<PAGE>
As filed with the Securities and Exchange Commission on June 30, 1997
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)
-------------------
ENTERPRISE SYSTEMS, INC.
LONG-TERM INCENTIVE PLAN
(Full title of the plan)
-------------------
Charles W. McCall
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 30 Pages
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CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PROPOSED PROPOSED
TITLE OF MAXIMUM MAXIMUM
SECURITIES AMOUNT TO OFFERING AGGREGATE AMOUNT OF
TO BE BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED SHARE PRICE FEE
- ------------------------ ----------- ----------- ----------- -----------
Common Stock,
$.05 par value, and 502,741 $27.7412(1) $13,946,639(1) $4,227(2)
Preferred Share shares
Purchase Rights(3)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(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 registration fee of $4,227 is calculated by multiplying the product
of $27.7412, the weighted average exercise price per share, and 502,741,
the number of shares subjected to option, by 1/33 of 1%.
(3) 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 30 Pages
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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 30 Pages
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
HBO & Company (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, 1996.
(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, 1996.
(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 30 Pages
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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
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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 Enterprise Systems, Inc. Long-Term Incentive 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 30 Pages
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(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 30 Pages
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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 30th day of June,
1997.
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 Charles W. McCall 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:
SIGNATURE TITLE DATE
- --------------------- ---------------------------------- --------------
/s/ Charles W. McCall
_____________________ Director, President and Chief June 30, 1997
Charles W. McCall Executive Officer (Principal
Executive Officer)
/s/ Jay P. Gilbertson
_____________________ Executive Vice President, Chief June 30, 1997
Jay P. Gilbertson Finanical Officer, Principal
Accounting Officer, Treasurer and
Secretary (Principal Financial
Officer and Principal Accounting
Officer)
/s/Holcombe T. Green, Jr.
_____________________ Chairman of the Board of Directors June 30, 1997
Holcombe T. Green, Jr
Page 8 of 30 Pages
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SIGNATURE TITLE DATE
- --------------------- ---------------------------------- --------------
/s/Alfred C. Eckert III
_____________________ Director June 30, 1997
Alfred C. Eckert III
/s/Philip A. Incarnati
_____________________ Director June 30, 1997
Philip A. Incarnati
/s/Alton F. Irby III
_____________________ Director June 30, 1997
Alton F. Irby III
/s/Gerald E. Mayo
_____________________ Director June 30, 1997
Gerald E. Mayo
/s/James V. Napier
_____________________ Director June 30, 1997
James V. Napier
/s/Donald C. Wegmiller
_____________________ Director June 30, 1997
Donald C. Wegmiller
Page 9 of 30 Pages
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EXHIBIT INDEX
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- --------------------------------------------------- ------
Included in Part II of the Registration Statement:
4 Enterprise Systems, Inc. Long-Term Incentive 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)
Page 10 of 30 Pages
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ENTERPRISE SYSTEMS, INC.
LONG-TERM INCENTIVE PLAN
I. PURPOSE
The Enterprise Systems, Inc. Long-Term Incentive Plan, effective
September 1, 1995, is an amendment and restatement of the Enterprise Systems,
Inc. 1993 Stock Option Plan (the "Prior Plan"). The Plan is designed to attract
and retain selected Key Employees and Key Non-Employees of the Company and its
Affiliates, and reward them for making major contributions to the success of the
Company and its Affiliates. These objectives are accomplished by making
long-term incentive awards under the Plan that will offer Participants an
opportunity to have a greater proprietary interest in, and closer identity with,
the Company and its Affiliates and their financial success.
The Awards may consist of:
(i) Incentive Options;
(ii) Nonstatutory Options;
(iii) Formula Options;
(iv) Restricted Stock;
(v) Rights; or
(vi) Cash Awards,
or any combination of the foregoing, as the Committee may determine.
The restatement of the Prior Plan shall not in any way affect the
rights of individuals who participated in the Prior Plan in accordance with its
provisions. All matters relating to eligibility for Options and the number of
Options to which such individuals may be entitled based upon events occurring
prior to the adoption of this Plan shall, except as otherwise expressly provided
herein, be determined in accordance with the applicable provisions of the Prior
Plan.
II. DEFINITIONS
A. Affiliate means a corporation that, for purposes of Section 422
of the Code, is a parent or subsidiary of the Company, direct or indirect.
B. Award means the grant to any Key Employee or Key Non-Employee of
any form of Option, Restricted Stock, Right, or Cash Award, whether granted
singly, in combination, or in tandem, and pursuant to such terms, conditions,
and limitations as the Committee may establish in order to fulfill the
objectives of the Plan.
C. Award Agreement means an agreement entered into between the
Company and a Participant under which an Award is granted and which sets forth
the terms, conditions, and limitations applicable to the Award.
D. Board means the Board of Directors of the Company.
E. Cash Award means an award of cash, subject to the requirements of
Article XI and such other restrictions as the Committee deems appropriate or
desirable.
Page 11 of 30 Pages
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F. Code means the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute thereto.
G. Committee means the committee to which the Board delegates the
power to act under or pursuant to the provisions of the Plan. The Committee
shall be constituted to permit the Plan to comply with Rule 16b-3 promulgated
under the Exchange Act, or any successor rule, and shall consist initially of
not less than two (2) members of the Board. No member of the Committee shall
receive any Award pursuant to the Plan or any similar plan of the Company or any
Affiliate while serving on the Committee, other than a Formula Option, or shall
have received any Award, other than a Formula Option, at any time within one (1)
year prior to his or her service on the Committee or, if different, for the time
period necessary to fulfill the then current Rule 16b-3 requirements under the
Exchange Act.
H. Common Stock means the $.01 par value common stock of the
Company.
I. Company means Enterprise Systems, Inc., an Illinois corporation,
and includes any successor or assignee corporation or corporations into which
the Company may be merged, changed, or consolidated; any corporation for whose
securities the securities of the Company shall be exchanged; and any assignee of
or successor to substantially all of the assets of the Company.
J. Disability or Disabled means a permanent and total disability as
defined in Section 22(e)(3) of the Code.
K. Exchange Act means the Securities Exchange Act of 1934, as
amended from time to time, or any successor statute thereto.
