<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
ENVOY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
ENVOY CORPORATION
TWO LAKEVIEW PLACE
15 CENTURY BOULEVARD, SUITE 600
NASHVILLE, TENNESSEE 37214
(615) 885-3700
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of ENVOY Corporation (the "Company")
will be held at 10:00 a.m., local time, on Thursday, June 19, 1997, at the
Sheraton Music City Hotel, 777 McGavock Pike, Nashville, Tennessee, for the
following purposes:
1. To elect three (3) Directors to hold office for a term of
three (3) years or until their successors are duly elected and
qualified;
2. To consider and act upon a proposal to ratify, confirm and
approve the ENVOY Corporation Employee Stock Purchase Plan;
3. To ratify the appointment of Ernst & Young LLP as the
independent accountants of the Company; and
4. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Only shareholders of record at the close of business on April 22, 1997
are entitled to notice of and to vote at the Annual Meeting. Your attention is
directed to the Proxy Statement accompanying this notice for a complete
statement regarding matters to be acted upon at the Annual Meeting.
By order of the Board of Directors,
/s/ Gregory T. Stevens
-------------------------------
GREGORY T. STEVENS
Vice President, General Counsel
and Secretary
Nashville, Tennessee
May 5, 1997
WE URGE YOU TO ATTEND THE ANNUAL MEETING. WHETHER OR NOT YOU PLAN TO
ATTEND, PLEASE COMPLETE, DATE AND SIGN THE ATTACHED PROXY CARD AND
RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
YOU MAY REVOKE THE PROXY AT ANY TIME BEFORE IT IS VOTED.
<PAGE> 3
ENVOY CORPORATION
TWO LAKEVIEW PLACE
15 CENTURY BOULEVARD, SUITE 600
NASHVILLE, TENNESSEE 37214
(615) 885-3700
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
The accompanying proxy is solicited by the Board of Directors of ENVOY
Corporation (the "Company") for use at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held at the Sheraton Music City Hotel, 777 McGavock
Pike, Nashville, Tennessee, on Thursday, June 19, 1997, at 10:00 a.m., local
time, and any adjournment thereof, for the purposes set forth in the foregoing
Notice of Annual Meeting of Shareholders. This proxy material was first mailed
to shareholders on or about May 5, 1997.
A shareholder who signs and returns a proxy may revoke the same at any
time before the authority granted thereby is exercised by attending the Annual
Meeting and electing to vote in person, by filing with the Secretary of the
Company a written revocation or by duly executing a proxy bearing a later date.
Unless revoked, the shares represented by the proxy will be voted at the Annual
Meeting. Where a choice is specified on the proxy, the shares represented
thereby will be voted in accordance with such specifications. If no
specification is made, such shares will be voted FOR the election of the three
director nominees, FOR approval of the ENVOY Corporation Employee Stock Purchase
Plan and FOR the ratification of the appointment of the independent public
accountants.
The Board of Directors knows of no other matters which are to be
brought to a vote at the Annual Meeting. However, if any other matter properly
does come before the Annual Meeting, the persons appointed in the proxy or their
substitutes will vote in accordance with their best judgment on such matters.
Only holders of the Company's common stock, no par value (the "Common
Stock"), and holders of the Company's Series B convertible preferred stock, no
par value (the "Series B Preferred Stock"), at the close of business on April
22, 1997 (the "Record Date") are entitled to vote at the Annual Meeting. On the
Record Date, the Company had 16,169,385 issued and outstanding shares of the
Common Stock and 3,730,233 issued and outstanding shares of the Series B
Preferred Stock. Holders of the Common Stock and Series B Preferred Stock will
be entitled to one vote for each share of Common Stock or Series B Preferred
Stock so held, which may be given in person or by proxy duly authorized in
writing.
The cost of solicitation of proxies will be borne by the Company,
including expenses in connection with preparing, assembling and mailing this
Proxy Statement. Such solicitation will be made by mail and also may be made by
the Company's executive officers or employees personally or by telephone or
telegram. The Company does not anticipate paying any compensation to any other
party other than its regular employees for this solicitation of proxies, but may
reimburse brokerage firms and others for their reasonable expenses in forwarding
solicitation material to beneficial owners.
