<PAGE>
As filed with the Securities and Exchange Commission on August 22, 1996
Registration No. 333-___________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form S-8
Registration Statement Under The Securities Act of 1933
-----------------------
HBO & COMPANY
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
37-0986839
(I.R.S. Employer Identification No.)
301 Perimeter Center North
Atlanta, Georgia 30346
(Address of principal executive offices) (zip code)
-----------------------
CYCARE SYSTEMS, INC.
1995 LONG-TERM INCENTIVE PLAN
(INCLUDING THE PREDECESSOR CYCARE
SYSTEMS, INC. STOCK OPTION PLAN)
CYCARE SYSTEMS, INC.
DIRECTOR STOCK PLAN
(Full title of the plan)
-----------------------
James A. Gilbert
HBO & Company
301 Perimeter Center North
Atlanta, Georgia 30346
(Name and address of agent for service)
-----------------------
(770) 393-6000
(Telephone number, including area code, of agent for service)
-----------------------
WITH COPY TO:
Lisa A. Stater, Esq.
Jones, Day, Reavis & Pogue
3500 One Peachtree Center
303 Peachtree Street, N.E.
Atlanta, Georgia 30308-3242
(404) 521-3939
Exhibit Index Appears on Page 10
Page 1 of 46 Pages
<PAGE>
Calculation of Registration Fee
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Proposed maximum Proposed maximum Amount of
Title of securities Amount to be offering price per aggregate offering registration
to be registered registered share price fee
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock
$.05 par value and
Preferred Share 464,400 $25.1932(1) $11,699,734.38(1) $4,034.38
Purchase Rights(2) shares
</TABLE>
(1) Estimated solely for calculating the amount of the registration fee,
pursuant to Rule 457(h) under the Securities Act of 1933, as amended. Because
all shares are presently subject to options, the offering price is based upon
the actual weighted average exercise price.
(2) The Preferred Share Purchase Rights, which are attached to the shares of
Common Stock being registered, will be issued for no additional consideration;
no additional registration fee is required.
Page 2 of 46 Pages
<PAGE>
EXPLANATORY NOTE
In accordance with the Note to Part I of Form S-8, the information specified
by Part I has been omitted from this Registration Statement.
Page 3 of 46 Pages
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The Company hereby incorporates by reference into this Registration
Statement the following documents:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.
(b) All other reports filed with the Securities and Exchange Commission
(the "Commission") pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), since December 31,
1995.
(c) The description of the Common Stock and Preferred Share Purchase Rights
contained in the Company's Registration Statement on Form 8-A filed
with the Commission on August 19, 1981, as amended, and February 19,
1991, as amended, respectively.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the 1934 Act prior to the filing of a post-
effective amendment which indicates that all securities have been sold or
which deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing such documents.
Item 4. DESCRIPTION OF SECURITIES.
Inapplicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Inapplicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Set forth below is a description of certain provisions of the
Certificate of Incorporation of the Company, the By-Laws, as amended (the
"By-Laws") of the Company and the General Corporation Law of the State of
Delaware (the "Delaware General Corporation Law"), as such provisions relate
to the indemnification of the directors and officers of the Company. This
description is intended only as a summary and is qualified in its entirety by
reference to the Certificate of Incorporation, the By-Laws and the Delaware
General Corporation Law.
The Company's By-Laws (Article IX, Section 1) provide that every person
who was or is a party or is threatened to be made a party to or is involved in
any action, suit, or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or a person of whom he is the
legal representative is or was a director or officer of the corporation or is
or was serving at the request of the corporation or for its benefit as a
director or officer of another corporation, or as its representative in a
partnership, joint venture, trust or other enterprise, shall be indemnified
and held harmless to the fullest extent legally permissible under and pursuant
to any procedure specified in the Delaware General Corporation Law, as amended
from time to time, against all expenses, liabilities and losses (including
attorneys' fees, judgments, fines and amounts paid or to be paid in
settlement) reasonably incurred or
Page 4 of 46 Pages
<PAGE>
suffered by him in connection therewith. Such right of indemnification shall
be a contract right that may be enforced in any manner by such person. Such
right of indemnification shall not be exclusive of any other right which such
directors, officers or representatives may have or hereafter acquire and,
without limiting the generality of such statement, they shall be entitled to
their respective rights of indemnification under any bylaw, agreement, vote of
stockholders, provision of law or otherwise, as well as their rights under
such article.
Article IX, Section 2 of the Company's By-Laws provides that the Board
of Directors may cause the corporation to purchase and maintain insurance on
behalf of any person who is or was a director or officer of the corporation,
or is or was serving at the request of the corporation as a director or
officer of another corporation, or as its representative in a partnership,
joint venture, trust or other enterprise against any liability asserted
against such person and incurred in any such capacity or arising out of such
status, whether or not the corporation would have the power to indemnify such
person.
With respect to indemnification of officers and directors, Section 145
of the Delaware General Corporation Law provides that a corporation shall have
the power to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, or investigative (other
than an action by or in the right of the corporation) by reason of the fact
that he is or was a director, officer, employee, or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture, trust,
or other enterprise, against expenses (including attorneys' fees), judgments,
fines, and amounts paid in settlement actually and reasonably incurred by him
in connection with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Under this provision of the Delaware General Corporation Law, the termination
of any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
Furthermore, the Delaware General Corporation Law provides that a
corporation shall have power to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending, or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses (including attorneys' fees), actually and reasonably incurred by him
in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability, but in view of all circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
In addition, the Delaware General Corporation Law was amended in 1986
to enable a Delaware corporation to include in its certificate of
incorporation a provision eliminating or limiting a director's liability to
the corporation or its stockholders for monetary damages for breaches of a
director's fiduciary duty of care. The statutory amendment provides, however,
that (a) liability for duty or loyalty, (b) acts or omissions not in good faith
or involving intentional misconduct or knowing violations of law, (c) the
unlawful purchase or redemption of stock or unlawful dividends or (d) the right
of improper personal benefits could not be eliminated or limited in this manner.
The Company's Certificate of Incorporation has been amended
Page 5 of 46 Pages
<PAGE>
to contain provisions substantially similar to those contained in the amended
Delaware General Corporation Law.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED.
Inapplicable.
Item 8. EXHIBITS.
Exhibit
Number Description
- -------- -----------
Included in Part II of the Registration Statement:
4(a) CyCare Systems, Inc. 1995 Long-Term Incentive Plan
4(b) CyCare Systems, Inc. Stock Option Plan, as amended
4(c) CyCare Systems, Inc. Director Stock Plan
5 Opinion of Counsel re: legality
15 Letter re: unaudited interim financial information
23(a) Consent of Counsel (contained in Exhibit 5)
23(b) Consent of independent public accountants
24 Power of Attorney (included in signature page)
Item 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended
(the "1933 Act"), each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the 1934 Act (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the 1934 Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the 1933 Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the 1933 Act and will be
governed by the final adjudication of such issue.
(c) The undersigned registrant undertakes to include any material
information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
Page 6 of 46 Pages
<PAGE>
(d) The undersigned registrant undertakes that, for the purpose of
determining any liability under the 1933 Act, each such post-effective
amendment shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(e) The undersigned registrant undertakes to remove from registration by
means of a post-effective amendment any of the securities being
registered which remain unsold at the termination of the offering.
Page 7 of 46 Pages
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Atlanta, State of Georgia, on the
19th day of August, 1996.
HBO & COMPANY
By: /s/ Charles W. McCall
-----------------------------
Charles W. McCall
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James A. Gilbert and Jay P. Gilbertson, jointly
and severally, each in his own capacity, his true and lawful attorneys-in-fact
and agents, each with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any and
all amendments to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that each of said attorneys-in-
fact and agents, or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Charles W. McCall Director, President and Chief Executive August 19, 1996
- ------------------------------ Officer (Principal Executive Officer)
Charles W. McCall
/s/ Jay P. Gilbertson Senior Vice President - Finance, Chief August 19, 1996
- ------------------------------ Financial Officer, Principal Accounting
Jay P. Gilbertson Officer, Treasurer and Assistant
Secretary (Principal Financial Officer
and Principal Accounting Officer)
/s/ Holcombe T. Green, Jr. Chairman of the Board of Directors August 19, 1996
- ------------------------------
Holcombe T. Green, Jr.
</TABLE>
Page 8 of 46 Pages
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Alfred C. Eckert III Director August 19, 1996
- ------------------------------
Alfred C. Eckert III
/s/ Philip A. Incarnati Director August 19, 1996
- ------------------------------
Philip A. Incarnati
/s/ Alton F. Irby III Director August 19, 1996
- ------------------------------
Alton F. Irby III
/s/ Gerald E. Mayo Director August 19, 1996
- ------------------------------
Gerald E. Mayo
/s/ James V. Napier Director August 19, 1996
- ------------------------------
James V. Napier
/s/ Charles E. Thoele Director August 19, 1996
- ------------------------------
Charles E. Thoele
/s/ Donald C. Wegmiller Director August 19, 1996
- ------------------------------
Donald C. Wegmiller
</TABLE>
Page 9 of 46 Pages
<PAGE>
EXHIBIT INDEX
Exhibit Page
Number Description Number
- ------- ------------ ------
Included in Part II of the Registration Statement:
4(a) CyCare Systems, Inc. 1995 Long-Term Incentive Plan 11
4(b) CyCare Systems, Inc. Stock Option Plan, as amended 22
4(c) CyCare Systems, Inc. Director Stock Plan 33
5 Opinion of Counsel re: legality 44
15 Letter re: unaudited interim financial information 45
23(a) Consent of Counsel (contained in Exhibit 5) 44
23(b) Consent of independent public accountants 46
24 Power of Attorney (included in signature page) 8
Page 10 of 46 Pages
<PAGE>
EXHIBIT 4(a)
CYCARE SYSTEMS, INC.