L. Fair Market Value means, if the Shares are listed on any national
securities exchange, the closing sales price, if any, on the largest such
exchange on the valuation date, or, if none, on the most recent trade date
immediately prior to the valuation date provided such trade date is no more than
thirty (30) days prior to the valuation date. If the Shares are not then listed
on any such exchange, the fair market value of such Shares shall be the closing
sales price if such is reported, or otherwise the mean between the closing "Bid"
and the closing "Ask" prices, if any, as reported in the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") for the valuation date,
or if none, on the most recent trade date immediately prior to the valuation
date provided such trade date is no more than thirty (30) days prior to the
valuation date. If the Shares are not then either listed on any such exchange
or quoted in NASDAQ, or there has been no trade date within such thirty (30) day
period, the fair market value shall be the mean between the average of the "Bid"
and the average of the "Ask" prices, if any, as reported in the National Daily
Quotation System for the valuation date, or, if none, for the most recent trade
immediately prior to the valuation date provided such trade date is no more than
thirty (30) days prior to the valuation date. If the fair market value cannot
be determined under the preceding three sentences, it shall be determined in
good faith by the Committee.
M. Formula Option means a Nonstatutory Option granted automatically
to a Nonemployee Director upon his or her initial election as a Nonemployee
Director.
N. Incentive Option means an Option that, when granted, is intended
to be an "incentive stock option," as defined in Section 422 of the Code.
O. Key Employee means an employee of the Company or of an Affiliate
who is designated by the Committee as being eligible to be granted one or more
Awards under the Plan.
P. Key Non-Employee means a Nonemployee Director, consultant, or
independent contractor of the Company or of an Affiliate who is designated by
the Committee as being eligible to be granted one or more Awards under the Plan.
Page 12 of 30 Pages
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Q. Nonemployee Director is a director of the Company who is not an
employee of the Company or any of its Affiliates.
R. Nonstatutory Option means an Option that, when granted, is not
intended to be an "incentive stock option," as defined in Section 422 of the
Code.
S. Option means a right or option to purchase Common Stock,
including Restricted Stock if the Committee so determines.
T. Participant means a Key Employee or Key Non-Employee to whom one
or more Awards are granted under the Plan.
U. Plan means the Enterprise Systems, Inc. Long-Term Incentive Plan,
as amended from time to time.
V. Restricted Stock means an Award made in Common Stock or
denominated in units of Common Stock and delivered under the Plan, subject to
the requirements of Article IX, such other restrictions as the Committee deems
appropriate or desirable, and as awarded in accordance with the terms of the
Plan.
W. Right means a stock appreciation right delivered under the Plan,
subject to the requirements of Article X and as awarded in accordance with the
terms of the Plan.
X. Shares means the following shares of the capital stock of the
Company as to which Options or Restricted Stock have been or may be granted
under the Plan and upon which Rights or Restricted Stock may be based: Common
Stock, $.01 par value, of the Company, or any shares of capital stock into which
the Shares are changed or for which they are exchanged within the provisions of
Article XVII of the Plan.
III. SHARES SUBJECT TO THE PLAN
The aggregate number of Shares as to which Awards may be granted from
time to time shall be one million one hundred fourteen thousand eight hundred
forty-six (1,114,846) Shares; provided, however, that in accordance with Code
Section 162(m), the aggregate number of Shares as to which Awards may be granted
in any one calendar year to any one Key Employee shall not exceed two hundred
thousand (200,000) Shares.
From time to time, the Committee and appropriate officers of the
Company shall take whatever actions are necessary to file required documents
with governmental authorities and stock exchanges so as to make Shares available
for issuance pursuant to the Plan. Shares subject to Awards that are forfeited,
terminated, expire unexercised, canceled by agreement of the Company and the
Participant, settled in cash in lieu of Common Stock or in such manner that all
or some of the Shares covered by such Awards are not issued to a Participant, or
are exchanged for Awards that do not involve Common Stock, shall immediately
become available for Awards. Awards payable in cash shall not reduce the number
of Shares available for Awards under the Plan.
The aggregate number of Shares as to which Awards may be granted shall
be subject to change only by means of an amendment of the Plan duly adopted by
the Company and approved by the stockholders of the Company within one year
before or after the date of the adoption of the amendment, subject to the
provisions of Article XVI.
IV. ADMINISTRATION OF THE PLAN
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The Plan shall be administered by the Committee. Subject to the
provisions of the Plan, the Committee is authorized to:
A. Interpret the provisions of the Plan and any Award or Award
Agreement, and make all rules and determinations that it deems necessary or
advisable to the administration of the Plan;
B. Determine which employees of the Company or an Affiliate shall be
designated as Key Employees and which of the Key Employees shall be granted
Awards;
C. Determine the Key Non-Employees to whom Awards, other than
Incentive Options for which Key Non-Employees shall not be eligible, shall be
granted;
D. Determine whether an Option to be granted shall be an Incentive
Option or Nonstatutory Option;
E. Determine the number of Shares for which an Option or Restricted
Stock shall be granted;
F. Determine the number of Rights or the Cash Award to be granted a
Key Employee or Key Non-Employee;
G. Provide for the acceleration of the right to exercise any Award
other than an Award for Formula Options, which may not be accelerated; and
H. Specify the terms, conditions, and limitations upon which Awards
may be granted; provided, however, that with respect to Incentive Options, all
such interpretations, rules, determinations, terms, and conditions shall be made
and prescribed in the context of preserving the tax status of the Incentive
Options as incentive stock options within the meaning of Section 422 of the
Code.
The Committee may delegate to the chief executive officer and to other
senior officers of the Company or its Affiliates its duties under the Plan
pursuant to such conditions or limitations as the Committee may establish,
except that only the Committee may select, and grant Awards to, Participants who
are subject to Section 16 of the Exchange Act. All determinations of the
Committee shall be made by a majority of its members. No member of the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Award.
The Committee shall have the authority at any time to cancel Awards
for reasonable cause and to provide for the conditions and circumstances under
which Awards shall be forfeited.
V. ELIGIBILITY FOR PARTICIPATION
Awards may be granted under this Plan only to Key Employees and Key
Non-Employees of the Company or its Affiliates. The foregoing notwithstanding,
each Participant receiving an Incentive Option must be a Key Employee of the
Company or of an Affiliate at the time the Incentive Option is granted.
The Committee may at any time and from time to time grant one or more
Awards to one or more Key Employees or Key Non-Employees and may designate the
number of Shares, if applicable, to be subject to each Award so granted,
provided, however that no Incentive Option shall be granted after the expiration
of ten (10) years from the earlier of the date of the adoption of the Plan by
the Company or the approval of the Plan by the stockholders of the Company, and
provided further, that the Fair Market Value of the Shares (determined at the
time the Option is granted) as to which Incentive Options are exercisable for
the first time by any Key Employee during any single calendar year (under the
Plan and under any other incentive stock option plan of the Company or an
Affiliate) shall not exceed One Hundred Thousand Dollars ($100,000).
