of creating shareholder value.
Overall Objectives and Approach. In making its compensation
determinations, the Committees evaluate, on both an absolute and relative basis,
a variety of the Company's financial results (including revenue growth,
earnings, return on equity, return on assets and balance sheet strength), market
share and competitive position, the potential for future growth, the overall
importance of the individual to the organization, the individual and group
performance of senior management, and compensation levels at comparable
companies, especially within the enterprise application integration industry. In
formulating its determinations, the Committees recognize and reward achievements
on an annual basis, while emphasizing the value and importance of sustained
long-term performance and the recognition of developing trends within the
enterprise application integration industry. The Board of Directors reviews
information prepared or compiled by the Company, and relies on the business
experience of the individual members of the Committees.
Cash Compensation. Executive officers, as well as other employees, are
compensated within salary ranges that are generally based on similar positions
in companies of comparable size and complexity to the Company. The actual base
salary for each officer is determined by the Compensation Committee based on a
combination of experience, performance and the particular needs of the Company
for the services provided by the individual, and is reviewed annually, with the
amount of any increases based on factors such as Company performance, general
economic conditions, marketplace compensation trends and individual performance.
In addition to their base salary, certain of the executive officers received
cash incentive bonuses of up to approximately 35% of their annual salary during
1998. These bonuses were determined based on the Company achieving or exceeding
the financial objectives, which are related the Company's performance, in the
Company's Annual Business Plan.
Stock Options. The Stock Option Committee grants options to executive
officers and other key personnel who are individually and collectively
responsible for creating and enhancing shareholder value. The grants generally
have been based on guidelines that take performance, salary level, tenure, the
number of options previously granted to the individual and the individual's
importance to the Company into account. All stock options granted to executive
officers during 1998 have exercise prices equal to the market price of the
underlying Common
26
<PAGE> 29
Stock on the date of grant, six-year terms and three-year vesting schedules. The
Company believes that stock options with incremental vesting provide a long-term
incentive to executive officers that directly links corporate performance to
executive compensation and are an important element to its success.
Compensation of Chief Executive Officer. The Committees consider
essentially the same factors in determining the base salary and cash incentive
bonus potential for the President and Chief Executive Officer as for the other
executive officers. Mr. Murrie's annual base salary and cash incentive bonus for
1998 were $237,000 and $85,000, respectively. Mr. Murrie's cash incentive bonus
potential for 1998 was based on whether the Company achieved the revenue and
earnings per share goals set forth in the Company's Annual Business Plan. In
addition to cash compensation, as a long-term incentive, Mr. Murrie was granted
options to purchase up to 100,000 shares of Common Stock at a per share exercise
price of $2.625, the fair market value of the Common Stock on the date of grant.
In addition, certain of Mr. Murrie's options were repriced as described above in
"-- Report on Repricing of Options." As of December 31, 1998, Mr. Murrie held
options to purchase an aggregate of 365,250 shares of the Company's Common Stock
at a weighted average exercise price of $2.17 per share.
COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
Parker H. Petit (Chairman) Charles R. Hatcher, Jr., M.D. (Chairman)
Charles R. Hatcher, Jr., M.D. William J. Gresham, Jr.
Donald W. Weber Parker H. Petit
PERFORMANCE GRAPH
The following graph compares the total cumulative shareholder returns
on the Company's Common Stock during the period from November 7, 1995 (the date
on which shares of the Common Stock began trading publicly) through December 31,
1998, with the comparable total cumulative returns of the Media General Market
Weighted Nasdaq Index Return and the SIC Code 7373 Index (Computer Integrated
Systems Design). The graph assumes that the value of the investment in the
Common Stock and each index was $100 on November 7, 1995, and that all dividends
were reinvested.
<TABLE>
<CAPTION>
Fiscal Year Ended December 31,
---------------------------------------------------
Company/Index/Market 11/07/95 1995 1996 1997 1998
- ------------------------------------------------- ---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
HIE, Inc. 100.00 163.64 400.00 129.45 373.09
SIC Code 7373 Index 100.00 106.98 113.55 135.69 295.58
Nasdaq National Market Index 100.00 101.13 125.67 153.73 216.82
</TABLE>
27
<PAGE> 30
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the Company's acquisition of HUBLink in May 1998,
the Company issued (i) an aggregate of approximately 844,612 shares of Common
Stock to Mark D. Shary, a director of the Company and the former Chief Executive
Officer of HUBLink, and (ii) an aggregate of 570,999 shares of Common Stock to
Scott A. Jones, a director of the Company. In addition, the Company entered into
a Private Placement and Registration Rights Agreement relating to such shares.
The consideration exchanged for these shares was determined through arms' length
negotiation.
Joseph G. Bleser, a director of the Company and the Company's former
Executive Vice President, Chief Financial Officer, Secretary and Treasurer, is
also a consultant to the Company. Under a Consulting Agreement dated May 12,
1998, the Company is obligated to pay Mr. Bleser a monthly fee of $6,500. The
Consulting Agreement terminates on June 30, 2001, but can be terminated earlier
by six months notice given by Mr. Bleser or the Company. During 1998, Mr. Bleser
earned $39,000 pursuant to the Consulting Agreement. The Company believes that
this consulting arrangement is on terms no less favorable to the Company than
terms available from unaffiliated parties in arm's-length transactions.
Carl E. Sanders, a director of the Company, is Chairman of Troutman
Sanders LLP, a law firm based in Atlanta, Georgia, which provided legal services
to the Company during fiscal year 1998 and is expected to provide legal services
to the Company during fiscal year 1999.
OTHER MATTERS
The Board of Directors does not know of any other matters to be
presented for action at the 1999 Annual Meeting. If any other business should
properly come before the meeting, the persons named in the accompanying form of
proxy intend to vote thereon in accordance with their best judgment.
INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG LLP to audit the accounts of
the Company and its subsidiaries for the fiscal year ending December 31, 1999. A
representative of KPMG LLP will be present at the Annual Meeting and will have
the opportunity to make a statement if he or she so desires and will be
available to respond to appropriate shareholder questions.
SHAREHOLDER PROPOSALS
To be considered for inclusion in next year's Proxy Statement,
shareholder proposals must be received at HIE's principal executive offices no
later than close of business on December 9, 1999. Proposals should be addressed
to J. Edward Pearson, Jr., Secretary, HIE, Inc., 1850 Parkway Place, Suite 1100,
Marietta, Georgia 30067.
28
<PAGE> 31
For any proposal that is not submitted for inclusion in next year's
Proxy Statement, but is instead sought to be presented directly at the Company's
Year 2000 Annual Meeting of Shareholders, management will be able to vote
proxies in its discretion if the Company: (i) receives notice of the proposal
before the close of business on February 20, 2000, and advises shareholders in
the Year 2000 Proxy Statement about the nature of the matter and how management
intends to vote on such matter; or (ii) does not receive notice of the proposal
prior to the close of business on February 22, 2000. Notices of intention to
present proposals at the Year 2000 Annual Meeting should be addressed to J.
Edward Pearson, Jr., Secretary, HIE, Inc., 1850 Parkway Place, Suite 1100,
Marietta, Georgia 30067.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
officers and persons who own more than ten percent of a registered class of the
Company's equity securities to file reports with the Commission regarding
beneficial ownership of Common Stock and other equity securities of the Company.
To the Company's knowledge, based solely on a review of copies of such reports
furnished to the Company and written representations that no other reports were
required, during the fiscal year ended December 31, 1998, all officers,
directors and greater than ten percent beneficial owners complied with the
Section 16(a) filing requirements of the Exchange Act, except for the failure to
timely file Mr. Lawless' Initial Report on Form 3, which has since been filed.