1995 LONG-TERM INCENTIVE PLAN
ARTICLE 1 PURPOSE
1.1 GENERAL. The purpose of the CyCare Systems, Inc. 1995 Long-Term
Incentive Plan (the "Plan") is to promote the success, and enhance the value,
of CyCare Systems, Inc. (the "Company") by linking the personal interests of
its key employees to those of Company shareholders and by providing its key
employees with an incentive for outstanding performance. The Plan is further
intended to provide flexibility to the Company in its ability to motivate,
attract, and retain the services of employees upon whose judgment, interest,
and special effort the successful conduct of the Company's operation is
largely dependent. Accordingly, the Plan permits the grant of incentive
awards from time to time to selected officers and key employees. It is also
intended that the Plan replace the Cycare Systems, Inc. Stock Option Plan (the
"Prior Plan"); provided, however, that options granted under the Prior Plan
shall continue to be subject to the terms and conditions set forth in the
agreement evidencing the option grant.
ARTICLE 2 EFFECTIVE DATE
2.1 EFFECTIVE DATE. The Plan is effective as of March 1, 1995 (the
"Effective Date). Within one year after the Effective Date, the Plan shall
be submitted to the shareholders of the Company for their approval. The Plan
will be deemed to be approved by the shareholders if it receives the
affirmative vote of the holders of a majority of the shares of stock of the
Company present, or represented, and entitled to vote at a meeting duly held
(or by the written consent of the holders of a majority of the shares of stock
of the Company entitled to vote) in accordance with the applicable provisions
of Delaware law and the Company's Bylaws and Articles of Incorporation. Any
Awards granted under the Plan prior to shareholder approval are effective when
made (unless the Committee specifies otherwise at the time of grant), but no
Award may be exercised or settled and no restrictions relating to any Award
may lapse before shareholder approval. If the shareholders fail to approve the
Plan, any Award previously made shall be automatically canceled without any
further act.
ARTICLE 3 DEFINITIONS AND CONSTRUCTION
3.1 DEFINITIONS. When a word or phrase appears in this Plan with the
initial letter capitalized, and the word or phrase does not commence a
sentence, the word or phrase shall generally be given the meaning ascribed to
it in this Section or in Sections 1.1 or 2.1 unless a clearly different
meaning is required by the context. The following words and phrases shall
have the following meanings:
(a) "Award" means any Option, Stock Appreciation Right, Restricted
Stock Award, Performance Share Award, Dividend Equivalent Award, or Other
Stock-Based Award, or any other right or interest relating to Stock or
cash, granted to a Participant under the Plan.
(b) "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.
(c) "Board" means the Board of Directors of the Company.
(d) "Change of Control" means and includes each of the following:
(1) A change of control of the Company through a transaction or
series of transactions, such that any person (as that term is used in
Section 13 and 14(d)(2) of the 1934 Act), excluding affiliates of the
Company as of the Effective Date, is or becomes the
Page 11 of 46 Pages
<PAGE>
beneficial owner (as that term is used in Section 13(d) of the 1934
Act) directly or indirectly, of securities of the Company
representing 35% or more of the combined voting power of the
Company's then outstanding securities;
(2) Upon the first purchase under a tender offer or exchange
offer for 20% or more of the outstanding shares of Stock (or
securities convertible into Stock), other than an offer by the Company
or any Subsidiary or any employee benefit plan sponsored by the
Company or any Subsidiary;
(3) Any merger or consolidation of the Company in which the
Company is not the continuing or surviving corporation or pursuant to
which Shares would be converted into cash, securities or other
property, other than a merger of the Company in which the holders of
the Shares immediately before the merger have the same proportionate
ownership of common stock of the surviving corporation immediately
after the merger;
(4) Substantially all of the assets of the Company are sold or
otherwise transferred to parties that are not within a "controlled
group of corporations" (as defined in Section 1563 of the Code) in
which the Company is a member; or
(5) If, at any time after March 1, 1995, there shall cease to be
a majority of the Board comprised as follows: individuals who as of
March 1, 1995, constitute the Board and any new director(s) whose
election by the Board or nomination for election by the Company's
stockholders was approved by a vote of the majority of the directors
still in office who either were directors as of March 1, 1995, or
whose election or nomination for election was previously so approved.
(e) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(f) "Committee" means the committee of the Board described in
Article 4.
(g) "Disability shall mean any illness or other physical or mental
condition of a Participant which renders the Participant incapable of
performing his full-time duties for the Company for six consecutive months
and within 30 days after notice by the Committee to the Participant, the
Participant does not return to the full-time performance of his duties.
(h) "Dividend Equivalent" means a right granted to a Participant
under Article 11.
(i) "Fair Market Value" means with respect to Stock or any other
property, the fair market value of such Stock or other property determined
by such methods or procedures as may be established from time to time by
the Committee. Unless otherwise determined by the Committee, the Fair
Market Value of Stock as of any date shall be the closing price for the
Stock as reported on the NASDAQ National Market System (or on any national
securities exchange on which the Stock is then listed) for that date or, if
no closing price is so reported for that date, the closing price on the
next preceding date for which a closing price was reported.
(j) "Incentive Stock Option" means an Option that is intended to meet
the requirements of Section 422 of the Code or any successor provision
thereto.
(k) "Non-Qualified Stock Option" means an Option that is not intended
to be an Incentive Stock Option.
Page 12 of 46 Pages
<PAGE>
(l) "Option" means a right granted to a Participant under Article 7
of the Plan to purchase Stock at a specified price during specified time
periods. An Option may be either an Incentive Stock Option or a Non-
Qualified Stock Option.
(m) "Other Stock-Based Award" means a right, granted to a Participant
under Article 12, that relates to or is valued by reference to Stock or
other Awards relating to Stock.
(n) "Participant" means a person who, as an officer or key employee
of the Company or any Subsidiary, has been granted an Award under the Plan.
(o) "Performance Share" means a right granted to a Participant under
Article 9, to receive cash, Stock, or other Awards, the payment of which is
contingent upon achieving certain performance goals established by the
Committee.
(p) "Plan" means the CyCare Systems, Inc. 1995 Long-Term Incentive
Plan, as amended from time to time.
(q) "Restricted Stock Award" means Stock granted to a Participant
under Article 10 that is subject to certain restrictions and to risk of
forfeiture.
(r) "Stock" means the common stock of the Company and such other
securities of the Company that may be substituted for Stock pursuant to
Article 13.
(s) "Stock Appreciation Right" or "SAR" means a right granted to a
Participant under Article 8 to receive a payment equal to the difference
between the Fair Market Value of a share of Stock as of the date of
exercise of the SAR over the grant price of the SAR, all as determined
pursuant to Article 8.
(t) "Subsidiary" means any corporation of which a majority of the
outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Company.
ARTICLE 4 ADMINISTRATION
4.1 COMMITTEE. The Plan shall be administered by a Committee that is
appointed by, and shall serve at the discretion of, the Board. The Committee
shall consist of at least two individuals who are members of the Board who are
"disinterested persons," as such term is defined in Rule 16b-3 promulgated
under Section 16 of the Securities Exchange Act of 1934 (the "1934 Act") or
any successor provision, except as may be otherwise permitted under Section 16
of the 1934 Act and the regulations and rules promulgated thereunder.
4.2 ACTION BY THE COMMITTEE. A majority of the Committee shall
constitute a quorum. The acts of a majority of the members present at any
meeting at which a quorum is present and acts approved in writing by a
majority of the Committee in lieu of a meeting shall be deemed the acts of the
Committee. Each member of the Committee is entitled to, in good faith, rely or
act upon any report or other information furnished to that member by any
officer or other employee of the Company or any Subsidiary, the Company's
independent certified public accountants, or any executive compensation
consultant or other professional retained by the Company to assist in the
administration of the Plan.
4.3 AUTHORITY OF COMMITTEE. The Committee has the exclusive power,
authority and discretion to:
(a) Designate Participants;
(b) Determine the type or types of Awards to be granted to each
Participant;
Page 13 of 46 Pages
<PAGE>
(c) Determine the number of Awards to be granted and the number of
shares of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award granted under the
Plan including but not limited to, the exercise price, grant price, or
purchase price, any restrictions or limitations on the Award, any schedule
for lapse of forfeiture restrictions or restrictions on the exercisability
of an Award, and accelerations or waivers thereof, based in each case on
such considerations as the Committee in its sole discretion determines;
(e) Determine whether, to what extent, and under what circumstances
an Award may be settled in, or the exercise price of an Award may be paid
in, cash, Stock, other Awards, or other property, or an Award may be
canceled, forfeited, or surrendered;
(f) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(g) Decide all other matters that must be determined in connection
with an Award;
(h) Establish, adopt or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan; and
(i) Make all other decisions and determinations that may be required
under the Plan or as the Committee deems necessary or advisable to
administer the Plan.
4.4 DECISIONS BINDING. The Committee's interpretation of the
Plan, any Awards granted under the Plan, any Award Agreement and all decisions
and determinations by the Committee with respect to the Plan are final,
binding, and conclusive on all parties.
ARTICLE 5 SHARES SUBJECT TO THE PLAN
5.1 NUMBER OF SHARES. Subject to adjustment provided in
Section 14.1, the aggregate number of shares of Stock reserved and available
for Awards or which may be used to provide a basis of measurement for or to
determine the value of an Award (such as with a Stock Appreciation Right or
Performance Share Award) shall be 1,120,000.
5.2 LAPSED AWARDS. To the extent that an Award terminates,
expires or lapses for any reason, any shares of Stock subject to the Award
will again be available for the grant of an Award under the Plan and shares
subject to SARs or other Awards settled in cash will be available for the
grant of an Award under the Plan, in each case to the full extent available
pursuant to the rules and interpretations of the Securities and Exchange
Commission under Section 16 of the 1934 Act, as amended.
5.3 STOCK DISTRIBUTED. Any Stock distributed pursuant to an
Award may consist, in whole or in part, of authorized and unissued Stock,
treasury Stock or Stock purchased on the open market.
5.4 LIMITATION ON NUMBER OF SHARES SUBJECT TO AWARDS.
Notwithstanding any provision in the Plan to the contrary, the maximum number
of shares of Stock with respect to one or more Awards that may be granted to
any one Participant over the term of the Plan shall be 600,000.
ARTICLE 6 ELIGIBILITY
6.1 GENERAL. Awards may be granted only to individuals who are
officers or other key employees (including employees who also are directors or
officers) of the Company or a Subsidiary, as determined by the Committee.