1
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the
beneficial ownership of shares of the Common Stock and Series B Preferred Stock
as of the Record Date by (i) all shareholders of the Company known to be
beneficial owners of more than 5% of the outstanding shares of either class of
stock; (ii) each director of the Company; (iii) the executive officers named in
the Summary Compensation Table (the "Named Executive Officers"); and (iv) all
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND
TITLE OF NAME AND ADDRESS OF NATURE OF BENEFICIAL PERCENT
CLASS BENEFICIAL OWNERS OWNERSHIP(1) OF CLASS(2)
- --------- ------------------- ------------- -------------
<S> <C> <C> <C>
Series B General Atlantic Partners 25, L.P...... 2,800,000(3) 75.06%/14.07%
Preferred c/o General Atlantic Service Corporation
Three Pickwick Plaza, Ste 200
Greenwich, CT 06830
Series B GAP Coinvestment Partners, L.P......... 2,800,000(3) 75.06%/14.07%
Preferred c/o General Atlantic Service Corporation
Three Pickwick Plaza, Ste 200
Greenwich, CT 06830
Series B William E. Ford........................ 2,802,000(4) 75.06%/14.08%
Preferred/ c/o General Atlantic Service Corporation
Common Three Pickwick Plaza, Ste 200
Greenwich, CT 06830
Common Transamerica Corporation............... 1,549,000(5) 9.58%
600 Montgomery Street
San Francisco, CA 94111
Common Wells Fargo Bank
National Association................... 1,303,750(6) 8.06%
464 California Street
San Francisco, CA 94163
Series B First Union Capital Partners, Inc. . 930,233(3) 24.94%/4.67%
Preferred One First Union Center, 18th Floor
Charlotte, NC 28288-0732
Common Jim D. Kever........................... 627,282(7) 3.78%
Common Fred C. Goad, Jr....................... 598,173(8) 3.62%
Common G. Walter Loewenbaum II................ 382,212(9) 2.36%
Common W. Marvin Gresham...................... 274,517(10) 1.69%
Common Richard A. McStay...................... 165,550(11) 1.02%
Common Laurence E. Hirsch..................... 114,500(12) *
Common Harlan F. Seymour .................... 2,000 *
Common Richard P. Caliri .................... 33,333(13) *
Common Sheila H. Schweitzer ................. 8,333(14) *
Common Kevin M. McNamara...................... 0 *
All Executive Officers and
Directors as a Group (13 persons)
Common ........................... 2,207,900(15) 12.85%
Series B Preferred ............... 2,800,000 75.06%
Common and Series B
Preferred (as converted).......... 5,007,900(16) 23.95%
</TABLE>
2
<PAGE> 5
- ---------------------------------------
* Less than one percent
(1) For the purpose of determining "beneficial ownership," the rules of the
Securities and Exchange Commission ("SEC") require that every person
who has or shares the power to vote or dispose of shares of stock be
reported as a "beneficial owner" of all shares as to which such power
exists. As a consequence, multiple persons may be deemed to be the
"beneficial owners" of the same securities. The SEC rules also require
that certain shares of stock that a beneficial owner has the right to
acquire within sixty days of such date pursuant to the exercise of
stock options are deemed to be outstanding for the purpose of
calculating the percentage ownership of such owner but are not deemed
outstanding for the purpose of calculating the percentage ownership of
any other person. At the close of business on the Record Date, there
were 16,169,385 and 3,730,233 shares of Common Stock and Series B
Preferred Stock, respectively, outstanding.
(2) If indicated, the second percentage assumes conversion of all
outstanding shares of the Series B Preferred Stock into Common Stock.
(3) Pursuant to an agreement dated November 30, 1995 and effective as of
March 6, 1996, General Atlantic Partners 25, L.P., GAP Coinvestment
Partners, L.P., and First Union Capital Partners, Inc. acquired
2,417,171; 382,829; and 930,233 shares, respectively, of Series B
Preferred Stock, each of which shares of Series B Preferred Stock is
convertible into one share of Common Stock (subject to adjustment).
General Atlantic Partners 25, L.P. and GAP Coinvestment Partners, L.P.
are affiliated parties; therefore, their ownership is aggregated for
purposes of the above table, and each is deemed to beneficially own all
2,800,000 shares of Series B Preferred Stock.
(4) Mr. Ford is a managing member of General Atlantic Partners LLC, the
general partner of General Atlantic Partners 25, L.P., and a general
partner of GAP Coinvestment Partners, L.P. and, therefore, is deemed to
beneficially own 2,800,000 shares of the Series B Preferred Stock. Mr.
Ford disclaims beneficial ownership of such shares except to the extent
of his pecuniary interests. Ownership also includes 2,000 shares
issuable pursuant to exercisable options for the purchase of Common
Stock.