ANNUAL REPORT ON FORM 10-K
The Company will furnish without charge a copy of its Annual Report on
Form 10-K filed with the Commission for the fiscal year ended December 31, 1998,
including financial statements and schedules, to any record or beneficial owner
of its Common Stock as of March 8, 1999 who requests a copy of such report. Any
request for the Form 10-K should be in writing addressed to: J. Edward Pearson,
Jr., Secretary, HIE, Inc., 1850 Parkway Place, Suite 1100, Marietta, Georgia
30067. If the person requesting the Form 10-K was not a shareholder of record on
March 8, 1999, the request must include a representation that such person was a
beneficial owner of the Common Stock on that date. Copies of any exhibit(s) to
the Form 10-K will be furnished on request and upon the payment of the Company's
expenses in furnishing such exhibit(s).
YOUR VOTE IS IMPORTANT
You are encouraged to let us know your preference by marking the
appropriate boxes on the enclosed proxy card.
29
<PAGE> 32
APPENDIX A
HIE, INC. STOCK OPTION PLAN I
(AMENDED AND RESTATED AS OF FEBRUARY 2, 1999)
ARTICLE I
PURPOSE
1.1 The HIE, INC. Stock Option Plan I is intended to advance the
interests of HIE, Inc., its shareholders and its subsidiaries by attracting,
retaining and stimulating the performance of officers, employees, consultants
and advisors of the Company of high caliber and potential upon whose judgment,
initiative and effort HIE, Inc. is largely dependent for the successful conduct
of its business, and to encourage and enable such officers, employees,
consultants and advisors to acquire and retain a proprietary interest in HIE,
Inc. by ownership of its stock. Options granted may, if so intended by the
Committee (as hereafter defined), be designed to meet the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended.
ARTICLE II
DEFINITIONS
2.1 "Board" means the Board of Directors of the Company.
2.2 "Code" means the Internal Revenue Code of 1986, as amended.
2.3 "Common Stock" means the Company's Common Stock, par value
$.0l per share, together with associated preferred stock purchase rights.
2.4 "Committee" means the Healthdyne Stock Option Committee.
2.5 "Company" means HIE, Inc.
2.6 "Date of Grant" means the date on which an Option is granted
under the Plan.
2.7 "Fair Market Value" shall be the mean between the highest and
the lowest quoted selling prices at which the Common Stock is sold in the
regular way on the Nasdaq National Market ("Nasdaq") or on any similar
securities exchange on the day an Option is granted hereunder or, in the absence
of any reported sales on such day, the first preceding day on which there were
such sales. If the Common Stock is not listed on Nasdaq or any similar exchange
for the public trading of securities, the Committee shall determine on a
semi-annual basis the Fair Market Value in whatever way it considers appropriate
under the circumstances taking into account the financial condition of the
Company as reflected in its financial statements and available independent third
party (such as analysts) estimates of such Fair Market Value. Any
<PAGE> 33
such determination of Fair Market Value shall remain effective until the next
semi-annual determination.
2.8 "Healthdyne" means Healthdyne, Inc.
2.9 "Healthdyne Stock Option Committee" means the Stock Option
Committee appointed by the Board of Directors of Healthdyne pursuant to
Healthdyne's 1993 Stock Option Plan or such other committee appointed by the
Board to replace the Stock Option Committee.
2.10 "Incentive Stock Option" means a stock option granted under
the Plan which is intended to meet the requirements of Section 422 of the Code
or any similar provision thereto.
2.11 "Nonqualified Stock Option" means a stock option granted under
the Plan which is not an Incentive Stock Option.
2.12 "Option" means a Nonqualified Stock Option or an Incentive
Stock Option granted under the Plan.
2.13 "Optionee" means a person to whom an Option, which has not
expired, has been granted under the Plan.
2.14 "Parent" means any corporation which qualifies as a parent of
the Company under the definition of "parent corporation" in Section 424(e) of
the Code.
2.15 "Plan" means this HIE, Inc. Stock Option Plan I.
2.16 "Stock Option Agreement" means an agreement between the
Company and an Optionee under which the Optionee may purchase Common Stock
thereunder.
2.17 "Subsidiary" or "Subsidiaries" means a subsidiary corporation
or corporations of the Company as defined in Section 424(f) of the Code or,
solely for purposes of granting Nonqualified Stock Options hereunder, any
partnership in which the Company is a partner with at least a 50 percent
ownership interest.
ARTICLE III
PARTICIPANTS
Options may be granted under the Plan to any person who is or who
agrees to become an officer or employee of the Company or any of its
Subsidiaries, or a consultant, advisor or other person providing services to the
Company. An employee may be a member of the Board of Directors of the Company or
of any Subsidiary, but no member of the Board of Directors shall be considered
an employee solely by reason of his membership on such Board of Directors. The
Committee may grant options to such persons in accordance with such
determinations as the
2
<PAGE> 34
Committee from time to time in its sole discretion may make. A member of the
Committee shall not act on any determination to grant an Option to such member
and any such determination shall be made by the other member or members of the
Committee.
ARTICLE IV
ADMINISTRATION
4.1 Committee. The Plan shall be administered by the Healthdyne Stock
Option Committee. Subject to the express provisions of the Plan, the Committee
shall have sole discretion and authority to determine from among eligible
officers, employees, advisors, consultants and other persons providing services
to the Company, those to whom and the time or times at which Options may be
granted and the number of shares of Common Stock to be subject to each Option.
Subject to the express provisions of the Plan, the Committee shall also have
complete authority to interpret the Plan, to prescribe, amend, and rescind rules
and regulations relating to it, to determine the details and provisions of each
Stock Option Agreement, and to make all the determinations necessary or
advisable in the administration of the Plan. All such actions and determinations
by the Committee shall be conclusive and binding for all purposes and upon all
persons.
4.2 Majority Rule. A majority of the members of the Committee (or, if
less than three, all of the members) shall constitute a quorum, and any action
taken by a majority present at a meeting at which a quorum is present or any
action taken without a meeting evidenced by a writing executed by a majority of
the whole Committee shall constitute the action of the Committee.
4.3 Company Assistance. The Company shall supply full and timely
information to the Committee on all matters relating to eligible officers,
employees, consultants and advisors, their employment or engagement, death,
retirement, disability or other termination of employment or engagement, and
such other pertinent facts as the Committee may require. The Company shall
furnish the Committee with such clerical and other assistance as is necessary in
the performance of its duties.
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 Limitations. Subject to adjustment pursuant to the provisions of
Section 5.3 hereof, the number of shares of Common Stock which may be issued and
sold hereunder shall be One Million, Five Hundred and Nineteen Thousand, Seven
Hundred Eighty-Three (1,519,783) shares of Common Stock. Such shares may be
either authorized but unissued shares, shares issued and reacquired by the
Company or shares bought on the market for the purposes of the Plan.
3
<PAGE> 35
5.2 Options Granted Under the Plan. Shares of Common Stock with respect
to which an Option granted hereunder shall have been exercised shall not again
be available for the grant of an Option hereunder. If an Option granted
hereunder shall terminate for any reason (including, without limitation, the
surrender of the Option by the Optionee in connection with the grant of a new
Option on the same or different terms or the expiration of the Option for any
reason) without being wholly exercised, the number of shares to which such
Option termination relates shall again be available for grant hereunder.
5.3 Antidilution. In the event that the outstanding shares of Common
Stock hereafter are changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another corporation by reason of
merger, consolidation, other reorganization, recapitalization, reclassification,
combination of shares, stock split-up or stock dividend, or in the event that
there should be any other stock splits, stock dividends or other relevant
changes in capitalization occurring after the effective date of this Plan:
(a) The aggregate number and kind of shares subject to Options
which may be granted hereunder shall be adjusted appropriately;
(b) Rights under outstanding Options granted hereunder, both
as to the number of subject shares and the Option price per share, shall be
adjusted appropriately; and
(c) Where dissolution or liquidation of the Company or any
merger or combination in which the Company is not a surviving corporation is
involved, each outstanding Option granted hereunder shall terminate, but the
Optionee shall have the right, immediately prior to such dissolution,
liquidation, merger, or combination, to exercise his Option in whole or in part,
to the extent that it shall not have been exercised, without regard to any
vesting or installment exercise provisions.