Page 14 of 46 Pages
<PAGE>
ARTICLE 7 STOCK OPTIONS
7.1 GENERAL. The Committee is authorized to grant Options to
Participants on the following terms and conditions:
(a) EXERCISE PRICE. The exercise price per share of Stock
under an Option shall be determined by the Committee, provided that
the exercise price for any Option shall not be less than the Fair
Market Value as of the date of grant.
(b) TIME AND CONDITIONS OF EXERCISE. The Committee shall
determine the time or times at which an Option may be exercised in
whole or in part, provided that no Option may be exercisable prior to
six months following the date of the grant of such Option. The
Committee also shall determine the performance or other conditions, if
any, that must be satisfied before all or part of an Option may be
exercised.
(c) PAYMENT. The Committee shall determine the methods by
which the exercise price of an Option may be paid, the form of
payment, including, without limitation, cash, shares of Stock, or
other property (including "cashless exercise" arrangements), and the
methods by which shares of Stock shall be delivered or deemed to be
delivered to Participants. Without limiting the power and discretion
conferred on the Committee pursuant to the preceding sentence, the
Committee may, in the exercise of its discretion, but need not, allow
a Participant to pay the Option price by directing the Company to
withhold from the shares of Stock that would otherwise be issued upon
exercise of the Option that number of shares having a Fair Market
Value on the exercise date equal to the Option price, all as
determined pursuant to rules and procedures established by the
Committee.
(d) EVIDENCE OF GRANT. All Options shall be evidenced by a
written Award Agreement between the Company and the Participant. The
Award Agreement shall include such provisions as may be specified by
the Committee.
7.2 INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock
Options granted under the Plan must comply with the following additional rules:
(a) EXERCISE PRICE. The exercise price per share of Stock
shall be set by the Committee, provided that the exercise price for
any Incentive Stock Option may not be less than the Fair Market Value
as of the date of the grant.
(b) EXERCISE. In no event, may any Incentive Stock Option
be exercisable for more than ten years from the date of its grant.
(c) LAPSE OF OPTION. An Incentive Stock Option shall lapse
under the following circumstances:
(1) The Incentive Stock Option shall lapse ten years
after it is granted, unless an earlier time is set in the Award
Agreement.
(2) The Incentive Stock Option shall lapse twelve
months after the Participant's termination of employment, if the
termination of employment was attributable to Disability.
(3) If the Participant separates from employment other
than as provided in paragraph (2), the Incentive Stock Option shall
lapse three months after the Participant's termination of employment.
Page 15 of 46 Pages
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(4) If the Participant dies before the Option lapses
pursuant to paragraph (1), (2) or (3), above, the Incentive Stock
Option shall lapse, unless it is previously exercised, on the earlier
of (i) the date on which the Option would have lapsed had the
Participant lived and had his employment status (i.e., whether the
Participant was employed by the Company on the date of his death or
had previously terminated employment) remained unchanged; or (ii) 15
months after the date of the Participant's death. Upon the
Participant's death, any exercisable Incentive Stock Options may be
exercised by the Participant's legal representative or
representatives, by the person or persons entitled to do so under the
Participant's last will and testament, or, if the Participant shall
fail to make testamentary disposition of such Incentive Stock Option
or shall die intestate, by the person or persons entitled to receive
said Incentive Stock Option under the applicable laws of descent and
distribution.
(d) INDIVIDUAL DOLLAR LIMITATION. The aggregate Fair Market
Value (determined as of the time an Award is made) of all shares of
Stock with respect to which Incentive Stock Options are first
exercisable by a Participant in any calendar year may not exceed
$100,000.00.
(e) TEN PERCENT OWNERS. An Incentive Stock Option shall be
granted to any individual who, at the date of grant, owns stock
possessing more than ten percent of the total combined voting power of
all classes of Stock of the Company only if such Option is granted at
a price that is not less than 110% of Fair Market Value on the date of
grant and the Option is exercisable for no more than five years from
the date of grant.
(f) EXPIRATION OF INCENTIVE STOCK OPTIONS. No Award of an
Incentive Stock Option may be made pursuant to this Plan after 2005.
(g) RIGHT TO EXERCISE. During a Participant's lifetime, an
Incentive Stock Option may be exercised only by the Participant.
ARTICLE 8 STOCK APPRECIATION RIGHTS
8.1 GRANT OF SARs. The Committee is authorized to grant SARs
to Participants on the following terms and conditions:
(a) RIGHT TO PAYMENT. Upon the exercise of a Stock
Appreciation Right, the Participant to whom it is granted has the
right to receive the excess, if any, of:
(1) The Fair Market Value of one share of Stock on the
date of exercise; over
(2) The grant price of the Stock Appreciation Right as
determined by the Committee, which shall not be less than the Fair
Market Value of one share of Stock on the date of grant in the case of
any SAR related to any Incentive Stock Option.
(b) OTHER TERMS. All awards of Stock Appreciation Rights
shall be evidenced by an Award Agreement. The terms, methods of
exercise, methods of settlement, form of consideration payable in
settlement, and any other terms and conditions of any Stock
Appreciation Right shall be determined by the Committee at the time of
the grant of the Award and shall be reflected in the Award Agreement.
Page 16 of 46 Pages
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ARTICLE 9 PERFORMANCE SHARES
9.1 GRANT OF PERFORMANCE SHARES. The Committee is authorized
to grant Performance Shares to Participants on such terms and conditions as
may be selected by the Committee. The Committee shall have the complete
discretion to determine the number of Performance Shares granted to each
Participant. All Awards of Performance Shares shall be evidenced by an Award
Agreement.
9.2 RIGHT TO PAYMENT. A grant of Performance Shares gives the
Participant rights, valued as determined by the Committee, and payable to, or
exercisable by, the Participant to whom the Performance Shares are granted, in
whole or in part, as the Committee shall establish at grant or thereafter.
The Committee shall set performance goals and other terms or conditions to
payment of the Performance Shares in its discretion which, depending on the
extent to which they are met, will determine the number and value of
Performance Shares that will be paid to the Participant, provided that the
time period during which the performance goals must be met shall, in all
cases, exceed six months.
9.3 OTHER TERMS. Performance Shares may be payable in cash,
Stock, or other property, and have such other terms and conditions as
determined by the Committee and reflected in the Award Agreement.
ARTICLE 10 RESTRICTED STOCK AWARDS
10.1 GRANT OF RESTRICTED STOCK. The Committee is authorized to
make Awards of Restricted Stock to Participants in such amounts and subject to
such terms and conditions as may be selected by the Committee. All Awards of
Restricted Stock shall be evidenced by a Restricted Stock Award Agreement.
10.2 ISSUANCE AND RESTRICTIONS. Restricted Stock shall be
subject to such restrictions on transferability and other restrictions as the
Committee may impose (including, without limitation, limitations on the right
to vote Restricted Stock or the right to receive dividends on the Restricted
Stock). These restrictions may lapse separately or in combination at such
times, under such circumstances, in such installments, or otherwise, as the
Committee determines at the time of the grant of the Award or thereafter.
10.3 FORFEITURE. Except as otherwise determined by the
Committee at the time of the grant of the Award or thereafter, upon
termination of employment during the applicable restriction period, Restricted
Stock that is at that time subject to restrictions shall be forfeited and
reacquired by the Company, provided, however, that the Committee may provide
in any Award Agreement that restrictions or forfeiture conditions relating to
Restricted Stock will be waived in whole or in part in the event of
terminations resulting from specified causes, and the Committee may in other
cases waive in whole or in part restrictions or forfeiture conditions relating
to Restricted Stock.
10.4 CERTIFICATES FOR RESTRICTED STOCK. Restricted Stock
granted under the Plan may be evidenced in such manner as the Committee shall
determine. If certificates representing shares of Restricted Stock are
registered in the name of the Participant, certificates must bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such Restricted Stock, and the Company shall retain physical
possession of the certificate until such time as all applicable restrictions
lapse.
ARTICLE 11 DIVIDEND EQUIVALENTS
11.1 GRANT OF DIVIDEND EQUIVALENTS. The Committee is authorized
to grant Dividend Equivalents to Participants subject to such terms and
conditions as may be selected by the Committee. Dividend Equivalents shall
entitle the Participant to receive payments equal to dividends with respect to
all or a portion of the number of shares of Stock subject to an Option Award
or SAR Award, as
Page 17 of 46 Pages
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determined by the Committee. The Committee may provide that Dividend
Equivalents be paid or distributed when accrued or be deemed to have been
reinvested in additional shares of Stock, or otherwise reinvested.
ARTICLE 12 OTHER STOCK-BASED AWARDS
12.1 GRANT OF OTHER STOCK-BASED AWARDS. The Committee is
authorized, subject to limitations under applicable law, to grant to
Participants such other Awards that are payable in, valued in whole or in part
by reference to, or otherwise based on or related to shares of Stock, as
deemed by the Committee to be consistent with the purposes of the Plan,
including without limitation shares of Stock awarded purely as a "bonus" and
not subject to any restrictions or conditions, convertible or exchangeable
debt securities, other rights convertible or exchangeable into shares of
Stock, and Awards valued by reference to book value of shares of Stock or the
value of securities of or the performance of specified Subsidiaries. The
Committee shall determine the terms and conditions of such Awards.
ARTICLE 13 PROVISIONS APPLICABLE TO AWARDS
13.1 STAND-ALONE, TANDEM, AND SUBSTITUTE AWARDS. Awards granted
under the Plan may, in the discretion of the Committee, be granted either
alone or in addition to, in tandem with, or in substitution for, any other
Award granted under the Plan. If an Award is granted in substitution for
another Award, the Committee may require the surrender of such other Award in
consideration of the grant of the new Award. Awards granted in addition to or
in tandem with other Awards may be granted either at the same time as or at a
different time from the grant of such other Awards.
13.2 EXCHANGE PROVISIONS. The Committee may at any time offer
to exchange or buy out any previously granted Award for a payment in cash,
Stock, or another Award (subject to Section 13.1), based on the terms and
conditions the Committee determines and communicates to the Participant at the
time the offer is made.
13.3 TERM OF AWARD. The term of each Award shall be for the
period as determined by the Committee, provided that in no event shall the
term of any Incentive Stock Option or a Stock Appreciation Right granted in
tandem with the Incentive Stock Option exceed a period of ten years from the
date of its grant.