(5) Transamerica Corporation ("Transamerica") reported on Schedule 13D, as
filed with the SEC, that as of March 7, 1997, it has shared voting and
shared dispositive power over 1,549,000 shares of Common Stock. Such
number includes 370,000 shares of Common Stock directly held by
Transamerica and 1,179,000 shares of Common Stock (including 144,000
shares of Common Stock owned for the benefit of unaffiliated investment
advisory clients of one of Transamerica's subsidiaries) owned by direct
and indirect subsidiaries of Transamerica. Such Transamerica
subsidiaries reported these holdings on a Schedule 13G filed with the
SEC on March 10, 1997.
(6) Wells Fargo Bank reported on Schedule 13G, as filed with the SEC, that
as of February 14, 1997, it has sole voting power with respect to
1,285,800 shares, shared voting power with respect to 350 shares and
shared dispositive power with respect to 1,303,750 shares.
(7) Includes 406,667 shares issuable pursuant to exercisable options for
the purchase of Common Stock.
(8) Includes 376,667 shares issuable pursuant to exercisable options for
the purchase of Common Stock.
(9) Includes 700 shares of which Mr. Loewenbaum's mother has the use for
life, 31,160 shares owned by Mr. Loewenbaum's wife, 1,500 shares owned
by the Estate of Edward Shaw, Jr., of which Mr. Loewenbaum's wife owns
a one-half interest, 10,000 shares owned by Mr. Loewenbaum's daughters,
30,000 shares held in trust to which Mr. Loewenbaum acts as trustee,
25,000 shares owned by a partnership in which Mr. Loewenbaum and his
wife collectively own 100% and 47,500 shares issuable pursuant to
exercisable options for the purchase of Common Stock. Mr. Loewenbaum
disclaims beneficial ownership of the shares held by such other persons
or entities, except to the extent of his pecuniary interests.
(10) Includes 25,120 shares owned by Mr. Gresham's children, 1,850 shares
owned by Mr. Gresham's wife, and 80,000 shares issuable pursuant to
exercisable options for the purchase of Common Stock. Mr. Gresham
disclaims beneficial ownership of the shares held by his wife and
children.
(11) Includes 1,300 shares owned by Mr. McStay's children and 40,000 shares
issuable pursuant to exercisable options for the purchase of Common
Stock. Mr. McStay disclaims beneficial ownership of the shares held by
his children.
(12) Includes 17,500 shares issuable pursuant to exercisable options for
the purchase of Common Stock.
(13) Includes 33,333 shares issuable pursuant to exercisable options for
the purchase of Common Stock.
(14) Includes 8,333 shares issuable pursuant to exercisable options for the
purchase of Common Stock.
(15) Includes 1,012,000 shares issuable pursuant to exercisable options for
the purchase of Common Stock.
(16) Assumes conversion of the 2,800,000 shares of the Series B Preferred
Stock and includes 1,012,000 shares issuable pursuant to exercisable
options for the purchase of Common Stock.
3
<PAGE> 6
PROPOSAL ONE - ELECTION OF DIRECTORS
Under the terms of the Company's Amended and Restated Charter, the
members of the Board of Directors are divided into three classes. Each director
is selected to serve a three-year term and shall hold office until the Annual
Meeting for the year in which such term expires and until the incumbent
director's successor is duly elected and qualified, subject, however, to prior
death, resignation, retirement, disqualification or removal from office. Each
class is to consist, as nearly as practicable, of one-third of the total number
of directors constituting the Board of Directors. The three directors to be
elected at the Annual Meeting will serve until the Annual Meeting of
Shareholders in 2000 (the "Class II" Directors), two directors currently serving
on the Board of Directors will continue to serve until the Annual Meeting of
Shareholders in 1998 (the "Class III" Directors) and three directors currently
serving on the Board of Directors will continue to serve until the Annual
Meeting of Shareholders in 1999 (the "Class I Directors").
Unless contrary instructions are received, shares of voting securities
of the Company represented by duly executed proxies will be voted in favor of
the election of the nominees named below. If for any reason a nominee is unable
to serve as a director, it is intended that the proxies solicited hereby will be
voted for such substitute nominee as the Board of Directors of the Company may
propose. The Board of Directors has no reason to expect that the nominees will
be unable to serve; therefore, at this time it does not have any substitute
nominees under consideration.
The nominees for election shall be elected by a plurality of the votes
cast by the shares of Common Stock and Series B Preferred Stock entitled to vote
at the Annual Meeting. Shareholders have no right to vote cumulatively for
directors, but rather each shareholder shall have one vote for each share of
Common Stock and Series B Preferred Stock held by such shareholder for each
director.
