<PAGE>
As filed with the Securities and Exchange Commission on March 13, 1997.
Registration No. 33-61967
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1
to
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
Senior Vice President
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)
<PAGE>
AMENDMENT
This Post-Effective Amendment is being filed for the purpose of adding the
amended and restated text of the plan indicated below as an exhibit to the
Registration Statement.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 8. Exhibits
The following exhibit is filed as part of this Registration
Statement and shall supersede Exhibit 4(b) filed with the original Registration
Statement:
Exhibit 4(b) The Company's 1994 Non-Qualified Stock Option and Restricted Stock
Plan, as amended and restated effective August 15, 1996
<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
Post-Effective Amendment to its registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Malvern, Pennsylvania,
on this 15th day of January, 1997.
SHARED MEDICAL SYSTEMS CORPORATION
By: /s/ R. James Macaleer
-----------------------------
R. James Macaleer,
Chairman of the Board
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to a registration statement has been signed below by the
following persons in the capacities and on the dates indicated.
Name Title Date
- ---- ----- ----
/s/ Marvin S. Cadwell President and Chief January 17, 1997
- ------------------------------ Executive Officer
Marvin S. Cadwell
(Principal Executive Officer)
/s/ Terrence W. Kyle Senior Vice President January 17, 1997
- ------------------------------ and Chief Financial
Terrence W. Kyle Officer
(Principal Financial Officer)
/s/ Edward J. Grady Controller January 17, 1997
- ------------------------------
Edward J. Grady
(Principal Accounting Officer)
/s/ R. James Macaleer Chairman of the Board, January 17, 1997
- ------------------------------ Director
R. James Macaleer
/s/ Raymond K. Denworth, Jr. Director January 17, 1997
- ------------------------------
Raymond K. Denworth, Jr.
/s/ Frederick W. DeTurk Director January 17, 1997
- ------------------------------
Frederick W. DeTurk
/s/ Jeffrey S. Rubin Director January 17, 1997
- ------------------------------
Jeffrey S. Rubin
/s/ Josh S. Weston Director January 17, 1997
- ------------------------------
Josh S. Weston
/s/ Gail Wilensky Director January 17, 1997
- ------------------------------
Gail Wilensky
<PAGE>
Exhibit Index
Exhibit Number Description of Exhibit
- -------------- ----------------------
4(b) The Company's 1994 Non-Qualified Stock Option and
Restricted Stock Plan, as amended and restated effective
August 15, 1996
<PAGE>
EXHIBIT 4(b)
SHARED MEDICAL SYSTEMS CORPORATION
1994 NON-QUALIFIED STOCK OPTION
AND RESTRICTED STOCK PLAN
AS AMENDED AND RESTATED EFFECTIVE AUGUST 15, 1996
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"), and the effective date of the Plan as
amended and restated herein is August 15, 1996.
(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"), and non-employee directors ("Non-Employee Directors"), attract and
retain qualified Key Employees and Non-Employee Directors and motivate such Key
Employees and Non-Employee Directors to exercise their best efforts on behalf of
the Company and any "Related Corporation."
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"
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 Company's Stock Option
Committee (the "Committee"), which shall consist of not less than two (2)
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.
The Committee shall have full authority, subject to the terms of the
Plan, to select the Key Employees and Non-Employee Directors to be granted
Options and/or RSAs under the Plan, based on such factors as the Committee in
its sole discretion deems appropriate, to grant Options and RSAs on behalf of
the Company and to set the date of grant and the other terms of
<PAGE>
such Options 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
-----------
Key Employees and Non-Employee Directors of the Company and/or of a
Related Corporation shall be eligible to receive Options and RSAs under the
Plan. More than one Option and/or RSA may be granted to any grantee 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. Notwithstanding any
provision in the Plan to the contrary, the maximum number of shares of Common
Stock with respect to one or more grants which may be awarded to any one
individual over the term of the Plan shall be 750,000, subject to adjustment as
hereinafter provided. 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 holder'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; provided, however, that (i) if an Option is
cancelled, the shares of Common Stock covered by the cancelled Option shall be
counted against the maximum number of shares specified above for which grants
may be made to any one individual, and (ii) if the exercise price of an Option
is reduced after the date of grant, the transaction shall be treated as a
cancellation of the original Option and the grant of a new Option for purposes
of such maximum.
