<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 21, 1995.
Registration No. 33-XXXXXX
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SHARED MEDICAL SYSTEMS CORPORATION
----------------------------------
(Exact name of registrant as specified in its charter)
Delaware 23-1704148
---------------------- --------------------------------
(State of Incorporation) (IRS Employer Identification No.)
51 Valley Stream Parkway, Malvern, Pennsylvania 19355
----------------------------------------------- ---------
(Address of Principal Executive Offices) (Zip Code)
1994 NON-QUALIFIED STOCK OPTION AND RESTRICTED STOCK PLAN
---------------------------------------------------------
(Full Title of the Plan)
Terrence W. Kyle
Vice President of Finance
Shared Medical Systems Corporation
51 Valley Stream Parkway
Malvern, Pennsylvania 19355
-------------------------------------
(Name and address of agent for service)
(610) 219-6300
-----------------------------------------------------------
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Title of Amount Proposed Proposed
Securities to to Be Maximum Offering Maximum Aggregate Amount of
be Registered Registered Price Per Share** Offering Price** Registration Fee**
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 2,000,000 15,000@ $35.50 $ 532,500 $26,136.69
par value Shares* 50,000@ $37.00 $ 1,850,000
$.01 per share 1,935,000@ $37.94 $73,413,900
</TABLE>
* Pursuant to Rule 416(a), this Registration Statement also registers such
indeterminate number of additional shares as may become issuable under the
Plan in connection with share splits, share dividends or similar
transactions.
** Calculated pursuant to Rule 457(h). As to shares subject to outstanding but
unexercised options, the price and fee are computed based upon $35.50 and
$37.00, the prices at which such options may be exercised. As to the
remaining shares, the price and fee are computed based upon $37.94, the
average of the high and low prices reported by the NASDAQ National Market
System on August 17, 1995.
Page 1 of 22
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
There are incorporated herein by reference the following documents:
1. The Shared Medical Systems Corporation (the "Company's") Annual
Report on Form 10-K for the year ended December 31, 1994.
2. All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 since December 31, 1994.
3. The description of the Company's Common Stock which is contained
in a registration statement filed under the Securities Exchange
Act of 1934, including any amendment or report filed for the
purpose of updating such description.
All other reports and other documents filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
subsequent to the date of this Registration Statement and prior to the filing of
a post-effective amendment to this Registration Statement which indicates that
all of the Common Shares offered hereby have been sold or which deregisters all
such Common Shares 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 the filing of such reports and documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Bonnie L. Shuman, an employee of the Registrant and the Registrant's
General Counsel and Assistant Secretary, has given an opinion upon the validity
of the securities being registered.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102(b)(7) of the Delaware General Corporation Law (the "GCL")
provides that a provision in a Delaware corporation's certificate of
incorporation eliminating or limiting the personal liability of a director to a
corporation or its stockholders shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) for willful
or negligent unlawful payments of dividends or stock purchases or redemptions by
the corporation, or (iv) for any transaction from which the director derived an
improper personal benefit.
Page 2 of 22
<PAGE>
Article Twelfth of the Registrant's Restated Certificate of
Incorporation provides that a director of the Registrant shall have no personal
liability to the Registrant or to its stockholders for monetary damages for
breach of fiduciary duty as a director except to the extent that Section 102(b)
(7) (or any successor provision) of the GCL, as amended from time to time,
expressly provides that the liability of a director may not be eliminated or
limited.
Section 145 of the GCL contains detailed provisions permitting a
Delaware corporation to indemnify directors and officers against expenses,
judgments, fines and settlements in connection with litigation under certain
circumstances.
Article IX of the Registrant's By-Laws provides that any person who was
or is a party or is threatened to be made a party to a proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that
such person is or was a director or officer of the Registrant, or is or was
serving while a director or officer of the Registrant at the request of the
Registrant as a director, officer, employee, agent, fiduciary or other
representative of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, shall be indemnified by the
Registrant against expenses (including attorneys' fees), judgments, fines,
excise taxes and amounts paid in settlement actually and reasonably incurred by
such person in connection with such action, suit or proceeding to the full
extent permissible under Delaware Law.
The Registrant maintains, on behalf of its directors and officers,
insurance protection against certain liabilities arising out of the discharge of
their duties, as well as insurance covering the Registrant for indemnification
payments made to its directors and officers for certain liabilities.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
ITEM 8. EXHIBITS.
The following is a list of exhibits required by Item 601 of Regulation
S-K filed as part of this Registration Statement.
Exhibit 4(a) Articles of Incorporation and By-Laws (Incorporated by reference
to Exhibit 3 to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1994).
Exhibit 4(b) The Company's 1994 Non-Qualified Stock Option and Restricted
Stock Plan.
Exhibit 5 Opinion of Counsel.