The foregoing adjustments and the manner of application of the
foregoing provisions shall be determined solely by the Committee, in accordance
with Treasury Regulation Section 1.425-1(a) or its successor regulation or
ruling such that the adjustment shall not cause a reissuance of the Option, and
any such adjustment may provide for the elimination of fractional share
interests.
ARTICLE VI
OPTIONS
6.1 Option Grant and Agreement. Each Option granted hereunder shall be
evidenced by minutes of a meeting or the written consent of the Committee and by
a written Stock Option Agreement dated as of the Date of Grant and executed by
the Company and the Optionee. Each Option granted by the Committee shall be
designated by the Committee as an Incentive Stock Option or a Nonqualified Stock
Option and, once granted, may not be amended to be the other kind of Option
unless such amendment shall cause the provisions of the Option to conform to the
requirements of this Plan in respect to the other kind of Option. The Stock
Option Agreement
4
<PAGE> 36
shall set forth such terms and conditions as may be determined by the Committee
to be consistent with the Plan, but may include additional provisions and
restrictions, provided that they are not inconsistent with the Plan. Nothing in
this Plan shall preclude the Committee from issuing or agreeing to issue new
Options to any holder upon the condition that all or any portion of such
holder's then outstanding Options be surrendered for cancellation regardless of
whether the exercise price of such new Options is higher or lower than, or the
other terms different from, the surrendered Options.
6.2 Option Price. The per share Option price of the Common Stock
subject to each Option shall be determined by the Committee, provided that the
per share price shall not be less than the Fair Market Value of the Common Stock
on the date the Option is granted.
6.3 Option Period. Each Option granted hereunder may be granted at any
time after the effective date of the Plan and prior to the termination of the
Plan, provided that no Incentive Stock Option may be granted at any time more
than ten years after the earlier of the date this Plan is adopted by the Board
or approved by the shareholders of the Company. The period for the exercise of
each Option shall be determined by the Committee, provided, however, that (i)
except as otherwise expressly provided in this Plan, the Committee may, in its
discretion, terminate outstanding Options or accelerate the exercise dates
thereunder, upon sixty (60) days' written notice given to the Optionee and (ii)
the period during which each Nonqualified or Incentive Stock Option may be
exercised shall not be later than ten years from the date such Nonqualified or
Incentive Stock Option is granted, provided that Incentive Stock Options granted
to a "10-percent owner" (as defined in Article VII) must be exercised within
five years from the date thereof.
6.4 Option Exercise. Except as provided in Section 6.7, an Incentive
Stock Option may not be exercised at any time unless the holder thereof is then
an employee of the Company, its Parent (if any) or any Subsidiary. Options may
be exercised in whole at any time, or in part from time to time, with respect to
whole shares only, within the period permitted for the exercise thereof, and
shall be exercised by written notice of intent to exercise the Option with
respect to a specified number of shares delivered to the Company at its
principal office, and payment in full to the Company at said office of the
amount of the Option price for the number of shares of the Common Stock with
respect to which the Option is then being exercised. In addition to and at the
time of payment of the Option price, Optionee shall pay to the Company or any
Subsidiary in cash or in Common Stock of the Company, the full amount, if any,
that the Company or any Subsidiary is required to withhold or pay under federal
or state law with respect to the exercise of the Option. Alternatively, the
number of shares delivered by the Company upon exercise of the Option shall be
appropriately reduced to reimburse the Company or the Subsidiary for such
payment.
6.5 Payment. The purchase price for shares of Common Stock purchased
upon exercise of Options shall be paid (i) in cash; (ii) in shares of Common
Stock of the Company (not subject to limitations on transfer) valued at the Fair
Market Value of such shares on the trading day immediately preceding the date of
purchase, or a combination of cash and such Common Stock; provided that any
shares of Common Stock tendered for payment shall have been owned
5
<PAGE> 37
for a period of six (6) months or such other period as in the opinion of the
Committee shall be sufficient for such shares to be considered "mature" shares
for purposes of accounting for the transaction; or (iii) if the Option Agreement
so specifies, and subject to such rules as may be established by the Committee,
through a so-called "cashless exercise" procedure with a designated broker.
6.6 Nontransferability of Option. No Option shall be transferred by an
Optionee otherwise than by will or the laws of descent and distribution. During
the lifetime of an Optionee the Option shall be exercisable only by him, or, in
the case of an Optionee who is mentally incapacitated, the Option shall be
exercisable by his guardian or legal representative. Notwithstanding the above,
the Committee, in its sole discretion, may allow for the limited transfer of a
Nonqualified Stock Option to family members of the Optionee, or a trust
benefiting such family members, for estate planning purposes.
6.7 Effect of Death or Other Termination of Employment or Engagement.
(a) Except as otherwise provided in this Section 6.7, if,
prior to a date thirty (30) days from the Date of Grant of an Option (or such
longer time as may be established by the Committee), an Optionee's employment
with the Company or a Subsidiary or engagement by the Company or a Subsidiary as
a consultant or advisor shall be terminated for any reason, or by the act of the
Optionee, the Optionee's right to exercise such Option shall terminate and all
rights thereunder shall cease.
(b) If, on or after thirty (30) days from the date an Option
shall have been granted (or such longer time as may be established by the
Committee), an Optionee's employment with or engagement as a consultant or
advisor by the Company or its Subsidiaries shall be terminated for any reason
other than death, permanent and total disability, for cause, or, in the event of
a Nonqualified Stock Option, retirement, the Optionee shall have the right,
during the period ending sixty (60) days (or such longer time as may be
established by the Committee at the Date of Grant or afterwards) after such
termination, to exercise such Option to the extent that it was exercisable at
the date of such termination of employment or engagement and shall not have been
exercised.
(c) If an Optionee shall die at any time after the Date of
Grant and while in the employ or engagement of the Company or its Subsidiaries
or within 60 days (or such length of time as may be established by the Committee
after the Date of Grant or afterwards) after termination of such employment or
engagement, the executor or administrator of the estate of the decedent or the
person or persons to whom an Option granted hereunder shall have been validly
transferred by the executor or the administrator pursuant to will or the laws of
descent and distribution shall have the right, during the period ending one year
after the date of the Optionee's death, to exercise the Optionee's Option to the
extent that it was exercisable at the date of termination of employment by death
or otherwise and shall not have been exercised; provided, however, such time
period may be shortened in accordance with the provisions of Section 6.3 if a
shortened exercise period is applied to Optionee in general.
6
<PAGE> 38
(d) If an Optionee shall become permanently and totally
disabled or, with respect to a Nonqualified Stock Option, shall retire at any
time after the Date of Grant, the Optionee (or in the case of an Optionee who is
mentally incapacitated, his guardian or legal representative) shall have the
right, during a period ending one year after such retirement or disability, to
exercise such Option to the extent that it was exercisable at the date of
termination of employment or engagement by retirement or disability and shall
not have been exercised; provided, however, such time period may be shortened in
accordance with the provisions of Section 6.3 if a shortened exercise period is
applied to Optionee in general.
(e) If an Optionee's employment with or engagement by the
Company or its Subsidiaries shall be terminated by the Company or any Subsidiary
for serious misconduct, the Optionee's right to exercise such Option shall
immediately terminate and all rights thereunder shall cease. For purposes of
this Plan, the term "serious misconduct" shall include, but not be limited to,
embezzlement or misappropriation of corporate funds, other acts of dishonesty,
significant activities harmful to the reputation of the Company or the
Subsidiaries, a significant violation of Company or Subsidiary policy, willful
refusal to perform, or substantial disregard of, the duties properly assigned to
the Optionee, or a significant violation of any contractual, statutory or common
law duty of loyalty to the Company or the Subsidiaries.
(f) No transfer of an Option by the Optionee by will or by
laws or descent and distribution shall be effective to bind the Company unless
the Company shall have been furnished with written notice thereof and an
authenticated copy of the will and/or such other evidence as the Committee may
deem necessary to establish the validity of the transfer and the acceptance by
the transferees or transferees of the terms and conditions of such Option.