13.4 FORM OF PAYMENT FOR AWARDS. Subject to the terms of the
Plan and any applicable law or Award Agreement, payments or transfers to be
made by the Company or a Subsidiary on the grant or exercise of an Award may
be made in such forms as the Committee determines at or after the time of
grant, including without limitation, cash, Stock, other Awards, or other
property, or any combination, and may be made in a single payment or transfer,
in installments, or on a deferred basis, in each case determined in accordance
with rules adopted by, and at the discretion of, the Committee.
13.5 LIMITS ON TRANSFER. No right or interest of a Participant
in any Award may be pledged, encumbered, or hypothecated to or in favor of any
party other than the Company or a Subsidiary, or shall be subject to any lien,
obligation, or liability of such Participant to any other party other than the
Company or a Subsidiary. Except as otherwise provided below, no Award shall
be assignable or transferable by a Participant other than by will or the laws
of descent and distribution or, except in the case of an Incentive Stock
Option, pursuant to a court order that would otherwise satisfy the
requirements to be a domestic relations order as defined in Section
414(p)(1)(B) of the Code, if the order satisfies Section 414(p)(1)(A) of the
Code notwithstanding that such an order relates to the transfer of a stock
option rather than an interest in an employee benefit pension plan. In the
Award Agreement for any Award other than an Award that includes an Incentive
Stock Option, the Committee may allow a Participant to assign or otherwise
transfer all or a portion of the rights represented by the Award to specified
individuals or classes of individuals, or to a trust benefiting such
individuals or classes of individuals, subject to such restrictions,
limitations, or conditions as the Committee deems to be appropriate.
Page 18 of 46 Pages
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13.6 BENEFICIARIES. Notwithstanding Section 13.5, a Participant
may, in the manner determined by the Committee, designate a beneficiary to
exercise the rights of the Participant and to receive any distribution with
respect to any Award upon the Participant's death. A beneficiary, legal
guardian, legal representative, or other person claiming any rights under the
Plan is subject to all terms and conditions of the Plan and any Award
Agreement applicable to the Participant, except to the extent the Plan and
Award Agreement otherwise provide, and to any additional restrictions deemed
necessary or appropriate by the Committee. If the Participant is married, a
designation of a person other than the Participant's spouse as his beneficiary
with respect to more than 50 percent of the Participant's interest in the
Award shall not be effective without the written consent of the Participant's
spouse. If no beneficiary has been designated or survives the Participant,
payment shall be made to the person entitled thereto under the Participant's
will or the laws of descent and distribution. Subject to the foregoing, a
beneficiary designation may be changed or revoked by a Participant at any time
provided the change or revocation is filed with the Committee.
13.7 STOCK CERTIFICATES. All Stock certificates delivered under
the Plan are subject to any stop-transfer orders and other restrictions as the
Committee deems necessary or advisable to comply with federal or state
securities laws, rules and regulations and the rules of any national
securities exchange or automated quotation system on which the Stock is
listed, quoted, or traded. The Committee may place legends on any Stock
certificate to reference restrictions applicable to the Stock.
13.8 ACCELERATION UPON A CHANGE OF CONTROL. If a Change of
Control occurs, all outstanding Options, Stock Appreciation Rights, and other
Awards in the nature of rights that may be exercised shall become fully
exercisable and all restrictions on outstanding Awards shall lapse. To the
extent that this provision causes Incentive Stock Options to exceed the dollar
limitation set forth in Section 7.2(d), the excess Options shall be deemed to
be Non-Qualified Stock Options. Notwithstanding any provision in this Plan to
the contrary, if a Change of Control of the Company has occurred and the
Participant's employment is terminated for any reason except those "excepted
causes" detailed below, the Participant shall be entitled for a seven-month
period following such termination, to exercise all Options and other Awards
that were exercisable as of the date of such termination (taking into account
the acceleration provision of this Section 13.8). For this purpose, excepted
cause shall mean termination of employment due to (i) the death of the
Participant, (ii) the disability of the Participant, or (iii) cause (which
shall deem to occur if the Participant willfully engages in conduct that is
demonstrably and materially injurious to the Company, monetarily, or
otherwise; and in making such determination, no act, or failure to act, on the
Participant's part shall be deemed "willful" unless done, or omitted to be
done, by the Participant in bad faith and without reasonable belief that the
act or omission was in the best interest of the Company.
ARTICLE 14 CHANGES IN CAPITAL STRUCTURE
14.1 GENERAL. In the event a stock dividend is declared upon
the Stock, the shares of Stock then subject to each Award (and the number of
shares subject thereto) shall be increased proportionately without any change
in the aggregate purchase price therefor. In the event the Stock shall be
changed into or exchanged for a different number or class of shares of Stock
or of another corporation, whether through reorganization, recapitalization,
stock split-up, combination of shares, merger or consolidation, there shall be
substituted for each such share of Stock then subject to each Award (and for
each share of Stock then subject thereto) the number and class of shares of
Stock into which each outstanding share of Stock shall be so exchanged, all
without any change in the aggregate purchase price for the shares then subject
to each Award.
ARTICLE 15 AMENDMENT, MODIFICATION AND TERMINATION
15.1 AMENDMENT, MODIFICATION AND TERMINATION. With the approval
of the Board, at any time and from time to time, the Committee may terminate,
amend or modify the Plan. However, without approval of the shareholders of
the Company or other conditions (as may be required by the Code, by the
insider trading rules of Section 16 of the 1934 Act, by any national
securities exchange or
Page 19 of 46 Pages
<PAGE>
system on which the Stock is listed or reported, or by a regulatory body
having jurisdiction), no such termination, amendment, or modification may:
(a) Materially increase the total number of shares of Stock
that may be issued under the Plan, except as provided in Section 14.1;
(b) Materially modify the eligibility requirements for
participation in the Plan; or
(c) Materially increase the benefits accruing to
Participants under the Plan.
15.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or
modification of the Plan shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the
Participant.
ARTICLE 16 GENERAL PROVISIONS
16.1 NO RIGHTS TO AWARDS. No Participant or employee shall have
any claim to be granted any Award under the Plan, and neither the Company nor
the Committee is obligated to treat Participants and employees uniformly.
16.2 NO STOCKHOLDERS RIGHTS. No Award gives the Participant any
of the rights of a shareholder of the Company unless and until shares of Stock
are in fact issued to such person in connection with such Award.
16.3 WITHHOLDING. The Company or any Subsidiary shall have the
authority and the right to deduct or withhold, or require a Participant to
remit to the Company, an amount sufficient to satisfy Federal, state, and
local taxes (including the Participant's FICA obligation) required by law to
be withheld with respect to any taxable event arising as a result of this
Plan. With respect to withholding required upon any taxable event under the
Plan, Participants may elect, subject to the Committee's approval, to satisfy
the withholding requirement, in whole or in part, by having the Company or any
Subsidiary withhold shares of Stock having a Fair Market Value on the date of
withholding equal to the amount to be withheld for tax purposes in accordance
with such procedures as the Committee establishes. The Committee may, at the
time any Award is granted, require that any and all applicable tax withholding
requirements be satisfied by the withholding of shares of Stock as set forth
above.
16.4 NO RIGHT TO EMPLOYMENT. Nothing in the Plan or any Award
Agreement shall interfere with or limit in any way the right of the Company or
any Subsidiary to terminate any Participant's employment at any time, nor
confer upon any Participant any right to continue in the employ of the Company
or any Subsidiary.
16.5 UNFUNDED STATUS OF AWARDS. The Plan is intended to be an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Participant pursuant to an Award, nothing contained
in the Plan or any Award Agreement shall give the Participant any rights that
are greater than those of a general creditor of the Company or any Subsidiary.
16.6 INDEMNIFICATION. To the extent allowable under applicable
law, each member of the Committee or of the Board shall be indemnified and
held harmless by the Company from any loss, cost, liability, or expense that
may be imposed upon or reasonably incurred by such member in connection with
or resulting from any claim, action, suit, or proceeding to which he or she
may be a party or in which he or she may be involved by reason of any action
or failure to act under the Plan and against and from any and all amounts paid
by him or her in satisfaction of judgment in such action, suit, or proceeding
against him or her provided he or she gives the Company an opportunity, at its
own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification
to which such persons may be
Page 20 of 46 Pages
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entitled under the Company's Articles of Incorporation or By-Laws, as a matter
of law, or otherwise, or any power that the Company may have to indemnify them
or hold them harmless.
16.7 RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan
shall be taken into account in determining any benefits under any pension,
retirement, savings, profit sharing, group insurance, welfare or other benefit
plan of the Company or any Subsidiary.
16.8 EXPENSES. The expenses of administering the Plan shall be
borne by the Company and its Subsidiaries.
16.9 TITLES AND HEADINGS. The titles and headings of the
Sections in the Plan are for convenience of reference only, and in the event
of any conflict, the text of the Plan, rather than such titles or headings,
shall control.
16.10 FRACTIONAL SHARES. No fractional shares of stock shall be
issued and the Committee shall determine, in its discretion, whether cash
shall be given in lieu of fractional shares or whether such fractional shares
shall be eliminated by rounding up.
16.11 SECURITIES LAW COMPLIANCE. With respect to any person who
is, on the relevant date, obligated to file reports under Section 16 of the
1934 Act, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the 1934 Act. To
the extent any provision of the Plan or action by the Committee fails to so
comply, it shall be void to the extent permitted by law and voidable as deemed
advisable by the Committee.
16.12 GOVERNMENT AND OTHER REGULATIONS. The obligation of the
Company to make payment of awards in Stock or otherwise shall be subject to
all applicable laws, rules, and regulations, and to such approvals by
government agencies as may be required. The Company shall be under no
obligation to register under the Securities Act of 1933, as amended (the "1933
Act"), any of the shares of Stock paid under the Plan. If the shares paid
under the Plan may in certain circumstances be exempt from registration under
the 1933 Act, the Company may restrict the transfer of such shares in such
manner as it deems advisable to ensure the availability of any such exemption.
16.13 GOVERNING LAW. The Plan and all Award Agreements shall be
construed in accordance with and governed by the laws of the State of Arizona.
Page 21 of 46 Pages
<PAGE>
CYCARE SYSTEMS, INC.