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
such Options to Key Employees or Non-Employee Directors (each an "Optionee")
under the Plan as it determines are warranted.
<PAGE>
The granting of an Option or RSA under the Plan shall not be deemed either to
entitle the recipient to, or to disqualify the recipient from, any participation
in any other grant of Options or RSAs under the Plan. In making any
determination as to whether a Key Employee or Non-Employee Director 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 such Key Employee or
Non-Employee Director, 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 limitations set forth in Section 4, there is
no annual limit on the number of Options which may be granted to a Key Employee
or Non-Employee Director under the Plan.
(c) General Terms and Conditions of Options
---------------------------------------
All Options granted pursuant to the Plan shall include expressly or
by reference the following general terms and conditions:
(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 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.
<PAGE>
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 Sections 5(d), 5(e) and
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 Optionee, provided that if such
shares of Common Stock were acquired through exercise of an ISO, an
Option or an option under a similar plan, such shares have been held
by the Optionee for a period of more than one (1) year on the date of
exercise;
(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.
<PAGE>
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
exercise, as such "fair market value" is determined in Paragraph
(ii), of the Common Stock so tendered in payment of such Option
price.
(v) Non-Transferability
-------------------
Except as otherwise provided in the Option Agreement, no Option shall
be assignable or transferable by the Optionee, nor shall any Option be sold,
pledged, hypothecated, alienated or otherwise disposed of in any way by the
Optionee otherwise than by will or by the laws of descent and distribution, and,
during the lifetime of the Optionee, the Option shall be exercisable only by
him/her or by his/her guardian or legal representative.
(vi) Rights as a Stockholder
-----------------------
An Optionee 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) Specific Terms and Conditions for Options Granted to Key Employees
------------------------------------------------------------------
Options granted to Key Employees pursuant to the Plan shall include
expressly or by reference the following terms and conditions in addition to the
general terms and conditions referred to in subsection (c) above:
(i) 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.
(ii) 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
<PAGE>
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.
(iii) 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
(i) and (ii) 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:
(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
one (1) year after the date of the Key Employee's death.
(e) Specific Terms and Conditions for Options Granted to Non-Employee
-----------------------------------------------------------------
Directors
- ---------
Options granted to Non-Employee Directors pursuant to the Plan shall
include expressly or by reference the following terms and conditions in addition
to the general terms and conditions referred to in subsection (c) above:
(i) Termination of Service on Board of Directors
--------------------------------------------
If a Non-Employee Director ceases to be a director of the Company
prior to the expiration date fixed for his/her Option for any reason other than
death, such Option may be exercised, to the extent of the number of shares with
respect to which the Non-Employee Director could have exercised it on the date
of such cessation, 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 Non-Employee Director at any time prior to the earlier
of:
(A) The expiration date specified in such Option; or
<PAGE>
(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 Non-Employee's termination of service as a director.
(ii) Exercise upon Death of Non-Employee Director
--------------------------------------------
If a Non-Employee Director shall die during his/her term of office,
and prior to the expiration date fixed for his/her Option, such Option may be
exercised, to the extent of the number of shares with respect to which the Non-
Employee Director 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
Non-Employee Director'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 Non-Employee Director. However, such exercise must
occur 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
one hundred twenty (120) days after the date of the Non-Employee
Director's death.
(f) 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 (in addition to those specified herein), not inconsistent with the
provisions of the Plan, as the Committee shall deem advisable. Each Option
Agreement shall specify that the Option is a non-qualified stock option. Each
Optionee shall enter into, and be bound by, an Option Agreement, as soon as
practicable after the grant of an Option.
6. Terms and Conditions of Restricted Stock Awards Granted Under Plan
------------------------------------------------------------------
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 or Non-
Employee Directors (each a "Grantee") as it determines are warranted. RSAs
shall be subject to the following terms and conditions:
(a) Payment for Shares
------------------
The Committee, in its sole discretion, shall determine, and the
Restricted Stock Agreement referred to in subsection (f) below shall indicate,
whether the Grantee shall be required to pay to the Company any amount in return
for the RSA, and if so, the amount and method of payment required.