Exhibit 24(a) Consent of Arthur Andersen LLP
Exhibit 24(b) Consent of Counsel (included in Exhibit 5).
Page 3 of 22
<PAGE>
ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (i) and (ii) do not apply if the information
-------- -------
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) 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.
Page 4 of 22
<PAGE>
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 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 Securities and Exchange
Commission such indemnification is against public policy as expressed in the 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 Act and will be governed by the final adjudication of
such issue.
Page 5 of 22
<PAGE>
SIGNATURES
The Registrant. 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 Malvern, Pennsylvania, on this 2nd day of August, 1995.
SHARED MEDICAL SYSTEMS CORPORATION
By: /s/ R. James Macaleer
-----------------------------
R. James Macaleer,
Chairman of the Board and
Chief Executive Officer
Page 6 of 22
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ R. James Macaleer Chairman of the August 2, 1995
----------------------
R. James Macaleer Board and Chief Executive
(Principal Executive Officer) Officer; Director
/s/ Terrence W. Kyle Vice President of August 2, 1995
--------------------
Terrence W. Kyle Finance
(Principal Financial Officer)
/s/ Edward J. Grady Controller August 2, 1995
-------------------
Edward J. Grady
(Principal Accounting Officer)
/s/ Marvin S. Cadwell President and Chief August 2, 1995
---------------------
Marvin S. Cadwell Operating Officer; Director
/s/ Raymond K. Denworth, Jr. Director August 2, 1995
----------------------------
Raymond K. Denworth, Jr.
/s/ Frederick W. DeTurk Director August 2, 1995
-----------------------
Frederick W. DeTurk
/s/ Jeffrey S. Rubin Director August 2, 1995
--------------------
Jeffrey S. Rubin
/s/ Josh S. Weston Director August 2, 1995
------------------
Josh S. Weston
</TABLE>
Page 7 of 22
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit Page
------ ---------------------- ----
<S> <C> <C>
4(a) Articles of Incorporation Incorporated by reference to
and By-Laws Exhibit 3 to the Registrant's
Annual Report on Form 10-K for
the year ended
December 31, 1994
4(b) The Company's 1994 9
Non-Qualified Stock Option
and Restricted Stock Plan.
5 Opinion of Counsel 21
24(a) Consent of Arthur 22
Andersen LLP
24(b) Consent of Counsel Included in Exhibit 5
</TABLE>
Page 8 of 22
<PAGE>
Exhibit 4(b)
SHARED MEDICAL SYSTEMS CORPORATION
1994 NON-QUALIFIED STOCK OPTION
AND RESTRICTED STOCK PLAN
1. Introduction
------------
(a) Effective Date
--------------
The effective date of the SHARED MEDICAL SYSTEMS CORPORATION 1994 NON-
QUALIFIED STOCK OPTION AND RESTRICTED STOCK PLAN ("Plan") is October 27, 1994,
the date of its adoption by the Board of Directors ("Board") of SHARED MEDICAL
SYSTEMS CORPORATION ("Company").
(b) Purpose
-------
The Plan is intended to provide a means whereby the Company may,
through the grant of non-qualified stock options ("Options") to purchase Common
Stock of the Company ("Common Stock") and through the award of Common Stock upon
the terms and conditions and subject to the restrictions set forth in Section 6
("Restricted Stock") to key employees, including employee directors ("Key
Employees"), attract and retain such Key Employees and motivate such Key
Employees to exercise their best efforts on behalf of the Company and of any
"Related Corporation". Notwithstanding the above, no member of the Company's
Stock Option Committee ("Committee") shall be entitled to participate in the
Plan.
For purposes of the Plan, a "Related Corporation" of the Company shall
mean either a corporate subsidiary of the Company, as defined in section 424(f)
of the Internal Revenue Code of 1986, as amended ("Code"), or the corporate
parent of the Company, as defined in section 424(e) of the Code. Further, as
used in the Plan, (i) the term "Incentive Stock Option" ("ISO") shall mean an
option which qualifies as an incentive stock option within the meaning of
section 422 of the Code; (ii) the term "Non-Qualified Stock Option" ("NQSO")
shall mean an option which, at the time such option is granted, does not qualify
as an ISO, and is designated as a non-qualified stock option in the Option
Agreement (as hereinafter defined); and (iii) the term "Restricted Stock Award"
("RSA") shall mean an award of Restricted Stock granted under the provisions of
the Plan.
2. Administration
--------------
The Plan shall be administered by the Committee, which shall consist of
not less than three (3) directors of the Company who shall be appointed by, and
shall serve at the pleasure of, the Board. Each member of such Committee, while
serving as such, shall be deemed to be acting in his/her capacity as a director
of the Company. As stated in Section 1 above, no member of the Committee shall
be entitled to participate in the Plan.