Page 14 of 30 Pages
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Notwithstanding any of the foregoing provisions, the Committee may
authorize the grant of an Incentive Option to a person not then in the employ of
the Company or of an Affiliate, conditioned upon such person becoming eligible
to be granted an Incentive Option at or prior to the execution of the Award
Agreement evidencing the actual grant of such Incentive Option.
VI. AWARDS UNDER THIS PLAN
As the Committee may determine, the following types of Awards may be
granted under the Plan on a stand alone, combination, or tandem basis:
A. Incentive Option
An Award in the form of an Option that shall comply with the
requirements of Section 422 of the Code. Subject to adjustments in accordance
with the provisions of Article XVII, the aggregate number of Shares that may be
subject to Incentive Options under the Plan shall not exceed one million one
hundred fourteen thousand eight hundred forty-six (1,114,846).
B. Nonstatutory Option
An Award in the form of an Option that shall not be intended to comply
with the requirements of Section 422 of the Code.
C. Formula Option
An Award in the form of an Option granted to a Nonemployee Director at
the time of his or her initial election to the Board.
D. Restricted Stock
An Award made to a Participant in Common Stock or denominated in units
of Common Stock, subject to future service and such other restrictions and
conditions as may be established by the Committee, and as set forth in the Award
Agreement, including but not limited to continuous service with the Company or
its Affiliates, achievement of specific business objectives, increases in
specified indices, attaining growth rates, and other measurements of Company or
Affiliate performance.
E. Stock Appreciation Right
An Award in the form of a Right to receive the excess of the Fair
Market Value of a Share on the date the Right is exercised over the Fair Market
Value of a Share on the date the Right was granted.
F. Cash Awards
An Award made to a Participant and denominated in cash, with the
eventual payment subject to future service and such other restrictions and
conditions as may be established by the Committee, and as set forth in the Award
Agreement, including but not limited to continuous service with the Company or
its Affiliates, achievement of specific business objectives, increases in
specified indices, attaining growth rates, and other measurements of Company or
Affiliate performance.
Each Award under the Plan shall be evidenced by an Award Agreement. Delivery of
an Award Agreement to each Participant shall constitute an agreement between the
Company and the Participant as to the terms and conditions of the Award.
VII. TERMS AND CONDITIONS OF INCENTIVE OPTIONS AND NONSTATUTORY OPTIONS
Page 15 of 30 Pages
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Each Option shall be set forth in an Award Agreement, duly executed on
behalf of the Company and by the Participant to whom such Option is granted.
Except for the setting of the Option price under Paragraph A, no Option shall be
granted and no purported grant of any Option shall be effective until such Award
Agreement shall have been duly executed on behalf of the Company and by the
Participant. Each such Award Agreement shall be subject to at least the
following terms and conditions:
A. Option Price
The purchase price of the Shares covered by each Option granted under
the Plan shall be determined by the Committee. The Option price per share of
the Shares covered by each Nonstatutory Option shall be at such amount as may be
determined by the Committee in its sole discretion on the date of the grant of
the Option. In the case of an Incentive Option, if the Participant owns
directly or by reason of the applicable attribution rules ten percent (10%) or
less of the total combined voting power of all classes of share capital of the
Company, the Option price per share of the Shares covered by each Incentive
Option shall be not less than the Fair Market Value of the Shares on the date of
the grant of the Incentive Option. In all other cases of Incentive Options, the
Option price shall be not less than one hundred ten percent (110%) of the Fair
Market Value on the date of grant.
B. Number of Shares
Each Option shall state the number of Shares to which it pertains.
C. Term of Option
Each Incentive Option shall terminate not more than ten (10) years
from the date of the grant thereof, or at such earlier time as the Award
Agreement may provide, and shall be subject to earlier termination as herein
provided, except that if the Option price is required under Paragraph A of this
Article VII to be at least one hundred ten percent (110%) of Fair Market Value,
each such Incentive Option shall terminate not more than five (5) years from the
date of the grant thereof, and shall be subject to earlier termination as herein
provided.
D. Date of Exercise
Upon the authorization of the grant of an Option, or at any time
thereafter, the Committee may, subject to the provisions of Paragraph C of this
Article VII, prescribe the date or dates on which the Option becomes
exercisable, and may provide that the Option become exercisable in installments
over a period of years, or upon the attainment of stated goals.
E. Medium of Payment
The Option price shall be payable upon the exercise of the Option, as
set forth in Paragraph I. It shall be payable in such form (permitted by Section
422 of the Code in the case of Incentive Options) as the Committee shall, either
by rules promulgated pursuant to the provisions of Article IV of the Plan, or in
the particular Award Agreement, provide.
F. Termination of Employment
1. A Participant who ceases to be an employee or Key
Non-Employee of the Company or of an Affiliate for any reason other
than death, Disability, or termination "for cause," as defined in
subparagraph (2) below, may exercise any Option granted to such
Participant, to the extent that the right to purchase Shares
thereunder has become exercisable on the date of such termination, but
only within one (1) month after such date (or three (3) months after
such date if the Participant ceases to be an employee or Key
Non-Employee of the Company or of an Affiliate as a result of such
Participant's voluntary
Page 16 of 30 Pages
<PAGE>
retirement on or after the date he or she
attains age sixty (60)), or, if earlier, within the originally
prescribed term of the Option. A Participant's employment shall not
be deemed terminated by reason of a transfer to another employer that
is the Company or an Affiliate.
2. A Participant who ceases to be an employee or Key
Non-Employee of the Company or of an Affiliate "for cause" shall, upon
such termination, cease to have any right to exercise any Option. For
purposes of this Plan, cause shall mean (i) a Participant's theft or
embezzlement, or attempted theft or embezzlement, of money or property
of the Company, a Participant's perpetration or attempted perpetration
of fraud, or a Participant's participation in a fraud or attempted
fraud, on the Company or a Participant's unauthorized appropriation
of, or a Participant's attempt to misappropriate, any tangible or
intangible assets or property of the Company, (ii) any act or acts of
disloyalty, dishonesty, misconduct, moral turpitude, or any other act
or acts by a Participant injurious to the interest, property,
operations, business or reputation of the Company, (iii) a
Participant's commission of a felony, (iv) a Participant's conviction
of any crime the commission of which results in injury to the Company,
or (v) any material violation of any restriction on the disclosure or
use of confidential information of the Company or on competition with
the Company or any of its businesses as then conducted. The
determination of the Committee as to the existence of cause shall be
conclusive and binding upon the Participant and the Company.