6.8 Rights as Shareholder. An Optionee or a transferee of an Option
shall have no rights as a shareholder with respect to any shares subject to such
Option prior to the purchase of such shares by exercise of such Options as
provided herein. Nothing contained herein or in the Stock Option Agreement shall
create an obligation on the part of the Company to repurchase any shares of
Common Stock purchased hereunder.
6.9 Dividend or Distribution Equivalents. An Optionee, whether or not
his Options are exercisable, shall, in the sole discretion of the Committee, if
specifically approved by the Committee at the Date of Grant or at any time
thereafter, be entitled to receive a payment in cash, stock, rights, warrants,
assets or other securities from the Company, as and when cash dividends or other
distributions of stock, rights, warrants, assets or other securities from the
Company, as and when cash dividends or other distributions of stock, rights,
warrants, assets or other securities are payable or distributed to the holders
of the Common Stock of the Company, in the amount equal to the cash dividend or
distribution which would be paid to said Optionee in respect of all shares
subject to such Options were such Optionee the holder of such shares on the
record date for such cash dividend or distribution.
6.10 Notice of Disqualifying Disposition. Each Incentive Stock Option
granted under the Plan shall provide that the employee receiving such Incentive
Stock Option shall notify the Company, in writing, to the attention of the Chief
Financial Officer, in the event that, prior to the
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later of two years after the Date of Grant of such Incentive Stock Option or one
year after the transfer of any share to him pursuant to such Option, he shall
dispose of such share, such notice to state the date of disposition, the nature
of the disposition and the price, if any, received for the share.
ARTICLE VII
TEN PERCENT OWNERS
Notwithstanding any other provisions of this Plan, the following terms
and conditions shall apply to Incentive Stock Options granted hereunder to a
"10-percent owner." For this purpose, a "10-percent owner" shall mean an
Optionee who, at the time the Incentive Stock Option is granted, owns stock
possessing more than 10 percent of the total combined voting power of all
classes of stock of the Company or of any Parent or Subsidiary.
With respect to a 10-percent owner:
(a) the price at which shares of stock may be purchased under
an Incentive Stock Option granted pursuant to this Plan shall not be less than
110 percent of the Fair Market Value thereof, said Fair Market Value being
determined in the manner described in Section 2.7, above; and
(b) the period during which any such Incentive Stock Option
may be exercised, to be fixed by the Committee in the manner described in
Section 6.3, above, shall expire not later than five (5) years from the date the
Incentive Stock Option is granted.
ARTICLE VIII
ANNUAL LIMITS
In no event shall the aggregate fair market value (determined as of the
time an Incentive Stock Option is granted) of shares with respect to which an
Incentive Stock Option is initially exercisable by the holder thereof, in any
calendar year (under all Incentive Stock Options granted under all plans of the
Company, its Parent (if any), or its Subsidiaries) exceed $100,000.
ARTICLE IX
OTHER TERMS AND CONDITIONS
Any Incentive Stock Options granted hereunder shall contain such and
additional terms, not inconsistent with the terms of this Plan, which are deemed
necessary or desirable by the Committee, which terms, together with the terms of
this Plan, shall constitute such Incentive Stock Option as an "Incentive Stock
Option" within the meaning of Section 422 of the Code and lawful regulations
thereunder.
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ARTICLE X
STOCK CERTIFICATES
10.1 Conditions. The Company shall not be required to issue or deliver
any certificate for shares of Common Stock purchased upon the exercise of any
Option granted hereunder or any portion thereof prior to fulfillment of all of
the following conditions:
(a) The completion of any registration or other qualification
of such shares under any federal or state law or under the rulings or
regulations of the Securities and Exchange Commission or any other governmental
regulatory body, or the receipt of a written representation that the shares to
be acquired upon such exercise are to be acquired for investment and not for
resale or with a view to the distribution thereof, which the Committee shall in
its sole discretion deem necessary or advisable;
(b) The obtaining of any approval or other clearance from any
federal or state governmental agency which the Committee shall in its sole
discretion determine to be necessary or advisable;
(c) The lapse of such reasonable period of time following the
exercise of the Option as the Committee from time to time may establish for
reasons of administrative convenience; and
(d) Satisfaction by the Optionee of all applicable withholding
taxes or other withholding liabilities.
10.2 Legends. The Company reserves the right to legend any certificate
for shares of Common Stock, conditioning sales of such shares upon compliance
with applicable federal and state securities laws and regulations.
ARTICLE XI
TERMINATION, AMENDMENT, AND MODIFICATION OF PLAN
The Board may at any time, upon recommendation of the Committee,
terminate, and may at any time and from time to time and in any respect, amend
or modify the Plan; provided, however that no such action shall impair the
rights of any holder of an Option theretofore granted; and further provided,
that (unless and until such time as shareholder approval is no longer required
under the 1934 Act, applicable exchange listing requirements or NASDAQ
requirements and applicable corporate law) no such action of the Board without
approval of the shareholders of the Company may:
(a) Increase the total number of shares of Common Stock
subject to the Plan, except as contemplated in Section 5.3 hereof;
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(b) Change the manner of determining the Option price; or
(c) Change the class of people who may become participants
in the Plan; provided, further, that, except to the extent otherwise permitted
in Section 6.3, no termination, amendment, or modification of the Plan shall in
any manner affect any option theretofore granted under the Plan without the
consent of the Optionee or transferee of the Option, shall extend the maximum
period during which Options may be exercised, or withdraw the administration of
the Plan from the Committee or the Board.
ARTICLE XII
MISCELLANEOUS
12.1 Employment or Engagement. Nothing in the Plan or in any Option
granted hereunder or in any Stock Option Agreement relating thereto shall confer
upon any director, officer, employee, advisor or consultant the right to
continue as such with the Company or any Subsidiary.
12.2 Other Compensation Plans. The adoption of the Plan shall not
affect any other stock option or incentive or other compensation plans in effect
for the Company or any Subsidiary, nor shall the Plan preclude the Company from
establishing any other forms of incentive or other compensation for employees of
the Company or any Subsidiary.
12.3 Plan Binding on Successors. The Plan shall be binding upon the
Company, its successors and assigns, and the Optionee, his executor,
administrator and permitted transferees.
12.4 Singular, Plural; Gender. Whenever used herein, nouns in the
singular shall include the plural, and the masculine pronoun shall include the
feminine gender.
12.5 Headings, etc., Not Part of Plan. Headings of Articles and
Sections hereof are inserted for convenience and reference; they constitute no
part of the Plan.
12.6 Effective Date. The Plan shall become effective upon its approval
by the Board of Directors, subject to ratification of the Plan by the holders of
a majority of the outstanding shares of Common Stock of the Company within one
year preceding or following the date the Plan is approved by the Board. If the
Plan is not so approved by the shareholders, the Plan shall terminate and any
Options granted hereunder shall be void and have no force or effect whatsoever.
12.7 Compliance With Laws. The Plan, the grant and exercise of Options
hereunder, and the obligation of the Company to sell and deliver shares under
such Options, shall be subject to all applicable laws, rules, and regulations,
including, but not limited to, those of the United States and its states, and to
such approvals by any government or regulatory agency as may be required.
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12.8 Governing Law. This Plan shall be construed and interpreted in
accordance with and governed by Georgia law, to the extent such construction and
interpretation does not adversely affect the treatment of any Option as an
Incentive Stock Option under the Code.
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APPENDIX B
HIE, INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
(amended and restated as of February 2, 1999)
1. Purpose of the Plan. The purpose of the HIE, Inc. Non-Employee
Director Stock Option Plan (the "Plan") of HIE, Inc. (the "Corporation") is to
promote the interests of the Corporation and its shareholders in obtaining and
maintaining the services of knowledgeable and independent directors on the
Corporation's Board of Directors (the "Board"). The Plan is intended to make
available for purchase by Non-Employee directors shares of the Corporation's
common stock, par value $.01 per share, together with associated preferred stock
purchase rights (the "Common Stock"), thus providing an additional incentive for
such directors to continue to serve on the Board and giving them a greater
interest as shareholders in the success of the Corporation.