The Committee shall have full authority, subject to the terms of the
Plan, to select the Key Employees to be granted NQSOs and/or RSAs under the
Plan, based on
Page 9 of 22
<PAGE>
such factors as the Committee in its sole discretion deems appropriate, to grant
NQSOs and RSAs on behalf of the Company and to set the date of grant and the
other terms of such NQSOs and RSAs. The Committee shall hold its meetings at
such times and places as it shall determine. A majority of its members shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing and
signed by all of its members shall be fully as effective as if it had been
approved by a majority vote of the members of the Committee at a meeting duly
called and held.
The Committee also shall have the authority to establish such rules and
regulations, not inconsistent with the provisions of the Plan, for the proper
administration of the Plan, and to amend, modify or rescind any such rules and
regulations, and to make such determinations and interpretations under, or in
connection with, the Plan, as it deems necessary or advisable. All such rules,
regulations, determinations and interpretations shall be binding and conclusive
upon the Company, its stockholders and all employees, and their respective legal
representatives, beneficiaries, successors and assigns and upon all other
persons claiming under or through any of them.
3. Eligibility
-----------
The class of employees who shall be eligible to receive NQSOs and RSAs
under the Plan shall be the Key Employees (including any employee directors of
the Company) of the Company and/or of a Related Corporation. More than one NQSO
and/or RSA may be granted to a Key Employee under the Plan.
4. Stock
-----
The maximum number of shares of Common Stock with respect to which RSAs
may be made and for which Options may be granted under the Plan shall be, in the
aggregate, two million (2,000,000) shares of Common Stock, par value $.01 per
share, subject to adjustment as hereinafter provided. Other than the aggregate
limit, there shall be no limit on the number of shares of Common Stock which may
be awarded to any one individual. Shares issuable under the Plan may be
authorized but unissued shares or reacquired shares, and the Company may
purchase shares required for this purpose, from time to time, if it deems such
purchase to be advisable.
If any Option granted under the Plan expires or otherwise terminates
for any reason whatever (including, without limitation, the Key Employee's
surrender thereof) without having been exercised, or if any RSA hereunder is
terminated, the shares subject to the unexercised portion of such Option and the
unvested shares covered by such RSA shall continue to be available for the
granting of Options and RSAs under the Plan as fully as if such shares had never
been subject to an Option or an RSA.
5. Terms and Conditions of Options Granted under Plan.
--------------------------------------------------
(a) Granting of Options
-------------------
From time to time until the expiration or earlier suspension or
discontinuance of the Plan, the Committee may, on behalf of the Company, grant
to Key Employees under the Plan such Options as it determines are warranted.
The
Page 10 of 22
<PAGE>
granting of an Option or RSA under the Plan shall not be deemed either to
entitle the Key Employee to, or to disqualify the Key Employee from, any
participation in any other grant of Options or RSAs under the Plan. In making
any determination as to whether a Key Employee shall be granted an Option and as
to the number of shares to be covered by such Option, the Committee shall take
into account the duties of the Key Employee, his/her present and potential
contributions to the success of the Company or a Related Corporation, and such
other factors as the Committee shall deem relevant in accomplishing the purposes
of the Plan. Moreover, the Committee may provide in the Option that said Option
may be exercised only if certain conditions, as determined by the Committee, are
fulfilled.
(b) Annual Limit on Options
-----------------------
Subject to the maximum limitation set forth in Section 4, there is no
annual limit on the number of Options which may be granted to a Key Employee
under the Plan.
(c) Other Terms and Conditions of Options
-------------------------------------
The Options granted pursuant to the Plan shall expressly specify that
they are NQSOs. In addition, the Options granted pursuant to the Plan shall
include expressly or by reference the following terms and conditions, as well as
such other provisions not inconsistent with the provisions of this Plan, as the
Committee shall deem desirable:
(i) Number of Shares
----------------
Each Option shall include a statement of the number of shares to which
the Option pertains.
(ii) Price
-----
The Option price shall be determined and fixed by the Committee in its
discretion, but shall not be less than the higher of seventy-five percent (75%)
of the fair market value of the optioned shares of Common Stock, or the par
value thereof, on the date the Option is granted.
The fair market value of the optioned shares of Common Stock shall be
arrived at by a good faith determination of the Committee and shall be:
(A) The mean between the highest and lowest quoted selling price,
if there is a market for the Common Stock on a registered securities
exchange or in an over the counter market, on the date of grant; or
(B) The weighted average of the means between the highest and
lowest sales on the nearest date before and the nearest date after the
date of grant, if there are no sales on the date of grant but there are
sales on dates within a reasonable period both before and after the
date of grant; or
(C) The mean between the bid and asked prices, as reported by the
National Quotation Bureau on the date of grant, if actual sales are not
Page 11 of 22
<PAGE>
available during a reasonable period beginning before and ending after
the date of grant; or
(D) Such other method of determining fair market value as shall
be authorized by the Code, or the rules or regulations thereunder, and
adopted by the Committee.