3. A Participant who is absent from work with the Company or an
Affiliate because of temporary disability (any disability other than a
Disability), or who is on leave of absence for any purpose permitted
by any authoritative interpretation (i.e., regulation, ruling, case
law, etc.) of Section 422 of the Code, shall not, during the period of
any such absence, be deemed, by virtue of such absence alone, to have
terminated his or her employment or relationship with the Company or
with an Affiliate, except as the Committee may otherwise expressly
provide or determine.
4. Paragraph F(1) shall control and fix the rights of a
Participant who ceases to be an employee or Key Non-Employee of the
Company or of an Affiliate for any reason other than death,
Disability, or termination "for cause," and who subsequently becomes
Disabled or dies. Nothing in paragraphs G and H of this Article VII
shall be applicable in any such case except that, in the event of such
a subsequent Disability or death within the one (1) month or, if
applicable, three (3) month period after the termination of employment
or, if earlier, within the originally prescribed term of the Option,
the Participant or the Participant's estate or personal representative
may exercise the Option permitted by this Paragraph F within three (3)
months after the date of Disability or death of such Participant, but
in no event beyond ten (1O) years after the date of the grant of an
Incentive Option.
G. Total and Permanent Disability
A Participant who ceases to be an employee or Key Non-Employee of the
Company or of an Affiliate by reason of Disability may exercise any Option
granted to such Participant (i) to the extent that the right to purchase Shares
thereunder has become exercisable on or before the date such Participant becomes
Disabled as determined by the Committee, and (ii) if the Option becomes
exercisable periodically, to the extent of any additional rights that would have
become exercisable had the Participant not become so Disabled until after the
close of business on the next periodic exercise date.
A Disabled Participant shall exercise such rights, if at all, only
within a period of not more than three (3) months after the date that the
Participant became Disabled as determined by the Committee (notwithstanding that
the Participant might have been able to exercise the Option as to some or all of
the Shares on a later date if the Participant had not become Disabled) or, if
earlier, within the originally prescribed term of the Option.
Page 17 of 30 Pages
<PAGE>
H. Death
In the event that a Participant to whom an Option has been granted
ceases to be an employee or Key Non-Employee of the Company or of an Affiliate
by reason of such Participant's death, such Option, to the extent that the right
is exercisable but not exercised on the date of death, may be exercised by the
Participant's estate or personal representative within three (3) months after
the date of death of such Participant or, if earlier, within the originally
prescribed term of the Option, notwithstanding that the decedent might have been
able to exercise the Option as to some or all of the Shares on a later date if
the Participant were alive and had continued to be an employee or Key
Non-Employee of the Company or of an Affiliate.
I. Exercise of Option and Issuance of Stock
Options shall be exercised by giving written notice to the Company.
Such written notice shall: (i) be signed by the person exercising the Option,
(ii) state the number of Shares with respect to which the Option is being
exercised, (iii) contain the warranty required by paragraph M of this Article
VII, if applicable, and (iv) specify a date (other than a Saturday, Sunday or
legal holiday) not less than five (5) nor more than ten (10) days after the date
of such written notice, as the date on which the Shares will be purchased. Such
tender and conveyance shall take place at the principal office of the Company
during ordinary business hours, or at such other hour and place agreed upon by
the Company and the person or persons exercising the Option. On the date
specified in such written notice (which date may be extended by the Company in
order to comply with any law or regulation that requires the Company to take any
action with respect to the Option Shares prior to the issuance thereof), the
Company shall accept payment for the Option Shares and shall deliver to the
person or persons exercising the Option in exchange therefor an appropriate
certificate or certificates for fully paid nonassessable Shares or undertake to
deliver certificates within a reasonable period of time. In the event of any
failure to take up and pay for the number of Shares specified in such written
notice on the date set forth therein (or on the extended date as above
provided), the right to exercise the Option shall terminate with respect to such
number of Shares, but shall continue with respect to the remaining Shares
covered by the Option and not yet acquired pursuant thereto.
J. Rights as a Stockholder
No Participant to whom an Option has been granted shall have rights as
a stockholder with respect to any Shares covered by such Option except as to
such Shares as have been registered in the Company's share register in the name
of such Participant upon the due exercise of the Option and tender of the full
Option price.
K. Assignability and Transferability of Option
By its terms, an Option granted to a Participant shall not be
transferable by the Participant and shall be exercisable, during the
Participant's lifetime, only by such Participant or, in the event of Disability,
his guardian or legal representative. Such Option shall not be assigned,
pledged, or hypothecated in any way (whether by operation of law or otherwise)
and shall not be subject to execution, attachment, or similar process. Any
attempted transfer, assignment, pledge, hypothecation or other disposition of
any Option or of any rights granted thereunder contrary to the provisions of
this Paragraph K, or the levy of any attachment or similar process upon an
Option or such rights, shall be null and void.
L. Other Provisions
The Award Agreement for an Incentive Option shall contain such
limitations and restrictions upon the exercise of the Option as shall be
necessary in order that such Option can be an "incentive stock option" within
the meaning of Section 422 of the Code. Further, the Award Agreements
authorized under the Plan shall be subject to such other terms and conditions
including, without limitation,
Page 18 of 30 Pages
<PAGE>
restrictions upon the exercise of the Option, as the Committee shall deem
advisable and which, in the case of Incentive Options, are not inconsistent
with the requirements of Section 422 of the Code.
M. Purchase for Investment
If Shares to be issued upon the particular exercise of an Option shall
not have been effectively registered under the Securities Act of 1933, as now in
force or hereafter amended, the Company shall be under no obligation to issue
the Shares covered by such exercise unless and until the following conditions
have been fulfilled. The person who exercises such Option shall warrant to the
Company that, at the time of such exercise, such person is acquiring his or her
Option Shares for investment and not with a view to, or for sale in connection
with, the distribution of any such Shares, and shall make such other
representations, warranties, acknowledgements, and affirmations, if any, as the
Committee may require. In such event, the person acquiring such Shares shall be
bound by the provisions of the following legend (or similar legend) which shall
be endorsed upon the certificate(s) evidencing his or her Option Shares issued
pursuant to such exercise.
"The shares represented by this certificate have been
acquired for investment and they may not be sold or
otherwise transferred by any person, including a pledgee, in
the absence of an effective registration statement for the
shares under the Securities Act of 1933 or an opinion of
counsel satisfactory to the Company that an exemption from
registration is then available."
"The shares represented by this certificate are subject to
all of the terms, conditions, limitations, and restrictions
as set forth in the Enterprise Systems, Inc. Long-Term
Incentive Plan (the "Plan") as approved by the Company's
stockholders on October 4, 1995, and the Award Agreements
pursuant to which such shares have been acquired (the "Award
Agreement"), copies of which are on file with the Company.