The following persons are the nominees for election to serve as Class
II Directors. All three nominees are presently directors of the Company. Certain
information relating to the nominees, which has been furnished to the Company by
the individuals named, is set forth below.
<TABLE>
<CAPTION>
CLASS OF DIRECTOR;
ANNUAL MEETING AT
NAME OF DIRECTOR WHICH TERM EXPIRES BACKGROUND INFORMATION
- ---------------------------- ------------------------- ----------------------------------------------------------
<S> <C> <C>
W. Marvin Gresham II, 1997 Mr. Gresham, 67, has served as a Director of the
Company since February 1995 and had served as a
Director of ENVOY Corporation, a Delaware corporation
and former parent corporation to the Company ("Old
Envoy"), from 1981 through June 6, 1995. Mr. Gresham
is the retired President of Gresham Drugs, Inc., a chain of
pharmacies in the state of Florida.
Richard A. McStay II, 1997 Mr. McStay, 60, has served as a Director of the Company
since February 1995 and had served as a Director of Old
Envoy from 1985 through June 6, 1995. Mr. McStay has
served as President of Southern Capital Advisors, Inc., the
investment advisory subsidiary of Morgan Keegan &
Company, Inc., since 1986, and is a Director of TBC
Corporation, a wholesaler of automobile tires and
accessories.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
CLASS OF DIRECTOR;
ANNUAL MEETING AT
NAME OF DIRECTOR WHICH TERM EXPIRES BACKGROUND INFORMATION
- ---------------------------- ------------------------- ----------------------------------------------------------
<S> <C> <C>
Harlan F. Seymour II, 1997 Harlan F. Seymour, 47, has served as a Director since
October 1996. Mr. Seymour currently is a partner in
Jefferson Capital Partners, Ltd., an investment banking
firm headquartered in Richmond, Virginia. Prior to
joining Jefferson Capital Partners, Ltd. in September
1996, Mr. Seymour served as Executive Vice President
and Chief Operating Officer, Business Development of
Trigon Blue Cross Blue Shield, a leading health care
insurance services company, from August 1994 to June
1996. Before joining Trigon, Mr. Seymour was with
First Financial Management Corporation ("FFMC") for
11 years, serving in a variety of senior corporate
positions, including President and Chief Executive
Officer of First Health Services Corporation, a wholly-
owned subsidiary of FFMC.
</TABLE>
The following five persons currently are members of the Board of
Directors and will continue in their present positions after the Annual Meeting.
The following persons are not nominees, and shareholders are not being asked to
vote for them. Certain information relating to the following persons has been
furnished to the Company by the individuals named.
<TABLE>
<CAPTION>
CLASS OF DIRECTOR:
ANNUAL MEETING AT
NAME OF DIRECTOR WHICH TERM EXPIRES BACKGROUND INFORMATION
- ----------------------------- ------------------------ --------------------------------------------------------
<S> <C> <C>
Fred C. Goad, Jr. III, 1998 Mr. Goad, 56, has served as the Company's Chairman
and Co-Chief Executive Officer since August 1995, and
served as President and a Director since the Company's
incorporation in August 1994. Mr. Goad served as Chief
Executive Officer and a Director of Old Envoy from
September 1985 through June 6, 1995. Mr. Goad also is
a Director of Performance Food Group Company, a food
distribution company, and is a Director of Oacis
Healthcare Systems, Inc., a clinical health care software
and services company.
G. Walter Loewenbaum II III, 1998 Mr. Loewenbaum, 52, has been a Director of the
Company since February 1995 and served as a Director
of Old Envoy from 1983 through June 6, 1995.
Mr. Loewenbaum has served as President and a Director
of Southcoast Capital Corporation, an investment banking
firm, since May 1990.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
CLASS OF DIRECTOR:
ANNUAL MEETING AT
NAME OF DIRECTOR WHICH TERM EXPIRES BACKGROUND INFORMATION
- ----------------------------- ------------------------ --------------------------------------------------------
<S> <C> <C>
Jim D. Kever I, 1999 Mr. Kever, 44, has served as the Company's President
and Co-Chief Executive Officer since August 1995. Prior
to such time, he served as the Company's Executive Vice
President, Secretary and General Counsel and as a
Director from incorporation in August 1994. Mr. Kever
had served as a Director and Secretary, Treasurer and
General Counsel of Old Envoy since 1981 and as
Executive Vice President since 1984. Mr. Kever also is
a Director of Transaction Systems Architects, Inc., a
supplier of electronic payment software products and
network integration solutions, and 3D Systems
Corporation, a manufacturer of technologically advanced
solid imaging systems and prototype models.