Where the fair market value of the optioned shares of Common Stock is
determined under (B) above, the average of the means between the
highest and lowest sales on the nearest date before and the nearest
date after the date of grant is to be weighted inversely by the
respective numbers of trading days between the sale dates and the date
of grant, in accordance with Treas. Reg. Section 20.2031-2(b)(1).
(iii) Term
----
Subject to earlier termination as provided in Paragraphs (v), (vi) and
(vii) below and in Section 9 hereof, the term of each Option shall be not more
than twenty (20) years from the date of grant.
(iv) Exercise
--------
(A) Exercisability
--------------
Options shall be exercisable in such installments and on such
dates, not less than six (6) months from the date of grant, as the
Committee may specify, provided that the Committee may accelerate the
exercise date of any outstanding Options in its discretion, if it deems
such acceleration to be desirable, but in no event shall such
accelerated exercise date be less than six (6) months from the date of
grant. Any Option shares, the right to the purchase of which has
accrued, may be purchased at any time up to the expiration or
termination of the Option. Exercisable Options may be exercised in
whole or in part from time to time by giving written notice of exercise
to the Company at its principal office, specifying the number of shares
to be purchased and accompanied by payment in full of the aggregate
Option price for such shares. Only full shares shall be issued under
the Plan, and any fractional share which might otherwise be issuable
upon exercise of an Option granted hereunder shall be forfeited.
(B) Payment of Exercise Price
-------------------------
The Option price shall be payable:
(AA) In cash or its equivalent;
(BB) In the discretion of the Committee, in Common Stock
previously acquired by the Key Employee, provided that if such shares
of Common Stock were acquired through exercise of an ISO, an NQSO or an
option under a similar plan, such shares have been held by the Key
Employee for a period of more than one (1) year on the date of
exercise;
Page 12 of 22
<PAGE>
(CC) In the discretion of the Committee, in any combination of
clauses (AA) and (BB) above; or
(DD) In the discretion of the Committee, by delivering a properly
executed notice of exercise of the Option to the Company and a broker,
with irrevocable instructions to the broker promptly to deliver to the
Company the amount of sale or loan proceeds necessary to pay the
exercise price of the Option.
In the event such Option price is paid, in whole or in part, with
shares of Common Stock, the portion of the Option price so paid shall
be equal to the "fair market value" on the date of tender, as such
"fair market value" is determined in Paragraph (ii), of the Common
Stock so tendered in payment of such Option price.
(v) Termination of Employment
-------------------------
If a Key Employee's employment by the Company (and Related
Corporations) is terminated by either party prior to the expiration date fixed
for his/her Option for any reason other than death or disability, such Option
may be exercised, to the extent of the number of shares with respect to which
the Key Employee could have exercised it on the date of such termination, or to
any greater extent permitted by the Committee (except that no accelerated
exercise date shall be less than six (6) months from the date of grant), by the
Key Employee at any time prior to the earlier of:
(A) The expiration date specified in such Option; or
(B) An accelerated termination date determined by the Committee,
in its discretion, except that, subject to Section 9 hereof, such
accelerated termination date shall not be earlier than the date of the
Key Employee's termination of employment.
(vi) Exercise upon Disability of Key Employee
----------------------------------------
If a Key Employee shall become disabled (within the meaning of section
22(e)(3) of the Code) during his/her employment and, prior to the expiration
date fixed for his/her Option, his/her employment is terminated as a
consequence of such disability, such Option may be exercised, to the extent
of the number of shares with respect to which the Key Employee could have
exercised it on the date of such termination, or to any greater extent
permitted by the Committee (except that no accelerated exercise date shall
be less than six (6) months from the date of grant), by the Key Employee at
any time prior to the earlier of:
(A) The expiration date specified in such Option; or
(B) An accelerated termination date determined by the Committee,
in its discretion, except that, subject to Section 9 hereof, such
accelerated termination date shall not be earlier than the date of the
Key Employee's termination of employment by reason of disability.
In the event of the Key Employee's legal disability, such Option may be
so exercised by the Key Employee's legal representative.
Page 13 of 22
<PAGE>
(vii) Exercise upon Death of Key Employee
-----------------------------------
If a Key Employee shall die during his/her employment, and prior to the
expiration date fixed for his/her Option, or if a Key Employee whose
employment is terminated for any reason, shall die following his/her
termination of employment but prior to the earlier of (A) the expiration
date fixed for his/her Option, or (B) the expiration of the period
determined under Paragraphs (v) and (vi) above, such Option may be
exercised, to the extent of the number of shares with respect to which the
Key Employee could have exercised it on the date of his/her death, or to any
greater extent permitted by the Committee (except that no accelerated
exercise date shall be less than six (6) months from the date of grant), by
the Key Employee's estate, personal representative or beneficiary who
acquired the right to exercise such Option by bequest or inheritance or by
reason of the death of the Key Employee. However, such exercise must occur
prior to the earlier of:
(AA) The expiration date specified in such Option; or
(BB) An accelerated termination date determined by the
Committee, in its discretion except that, subject to Section 9
hereof, such accelerated termination date shall not be earlier
than one (1) year after the date of the Key Employee's death.