All terms, conditions, limitations, and restrictions of the
Plan and the Award Agreements are fully binding upon the
holder of this certificate, his or her successors, estate,
heirs, assigns, personal representative, administrator,
executor or guardian, as the case may be, for all purposes
until such time as all terms, conditions, limitations, and
restrictions of the Plan are removed, waived or otherwise
vacated in a manner expressly authorized thereunder."
Without limiting the generality of the foregoing, the Company may delay issuance
of the Shares until completion of any action or obtaining any consent that the
Company deems necessary under any applicable law (including without limitation
state securities or "blue sky" laws).
VIII. FORMULA OPTIONS
A. Each Nonemployee Director shall be granted automatically a
Formula Option to purchase five thousand (5,000) Shares upon his or her initial
election and qualification as a Nonemployee Director.
B. The purchase price of the Shares subject to the Formula Option
shall be equal to the Fair Market Value as of the date of grant.
Page 19 of 30 Pages
<PAGE>
C. The Shares subject to the Formula Option granted to a Nonemployee
Director shall become exercisable cumulatively, in accordance with the following
schedule:
Years Elapsed Since Cumulative Number of Shares
Date of Grant for Which Formula Option
------------- May be Exercised
----------------
Less than 1 0
1 1,666
2 3,333
3 or more 5,000
The foregoing schedule notwithstanding, if a Nonemployee Director shall cease to
be a director of the Company because of death or Disability, all Shares for
which a Formula Option has been granted shall become immediately exercisable and
shall be exercisable in accordance with Paragraphs G and H of Article VII. If a
Nonemployee Director ceases to be a director of the Company for any reason other
than death or Disability, his or her right to exercise the Formula Option, and
the timing of such exercise, shall be governed by the applicable provisions of
Paragraph F of Article VII.
D. Formula Options shall be evidenced by an Award Agreement which
shall conform to the requirements of the Plan, and may contain such other
provisions not inconsistent therewith, as the Committee shall deem advisable.
The provisions of Article VII governing Nonstatutory Options, and the exercise
and issuance thereof, shall apply to Formula Options to the extent such
provisions are not inconsistent with this Article VIII.
IX. REQUIRED TERMS AND CONDITIONS OF RESTRICTED STOCK
A. The Committee may from time to time grant an Award in Shares of
Common Stock or grant an Award denominated in units of Common Stock, for such
consideration, if any, as the Committee deems appropriate (which amount may be
less than the Fair Market Value of the Common Stock on the date of the Award),
and subject to such restrictions and conditions and other terms as the Committee
may determine at the time of the Award (including, but not limited to,
continuous service with the Company or its Affiliates, achievement of specific
business objectives, increases in specified indices, attaining growth rates, and
other measurements of Company or Affiliate performance), and subject further to
the general provisions of the Plan, the applicable Award Agreement, and the
following specific rules.
B. If Shares of Restricted Stock are awarded, such Shares cannot be
assigned, sold, transferred, pledged, or hypothecated prior to the lapse of the
restrictions applicable thereto. The Company shall issue, in the name of the
Participant, stock certificates representing the total number of Shares of
Restricted Stock awarded to the Participant, as soon as may be reasonably
practicable after the grant of the Award, which certificates shall be held by
the Secretary of the Company as provided in Paragraph G.
C. Restricted Stock issued to a Participant under the Plan shall be
governed by an Award Agreement that shall specify whether Shares of Common Stock
are awarded to the Participant, or whether the Award shall be one not of Shares
of Common Stock but one denominated in units of Common Stock, any consideration
required thereto, and such other provisions as the Committee shall determine.
D. Subject to the provisions of Paragraphs B and E hereof and the
restrictions set forth in the related Award Agreement, the Participant receiving
an Award of Shares of Restricted Stock shall thereupon be a stockholder with
respect to all of the Shares represented by such certificate or certificates and
shall have the rights of a stockholder with respect to such Shares, including
the right to vote such Shares
Page 20 of 30 Pages
<PAGE>
and to receive dividends and other distributions made with respect to such
Shares. All Common Stock received by a Participant as the result of any
dividend on the Shares of Restricted Stock. or as the result of any stock
split, stock distribution, or combination of the Shares affecting Restricted
Stock, shall be subject to the restrictions set forth in the related Award
Agreement.
E. Restricted Stock awarded to a Participant pursuant to the Plan
will be forfeited, and any Shares of Restricted Stock or units of Restricted
Stock sold to a Participant pursuant to the Plan may, at the Company's option,
be resold to the Company for an amount equal to the price paid therefor, and in
either case, such Restricted Stock shall revert to the Company, if the Company
so determines in accordance with Article XIII or any other condition set forth
in the Award Agreement, or, alternatively, if the Participant's employment with
the Company or its Affiliates terminates, other than for reasons set forth in
Article XII, prior to the expiration of the forfeiture or restriction provisions
set forth in the Award Agreement.
F. The Committee, in its discretion, shall have the power to
accelerate the date on which the restrictions contained in the Award Agreement
shall lapse with respect to any or all Restricted Stock awarded under the Plan.
G. The Secretary of the Company shall hold the certificate or
certificates representing Shares of Restricted Stock issued under the Plan,
properly endorsed for transfer, on behalf of each Participant who holds such
Shares, until such time as the Shares of Restricted Stock are forfeited, resold
to the Company, or the restrictions lapse. Any Restricted Stock denominated in
units of Common Stock, if not previously forfeited, shall be payable in
accordance with Article XIV as soon as practicable after the restrictions lapse.
H. The Committee may prescribe such other restrictions, conditions,
and terms applicable to Restricted Stock issued to a Participant under the Plan
that are neither inconsistent with nor prohibited by the Plan or the Award
Agreement, including, without limitation, terms providing for a lapse of the
restrictions of this Article or any Award Agreement in installments.
X. REQUIRED TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
If deemed by the Committee to be in the best interests of the Company,
a Participant may be granted a Right. Each Right shall be granted subject to
such restrictions and conditions and other terms as the Committee may specify in
the Award Agreement at the time the Right is granted, subject to the general
provisions of the Plan, and the following specific rules.
A. Rights may be granted, if at all, either singly, in combination
with another Award, or in tandem with another Award. At the time of grant of a
Right, the Committee shall specify the base price of Common Stock to be used in
connection with the calculation described in Paragraph B below, provided that
the base price shall not be less than one hundred percent (100%) of the Fair
Market Value of a Share of Common Stock on the date of grant, unless approved by
the Board.