2. Effective Date of the Plan. The Plan shall take effect on the date
of its adoption by the Board (the "Effective Date"), provided that the Plan
shall be subject to approval by the Corporation's shareholders (to the extent
required by applicable law or rules). If the Plan is not so approved by the
Corporation's shareholders, the Plan shall terminate and any options granted
hereunder shall be void and have no force or effect.
3. Shares Subject to the Plan. Subject to adjustment as provided in
paragraph 13 hereof, an aggregate of 500,000 shares of the Common Stock shall be
available for issuance upon the exercise of all options granted under the Plan.
Such shares may consist either in whole or in part, as the Board in its
discretion shall from time to time determine, either of authorized but unissued
shares of Common Stock or issued shares of Common Stock which have been
reacquired by the Corporation. If any option granted under this Plan expires or
ceases to be exercisable without having been exercised in full, the unpurchased
shares shall thereafter be available for the grant of further options under the
Plan.
4. Administration of the Plan. The Plan shall be administered by the
Board. The Board shall, subject to the provisions of the Plan, have the power to
construe the Plan, to determine all questions arising thereunder and to adopt
and amend such rules and regulations for the administration of the Plan as it
may deem desirable.
5. Eligibility; Grant of Options.
(a) Options under the Plan shall be granted to each director of the
Corporation who is not otherwise an employee of the Corporation or any
subsidiary of the Corporation (a "Non-Employee Director") on the Effective Date
or, in the case of future Non-Employee Directors, on (i) the date such director
is first duly elected as a director by the shareholders of the Corporation or
the Board, or, if later, (ii) the date such director first becomes a
Non-Employee Director (in either case, the "Initial Grant Date"). In addition,
an option shall be granted to each continuing Non-Employee Director who is
serving as such at the annual meeting of the shareholders, provided that such
individual has been a Non-Employee Director for the preceding six (6) months
(the "Annual Grant Date").
(b) Each Non-Employee Director shall be granted, as of the Initial
Grant Date, with respect to such director, an option to acquire 20,000 shares of
Common Stock, subject to adjustment as set forth in paragraph 13 hereof. In
addition, in accordance with paragraph (a) above each Non-Employee Director
shall be granted on each Annual Grant Date with respect to such director an
option to acquire 5,000 shares of Common Stock, subject to adjustment as set
forth in
<PAGE> 44
paragraph 13 hereof. Each option granted under the Plan shall be evidenced by an
option agreement (an "Agreement") duly executed on behalf of the Corporation and
by the director to whom such option is granted, which Agreement shall comply
with and be subject to the terms and conditions of the Plan. An Agreement may
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Board. No option shall be deemed to be granted
within the meaning of the Plan and no purported grant of any option shall be
deemed effective until such an Agreement shall have been duly executed on behalf
of the Corporation and the director to whom the option is to be granted.
6. Option Price. The option price per share with respect to each option
granted under the Plan shall be 100% of the fair market value on the applicable
Initial Grant Date or applicable Annual Grant Date (in all cases said date to be
referred to as the "Date of Grant"). For purposes of the preceding sentence, the
fair market value of a share of Common Stock shall mean the closing sale price
of the Common Stock on the Date of Grant or, if a public holiday, weekend or
other day in which shares of stock are not publicly traded, the first trading
day immediately prior thereto, or, in case no sale is publicly reported, the
average of the closing bid and asked quotations for the Common Stock on that
date, in any case as reported in The Wall Street Journal or, if the Common Stock
is not then quoted in The Wall Street Journal or an equivalent publication, as
furnished by a member of the National Association of Securities Dealers, Inc.
selected by the Corporation for that purpose.
7. Term of Options. The term of each option granted under the Plan
shall be five (5) years from the Date of Grant, subject to earlier termination
as provided in paragraphs 10 and 11 herein.
8. Time and Manner of Exercise of Options.
(a) Except as otherwise provided herein, options granted under the
Plan shall not be exercisable for a period of one year from the Date of Grant.
Thereafter, options shall be exercisable in accordance with the terms of the
Plan at any time or from time to time during the term of the option, subject to
the following: (i) not more than 25% of the total number of option shares shall
be purchasable on or following the first anniversary of the Date of Grant; (ii)
not more than 50% of the total number of option shares shall be purchasable on
or following the second anniversary of the Date of Grant; (iii) not more than
75% of the total number of option shares shall be purchasable on or following
the third anniversary of the Date of Grant; and (iv) 100% of the option shares
shall be purchasable on or following the fourth anniversary of the Date of
Grant.
(b) Subject to the foregoing, an option granted under the Plan may
be exercised in full at one time or in part from time to time by giving written
notice, signed by the person or persons exercising the option, to the
Corporation, stating the number of shares with respect to which the option is
being exercised. Upon the exercise of the option, the purchase price of the
shares shall be paid in full (i) in cash; (ii) in shares of Common Stock of the
Corporation (not subject to limitations on transfer) valued at the fair market
value of such shares on the trading day immediately preceding the date of
purchase; provided that any shares of Common Stock tendered for payment shall
have been owned for a period of six (6) months or such other period as in the
opinion of the Board shall be sufficient for such shares to be considered
"mature" shares for purposes of accounting for the transaction; or (iii) if the
applicable Agreement so specifies, and subject to such rules as may be
established by the Board through a so-called "cashless exercise" procedure with
a designated broker; or (iv) a combination of the
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above. The Corporation shall not be required to deliver certificates for such
shares until such payment has been made.
(c) The holder of an option granted under the Plan shall not have
any rights as a shareholder with respect to the shares subject to the option
until certificates representing such shares are delivered to him by the
Corporation upon the exercise of his option.
9. Nontransferability of Options. No option granted under the Plan
shall be transferable or assignable by the optionee, otherwise than by will or
the laws of descent and distribution. During the lifetime of the optionee, the
option shall be exercisable only by him. Notwithstanding the above, the Board,
in its sole discretion, may allow for the limited transfer of an option to
family members of the optionee, or a trust benefiting such family members, for
estate planning purposes.
10. Effect of Termination of Services or Loss of Eligible Director
Status. An option granted under the Plan shall terminate within thirty (30) days
immediately following (i) the director's discontinuance of service on the Board
of Directors for any reason, with or without cause, other than the director's
death or the discontinuance of his services due to the circumstances set forth
in paragraph 12 herein, or (ii) the director's loss of Non-Employee status with
respect to the Corporation or any subsidiary of the Corporation. In either of
such events, the optionee may exercise his option during such thirty-day period,
to the extent of the number of shares of Common Stock covered by his option
which were purchasable by him at the date of such termination or loss of
Non-Employee status, as the case may be.
11. Death of Option Holder. In the event of the death of an optionee
while serving as a Non-Employee Director of the Corporation, the option shall
terminate on the earlier of six months following the date of death or the
expiration date of the option as provided by paragraph 7 of the Plan. Such
option may be exercised during such time by the executors or administrators of
the optionee or by any person or persons to whom the option is transferred by
will or the applicable laws of descent and distribution, to the extent of the
full number of shares that the optionee was entitled to purchase under the
option on the date of his death.
12. Change in Control. If an optionee's service as a member of the
Board of Directors is terminated or discontinued due to or as result of change
in control, his option shall become immediately exercisable in full as of a
period beginning thirty (30) days prior to such proceeding, without regard to
the provisions of paragraph 8(a) of the Plan. For purposes of this paragraph, a
"change in control" of the business and operations of the Corporation shall mean
a change in control of a nature that would be required to be reported in
response to Item 5(f) of Schedule 14A of Regulation 14A promulgated under the
Exchange Act, as in effect on the Effective Date; provided that, without
limitation, such a change in control shall be deemed to have occurred if any
"person" (as such term is used in Section 13(d)(2) of the Exchange Act) after
the Effective Date becomes the beneficial owner, directly or indirectly, of
securities of the Corporation representing 20% or more of the combined voting
power of the Corporation's then outstanding securities. Notwithstanding the
foregoing, this paragraph 12 shall not apply to the distribution by Healthdyne,
Inc. to its shareholders of common stock of the Corporation and such transaction
shall not constitute a "change in control" hereunder.