(b) Vesting Period
--------------
The Committee shall establish one or more vesting periods with
respect to the shares covered by an RSA, and may also establish such additional
conditions to the vesting of
<PAGE>
shares covered by an RSA as it may deem advisable in its sole discretion, such
as the achievement of corporate or individual goals ("Vesting Period"). 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 of Employee Grantee
---------------------------------------------
(i) Treatment of Unvested Shares. If, prior to the expiration of
----------------------------
the Vesting Period with respect to shares subject to an RSA ("Unvested
Shares") granted to a Key Employee, the Key Employee's employment with the
Company (and Related Corporations) is terminated for any reason, then, in
such case, the Key Employee'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 Key
Employee, 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 Key Employee 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 a Key
-----------------------------------------
Employee Grantee's employment is terminated for any reason, the Key
Employee (or his/her beneficiary (as determined pursuant to Subsection (d)
below) in the event of the Key Employee's death) shall be entitled to
receive an amount equal to the amount, if any, paid by such Key Employee
for each Unvested Share which does not vest upon such termination of
employment.
(d) Termination of Service on Board of Director Grantee
---------------------------------------------------
(i) Treatment of Unvested Shares. Unless otherwise provided in the
----------------------------
Restricted Stock Agreement, if a Non-Employee Director ceases to be a
director of the Company for any reason prior to the expiration of the
Vesting Period with respect to shares subject to an RSA ("Unvested Shares")
granted to such Non-Employee Director, then, in such case, the Non-Employee
Director'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 Non-Employee Director,
subject to such further terms and conditions, if any, as the Committee may
determine.
(ii) Return of Amount Paid for Unvested Shares. In the event a Non-
-----------------------------------------
Employee Director's Unvested Shares are forfeited pursuant to subsection
(i) above, the Non-Employee Director (or his/her beneficiary (as determined
pursuant to Subsection (e) below) in the event of the Non-Employee
Director's death) shall be entitled to receive an amount equal to the
amount, if any, paid by such Non-Employee Director for each forfeited
share.
(e) 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
<PAGE>
otherwise disposed of in any way by a Grantee. However, a Grantee may, with the
consent of the Committee, designate one or more beneficiaries to receive, in the
event of his/her death, any stock to which he/she would then be entitled in
accordance with Subsection (c) or (d). 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.
(f) Rights As a Stockholder
-----------------------
Except as set forth in Subsection (e), 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 Grantee 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 (e), 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.
(g) 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 (f) 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.
(h) 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
<PAGE>
portion of the Restricted Stock covered by the RSA with respect to which he/she
has made such election shall be forfeited to the Company.
(i) 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 Optionee
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 Optionee or Grantee or
the legal representative or beneficiary of such Optionee 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 Optionee 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 Optionee 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 Optionee 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 Optionee or
Grantee, that the Optionee 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 Optionee or Grantee until
such provision for the withholding or payment of any applicable taxes has been
made to the satisfaction of the Committee.
<PAGE>
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 Optionee 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 Optionee 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. 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 Optionee 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 and the maximum
number of shares with respect to which grants may be made to any one individual,
both 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 Optionee 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.
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
<PAGE>
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.
The Committee shall have the right to include in any Option Agreement or
Restricted Stock Agreement (i) provisions cancelling, accelerating the exercise
date or vesting of, or modifying the benefits to be received under, the Option
or RSA evidenced thereby upon the occurrence of specified events, including an
acquisition of a specified percentage of the voting power of the Company's
Common Stock, a change in the membership of the Company's Board of Directors,
the dissolution or liquidation of the Company, the sale of all or substantially
all of the property and assets of the Company or an event of the type described
in Section 9, and (ii) provisions cancelling or providing for the forfeiture of
benefits provided under such Option or RSA in the event the Optionee or Grantee
acts in a manner contrary to the best interests of the Company which is
specified by the Committee in the Option Agreement or the RSA.
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 an Optionee or Grantee, the Company shall have the right, in its
discretion, to retire a Key Employee 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.
(c) Procedure
---------
<PAGE>
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 an Optionee 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.