B. Upon exercise of a Right, which shall be not less than six (6)
months from the date of the grant, the Participant shall be entitled to receive
in accordance with Article XIV, and as soon as practicable, the excess of the
Fair Market Value of one Share of Common Stock on the date of exercise over the
base price specified in such Right, multiplied by the number of Shares of Common
Stock then subject to the Right, or the portion thereof being exercised.
Notwithstanding anything herein to the contrary, unless otherwise permitted by
Rule 16b-3 as promulgated under the Exchange Act, if a Right is to be settled
under Article XIV in cash, a Participant shall be entitled to exercise such
Right only during the period beginning on the third business day following the
date of public release of the Company's quarterly sales and earnings
information, and ending on the twelfth business day following such date.
Page 21 of 30 Pages
<PAGE>
C. Notwithstanding anything herein to the contrary, if the Award
granted to a Participant allows him to elect to cancel all or any portion of an
unexercised Option by exercising an additional or tandem Right, then the Option
price per Share of Common Stock shall be used as the base price specified in
Paragraph A to determine the value of the Right upon such exercise and, in the
event of the exercise of such Right, the Company's obligation with respect to
such Option or portion thereof shall be discharged by payment of the Right so
exercised. In the event of such a cancellation, the number of Shares as to
which such Option was canceled shall become available for use under the Plan,
less the number of Shares, if any, received by the Participant upon such
cancellation in accordance with Article XIV.
D. A Right may be exercised only by the Participant (or, if
applicable under Article XII, by a legatee or legatees of such Right, or by the
Participant's executors, personal representatives, or distributees).
XI. REQUIRED TERMS AND CONDITIONS OF CASH AWARDS
A. The Committee may from time to time authorize the award of cash
payments under the Plan to Participants, subject to such restrictions and
conditions and other terms as the Committee may determine at the time of
authorization (including, but not limited to, continuous service with the
Company or its Affiliates, achievement of specific business objectives,
increases in specified indices, attaining growth rates, and other measurements
of Company or Affiliate performance), and subject to the general provisions of
the Plan, the applicable Award Agreement, and the following specific rules.
B. Any Cash Award will be forfeited if Company so determines in
accordance with Article XIII or any other condition set forth in the Award
Agreement, or, alternatively, if the Participant's employment with the Company
or its Affiliates terminates, other than for reasons set forth in Article XII,
prior to the expiration of the forfeiture or restriction provisions set forth in
the Award Agreement.
C. The Committee, in its discretion, shall have the power to
accelerate the date on which the restrictions contained in the Award Agreement
shall lapse with respect to any Cash Award.
D. Any Cash Award, if not previously forfeited, shall be payable as
soon as practicable after the restrictions lapse in accordance with Article XIV.
E. The Committee may prescribe such other restrictions, conditions,
and terms applicable to the Cash Awards issued to a Participant under the Plan
that are neither inconsistent with nor prohibited by the Plan or the Award
Agreement, including, without limitation, terms providing for a lapse of the
restrictions of this Article or any Award Agreement in installments.
XII. TERMINATION OF EMPLOYMENT
Except as may otherwise be provided in, or limited by, Article VII for
Options, Article VIII for Formula Options, or under the Award Agreement, if the
employment of a Participant terminates, other than pursuant to Paragraphs A
through C of this Article XII, all unexpired, unpaid, unexercised, or deferred
Awards shall be canceled immediately.
A. Retirement under a Company or Affiliate Retirement Plan. When a
Participant's employment terminates as a result of retirement as defined under a
Company or Affiliate retirement plan, the Committee may permit Awards to
continue in effect beyond the date of retirement in accordance with the
applicable Award Agreement, and the exercisability and vesting of any Award may
be accelerated.
B. Resignation in the Best Interests of the Company or an
Affiliate. When a Participant resigns from the Company or an Affiliate and,
in the judgment of the chief executive officer or other senior officer
designated by the Committee, the acceleration and/or continuation of
outstanding Awards would be in the best interests of the Company, the
Committee may (i) authorize, where appropriate,
Page 22 of 30 Pages
<PAGE>
the acceleration and/or continuation of all or any part of Awards
granted prior to such termination and (ii) permit the exercise, vesting, and
payment of such Awards for such period as may be set forth in the applicable
Award Agreement, subject to earlier cancellation pursuant to Article XIII or at
such time as the Committee shall deem the continuation of all or any part of the
Participant's Awards are not in the Company's or its Affiliate's best interests.
C. Death or Disability of a Participant
1. In the event of a Participant's death, the Participant's
estate or beneficiaries shall have a period up to the earlier of (i)
the expiration date specified in the Award Agreement, or (ii) the
expiration date specified in Paragraph H of Article VII, within which
to receive or exercise any outstanding Awards held by the Participant
under such terms as may be specified in the applicable Award
Agreement. Rights to any such outstanding Awards shall pass by will
or the laws of descent and distribution in the following order: (a) to
beneficiaries so designated by the Participant; (b) to a legal
representative of the Participant; or (c) to the persons entitled
thereto as determined by a court of competent jurisdiction. Awards so
passing shall be made at such times and in such manner as if the
Participant were living.
2. In the event a Participant is deemed by the Company to be
Disabled, and subject to the limitations of Paragraph G of Article
VII, Awards may be paid to, or exercised by, the Participant, if
legally competent, or by a legally designated guardian or other
representative if the Participant is legally incompetent by virtue of
such Disability.
3. After the death or Disability of a Participant, the
Committee may in its sole discretion at any time (i) terminate
restrictions in Award Agreements; (ii) accelerate any or all
installments and rights; and (iii) instruct the Company to pay the
total of any accelerated payments in a lump sum to the Participant,
the Participant's estate, beneficiaries or representative,
notwithstanding that, in the absence of such termination of
restrictions or acceleration of payments, any or all of the payments
due under the Awards ultimately might have become payable to other
beneficiaries.