(viii) Non-Transferability
-------------------
No Option shall be assignable or transferable by the Key Employee, nor
shall any Option be sold, pledged, hypothecated, alienated or otherwise
disposed of in any way by the Key Employee otherwise than by will or by the
laws of descent and distribution, and, during the lifetime of the Key
Employee, the Option shall be exercisable only by him/her or by his/her
guardian or legal representative.
(ix) Rights as a Stockholder
-----------------------
A Key Employee shall have no right to receive any dividend on or to
vote or exercise any rights as a stockholder with respect to any shares
covered by his/her Option until the issuance to him/her of a stock
certificate for such shares.
(d) Option Instruments - Other Provisions
-------------------------------------
Options granted under the Plan shall be evidenced by written documents
("Option Agreements") in such form as the Committee shall, from time to time,
approve, which Option Agreements shall contain such provisions and such
conditions, not inconsistent with the provisions of the Plan, as the Committee
shall deem advisable. Each Option Agreement shall specify that the Option is an
NQSO. Each Key Employee shall enter into, and be bound by, an Option Agreement,
as soon as practicable after the grant of an Option.
Page 14 of 22
<PAGE>
6. Terms and Conditions of Restricted Stock Awards
-----------------------------------------------
From time to time until the expiration or earlier termination of the Plan,
the Committee may grant such RSAs under the Plan to Key Employees ("Grantees")
as it determines are warranted. RSAs shall be subject to the following terms
and conditions:
(a) Payment for Shares
------------------
Prior to the issuance of shares to be covered by each RSA, the Grantee
shall pay in cash to the Company such amount as shall be determined by the
Committee, in its sole discretion, but in no event shall such amount be less
than the par value of each such share.
(b) Vesting Period
--------------
The Committee shall establish one or more vesting periods ("Vesting
Period") with respect to the shares covered by an RSA. The length of such
Vesting Period shall be within the discretion of the Committee, except that such
period or periods shall not be less than six (6) months from the date of grant.
Subject to the provisions of this Section 6, shares subject to an RSA shall vest
in the Grantee upon the expiration of the Vesting Period with respect to such
shares. The Committee may, in its sole discretion, accelerate the Vesting
Period with respect to an RSA at any time, except that such accelerated Vesting
Period may not be for a term of less than six (6) months from the date of grant.
(c) Termination of Employment
-------------------------
(i) Treatment of Unvested Shares. If, prior to the expiration of the
----------------------------
Vesting Period with respect to shares subject to an RSA ("Unvested Shares"),
a Grantee's employment with the Company (and Related Corporations) is
terminated for any reason, then, in such case, the Grantee's Unvested Shares
shall be forfeited, except that the Committee, if it determines that the
circumstances warrant, may direct that all or a portion of such Unvested
Shares be vested in the Grantee, but only if at least six (6) months have
elapsed since the date of grant of the RSA, subject to such further terms
and conditions, if any, as the Committee may determine. Notwithstanding
anything to the contrary herein, in no event shall a Grantee be vested in
any portion of an RSA until six (6) months have elapsed after the date of
grant of such RSA.
(ii) Return of Amount Paid for Unvested Shares. In the event the
-----------------------------------------
Grantee's employment is terminated for any reason, the Grantee (or his/her
beneficiary (as determined pursuant to Subsection (d) below) in the event of
the Grantee's death) shall be entitled to receive an amount equal to the
amount paid by such Grantee for each Unvested Share which does not vest upon
such termination of employment.
(d) Transferability
---------------
During the Vesting Period, none of the Restricted Stock issued in
accordance with an RSA may be sold, assigned, bequeathed, transferred, pledged,
hypothecated, alienated, or otherwise disposed of in any way by a Grantee.
However, a Grantee may, with the consent of the Committee, designate one or more
beneficiaries
Page 15 of 22
<PAGE>
to receive, in the event of his/her death, any stock to which he/she would then
be entitled in accordance with Subsection (c). Such designation shall be made
upon forms supplied by and delivered to the Committee and may be revoked in
writing. If a Grantee fails to designate a beneficiary, his/her estate shall be
his/her beneficiary. The shares of stock included in each RSA shall be
registered on the Company's books in the name of the Grantee as of the award
date. If stock certificates representing such shares are issued in the name of a
Grantee of an RSA prior to vesting of such RSA, such certificates shall be held
by the Company, together with a stock power which shall be executed in favor of
the Company by the Grantee, until such time as the Vesting Period shall end. The
certificates may include a legend setting forth restrictions on transfer and any
legend required under Section 7.