13. Antidilution. In the event that the outstanding shares of the
Common Stock of the Corporation are changed into or exchanged for a different
number or kind of shares or other securities of the Corporation or of another
corporation by reason of any reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, combination of shares or
dividends
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payable in capital stock, appropriate adjustment shall be made in the number and
kind of shares as to which outstanding options, or portions thereof then
unexercised shall be exercisable, to the end that the proportionate interest of
the optionee shall be maintained as before the occurrence of such event; such
adjustment in outstanding options shall be made without change in the total
price applicable to the unexercised portion of such options and with a
corresponding adjustment in the option price per share. Notwithstanding the
foregoing, the Corporation may adjust the option price of any option hereunder
pursuant to a formula established by the Corporation solely to preserve without
exceeding the value of such option in the event of the spin-off of any
subsidiary of the Corporation.
14. Securities Matters. The exercise of any option granted hereunder
shall only be effective at such time as counsel to the Corporation shall have
determined that the issuance and delivery of shares of Common Stock pursuant to
such exercise will not violate any state or federal securities or other laws.
The optionee desiring to exercise an option may be required by the Corporation,
as a condition of the effectiveness of any exercise of an option granted
hereunder, to agree in writing that all shares of Common Stock to be acquired
pursuant to such exercise shall be held for investment for his own account
without a view to any further distribution thereof, that the certificates for
such shares shall bear an appropriate legend to that effect and that such shares
will not be transferred or disposed of except in compliance with applicable
federal and state laws. The Corporation may, in its sole discretion, defer the
effectiveness of any exercise of an option granted hereunder in order to allow
the issuance of shares of Common Stock pursuant thereto to be made pursuant to
registration or an exemption from registration or other methods for compliance
available under federal or state securities laws. The Corporation shall be under
no obligation to effect the registration pursuant to the Securities Act of 1933,
as amended, of any shares of Common Stock to be issued hereunder or to effect
similar compliance under any state laws.
The Corporation shall inform the optionee in writing of its decision to
defer the effectiveness of the exercise of an option granted hereunder. During
the period that the exercise of the option has been deferred, the optionee may,
by written notice, withdraw such exercise and obtain the refund of any amount
paid with respect thereto.
15. Termination and Amendment of the Plan. Unless sooner terminated as
herein provided, the Plan shall terminate ten (10) years from the Effective
Date. The Board may suspend or terminate the Plan or make such modification or
amendment thereto as it deems advisable; provided, however, that (a) the Plan
may not be amended or modified more than once every six months unless such
amendment is necessary to comply with changes to either the Internal Revenue
Code of 1986, as amended, or the Employee Retirement Income Security Act of
1974, as amended, and (b) except as provided in paragraph 13, the Board may not,
without the approval of the shareholders of the Corporation, change the number
of shares subject to the Plan or any option granted thereunder, extend the
option period provided for in paragraph 7, or materially increase the benefits
under the Plan. No termination, modification or amendment of the Plan shall,
without the consent of an optionee, adversely affect the rights of such
optionee.
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APPENDIX C
HIE, INC. EMPLOYEE STOCK PURCHASE PLAN
(Amended and Restated as of February 2, 1999)
1. PURPOSE
The primary purpose of the HIE, Inc. Employee Stock Purchase Plan (the
"Plan") is to encourage stock ownership by all eligible employees of HIE, Inc.
(the "Company") and each "subsidiary corporation" of the Company (as defined in
Section 424(f) of the Internal Revenue Code of 1986, as amended (the "Code") and
hereinafter referred to as a "Subsidiary") for which participation in this Plan
has been authorized (under Paragraph 4) in order to increase their interest in
the success of the Company and to encourage them to remain in the employ of the
Company and each such Subsidiary. The Company intends that this Plan constitutes
an "employee stock purchase plan" within the meaning of Section 423 of the Code.
2. STOCK
The shares of the Company's stock which may be sold to participants (as
described in Paragraph 6) pursuant to options granted under this Plan shall be
an aggregate number of 400,000 shares of the authorized but unissued Common
Stock, par value $.01, together with associated preferred stock purchase rights,
of the Company (the "Stock"). Any shares of Stock which are not purchased
pursuant to an option granted on any Offering Date (as defined in Paragraph 5)
shall again become available for sale pursuant to options granted under this
Plan as of any subsequent Offering Date (as hereinafter defined).
3. ADMINISTRATION
The Plan shall be administered by an Employee Stock Purchase Plan
Committee (the "Committee") comprised of three (3) persons selected by the Board
of Directors of the Company. The Committee shall select one of its members as
its Chairman, and shall hold meetings at such times and places as it may
determine. Any decision or determination reduced to writing and signed by all
the members shall be fully 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
and shall keep minutes of all meetings and shall make such rules and regulations
for the conduct of its business as it deems necessary or appropriate. A majority
of the Committee shall constitute a quorum and all determinations of the
Committee shall be made by not less than a majority of its members. The
interpretation and construction by the Committee of any provision of this Plan
shall be final and binding on all employees, eligible employees, participants
and on any person making a claim based on the rights, if any, of any such
persons under this Plan.
4. ELIGIBLE EMPLOYEES
Each employee of the Company and each employee of each Subsidiary (for
which participation in this Plan has been authorized under this Paragraph by the
Committee) shall be
<PAGE> 48
eligible to become a participant in this Plan on an Offering Date (as defined in
Paragraph 5) if such employee is employed by the Company or by a Subsidiary, or
by any combination of the Company and/or one or more than one Subsidiary, on
such date and such an employee shall be referred to in this Plan as an "eligible
employee"; provided, no person shall be considered an eligible employee for
purposes of this Plan:
(1) if his customary employment with the Company or any
Subsidiary is twenty hours or less per calendar week or his customary
employment with the Company or any Subsidiary is for not more than five
months in any calendar year; or
(2) if he would own stock (after taking into account the
attribution and other constructive ownership rules in Section 423(b)(3)
and Section 424(d) of the Code) immediately after the grant of such
option which possesses 5% or more of the total combined voting power or
value of all classes of stock of the Company or any Subsidiary or its
parent (as defined in Section 424(e) of the Code and hereinafter
referred to as a "Parent").
The Committee as of each Offering Date (as defined in Paragraph 5)
shall determine whether a corporation is a Subsidiary and whether a Subsidiary
shall be authorized to participate in this Plan for the offering which begins on
such Offering Date. However, no Subsidiary shall be authorized to participate in
this Plan unless each employee of that Subsidiary is eligible to become a
participant in accordance with the rules set forth in this Paragraph 4 and the
shareholders of the Company approve the addition of such Subsidiary to the
extent required by Code Section 423 and the regulations thereunder.
5. STOCK OPTION OFFERINGS
Options to purchase Stock shall be offered to participants (as
described in Paragraph 6) in accordance with this Plan through a continuous
series of offerings, each of which shall commence on the first business day of a
calendar quarter (an "Offering Date") and shall terminate on the last business
day of such quarter (a "Termination Date"), and the first Offering Date shall be
the first day of the calendar quarter immediately following the date the
shareholders of the Company approve the Plan; provided, however,
(1) the Committee may decide in its sole discretion that
no offering will be made on an Offering Date if, in
the opinion of the Committee, the Stock remaining
available under this Plan is insufficient to make an
offering to all eligible employees, and
(2) the Committee acting in its absolute discretion shall
have the power to make one offering under this Plan
between the date the shareholders of the Company
approve the adoption of this Plan and the first day
of the calendar quarter immediately thereafter, and
the date set by the Committee for the commencement of
such offering shall be treated as an Offering Date,
and the last day of the calendar quarter in which the
offering commences shall be treated as the
Termination Date for such offering.