STOCK OPTION PLAN
1. PURPOSE OF PLAN.
The purpose of this Stock Option Plan (hereinafter called the "Plan") is
to further the success of CyCare Systems, Inc., a Delaware corporation or any
successor corporation (hereinafter called the "Company"), and its subsidiaries
or affiliates by making available Common Stock of the Company for purchase by
eligible officers and other key employees of the Company and its subsidiaries
and affiliates and thus to provide an additional incentive to such employees
to continue in the employ of the Company or its subsidiaries or affiliates and
to give them a greater interest as stockholders in the success of the Company.
Options to purchase shares of Common Stock of the Company ("stock") may be
granted from the date of approval of this Plan by the stockholders of the
Company to December 31, 1996, to such eligible employees as may be selected by
the Stock Option Committee hereinafter designated by the Board of Directors of
the Company ("Board") or the Board of Directors.
2. STOCK SUBJECT TO PLAN.
Subject to the provisions of Paragraph 10 hereof, there shall be reserved
for issuance or transfer upon the exercise of options to be granted from time
to time under the Plan an aggregate of 620,000 shares of Common Stock, $.01
par value (hereinafter called "stock"). If any option granted under the Plan
shall expire or terminate for any reason without having been exercised in
full, the unpurchased shares subject thereto shall again be available for the
purpose of the Plan.
3. TERMS OF OPTIONS.
Options granted under this Plan shall be non-qualified stock options or
"incentive stock options", within the meaning of Section 422A of the Internal
Revenue Code of 1986, as the Board, or a Stock Option Committee hereafter
designated by the Board, shall determine subject to the following terms and
conditions. In the case of an incentive stock option granted to an employee
hereunder, the aggregate fair market value (determined at the time an option
is granted) of the stock with respect to which such option and all other
incentive stock options held by such employee (whether such options are
granted under this Plan or under
Page 22 of 46 Pages
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any other stock option plan maintained by the Company or any subsidiary) are
exercisable for the first time during any calendar year shall not exceed
$100,000. No incentive stock option shall be exercisable less than one nor
more than five years after the date of grant, subject to the following
schedule: No more than 25% of the shares subject to an option may be
purchased prior to the second anniversary of the date of grant of such option;
no more than 50% of the shares subject to an option may be purchased before
the third such anniversary; no more than 75% of the shares subject to such
option may be purchased before the fourth such anniversary, and options may be
exercised in full after such fourth anniversary. The per share redemption
price shall be not less than 100% of the fair market value of a share of Stock
at the time the option is granted. Options granted shall not be transferable,
except to the extent the optionee was entitled to exercise an option at the
date of his death. In such a case, such option may be so exercised within 90
days after the death of such optionee by the executor, administrator, or a
person who acquired the right to exercise any such option by bequest or
inheritance or by reason of the death of the optionee. Notwithstanding the
provisions relating to the termination of employment otherwise set forth
herein, if a change in control of the Company (as defined in Paragraph 14(b)
hereof) shall have occurred and the employment of an optionee is terminated
for any reason except those "excepted causes" detailed below, the optionee
shall be entitled for a seven month period following such termination, to
exercise all options to purchase all of the shares of stock that were
exercisable as of the date of such termination.
For purposes of the foregoing provisions of this Paragraph 3, an "excepted
cause" shall be limited to the following:
(i) the death of the optionee;
(ii) termination following the date upon which any optionee obtains
the age of 65, irrespective of whether the optionee retires or is
otherwise terminated; or
(iii) the optionee is terminated by the Company for disability or for
cause as defined below. For purposes of the foregoing clause (iii),
an employee shall be deemed terminated for disability only if as a
result of an incapacity due to physical or mental illness, the
optionee shall have been absent from full-time performance of his
duties with the Company for six consecutive months, and within 30 days
after written notice of termination is given to the
Page 23 of 46 Pages
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optionee, the optionee shall not have returned to the full-time
performance of the optionee's duties. For purposes of the foregoing
clause (iii), an optionee shall be deemed terminated for cause only
if such termination is based upon the optionee willfully engaging in
conduct that is demonstrably and materially injurious to the
Company, monetarily or otherwise; in determining cause it is further
stipulated that no act, or failure to act, on the part of an
optionee shall be deemed "willful" unless done, or omitted to be
done, by the optionee in bad faith and without reasonable belief
that the act or omission was in the best interest of the Company.
All options under this Plan shall be evidenced by written agreements
between the Company and the optionees. Such agreements shall contain such
further terms and conditions, not inconsistent with the foregoing, relating to
the grant or the time or times of exercise of nonqualified stock options as
the Stock Option Committee or the Board shall prescribe.
4. ELIGIBILITY.
Options may be granted only to key employees, including officers, of (a)
the Company, (b) subsidiary corporations (hereinafter called "subsidiaries"),
of the Company from time to time, and (c) any business entity (hereinafter
called an "affiliate") in which the Company shall have a substantial interest.
In determining the employees to whom options shall be granted and the number
of shares to be covered by each option, the Board may take into account the
nature of the services rendered by the respective employees, their present and
potential contributions to the Company's success and such other factors as the
Board in its discretion shall deem relevant. Options may be granted to key
employees who hold or have held options under previous plans. An employee who
has been granted an option under the Plan may be granted an additional option
or options under the Plan if the Board shall so determine.
5. MANNER OF EXERCISE.
Each exercise of an option granted hereunder shall be made by the
delivery by participant (or his personal representative, as the case may be)
of written notice of such election to the Company stating the number of shares
with respect to which the option is being exercised. No shares shall be
issued until full payment therefore shall have been made as provided below.
Delivery of the shares may be made at the
Page 24 of 46 Pages
<PAGE>
office of the Company or at the office of a transfer agent appointed for the
transfer of shares of the Company, as the Company shall determine. In the
event of any failure to take and pay for the number of shares specified in the
notice of election on the date stated therein, the option shall become
inoperative and lapse as to such number of shares, but shall continue with
respect to any remaining shares subject to the option as to which exercise has
not yet been made.
(a) Payment in Cash. If the shares as to which the option is being
exercised are to be paid for entirely in cash, such notice shall either be
accompanied by such cash or certified check or specify a date not less than
five (5) nor more than fifteen (15) days after the date of the mailing of such
notice on which the shares will be taken and payment made therefore. On the
date specified in the notice of election, the Company shall deliver or cause
to be delivered to the participant stock certificates for the number of shares
with respect to which the option is being exercised against payment therefore.
(b) Request to Make Payments in Shares of the Company. If
requested by the participant or his personal representative, payment may be
made by transfer to the Company of shares of Stock or any combination of
shares of Stock, cash or certified check, having a fair market value,
determined as of the close of business on the day preceding the transfer,
equal to, but not exceeding, due the full option price of the shares with
respect to which the option is being exercised.
6. ADMINISTRATION OF PLAN.
This Plan shall be administered by a committee to be designated the
"Stock Option Committee" or the Board. If the Plan is to be administered by
the Board of Directors, the majority of the Directors then in office shall be
ineligible to participate in, and shall not have within one year prior to
their election to the Board participated in, this Plan or any other stock
option, stock purchase or stock unit plan of the Company. The Stock Option
Committee shall consist of three or more Directors designated by the Board,
none of whom shall be eligible to participate in, or shall have within one
year prior to appointment to the Stock Option Committee participated in, this
Plan or any other stock option, stock purchase or stock unit plans of the
Company.
The Board of Directors or the Stock Option Committee shall have plenary
authority in its discretion, but subject to the express provisions of the
Plan, to determine the purchase price of the Common Stock
Page 25 of 46 Pages
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covered by each option, the employees to whom, at the time or times which,
options shall be granted, and the number of shares to be subject to each
option; to determine when an option can be exercised and whether in whole or
in installments; to interpret the Plan, to prescribe, amend, and rescind rules
and regulations relating to it; to determine the terms and provisions (and
amendments thereof) of the respective option agreements (which need not be
identical), including such terms and provisions (and amendments) as shall be
required in the judgment of the Board of Directors or the Stock Option
Committee to conform to any change in any law or regulation applicable
thereto; and to make all other determinations deemed necessary or advisable
for the administration of the Plan. The decision of the Board of Directors or
the Stock Option Committee on any of the foregoing matters shall be conclusive.
7. OPTION PRICES.
The purchase price of Common Stock under each option shall be determined
by the Board, or by a Stock Option Committee hereafter designated by the
Board, provided, however, that the purchase price of stock subject to an
incentive stock option shall be equal to the fair market value of the Common
Stock at the time of granting, and providing further that in the case of an
incentive stock option granted to an employee who, immediately after the
grant, would own shares or hold outstanding options to purchase stock
possessing more than ten percent (10%) of the total combined voting power of
all classes of shares of the Company or any of its subsidiaries (taking into
account in determining such stock ownership all stock owned by the brothers,
sisters, spouse, ancestors or descendants of such employee and all stock owned
by any corporation, partnership, estate or trust of which such employee is a
holder of ten percent (10%) or more of the outstanding shares, partner or
beneficiary), the option price shall be 110% of the fair market value of the
Common Stock at the time of granting.
8. NONTRANSFERABILITY OF OPTIONS.
Any option granted hereunder may be exercised only by the employee to
whom the option is granted at the times and under the conditions provided in
this Plan. In no event may any option which is granted hereunder be assigned
or transferred, and in the event that an assignment or transfer of any option
is attempted, no purported assignee or transferee shall have any power to
exercise an option hereunder.
9. ADJUSTMENT CHANGES IN CAPITALIZATION.
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Notwithstanding any other provisions of the Plan, each option agreement
may contain such provisions as the Board shall determine to be appropriate for
the adjustment of the number and class of shares subject to such option and
the option price in the event of changes in the outstanding Common Stock by
reason of any stock dividend, split-up, recapitalization, combination or
exchange of share, merger, consolidation, acquisition of property or stock,
separation, reorganization or liquidation and the like, and, in the event of
any such change in the outstanding Common Stock, the aggregate number and
class of shares available under the Plan shall be appropriately adjusted by
the Board, whose determination shall be conclusive.