(e) Rights As a Stockholder
-----------------------
Except as set forth in Subsection (d), a Grantee shall have all of the
rights of a stockholder with respect to the Restricted Stock, including the
right to vote the shares of Restricted Stock and to receive all dividends or
other distributions of assets made with respect to such Restricted Stock, and
any such dividends or other distributions paid to or received by the Grantees in
respect of such shares shall remain the property of the Grantee and shall not be
subject to forfeiture even though such shares may revert to the Company as
otherwise permitted under the Plan; provided, however, that any shares or other
assets distributed to the Grantee as the result of a stock dividend, stock
split, recapitalization, reorganization, merger, consolidation, spin-off, share
combination, exchange of shares or other similar event or similar change in the
capitalization of the Company shall be returned by the Grantee upon receipt,
together with a stock power as provided in Subsection (d), and shall be deemed
Restricted Stock and subject to the provisions of this Section 6 unless the
Committee otherwise determines at the time of such distribution.
(f) Restricted Stock Agreement
--------------------------
Each Grantee shall enter into, and be bound by the terms of, a
Restricted Stock Agreement which shall include or incorporate by reference the
terms of the RSA and of the Plan and which shall contain such other terms,
conditions and restrictions not inconsistent with the Plan as the Committee
shall determine, including such terms, conditions, and restrictions as may be
required by applicable securities or other laws or by any securities exchange on
which the Company's common stock is listed. Such Restricted Stock Agreement
shall also contain a specific covenant by the Grantee that he/she will comply
with the terms of Subsection (e) in the event of any distribution of shares or
other assets as the result of a stock dividend, stock split, recapitalization,
reorganization, merger, consolidation, spin-off, share combination, exchange of
shares, or other similar event or similar change in the capitalization of the
Company.
(g) Agreement Not To Make Section 83(b) Election
--------------------------------------------
Each Grantee shall agree in writing at the time of any RSA, and as a
condition thereof, that he/she shall not make an election under section 83(b) of
the Code to include in his/her gross income as determined for federal income tax
purposes any part of the value of Restricted Stock issued or transferred to
him/her under the RSA unless all restrictions pertaining to that portion of the
RSA with respect to which the Grantee desires to make an election have lapsed.
If a Grantee makes such an election with respect to any RSA granted to him/her,
that portion of the Restricted Stock covered
Page 16 of 22
<PAGE>
by the RSA with respect to which he/she has made such election shall be
forfeited to the Company.
(h) Delivery of Certificates
------------------------
Upon the vesting of an RSA, the Company shall, subject to the
requirements of Section 8 and any other applicable provision of the Plan and of
the Restricted Stock Agreement, either (i) promptly cause a stock certificate
representing the vested shares to be issued in the name of the Grantee or
his/her beneficiary or estate, or (ii) release the previously issued
certificates representing the vested shares to the Grantee or to his/her
beneficiary or estate. Only full shares shall be released upon vesting, and any
fractional shares which might otherwise be released pursuant to an RSA shall be
forfeited.
7. Listing and Registration of Shares
----------------------------------
Each Option and each RSA shall be subject to the requirement that, if at any
time the Committee shall determine, in its discretion, that the listing,
registration or qualification of the shares covered thereby upon any securities
exchange or under any state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition of, or in
connection with, the granting of such Option or such RSA or the purchase or
vesting of shares thereunder, or that action by the Company or by the Key
Employee or Grantee should be taken in order to obtain an exemption from any
such requirement, no such Option may be exercised, and no transfer of stock
pursuant to such RSA may be made, in whole or in part, unless and until such
listing, registration, qualification, consent, approval, or action shall have
been effected, obtained, or taken under conditions acceptable to the Committee.
Without limiting the generality of the foregoing, each Key Employee or Grantee
or the legal representative or beneficiary of such Key Employee or Grantee may
also be required to give satisfactory assurance that shares purchased upon
exercise of an Option or received pursuant to an RSA are being acquired for
investment and not with a view to distribution, and certificates representing
such shares may be legended accordingly.