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6. PARTICIPANT
An employee who elects to become a participant on the payroll deduction
authorization form (an "Authorization") provided for this purpose shall become a
participant (and such Authorization shall become effective) on the first
Offering Date which follows the date he completes and files such Authorization
with the Committee, provided he is an eligible employee under Paragraph 4 on
such Offering Date. An Authorization shall be effective for each subsequent
Offering Date unless amended or revoked by the participant or the participant
ceases to be an eligible employee. A participant may file an amended
Authorization and, except as expressly provided in Paragraphs 10, 12 and 14
hereunder, such amended Authorization shall become effective on the first
Offering Date which follows the date he completes and files such amended
Authorization with the Committee. An Authorization shall require an eligible
employee to provide such information and to take such action as the Committee in
its discretion deems necessary or helpful to the orderly administration of this
Plan. A participant's status as such shall terminate at such time as his status
as an eligible employee terminates or he elects to terminate such status on an
amended Authorization which he completes and files with the Committee.
7. PAYROLL DEDUCTIONS
Each Authorization shall specify the amount of the payroll deduction
which the participant authorizes the Company and any of its Subsidiaries to make
from his Compensation (as defined below) on each payday during which such
Authorization remains in effect, provided,
(1) such amount shall not be less than two percent (2%)
of the participant's current Compensation as paid on
each such payday or $25.00, whichever is less, and
(2) such amount shall not be more than ten percent (10%)
of the participant's current Compensation as paid on
each such payday.
The term "Compensation" for this purpose shall mean a participant's
base annual hourly wages, stated salary or sales commissions paid by the Company
or any Subsidiary and therefor shall not include any other forms of
compensation, including any overtime, profit sharing, bonuses, miscellaneous
reimbursements, and contributions by the Company or any Subsidiary to any
employee benefit plans. The Committee shall establish a non-interest bearing
"account" under this Plan for each participant. All payroll deductions made for
a participant shall be credited to such account, and the monies represented by
such account shall be held without interest as part of the Company's general
assets. A participant may not make any separate cash payment or contribution to
such account.
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8. GRANTING OF OPTION
(a) Except as set forth in Paragraph 8(b), each participant shall be
granted (by operation of the Plan) an option to purchase up to 2,000 shares of
Stock on each Offering Date, and such option shall expire (to the extent
unexercised) on the corresponding Termination Date; provided, however, that no
participant shall be granted an option under this Plan if such option will
permit his rights to purchase stock under all employee stock purchase plans of
the Company, its Parent and any of its Subsidiaries to accrue (within the
meaning of Section 423(b)(8) of the Code) at a rate which exceeds $25,000 in the
fair market value of such stock (determined at the time such option is granted)
for each calendar year (or portion of such year) in which such option would be
outstanding.
(b)(l) If the number of shares available for purchase under the Plan is
insufficient on any Offering Date to grant to each participant an option to
purchase up to 2,000 shares of Stock but the Committee nevertheless determines
to allow such offering, then each participant shall be granted an option (by
operation of this Plan) to purchase that number of available shares of Stock
which is equal to the total number of available shares divided by the number of
participants on such Offering Date.
(c) The Committee acting in its absolute discretion shall have the
power from time to time to increase or decrease the 2,000 share figure set forth
in Paragraph 8(a) for any offering, provided the Committee announces the new
figure before the Offering Date for such offering, and each participant shall be
granted an option (by operation of the Plan) to purchase that number of shares
equal to such new figure on such Offering Date and on each subsequent Offering
Date until the Committee in accordance with this Paragraph 8(b)(2) announces
another new figure.
9. OPTION PRICE
The option price ("option price") for each option granted by operation
of this Plan under Paragraph 8 shall be the lower of:
(1) 85% of the fair market value (as defined below) per share
of Stock on the Offering Date, or
(2) 85% of the fair market value (as defined below) per share
of Stock on the corresponding Termination Date.
If the Stock is not listed on an established stock exchange on an
Offering Date or on a Termination Date, the fair market value per share shall be
the closing quoted selling price of the Stock in the over-the-counter market on
such date as reflected by The Wall Street Journal or any successor, similar
publication. If the Stock is listed on an established stock exchange on an
Offering Date or on a Termination Date, the fair market value per share shall be
the closing quoted selling price of the Stock on such stock exchange on such
date as reflected by The Wall Street Journal or any successor, similar
publication. Finally, if the fair market value per share cannot be determined on
an Offering Date or on a Termination Date by reference to any such selling
prices, such fair market value shall be determined as of such date by whatever
equitable means the Committee in its absolute discretion deems appropriate.
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<PAGE> 51
10. EXERCISE OF OPTION
Unless a participant files an amended Authorization before the
Termination Date on which an option granted to him under Paragraph 8 will
expire, such option will be exercised automatically for him on such Termination
Date for the purchase of as many full shares of Stock subject to the option
granted to him as the accumulated payroll deductions credited to his account as
of that date under Paragraph 7 will purchase at the option price for such Stock.
No participant (or any person claiming through such participant) shall have any
interest in any Stock subject to an option until such option has been exercised,
at which point such interest shall be limited to the interest of a purchaser of
the Stock purchased upon such exercise pending the delivery of such Stock in
accordance with Paragraph 11.
A participant may file an amended Authorization with the Committee
before a Termination Date to elect, effective as of such Termination Date,
(1) to withdraw in cash all the accumulated payroll deductions
credited to his account under Paragraph 7 as of that date; or
(2) to exercise his option for a specified number of full
shares, which is not less than 5, but is less than the number of full
shares of Stock which the accumulated payroll deductions credited to
his account under Paragraph 7 will purchase and to withdraw the balance
of the accumulated payroll deductions credited to his account under
Paragraph 7 as of such Termination Date after giving effect to such
partial exercise.
Any such amended Authorization shall state whether the participant elects to
terminate his status as such, and a participant who does elect to terminate his
status as such thereafter can resume participation on any subsequent Offering
Date in accordance with Paragraph 6, provided he remains an eligible employee
under Paragraph 4 on such date.
In the event that the accumulated payroll deductions credited to the
account of a participant who exercises his option in full exceed the amount
needed to purchase the full number of shares for which his option was granted,
such excess shall be refunded to the participant as soon as practicable
following the relevant Termination Date, except that any such excess which
results solely from the failure to purchase a fractional share of Stock shall be
carried forward without interest in the participant's account unless the
participant has elected to terminate his status as such effective as of the
first Offering Date which follows such Termination Date.
11. DELIVERY
Stock purchased upon the exercise of an option under this Plan shall be
delivered to a participant registered in the name of the participant or, if the
participant so directs on his Authorization filed with the Committee before the
relevant Termination Date, in the names of the participant and one such other
person as may be designated by the participant, as joint tenants with rights of
survivorship, to the extent permitted by applicable law. As promptly as
practicable after each Termination Date, the Company will deliver to each
participant the Stock, if any, purchased upon the exercise of his option under
Paragraph 10 together with such cash, if any, due as a result of such exercise
or as a result of an election not to exercise such option under Paragraph 10.
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<PAGE> 52
12. VOLUNTARY ACCOUNT WITHDRAWALS
A participant may withdraw the accumulated payroll deductions credited
to his account under Paragraph 7 at any time before a Termination Date by filing
an amended Authorization with the Committee before such date, in which event all
of the participant's accumulated payroll deductions credited to his account will
be paid to him in cash as soon as practicable after such amended Authorization
is filed, and no further payroll deductions shall be made on his behalf until
after such Termination Date.
13. TERMINATION OF EMPLOYMENT
Nothing in this Plan nor any option granted hereunder shall confer upon
any individual the right to continued employment with the Company or any
Subsidiary, and a participant's status as such shall terminate automatically on
the date his employment by the Company or by any Subsidiary terminates for any
reason, including retirement or death. Any option which he may have been granted
under the Plan shall expire automatically to the extent unexercised as of such
date and shall not thereafter be exercised (or be deemed to have been exercised)
in whole or in part, and the accumulated payroll deductions credited to his
account will be returned without interest to him or, in the event of his death,
to the person or persons entitled to such account under Paragraph 14, as soon as
practicable after such termination of employment. A transfer of employment
between the Company and any Subsidiary or between one Subsidiary and another
Subsidiary shall not be deemed a termination of employment under this Paragraph
13; however, no further payroll deductions will be made if the Subsidiary to
which the participant transfers is not authorized to participate in the Plan
pursuant to Paragraph 4.