10. AMENDMENT AND TERMINATION.
Unless the Plan shall theretofore have been terminated as hereinafter
provided, it shall terminate at such time as options have been granted and
exercised for the total number of shares allocated to this Plan. The Plan may
be terminated, modified, or amended by the stockholders of the Company. The
Board of Directors of the Company may terminate the Plan or make such
modifications or amendments thereof as it shall deem advisable, or in order to
conform to any change in any law or regulation applicable thereto; provided,
however, that the Board of Directors may not, without further approval by the
holders of a majority of the outstanding stock of the Company having general
voting power, (a) increase the maximum number of shares as to which options
may be granted under the Plan, (b) change the class of employees eligible to
be granted options, (c) increase the period during which options may be
granted or exercised, or, (d) extend the period during which options may be
granted under this Plan beyond December 31, 1996, or, (e) decrease the
purchase price of the stock for any option below the fair market value of the
stock at the time the option is granted. No termination, modification, or
amendment of the Plan may, without the consent of the employee to whom any
option shall theretofore have been granted, adversely affect the rights of
such employee under such option.
11. EFFECTIVENESS OF PLAN.
The Plan shall become effective upon such date as (a) it shall have been
approved, within twelve (12) months after the date of its adoption by the Board
of Directors, by the vote of the holders of a majority of all the issued and
outstanding shares of stock of the Company entitled to vote thereon at a meeting
Page 27 of 46 Pages
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thereof duly held and (b) the Board shall have been advised by counsel that
all other applicable legal requirements have been complied with. Options may
be granted to employees prior to such date, but the exercisability of all such
options shall be conditioned upon such approval and advice.
12. TIME OF GRANTING OF OPTIONS.
Nothing contained in the Plan or in any resolution adopted or to be
adopted by the Board of Directors, or the stockholders of the Company shall
constitute the granting of any option hereunder. The granting of an option
pursuant to the Plan shall take place only when a written option agreement
shall have been duly executed and delivered by or on behalf of the Company and
the individual (or his duly authorized attorney-in-fact) to whom such option
is to be granted.
13. EXCHANGE OF OUTSTANDING INCENTIVE STOCK OPTIONS.
An incentive stock option outstanding as of January 1, 1987 may be
exchanged for a nonqualified option with an exercise price determined by the
Board or a Stock Option Committee hereafter designated by the Board. A
nonqualified option received in such an exchange shall be exercisable to the
same extent the incentive stock option for which it is exchanged is
exercisable at the time of such exchange, notwithstanding the provisions of
Paragraph 3 of this Plan.
14. ACCELERATION UPON A CHANGE IN CONTROL.
(a) Notwithstanding the vesting schedule set forth in Paragraph 3
hereof, upon a change in control in the Company, outstanding options granted
hereunder shall become immediately exercisable as to 100% of the shares of
stock underlying such options and with respect to which the option has not
previously been exercised.
(b) For purposes of this Plan, a "change in control of the Company"
shall be deemed to occur:
(i) upon the acquisition by any "person", (as defined for Sections
13(d) and 14(d) of the Securities and Exchange Act of 1934, as amended) the
Company or any of its subsidiaries or any employee benefit plan sponsored by
the Company or any of its subsidiaries, of "beneficial ownership", (as defined
in Rule 13d-3 under the Exchange Act) directly or indirectly, of securities of
the Company representing 35% or more of the combined voting power of the
Company's then outstanding securities;
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(ii) if, at any time after August 16, 1988, there shall cease to be
a majority of the Board comprised as follows: individuals who as of August 16,
1988 constitute the Board and any new director(s) whose election by the Board
or nomination for election by the Company's stockholders was approved by a
vote of a majority of the Directors then still in office who either were
Directors as of August 16, 1988, or whose election or nomination for election
was previously so approved;
(iii) upon the first purchase under a tender offer or exchange
offer for 20% or more of the outstanding shares of stock (or securities
convertible stock), other than an offer by the Company or any of its
subsidiaries or any employee benefit plan sponsored by the Company or any of
its subsidiaries; or
(iv) if the stockholders of the Company shall approve (a) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of stock would
be converted into cash, securities or other property, or (b) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of the Company.
Page 29 of 46 Pages
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FIRST AMENDMENT
TO THE
CYCARE SYSTEMS, INC. STOCK OPTION PLAN
The CyCare Systems, Inc. Stock Option Plan ("Plan"), which was adopted
effective January 1, 1987, provides an incentive plan to employees by issuing
options to purchase Common Stock of CyCare Systems, Inc. including
non-qualified stock options and "incentive stock options" within the meaning
of Section 422A of the Internal Revenue Code of 1986, as amended. By this
Amendment, the Board of Directors is increasing the number of shares available
for exercise under options granted pursuant to the Plan, broadening the group
of persons eligible for grants of non-qualified stock options, extending the
maximum term of options, and revising the manner in which vesting of options
is determined.
1. The provisions of this First Amendment shall be effective as of
_____________________, 1991, except as otherwise provided herein. This
Amendment shall only amend the provisions of the Plan as set forth herein and
those provisions not expressly amended hereby shall be considered in full
force and effect.
2. Paragraph 2 of the Plan shall be amended by adding the following
thereto:
"Effective ____________, 1991, an additional number of shares of stock
equal to 15% of the Company's outstanding stock as of the effective
date of the First Amendment, reduced by the number of shares of stock
previously reserved under the Plan, will be reserved for issuance or
transfer upon the exercise of options to be granted from time to time
under the Plan."
3. The third sentence of Paragraph 3 of the Plan shall be amended and
restated to provide as follows:
"No stock option may be exercised after an expiration of ten years
from the date such option is granted. The Board of Directors will
determine at what times and under what circumstances options may be
exercised."
4. Effective January 1, 1990, Paragraph 3 of the Plan shall be amended by
adding the following:
"Notwithstanding any provision of this Paragraph 3 or any other
provision of the Plan to the contrary, stock options granted to non-
employee members of the Board will not be determined by the Board of
Directors as provided in Paragraph 6, but shall be subject to the
following terms:
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(a) Each new non-employee director shall receive a
non-qualified stock option to purchase 10,000 shares.
(b) A non-employee director may be granted additional
non-qualified stock options by the Board, provided such
grants are approved by the holders of a majority of the
outstanding stock of the Company, in the manner described in
Paragraph 10.
(c) The purchase price for the shares under stock
options shall be the fair market value of the stock on the
date of grant.
(d) The option shall be exercisable only if the non-
employee director is still a member of the Board on the
exercise dates provided for as follows: 25% of the shares
subject to an option may be purchased after the first
anniversary of the date of grant, but prior to the second
anniversary; no more than 50% of the shares may be purchased
prior to the third anniversary: no more than 75% of the
shares may be purchased prior to the fourth anniversary;
and, after the fourth anniversary, all of the shares may be
purchased."
5. Paragraph 4 of the Plan shall be amended by adding to the end
thereof the following:
"Effective January 1, 1990, non-qualified stock options may be granted
to non-employee members of the Board, subject to the terms set forth
in Paragraph 3."
6. Except as otherwise amended and supplemented by this First
Amendment, CyCare SyStems, Inc. hereby ratifies the Plan as originally
established.
DATED: ________________, 1991.
CYCARE SYSTEMS, INC.
By:
--------------------------------
Its:
----------------------------
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<PAGE>
SECOND AMENDMENT
TO THE
CYCARE SYSTEMS, INC. STOCK OPTION PLAN
The CyCare Systems, Inc. Stock Option Plan (the "Plan") as amended
through _________________, 1991 provides an incentive plan to employees and
non-employee directors by issuing options to purchase Common Stock of CyCare
Systems, Inc. including non-qualified stock options and "incentive stock
options" within the meaning of Section 422A of the Internal Revenue Code of
1986, as amended. The Plan was drafted in part to permit the shares of Common
Stock to qualify for an exemption from certain provisions of Section 16 of the
Securities and Exchange Act of 1934, as amended, and the regulations
promulgated thereunder. The regulations under Section 16 have recently been
amended by the Securities and Exchange Commission, including the regulations
providing for the exemption from certain provisions of Section 16. By this
Amendment, the Board of Directors is modifying the Plan as necessary to permit
the shares of Common Stock issued pursuant to the Plan to continue to qualify
for an exemption from Section 16.
1. The provisions of this Second Amendment shall be effective as of
______________, 1991, except as otherwise provided herein. This Amendment
shall only amend the provisions of the Plan as set forth herein and those
provisions not expressly amended hereby shall be considered in full force and
effect.
Page 32 of 46 Pages
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EXHIBIT 4(c)
CYCARE SYSTEMS, INC.
DIRECTOR STOCK PLAN
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. CyCare Systems, Inc., a Delaware
corporation, hereby establishes the CyCare Systems, Inc. Director Stock Plan
(the "Plan") for the benefit of its Non-employee Directors. The Plan sets forth
the terms of an initial, one-time grant of Non-Qualified Stock Options and
subsequent annual grants of Restricted Stock to Non-employee Directors. All
such grants are subject to the terms and provisions set forth in this Plan.
1.2 PURPOSE OF THE PLAN. The purpose of the Plan is to encourage
ownership in the Company by Non-employee Directors, to strengthen the ability of
the Company to attract and retain the services of experienced and knowledgeable
individuals as Non-employee Directors of the Company, and to provide Non-
employee Directors with a further incentive to work for the best interests of
the Company and its stockholders.
1.3 EFFECTIVE DATE. The Plan is effective as of October 18, 1994 (the
"Effective Date"). Within one year after the Effective Date, the Plan shall be
submitted to the stockholders of the Company for their approval. The Plan will
be deemed to be approved by the stockholders if it receives the affirmative vote
of the holders of a majority of the shares of stock of the Company present, or
represented, and entitled to vote at a meeting duly held in accordance with the
applicable provisions of the Delaware Law and the Company's Bylaws and Restated
Certificate of Incorporation. Any Awards granted under the Plan prior to
stockholder approval are effective when made, but no Award may be exercised or
settled and no restrictions relating to any Award may lapse before stockholder
approval. If the stockholders fail to approve the Plan, any Award previously
made shall be automatically canceled without any further act.
1.4 DURATION OF THE PLAN. The Plan shall remain in effect until such time
as the Plan is terminated by the Board of Directors pursuant to Article 9 or
Section 10.4.
ARTICLE 2. DEFINITIONS AND CONSTRUCTION
2.1 DEFINITIONS. For purposes of the Plan, the following terms will have
the meanings set forth below:
(a) "Award" means a grant of Non-Qualified Stock Options or
Restricted Stock under the Plan.