XIII. CANCELLATION AND RESCISSION OF AWARDS
Unless the Award Agreement specifies otherwise, the Committee may
cancel any unexpired, unpaid, unexercised, or deferred Awards at any time if the
Participant is not in compliance with the applicable provisions of the Award
Agreement, the Plan, or with the following conditions:
A. A Participant shall not render services for any organization or
engage directly or indirectly in any business which, in the judgment of the
chief executive officer of the Company or other senior officer designated by the
Committee, is or becomes competitive with the Company, or which organization or
business, or the rendering of services to such organization or business, is or
becomes otherwise prejudicial to or in conflict with the interests of the
Company. For Participants whose employment has terminated, the judgment of the
chief executive officer shall be based on the Participant's position and
responsibilities while employed by the Company or its Affiliates, the
Participant's post-employment responsibilities and position with the other
organization or business, the extent of past, current, and potential competition
or conflict between the Company and other organization or business, the effect
of the Participant's assuming the post-employment position on the Company's or
its Affiliate's customers, suppliers, and competitors, and such other
considerations as are deemed relevant given the applicable facts and
circumstances. A Participant may, however, purchase as an investment or
otherwise, stock or other securities of any organization or business so long as
they are listed upon a recognized securities exchange or traded
over-the-counter, and such investment does not represent a substantial
investment to the Participant or a greater than one percent (1%) equity interest
in the organization or business.
Page 23 of 30 Pages
<PAGE>
B. A Participant shall not, without prior written authorization from
the Company, disclose to anyone outside the Company or its Affiliates, or use in
other than the Company's or Affiliate's business, any confidential information
or materials relating to the business of the Company or its Affiliates, acquired
by the Participant either during or after employment with the Company or its
Affiliates.
C. A Participant shall disclose promptly and assign to the Company
all right, title, and interest in any invention or idea, patentable or not, made
or conceived by the Participant during employment by the Company or an
Affiliate, relating in any manner to the actual or anticipated business,
research, or development work of the Company or its Affiliates, and shall do
anything reasonably necessary to enable the Company or its Affiliates to secure
a patent or other protectable interest where appropriate in the United States
and in foreign countries.
Upon exercise, payment, or delivery pursuant to an Award, the Participant shall
certify on a form acceptable to the Committee that he or she is in compliance
with the terms and conditions of the Plan, including the provisions of
Paragraphs A, B or C of this Article XIII. Failure to comply with the
provisions of Paragraphs A, B or C of this Article XIII prior to, or during the
six months after, any exercise, payment, or delivery pursuant to an Award shall
cause such exercise, payment, or delivery to be rescinded. The Company shall
notify the Participant in writing of any such rescission within two (2) years
after such exercise, payment, or delivery. Within ten (10) days after receiving
such a notice from the Company, the Participant shall pay to the Company the
amount of any gain realized or payment received as a result of the rescinded
exercise, payment, or delivery pursuant to the Award. Such payment shall be
made either in cash or by returning to the Company the number of Shares of
Common Stock that the Participant received in connection with the rescinded
exercise, payment, or delivery.
XIV. PAYMENT OF RESTRICTED STOCK, RIGHTS, AND CASH AWARDS
Payment of Restricted Stock, Rights, and Cash Awards may be made, as
the Committee shall specify, in the form of cash, Shares of Common Stock, or
combinations thereof; provided, however, that a fractional Share of Common Stock
shall be paid in cash equal to the Fair Market Value of the fractional Share of
Common Stock at the time of payment.
XV. WITHHOLDING
Except as otherwise provided by the Committee,
A. The Company shall have the power and right to deduct or withhold,
or require a Participant to remit to the Company, an amount sufficient to
satisfy federal, state, and local taxes required by law to be withheld with
respect to any grant, exercise, or payment made under or as a result of this
Plan; and
B. In the case of payments of Awards, or upon any other taxable
event hereunder, a Participant may elect, subject to Committee approval, to
satisfy the withholding requirement, if any, in whole or in part, by having the
Company withhold Shares of Common Stock that would otherwise be transferred to
the Participant having a Fair Market Value, on the date the tax is to be
determined, equal to the minimum marginal tax that could be imposed on the
transaction. All elections shall be made in writing and signed by the
Participant and, if required by Rule 16b-3 as promulgated under the Exchange
Act, either:
1. Delivered to the Committee at least six (6) months prior to
the date specified by the Participant on which the taxable event is to
occur; or
2. Be made pursuant to an exercise of an Option during a
"Window Period." For this purpose, "Window Period" means the period
beginning on the third business day following the date of public
release of the Company's quarterly sales and earnings information, and
ending on the twelfth business day following such date.
Page 24 of 30 Pages
<PAGE>
XVI. SAVINGS CLAUSE
This Plan is intended to comply in all respects with applicable law
and regulations, including, with respect to those Participants who are officers
or directors for purposes of Section 16 of the Exchange Act, and Rule 16b-3 of
the Securities and Exchange Commission. In case any one or more provisions of
this Plan shall be held invalid, illegal, or unenforceable in any respect under
applicable law and regulation (including Rule 16b-3), the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby and the invalid, illegal, or unenforceable provision shall
be deemed null and void; however, to the extent permitted by law, any provision
that could be deemed null and void shall first be construed, interpreted, or
revised retroactively to permit this Plan to be construed in compliance with all
applicable law (including Rule 16b-3) so as to foster the intent of this Plan.
Notwithstanding anything herein to the contrary, with respect to Participants
who are officers and directors for purposes of Section 16 of the Exchange Act,
and if required to comply with rules promulgated thereunder, no grant of, or
Option to purchase, Common Stock shall permit unrestricted ownership of Common
Stock by the Participant for at least six (6) months from the date of grant or
Option.
XVII. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event that the outstanding Shares of the Company are changed
into or exchanged for a different number or kind of shares or other securities
of the Company or of another corporation by reason of any reorganization,
merger, consolidation, recapitalization, reclassification, change in par value,
stock split-up, combination of shares or dividends payable in capital stock, or
the like, appropriate adjustments to prevent dilution or enlargement of the
Awards granted to, or available for, Participants shall be made in the manner
and kind of Shares for the purchase of which Awards may be granted under the
Plan, and, in addition, appropriate adjustment shall be made in the number and
kind of Shares and in the Option price per share subject to outstanding Options.
The foregoing notwithstanding, no such adjustment shall be made in an Incentive
Option which shall, within the meaning of Section 424 of the Code, constitute
such a modification, extension, or renewal of an Option as to cause it to be
considered as the grant of a new Option.
Notwithstanding anything herein to the contrary, the Company may, in
its sole discretion, accelerate the timing of the exercise provisions of any
Award in the event of a tender offer for the Company's Shares, the adoption of a
plan of merger or consolidation under which a majority of the Shares of the
Company would be eliminated, or a sale of substantially all of the Company's
assets. Alternatively, the Company may, in its sole discretion, cancel any or
all Awards upon any of the foregoing events and provide for the payment to
Participants in cash of an amount equal to the value or appreciated value,
whichever is applicable, of the Award, as determined in good faith by the
Committee, at the close of business on the date of such event. The preceding
two sentences of this Article XVII notwithstanding, the Company shall be
required to accelerate the timing of the exercise provisions of any Award if (i)
any such business combination is to be accounted for as a pooling-of-interests
under APB Opinion 16 and (ii) the timing of such acceleration does not prevent
such pooling-of-interests treatment.