8. Withholding and Use of Shares to Satisfy Tax Obligations
--------------------------------------------------------
The obligation of the Company to deliver shares of Common Stock upon the
exercise of any Option or pursuant to an RSA, or to make payment of dividends or
other distributions with respect to unvested shares covered by an RSA, shall be
subject to applicable federal, state and local tax withholding requirements. By
participating in the Plan, the Key Employee and Grantee acknowledge and agree
that, to the extent not otherwise satisfied in the manner provided below, the
Company shall, to the extent required or permitted by law, deduct from any
payments of any kind otherwise due or to become due to the Key Employee or
Grantee, when due, any federal, state or local taxes of any kind required to be
withheld with respect to the Common Stock transferred to a Key Employee or
Grantee upon the exercise of an Option or with respect to any Common Stock
issued under an RSA, or if there are no such payments due or to become due to
the Key Employee or Grantee, that the Key Employee or Grantee will pay to the
Company, or make arrangements satisfactory to the Committee regarding payment
of, any federal, state or local taxes of any kind required by law to be
withheld, if any, with respect to the Common Stock purchased pursuant to an
Option or awarded under an RSA. No share certificate shall be released to any
Key Employee or Grantee
Page 17 of 22
<PAGE>
until such provision for the withholding or payment of any applicable taxes has
been made to the satisfaction of the Committee.
If the exercise of any Option or the vesting of any RSA is subject to the
withholding requirements of applicable federal tax laws, the Committee, in its
discretion (and subject to such withholding rules ("Withholding Rules") as may
be adopted by the Committee), may permit the Key Employee or Grantee to satisfy
the federal withholding tax, in whole or in part, by electing to have the
Company withhold (or by returning to the Company) shares of Common Stock, which
shares shall be valued, for this purpose, at their fair market value on the date
of exercise of the Option or the date shares subject to the RSA vest in the
grantee, (or if later, the date on which the Key Employee or Grantee recognizes
ordinary income with respect to such exercise or vesting) (the "Determination
Date"). Such election must be made in compliance with and subject to the
Withholding Rules, and the Committee may not withhold shares in excess of those
necessary to satisfy the minimum federal tax withholding requirements. In the
event shares of Common Stock acquired under the exercise of an ISO are used to
satisfy such withholding requirements, such shares of Common Stock must have
been held by the Key Employee for a period of not less than the holding period
described in section 422(a)(1) of the Code on the Determination Date.
9. Capital Adjustments
-------------------
The number of shares which may be issued under the Plan, as stated in
Section 4 hereof, and the number of shares issuable upon exercise of outstanding
Options under the Plan (as well as the Option price per share under such
outstanding Options) shall be adjusted, as may be deemed appropriate by the
Committee, to reflect any stock dividend, stock split, recapitalization,
reorganization, merger, combination, spin-off, share combination, or other
similar event or similar change in the capitalization of the Company.
In the event of a corporate transaction (as that term is described in
section 424(a) of the Code and the Treasury Regulations issued thereunder as,
for example, a merger, consolidation, acquisition of property or stock,
separation, reorganization, or liquidation), each outstanding Option and RSA
shall be assumed by the surviving or successor corporation; provided, however,
that, in the event of a proposed corporate transaction, the Committee may
terminate all or a portion of the outstanding Options and/or RSAs if it
determines that such termination is in the best interests of the Company. If
the Committee decides to terminate outstanding options, the Committee shall give
each Key Employee holding an Option to be terminated not less than seven (7)
days' notice prior to any such termination by reason of such a corporate
transaction, and any such Option which is to be so terminated may be exercised
(if and only to the extent that it is then exercisable) up to, and including,
the date immediately preceding such termination. Further, as provided in
Section 5(c)(iv) hereof, the Committee, in its discretion, may accelerate, in
whole or in part, the date on which any or all Options become exercisable, but
in no event may such accelerated exercise date be less than six (6) months from
the date of grant of such Options. If the Committee decides to terminate any
outstanding RSA by reason of such liquidation or corporate transaction, any
unvested shares under the RSA shall be forfeited on such termination date except
as provided below. The Committee may, in its discretion, also immediately vest
all or a portion of the remaining Unvested Shares under any RSA which is to be
so terminated, provided that no such Shares shall vest earlier than six (6)
months from the date of grant of the RSA.
Page 18 of 22
<PAGE>
The Committee also may, in its discretion, change the terms of any
outstanding Option or RSA to reflect any such corporate transaction.
10. Amendment or Discontinuance of the Plan
---------------------------------------
The Board from time to time may suspend or discontinue the Plan or amend it
in any respect whatsoever, provided, that no such suspension, discontinuance or
amendment shall materially impair the rights of any holder of an outstanding
Option or of a Grantee of an RSA without the consent of such holder or such
Grantee.
11. Rights
------
Neither the adoption of the Plan nor any action of the Board or the
Committee shall be deemed to give any individual any right to be granted an
Option, an RSA, or any other right hereunder, unless and until the Committee
shall have granted such individual an Option or an RSA, and then his/her rights
shall be only such as are provided by the Option Agreement or Restricted Stock
Agreement.