(b) "Board" or "Board of Directors" means the Board of Directors of
the Company, and includes any committee of the
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Board of Directors designated by the Board to administer this Plan.
(c) "Change in Control" of the Company means and includes each of the
following:
(1) a change of control of the Company of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of
the Exchange Act regardless of whether the Company is subject to such
reporting requirements;
(2) a change of control of the Company through a transaction or
series of transactions, such that any person (as that term is used in
Section 13 and 14(d)(2) of the Exchange Act), excluding affiliates of
the Company as of the Effective Date, is or becomes the beneficial
owner (as that term is used in Section 13(d) of the Exchange Act),
directly or indirectly, of securities of the Company representing 35%
or more of the combined voting power of the Company's then outstanding
securities;
(3) any consolidation or liquidation of the Company in which the
Company is not the continuing or surviving corporation or pursuant to
which Shares would be converted into cash, securities, or other
property, other than a merger of the Company in which the holders of
the Shares immediately before the merger have the same proportionate
ownership of Common Stock of the surviving corporation immediately
after the merger;
(4) the stockholders of the Company approve any plan or proposal
for the liquidation or dissolution of the Company; or
(5) substantially all of the assets of the Company are sold or
otherwise transferred to parties that are not within a "controlled
group of corporations" (as defined in Section 1563 of the Code) in
which the Company is a member.
The foregoing events shall not be deemed to be a Change in Control if
the transaction or transactions causing such change shall have been
approved by the affirmative vote of at least a majority of the members
of the Board in office as of the Effective Date ("Incumbents"), those
serving on the Board pursuant to nomination or appointment thereto by
a majority of Incumbents ("Successors"), and those serving on the
Board pursuant to nomination or appointment thereto by a majority of a
Board composed of Incumbents and/or Successors.
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(d) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(e) "Committee" means the committee appointed by the Board to
administer the Plan.
(f) "Company" means CyCare Systems, Inc., a Delaware corporation, or
any successor as provided in Section 10.3.
(g) "Director" means any individual who is a member of the Board of
Directors of the Company.
(h) "Disability" means a permanent and total disability, within the
meaning of Section 22(e)(3) of the Code. To the extent permitted pursuant
to Section 16 of the Exchange Act, Disability shall be determined by the
Board in good faith, upon receipt of sufficient competent medical advice
from one or more individuals, selected by the Board, who are qualified to
give professional medical advice.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor provision.
(j) "Fair Market Value" means the average of the highest and lowest
quoted selling prices for Shares on the relevant date, or (if there were no
sales on such date) the average of the highest and lowest quoted selling
prices on the immediately preceding date on which such sales occurred, as
reported in The Wall Street Journal or a similar publication selected by
the Committee.
(k) "Grant Date" means July 1, 1995 and each anniversary of that
date.
(l) "Non-employee Director" means any individual who is a member of
the Board of Directors of the Company, but who is not otherwise an employee
of the Company.
(m) "Non-Qualified Stock Option" or "NQSO" means an option to
purchase Shares, granted under Article 6, that is not intended to be an
incentive stock option qualifying under Section 422 of the Code.
(n) "Option" means a Non-Qualified Stock Option granted under the
Plan.
(o) "Participant" means a Non-employee Director of the Company who
has been granted an Award under the Plan.
(p) "Period of Restriction" means the period during which the
transfer of Shares of Restricted Stock is limited in some way, and the
Shares are subject to a substantial risk of forfeiture, as provided in
Article 7.
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(q) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, and shall
include a "group," as that term is defined in Section 13(d).
(r) "Restricted Stock" means an Award granted to a Non-employee
Director pursuant to Article 7 that is subject to a Period of Restriction.
(s) "Shares" means the shares of the Company's Common Stock, $.01 par
value.
2.2 GENDER AND NUMBER. Except as indicated by the context, any masculine
term also shall include the feminine, the plural shall include the singular, and
the singular shall include the plural.
2.3 SEVERABILITY OF PROVISIONS. With respect to persons subject to
Section 16 of the Exchange Act, transactions under this plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors under the
Exchange Act. To the extent any provision of the Plan or action by the plan
administrators fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the plan administrators, and the
remaining provisions of the Plan or actions by plan administrators shall be
construed and enforced as if the invalid provision or action had not been
included or undertaken.
2.4 INCORPORATION BY REFERENCE. In the event this Plan does not include a
provision required by Rule 16b-3 to be stated herein, such provision (other than
one relating to eligibility requirements or the price and amount of Awards)
shall be deemed automatically to be incorporated by reference herein, insofar as
Participants subject to Section 16 of the Exchange Act are concerned.
ARTICLE 3. ADMINISTRATION
3.1 THE COMMITTEE. The Plan will be administered by the Committee,
subject to the restrictions set forth in the Plan.
3.2 ADMINISTRATION BY THE COMMITTEE. The Committee has the full power,
discretion, and authority to interpret and administer the Plan in a manner that
is consistent with the Plan's provisions. However, the Committee does not have
the power to (i) determine Plan eligibility, or to determine the number, the
price, the vesting period, or the timing of Awards to be made under the Plan to
any Participant or (ii) take any action that would result in the Awards not
being treated as "formula awards" within the meaning of Rule l6b-3(c)(ii) or any
successor provision, promulgated pursuant to the Exchange Act.
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<PAGE>
3.3 DECISIONS BINDING. The Committee's determinations and decisions under
the Plan, and all related orders or resolutions of the Board shall be final,
conclusive, and binding on all persons, including the Company, its stockholders,
employees, Participants, and their estates and beneficiaries.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. The total number of Shares available for grant
under the Plan may not exceed 50,000, subject to adjustment as provided in
Section 4.3. The Shares issued pursuant to the exercise of Options granted under
the Plan and the Shares issued as Restricted Stock may be authorized and
unissued Shares or Shares reacquired by the Company, as determined by the
Committee.
4.2 LAPSED AWARDS. If any Option or Share of Restricted Stock granted
under the Plan terminates, expires, or lapses for any reason, any Shares subject
to purchase pursuant to such Option and any such Shares of Restricted Stock
again will be available for grant under the Plan.
4.3 ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, stock
dividend, split-up, Share combination, or other change in the corporate
structure of the Company affecting the Shares, the number and/or type of Shares
subject to any outstanding Award, and the Option exercise price per Share under
any outstanding Option will be automatically adjusted so that the proportionate
interests of the Participants will be maintained as before the occurrence of
such event.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 ELIGIBILITY. Eligibility to participate in the Plan is limited to
Non-employee Directors.
5.2 ACTUAL PARTICIPATION. All eligible Non-employee Directors will
receive a grant of Options pursuant to Article 6 and annual grants of Restricted
Stock pursuant to Article 7.
ARTICLE 6. ONE-TIME GRANT OF OPTIONS
6.1 ONE-TIME GRANT OF OPTIONS. Each individual who is a Non-employee
Director on October 18, 1994 fill be granted Options on that date, the exercise
of which will entitle the Non-employee Director to purchase 2,500 Shares. The
specific terms of the Options are subject to the provisions of this Article 6
and the Option Agreement executed pursuant to Section 6.2.
6.2 OPTION AGREEMENT. The grant of Options will be evidenced by an Option
Agreement that will not include any terms or conditions that are inconsistent
with the terms and conditions of this Plan.
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6.3 OPTION EXERCISE PRICE PER SHARE. The Option exercise price per Share
under any outstanding Option granted pursuant to this Article 6 shall be $12.375
(the "Exercise Price").
6.4 DURATION OF OPTIONS. Each Option granted to a Participant under this
Article 6 shall expire on October 18, 1999, the fifth (5th) anniversary date of
its grant, unless the Option is earlier terminated, forfeited, or surrendered
pursuant to a provision of this Plan.
6.5 VESTING OF OPTIONS SUBJECT TO EXERCISE. Subject to Section 1.3, the
Options granted to the Participants under this Article 6 shall vest and become
subject to exercise during the four-year period (the "Exercise Period")
beginning on the Effective Date and ending on October 18, 1998; provided,
however, that only one-quarter of the total number of Options granted to a
Participant pursuant to this Article 6 shall vest during each of the four one-
year periods during the Exercise Period that begin on the Effective Date and
each subsequent October 18 thereafter until October 18, 1998.
6.6 EXERCISE OR DISPOSITION OF OPTIONS. Participants shall be entitled to
exercise any Option that has vested at any time within the period beginning with
the Effective Date and ending five (5) years after the Effective Date; provided,
however, that the disposition by a Participant of any Shares acquired pursuant
to the exercise of an Option shall occur only after the end of the six (6) month
period beginning on the date that Company's stockholders approve the Plan.
6.7 PAYMENT. Options are exercised by delivering a written notice of
exercise to the Secretary of the Company, setting forth the number of Options to
be exercised and accompanied by a payment equivalent to the product of the
number of Options exercised multiplied by the Exercise Price (the "Total
Exercise Price"). The Total Exercise Price is payable:
(a) in cash or its equivalent;
(b) by tendering previously acquired Shares having a Fair Market
Value at the time of exercise equal to the Total Exercise Price;
(c) by directing the Company to withhold from the shares of Stock
that would otherwise be issued upon exercise of the Options that number of
Shares having a Fair Market Value on the exercise date equal to the Total
Exercise Price; or
(d) by a combination of (a), (b), and (c).
A Participant may elect to use the payment method described in clause (c)
of this Section 6.7 only with the consent of, and at the time and in the
manner prescribed by, the
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Committee. As soon as practicable after receipt of a written notification
of exercise and full payment, the Company shall deliver to the Participant,
in the Participant's name, Share certificates in an appropriate amount
based upon the number of Shares purchased pursuant to the exercise of the
Options.
6.8 RESTRICTIONS ON SHARE TRANSFERABILITY. To the extent necessary to
ensure that Options granted under this Article 6 comply with applicable law, the
Board shall impose restrictions on the transferability of any Shares acquired
pursuant to the exercise of an Option under this Article 6, including, without
limitation, restrictions under applicable Federal securities laws, under the
requirements of any Stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws applicable
to such Shares.
6.9 TERMINATION OF SERVICE ON BOARD OF DIRECTORS DUE TO DEATH OR
DISABILITY. If a Participant's service on the Board is terminated by reason of
death or Disability, any outstanding Options held by the Participant that are
not fully vested are immediately forfeited and returned to the Company. Any
outstanding options held by the Participant that are fully vested will remain
fully vested and subject to exercise.