XVIII. DISSOLUTION OR LIQUIDATION OF THE COMPANY
Upon the dissolution or liquidation of the Company other than in
connection with a transaction to which Article XVII is applicable, all Awards
granted hereunder shall terminate and become null and void; provided, however,
that if the rights of a Participant under the applicable Award have not
otherwise terminated and expired, the Participant may, if the Committee, in its
sole discretion, so permits, have the right immediately prior to such
dissolution or liquidation to exercise any Option granted hereunder to the
extent that the right to purchase Shares thereunder has become exercisable as of
the date immediately prior to such dissolution or liquidation.
XIX. TERMINATION OF THE PLAN
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The Plan shall terminate (10) years from the earlier of the date of
its adoption or the date of its approval by the stockholders. The Plan may be
terminated at an earlier date by vote of the stockholders or the Board;
provided, however, that any such earlier termination shall not affect any Award
Agreements executed prior to the effective date of such termination.
Notwithstanding anything in this Plan to the contrary, any Options granted prior
to the effective date of the Plan's termination may be exercised until the
earlier of (i) the date set forth in the Award Agreement, or, in the case of an
Incentive Option, (ii) ten (10) years from the date the Option is granted; and
the provisions of the Plan with respect to the full and final authority of the
Committee under the Plan shall continue to control.
XX. AMENDMENT OF THE PLAN
The Plan may be amended by the Board and such amendment shall become
effective upon adoption by the Board; provided, however, that any amendment that
(i) increases the numbers of Shares that may be granted under this Plan, other
than as provided by Article XVII, (ii) materially modifies the requirements as
to eligibility to participate in the Plan, (iii) materially increases the cost
of the Plan or materially increases the benefits to Participants, (iv) extends
the period during which Awards may be granted or exercised, (v) changes the
provisions of the Plan regarding Option price, or (vi) changes the designation
of the class of employees eligible to receive Incentive Options, or otherwise
causes the Incentive Options to no longer qualify as "incentive stock options"
as defined in Section 422 of the Code, shall nevertheless be subject to the
approval of the stockholders of the Company within one (1) year either before or
after such adoption by the Board, subject to the requirements of Article XVI of
the Plan.
XXI. EMPLOYMENT RELATIONSHIP
Nothing herein contained shall be deemed to prevent the Company or an
Affiliate from terminating the employment of a Participant, nor to prevent a
Participant from terminating the Participant's employment with the Company or an
Affiliate.
XXII. INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they may have
as directors or as members of the Committee, the members of the Committee shall
be indemnified by the Company against all reasonable expenses, including
attorneys' fees, actually and reasonably incurred in connection with the defense
of any action, suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action taken by them
as directors or members of the Committee and against all amounts paid by them in
settlement thereof (provided such settlement is approved by the Board) or paid
by them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that the director or Committee member is liable for gross
negligence or willful misconduct in the performance of his or her duties. To
receive such indemnification, a director or Committee member must first offer in
writing to the Company the opportunity, at its own expense, to defend any such
action, suit or proceeding.
XXIII. UNFUNDED PLAN
Insofar as it provides for payments in cash in accordance with Article
XIV, the Plan shall be unfunded. Although bookkeeping accounts may be
established with respect to Participants who are entitled to cash, Common Stock,
or rights thereto under the Plan, any such accounts shall be used merely as a
bookkeeping convenience. The Company shall not be required to segregate any
assets that may at any time be represented by cash, Common Stock, or rights
thereto, nor shall the Plan be construed as providing for such segregation, nor
shall the Company, the Board, or the Committee be deemed to be a trustee of any
cash, Common Stock, or rights thereto to be granted under the Plan. Any
liability of the Company to any Participant with respect to a grant of cash,
Common Stock, or rights thereto under the Plan shall be based solely upon any
contractual obligations that may be created by the Plan and any Award Agreement;
no such obligation of the Company shall be deemed to be secured by any pledge or
other encumbrance on any
Page 26 of 30 Pages
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property of the Company. Neither the Company nor the Board nor the Committee
shall be required to give any security or bond for the performance of any
obligation that may be created by the Plan.
XXIV. MITIGATION OF EXCISE TAX
If any payment or right accruing to a Participant under this Plan
(without the application of this Article XXIV), either alone or together with
other payments or rights accruing to the Participant from the Company or an
Affiliate ("Total Payments") would constitute a "parachute payment" (as defined
in Section 28OG of the Code and regulations thereunder), such payment or right
shall be reduced to the largest amount or greatest right that will result in no
portion of the amount payable or right accruing under the Plan being subject to
an excise tax under Section 4999 of the Code or being disallowed as a deduction
under Section 28OG of the Code. The determination of whether any reduction in
the rights or payments under this Plan is to apply shall be made by the Company.
The Participant shall cooperate in good faith with the Company in making such
determination and providing any necessary information for this purpose.
XXV. EFFECTIVE DATE
This Plan shall become effective upon adoption by the Board, provided
that within one (1) year before or after such adoption by the Board the Plan is
approved by the stockholders of the Company.
XXVI. GOVERNING LAW
This Plan shall be governed by the laws of the State of Delaware and
construed in accordance therewith.
Adopted by the Board of Directors the 28th day of September, 1995.
Adopted by the Shareholders the 4th day of October, 1995.
Page 27 of 30 Pages
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Exhibit 5
June 30, 1997
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 502,741 shares of Common
Stock, $.05 par value per share, of the Company (the "Shares"), to be issued by
the Company in accordance with the Enterprise Systems, Inc. Long-Term Incentive
Plan (the "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 Plan, 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
Page 28 of 30 Pages
<PAGE>
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 Enterprise Systems, Inc. Long-Term Incentive
Plan, its Form 10-Q for the quarter ended March 31, 1997 which includes our
report dated April 16, 1997, covering the unaudited interim financial
information contained therein. Pursuant to Regulation C of the Securities Act
of 1933 (the "Act"), that report is not considered to be a part of the
Registration Statement prepared or certified by our firm within the meaning
of Sections 7 and 11 of the Act.
/s/ Arthur Anderson, LLP
Atlanta, Georgia
June 26, 1997
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-8 of our reports dated
February 6, 1997 included or incorporated by reference in HBO & Company's
Form 10-K for the year ended December 31, 1996.
/s/ Arthur Andersen LLP
Atlanta, Georgia
June 26, 1997