Any Option under the Plan shall not entitle the holder thereof to any rights
as a stockholder of the Company prior to the exercise of such Option and the
issuance of the shares pursuant thereto. Further, notwithstanding any
provisions of the Plan or any Option Agreement or Restricted Stock Agreement
with a Key Employee or Grantee, the Company shall have the right, in its
discretion, to retire a Key Employee or Grantee at any time pursuant to its
retirement rules or otherwise to terminate his/her employment at any time for
any reason whatsoever, with or without cause.
12. Indemnification of Board and Committee
--------------------------------------
(a) Indemnification
---------------
Without limiting any other rights of indemnification which they may
have from the Company and any Related Corporation, any member of the Board and
any member of the Committee 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, by reason of any
action taken or failure to act under, or in connection with, the Plan or any
Option or RSA granted thereunder, shall be indemnified by the Company against
expenses (including attorneys' fees), judgments, fines, excise taxes and amounts
paid in settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding to the full extent permissible under
Delaware law.
(b) Advances
--------
Any person claiming indemnification within the scope of Subsection (a)
of this Section 12 shall be entitled to advances from the Company for payment of
the expenses of defending actions against such person in the manner and to the
full extent permissible under Delaware law.
Page 19 of 22
<PAGE>
(c) Procedure
---------
On the request of any person requesting indemnification under
Subsection (a) of this Section 12, the Board or a committee thereof shall
determine whether such indemnification is permissible, or such determination
shall be made by independent legal counsel if the Board or committee so directs
or if the Board or committee is not empowered by statute to make such
determination.
13. Application of Funds
--------------------
The proceeds received by the Company from the sale of Common Stock pursuant
to Options granted under the Plan or pursuant to RSAs under the Plan or
otherwise shall be used for general corporate purposes. Any cash received in
payment for shares upon exercise of an Option to purchase Common Stock or upon
an RSA or otherwise shall be added to the general funds of the Company and shall
be used for its corporate purposes. Any Common Stock received in payment for
shares upon exercise of an Option to purchase Common Stock shall become treasury
stock.
14. No Obligation to Exercise Option
--------------------------------
The granting of an Option shall impose no obligation upon a Key Employee to
exercise such Option.
15. Termination of Plan
-------------------
Unless earlier terminated as provided in the Plan, the Plan and all
authority granted hereunder shall terminate absolutely at 12:00 midnight on
October 26, 2004, which date is within ten (10) years after the date the Plan
was adopted by the Board, and no Options or RSAs hereunder shall be granted
thereafter. Nothing contained in this Section 15, however, shall terminate or
affect the continued existence of rights created under Options or RSAs issued
hereunder and outstanding on October 26, 2004, which by their terms extend
beyond such date.
16. Governing Law
-------------
The laws of the State of Delaware shall govern the operation of the Plan,
the Restricted Stock Agreements and Option Agreements and any Options or RSAs
granted thereunder.
Page 20 of 22
<PAGE>
Exhibit 5
August 2, 1995
The Board of Directors of
Shared Medical Systems Corporation
Gentlemen:
I am the General Counsel of Shared Medical Systems Corporation (the
"Company") and have acted as such in connection with the preparation and filing
with the Securities and Exchange Commission of the Company's Registration
Statement on Form S-8 under the Securities Act of 1933 (the "Registration
Statement") relating to 2,000,000 shares of the Common Stock of the Company, par
value $.01 per share (the "Shares"), issuable upon exercise of options granted
under the Company's 1994 Non-Qualified Stock Option and Restricted Stock Plan
(the "Plan") and upon the award of stock grants to be made under the Plan.
In this connection, I have reviewed the Company's Restated Certificate
of Incorporation and its By-Laws, as amended, resolutions of its Board of
Directors and its stockholders, the Plan and such other documents and corporate
records as I have deemed appropriate in the circumstances.
Based upon the foregoing and consideration of such questions of law as
I have deemed relevant, I am of the opinion that the issuance of the Shares by
the Company upon the exercise of stock options properly granted under the Plan
or upon the awarding of stock grants properly made under the Plan has been duly
and validly authorized by the necessary corporate action, and the Shares will,
upon exercise of such options and payment therefor, or upon the awarding of such
stock grants and payment therefor, in accordance with the terms of the Plan, be
validly issued, fully-paid and non-assessable by the Company.
I consent to the use of this opinion as an exhibit to the Registration
Statement.
Sincerely yours,
/s/ Bonnie L. Shuman
Bonnie L. Shuman
General Counsel
Page 21 of 22
<PAGE>
Exhibit 24(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Shared Medical Systems Corporation:
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-8 registration statement for the Shared Medical Systems
1994 Non-Qualified Stock Option and Restricted Stock Plan of our report dated
February 6, 1995 included (or incorporated by reference) in Shared Medical
Systems Corporation's Form 10-K for the year ended December 31, 1994 and to all
references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
Philadelphia, Pennsylvania
August 14, 1995
Page 22 of 22