To the extent an Option is fully vested and exercisable as of the date of
death or Disability, it will remain exercisable for sixty (60) days after the
date of death or Disability by the Participant or such person or persons as
shall have been named as the Participant's legal representative or beneficiary,
or by such persons as shall have acquired the Participant's Options by will or
by the laws of descent and distribution. Any Option that is fully vested but
not exercised during this sixty (60) day period after death or Disability will
be immediately forfeited to the Company.
6.10 TERMINATION OF SERVICE ON BOARD OF DIRECTORS FOR OTHER REASONS. If
the Participant's service on the Board is terminated for any reason other than
for death or Disability, any outstanding Options held by the Participant that
are not fully vested as of the date of termination are immediately forfeited to
the Company. To the extent an Option is fully vested and exercisable as of such
date, it will remain exercisable for sixty (60) days after the date the
Participant's service on the Board terminates. Any Option that is fully vested
but not exercised during this sixty (60) day period after termination of service
will be immediately forfeited to the Company.
6.11 LIMITATIONS ON THE TRANSFERABILITY OF OPTIONS. No Option granted
under this Article 6 may be sold, transferred, pledged, assigned, or otherwise
alienated, other than by will, the laws of descent and distribution, or under
any other circumstances allowed by the Committee that would not violate the
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transferability restrictions contained in Rule 16b-3(a)(2) or any successor
provision.
ARTICLE 7. ANNUAL RESTRICTED STOCK GRANTS
7.1 INITIAL GRANT OF RESTRICTED STOCK. Each individual who is a Non-
employee Director on July 1, 1995 will be granted One Thousand (1,000) Shares of
Restricted Stock on that date. The specific terms of the Restricted Stock grant
are subject to the provisions of this Article 7 and the Restricted Stock
Agreement executed pursuant to Section 7.3.
7.2 ANNUAL GRANT OF RESTRICTED STOCK. Each individual who is a Non-
employee Director on the relevant Grant Date after July 1, 1995 will be granted
One Thousand (1,000) Shares of Restricted Stock on such Grant Date, subject to
the limitation on the number of Shares that may be awarded under the Plan.
7.3 RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Agreement that will not include any terms or
conditions that are inconsistent with the terms and conditions of the Plan.
7.4 NONTRANSFERABILITY OF RESTRICTED STOCK. The Shares of Restricted
Stock granted may not be sold, transferred, pledged, assigned, or otherwise
alienated until the end of the applicable Period of Restriction.
7.5 PERIOD OF RESTRICTION. The Period of Restriction for each grant of
Shares of Restricted Stock awarded pursuant to this Article 7 shall expire at
the end of the one (1) year period following the applicable Grant Date.
7.6 CERTIFICATE LEGEND. Any certificate representing Shares of
Restricted Stock granted pursuant to the Plan shall bear the following legend:
"The sale or other transfer of the Shares of stock
represented by this certificate, whether voluntary,
involuntary, or by operation of law, is subject to certain
restrictions on transfer as set forth in the Cycare
Systems, Inc. Director Stock Plan, and the corresponding
Restricted Stock Agreement. A copy of the Plan and the
Restricted Stock Agreement may be obtained from the
Secretary of CyCare Systems, Inc."
7.7 REMOVAL OF RESTRICTIONS. Except as otherwise provided in the Plan,
Shares of Restricted Stock covered by each Restricted Stock grant made under the
Plan shall become freely transferable by the Non-employee Director after the
last day of the Period of Restriction. Once the Shares are released from the
restrictions, the Non-employee Director shall be entitled to have
Page 40 of 46 Pages
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the legend required by Section 7.6 removed from his or her Share certificates.
All rights with respect to the Restricted Stock granted to a Non-employee
Director under the Plan shall be available during his or her lifetime only to
such Non-employee Director.
7.8 VOTING RIGHTS. During the Period of Restriction, Non-employee
Directors holding Shares of Restricted Stock granted hereunder will have voting
rights with respect to those Shares.
7.9 DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of Restriction,
cash and stock dividends on Shares of Restricted Stock may be either currently
paid or withheld by the Company for the Participant's account. At the
discretion of the Committee, interest may be paid on the amount of cash
dividends withheld, including cash dividends on stock dividends, at a rate and
subject to such terms as will be determined by the Committee.
7.10 TERMINATION OF SERVICE ON BOARD. If a Participant's service on the
Board terminates for any reason before the end of a Period of Restriction
relating to any grant of Restricted Stock, the Restricted Stock that is subject
to a Period of Restriction shall be forfeited to the Company and will be again
available for grant under the Plan.
ARTICLE 8. CHANGE IN CONTROL
In the event of a Change in Control of the Company, all Awards granted
under the Plan that are still outstanding and not yet vested or are subject to
restrictions, shall become immediately one hundred percent (100%) vested in each
Participant or shall be free of any restrictions, as of the first date that a
Change in Control occurs, and shall be exercisable for the remaining duration of
the Award. All Options that are exercisable as of the effective date of the
Change in Control will remain exercisable for the remaining duration of the
Options.
ARTICLE 9. AMENDMENT, MODIFICATION, AND TERMINATION
9.1 AMENDMENT, MODIFICATION, AND TERMINATION. Subject to the terms set
forth in this Section 9.1, the Committee may terminate, amend, or modify the
Plan at any time; provided, however, that stockholder approval is required for
any Plan amendment that would materially increase the benefits to Participants
or the number of securities that may be issued, or materially modify the
eligibility requirements in the Plan. Further, Plan provisions relating to the
amount, price, and timing of securities to be awarded under the Plan may not be
amended more than once every six (6) months, other than to comport with changes
in the Code, the Employee Retirement Income Security Act, or the rules
thereunder.
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9.2 AWARDS PREVIOUSLY GRANTED. Unless required by law, no termination,
amendment, or modification of the Plan shall in any manner adversely affect any
Award previously granted under the Plan, without the written consent of the
Participant holding the Award.
ARTICLE 10. MISCELLANEOUS
10.1 INDEMNIFICATION. Each individual who is or shall have been a member
of the Board or the Committee shall be indemnified and held harmless by the
Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action taken or
failure to act under this Plan and against and from any and all amounts paid by
him or her in settlement thereof, with the Company's approval, or paid by him or
her in satisfaction of any judgment in any such action, suit, or proceeding
against him or her, provided he or she shall give the Company an opportunity, at
its own expense, to assume and defend the same before he or she undertakes to
defend it on his or her own behalf.
The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such individuals may be entitled under the
Company's Restated Certificate of Incorporation or Bylaws, as a matter of law,
or otherwise, or any power that the Company may have to indemnify them or hold
them harmless.
10.2 BENEFICIARY DESIGNATION. Each Participant under the Plan may name
any beneficiary or beneficiaries to whom any benefit under the Plan is to be
paid in the event of his or her death. Each designation will revoke all prior
designations by the same Participant, shall be in a form prescribed by the
Committee, and will be effective only when filed by the Participant in writing
with the Committee during his or her lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the Participant's estate.
10.3 SUCCESSORS. All obligations of the Company under the Plan, with
respect to Awards granted hereunder, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.
10.4 REQUIREMENTS OF LAW. The granting of Awards under the Plan shall be
subject to all applicable laws, rules, and regulations, and to such approvals by
any governmental agencies or national securities exchanges as may be required.
Notwithstanding any other provision of the Plan, the Committee
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may, in its sole discretion, terminate, amend, or modify the Plan in any way
necessary to comply with the applicable requirements of Rule l6b-3 promulgated
by the Securities and Exchange Commission as interpreted pursuant to no-action
letters and interpretive releases.
10.5 GOVERNING LAW. To the extent not preempted by Federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the State of Delaware.
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Exhibit 5
August 19, 1996
HBO & Company
301 Perimeter Center North
Atlanta, Georgia 30346
Gentlemen:
We have acted as counsel to HBO & Company, a Delaware corporation
(the "Company"), in connection with the registration of 464,400 shares of
Common Stock, $.05 par value per share, of the Company (the "Shares"), to be
issued by the Company in accordance with the CyCare Systems, Inc. 1995
Long-Term Incentive Plan, including the predecessor CyCare Systems, Inc.
Stock Option Plan and the CyCare System, Inc. Director Stock Plan, pursuant
to a Registration Statement on Form S-8 filed with the Securities and
Exchange Commission (the "Registration Statement") to which this opinion
appears as Exhibit 5.
We have examined originals or certified or photostatic copies of such
records of the Company, certificates of officers of the Company, and public
officials and such other documents as we have deemed relevant or necessary as
the basis of the opinion set forth below in this letter. In such examination,
we have assumed the genuineness of all signatures, the conformity to original
documents submitted as certified or photostatic copies, and the authenticity of
originals of such latter documents. Based on the foregoing, we are of the
following opinion:
The Shares, when issued in the manner contemplated by the Registration
Statement, will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement.
Sincerely,
/s/ Jones, Day, Reavis & Pogue
JONES, DAY, REAVIS & POGUE
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EXHIBIT 15
LETTER REGARDING UNAUDITED
INTERIM FINANCIAL INFORMATION
We are aware that HBO & Company has incorporated by reference in its Form S-8
Registration Statement for the CyCare Systems, Inc. 1995 Long-Term Incentive
Plan (including the predecessor CyCare Systems, Inc. Stock Option Plan) and
the CyCare Systems, Inc. Director Stock Plan, its Form 10-Qs for the quarters
ended March 31, 1996 and June 30, 1996, which include our reports dated April
16, 1996 and July 16, 1996, respectively, covering the unaudited interim
financial information contained therein. Pursuant to Regulation C of the
Securities Act of 1933 (the "Act"), those reports are not considered to be a
part of the Registration Statements prepared or certified by our firm or
reports prepared or certified by our firm within the meaning of Sections 7
and 11 of the Act.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
August 19, 1996
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EXHIBIT 23(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our reports dated February 6, 1996
incorporated by reference or included in HBO & Company's Annual Report on
Form 10-K for the year ended December 31, 1995 and to all references to our firm
included in this Registration Statement.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
August 19, 1996
Page 46 of 46 Pages