14. DESIGNATION OF BENEFICIARY
A participant shall designate on his Authorization a beneficiary who is
to receive the Stock, if any, and cash, if any, to the participant's credit
under the Plan in the event of such participant's death prior to delivery to him
of such Stock and cash. Such designation may be revised at any time by the
participant by the filing of an amended Authorization, and his revised
designation shall be effective at such time as such amended Authorization is
filed with the Committee. The Company shall deliver such Stock, if any, and
cash, if any, to a deceased participant's beneficiary upon a determination by
the Committee that such delivery is appropriate under the circumstances. In the
event of the death of a participant who failed to so designate a beneficiary or,
if no person so designated survives the participant or, if after checking his
last known mailing address, the whereabouts of the person so designated are
unknown and no claim is submitted to the Committee by such person within one
year of the participant's death, the Company shall deliver such Stock, if any,
and cash, if any, to the person who will receive the proceeds of the
participant's group term life insurance under the group term life insurance
program maintained by the Company or a Subsidiary or, if none or if the
whereabouts of such person are unknown, to the personal representative of the
participant, if any has qualified within fifteen (15) months from the date of
the participant's death or, if no personal representative has so qualified, the
Company, at the direction of the Committee acting in its discretion, may deliver
such Stock, if any, and cash, if any, to any heirs at law of the participant
whose whereabouts are known by the Committee. No designated beneficiary shall,
prior to the death of the participant by
6
<PAGE> 53
whom he has been designated, acquire any interest whatsoever in the Stock, if
any, or cash, if any, credited to the participant under this Plan.
15. TRANSFERABILITY
Neither accumulated payroll deductions credited to a participant's
account under Paragraph 7 nor any rights to the exercise of an option or to
receive Stock under the Plan may be assigned, encumbered, alienated,
transferred, pledged, or otherwise disposed of in any way by the participant or
any other person during his lifetime, and any attempt to do so shall be without
effect, provided that the Committee in its absolute discretion may treat such
act as an election to withdraw funds in accordance with Paragraph 12.
16. ADJUSTMENT
The number of shares of Stock covered by outstanding options granted
pursuant to this Plan and the number of shares of Stock available for the
granting of options pursuant to Paragraph 2 of this Plan shall be adjusted by
the Committee in an equitable manner to reflect any change in the capitalization
of the Company, including, but not limited to such changes as stock dividends or
stock splits. Furthermore, the Committee shall have the right to adjust (in a
manner which satisfies the requirements of Section 424(a) of the Code) the
number of shares of Stock available for the granting of options under Paragraph
2 and the number of shares of Stock covered by stock options granted under this
Plan in the event of any corporate transaction described in Section 424(a) of
the Code. If any adjustment under this Paragraph 16 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
this Plan and the number of shares subject to options granted pursuant to this
Plan shall be the next lower number of whole shares, rounding all fractions
downward. An adjustment made under this Paragraph 16 by the Committee shall be
conclusive and binding on all affected persons.
17. SECURITIES REGISTRATION
If the Company shall deem it necessary to register (under the
Securities Act of 1933 or any other applicable statutes) any shares of Stock
with respect to which an option shall have been exercised or to qualify any such
shares for an exemption from the Securities Act of 1933 under Regulation A of
the Rules and Regulations of the Securities and Exchange Commission, the Company
shall take such action at its own expense and the Company's obligations with
respect to delivery of such shares shall be expressly conditioned upon obtaining
such registration or exemption. If the shares of Stock of the Company shall be
listed on any national stock exchange at the time of the exercise of an option
under this Plan, then whenever required, the Company shall register the shares
with respect to which such option is exercised under the 1934 Act (as defined in
Paragraph 3), and shall make prompt application for the listing on such stock
exchange of such shares, at the sole expense of the Company.
18. AMENDMENT OR TERMINATION
This Plan may be amended by the Company's Board of Directors from time
to time to the extent that such Board of Directors deems necessary or
appropriate in light of, and consistent with, Section 423 of the Code; provided,
however, no such amendment shall be made absent the approval of the shareholders
of the Company if such approval is required pursuant to applicable
7
<PAGE> 54
law or regulations governing or otherwise applicable to the Plan. The Company's
Board of Directors also may terminate this Plan or the granting of options
pursuant to this Plan at any time; provided, however, the Board of Directors
shall not have the right to modify, cancel or amend any outstanding option
granted pursuant to this Plan before such termination unless each participant
consents in writing to such modification, amendment or cancellation.
19. NOTICES
All Authorizations and other communications from a participant to the
Committee under, or in connection with, this Plan shall be deemed to have been
filed with the Committee when actually received in the form specified by the
Committee at the location, or by the person, designated by the Committee for the
receipt of such Authorizations and communications.
20. EFFECTIVE DATE OF PLAN
The effective date of this Plan shall be the date the shareholders of
the Company (acting at a duly called meeting of such shareholders) approve the
adoption of this Plan.
21. MISCELLANEOUS
The headings to paragraphs in this Plan have been included for
convenience of reference only. The masculine pronoun shall include the feminine,
the singular and the plural, whenever appropriate. This Plan shall be
interpreted and construed in accordance with the laws of the State of Georgia.
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<PAGE> 55
HIE, INC.
1850 PARKWAY PLACE, SUITE 1100
MARIETTA, GEORGIA 30067
COMMON STOCK PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 17, 1999
The undersigned hereby appoints PARKER H. PETIT and ROBERT I. MURRIE, and
each of them, proxies, with full power of substitution and with discretionary
authority, to represent and to vote in accordance with the instructions set
forth herein, all shares of Common Stock of HIE, Inc. held of record by the
undersigned on March 8, 1999 at the Annual Meeting of Shareholders to be held at
the Company's corporate office building, 1850 Parkway Place, Suite 320,
Marietta, Georgia 30067, at 11:00 a.m., Atlanta time, on Monday, May 17, 1999,
and any adjournments thereof.
1. ELECTION OF THE FOLLOWING NOMINEES TO THE BOARD OF DIRECTORS FOR THE TERMS
STATED BELOW AND UNTIL THEIR SUCCESSORS ARE ELECTED AND QUALIFIED.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE DIRECTOR NOMINEES NAMED BELOW.
<TABLE>
<CAPTION>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) for all nominees listed below
</TABLE>
CLASS I (TERM EXPIRING IN 2002): WILLIAM J. GRESHAM, JR., CHARLES R. HATCHER,
JR., M.D., AND DONALD W. WEBER
CLASS II (TERM EXPIRING IN 2000): SCOTT A. JONES
CLASS III (TERM EXPIRING IN 2001): MARK D. SHARY
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
the nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE HIE, INC. STOCK OPTION PLAN
I TO, AMONG OTHER THINGS, INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE
UNDER SUCH PLAN BY 500,000 SHARES.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 2.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be signed on reverse side)
3. APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE HIE, INC. NON-EMPLOYEE
DIRECTOR STOCK OPTION PLAN TO, AMONG OTHER THINGS, INCREASE THE NUMBER OF
SHARES RESERVED FOR ISSUANCE UNDER SUCH PLAN BY 250,000 SHARES.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 3.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE HIE, INC. EMPLOYEE STOCK
PURCHASE PLAN TO, AMONG OTHER THINGS, INCREASE THE NUMBER OF SHARES RESERVED
FOR ISSUANCE UNDER SUCH PLAN BY 200,000 SHARES.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 4.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR"
THE ELECTION OF THE DIRECTOR NOMINEES NAMED ABOVE AND "FOR" ITEMS 2, 3 AND 4.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. PLEASE SIGN EXACTLY AS NAME APPEARS ON STOCK CERTIFICATE.
Date: , 1999
------------------------
------------------------------
Signature:
------------------------------
Signature if held jointly:
If stock is held in the name
of two or more persons, all
must sign. When signing as
attorney, as executor,
administrator, trustee, or
guardian, please give full
title as such. If a
corporation, please sign in
full corporate name by
President or other authorized
officer. If a partnership,
please sign in partnership
name by authorized person.