Laurence E. Hirsch I, 1999 Mr. Hirsch, 51, has served as a Director of the Company
since February 1995 and had served as a Director of Old
Envoy from 1987 through June 6, 1995. Mr. Hirsch has
served as the President of Centex Corporation, a
corporation engaged in home building, mortgage banking
and related businesses, from March 1985 to July 1991, as
its Chief Executive Officer since July 1988, and as its
Chairman of the Board of Directors since July 1991.
Mr. Hirsch also serves as a Director of Commercial
Metals Company, a company engaged in the
manufacturing and recycling of steel and metal products,
and as a Trustee of BlackRock Investors, Inc., a
registered investment company.
William E. Ford I, 1999 Mr. Ford, 35, was appointed a Director of the Company
on March 6, 1996. He has served as a managing member
of General Atlantic Partners LLC, the general partner of
General Atlantic Partners 25, L.P. and as a general
partner of GAP Coinvestment Partners, L.P. since 1991.
Mr. Ford also serves as a Director of GT Interactive
Software Corporation, a provider of entertainment and
educational consumer software; Marcam Corporation, a
provider of application software to manufacturing
companies; SS&C Technologies, Inc., a financial
software company; and E*Trade Group, Inc., a discount
on-line electronic brokerage company.
</TABLE>
6
<PAGE> 9
The Board of Directors held six meetings during the fiscal year ended
December 31, 1996. The Board of Directors has an Audit, Compensation and
Executive Committee, but does not have a nominating committee.
The Audit Committee has been established for the purpose of
recommending the Company's auditors, reviewing the scope of their engagement,
consulting with such auditors, reviewing the results of the audit examination,
acting as a liaison between the Board of Directors and the auditors and
reviewing various Company policies, including those related to accounting and
internal control management. It is also the function of the Audit Committee to
ensure that the Company's financial statements accurately reflect the Company's
financial position and results of operations. Messrs. McStay (Chairman), Ford
and Loewenbaum currently comprise the Audit Committee, which held two meetings
during fiscal 1996.
The purpose of the Compensation Committee is to establish, among other
things, salaries, bonuses and other compensation for the Company's executives
and to administer the Company's stock option and other employee benefit plans.
Messrs. Gresham (Chairman) and Hirsch currently comprise the Compensation
Committee, which met two times during fiscal 1996.
The Executive Committee is authorized generally to act on behalf of the
Board of Directors between scheduled meetings, subject to certain limitations
and applicable corporate law. The Executive Committee is also given specific
authorization by the Board of Directors, from time to time, with respect to
certain matters. Messrs. Goad (Chairman), Hirsch and Kever currently comprise
the Executive Committee, which met two times during fiscal 1996.
All incumbent directors attended more than 75% of the meetings of the
Board of Directors and the respective committees of which they were members
during fiscal 1996.
7
<PAGE> 10
EXECUTIVE COMPENSATION
The following table provides information as to annual, long-term and
other compensation during the last three fiscal years for the Company's Co-Chief
Executive Officers and each of the Company's four other most highly compensated
executive officers during fiscal 1996 (the "Named Executive Officers"). The
three year period reflects compensation paid to such persons by Old Envoy prior
to the June 6, 1995 distribution. Immediately following the distribution Old
Envoy was merged with and into First Data Corporation ("FDC"), and its separate
corporate existence ceased.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------------------------- ---------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME & FISCAL COMPENSATION OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($)(1) BONUS ($)(2) ($)(3) (#)(4) ($)(5)
- ----------------------- ------ ------------ ------------- -------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Fred C. Goad, Jr., 1996 157,500 175,000 N/A 0 5,357
Chairman of the Board 1995 140,000 183,160 N/A 500,000 5,357
and Co-Chief Executive 1994 140,000 163,160 N/A 0 5,357
Officer
Jim D. Kever, 1996 165,495 175,000 N/A 0 3,425
President and Co-Chief 1995 135,618 183,160 N/A 500,000 3,425
Executive Officer 1994 125,855 136,966 N/A 0 3,425
Kevin M. McNamara, 1996 160,417 87,500 89,195(7) 50,000 0
Senior Vice President 1995 N/A N/A N/A 100,000 N/A
and Chief Financial 1994 N/A N/A N/A N/A N/A
Officer(6)
Sheila H. Schweitzer, 1996 121,000 29,000 15,774(7) 100,000 300
Senior Vice President of 1995 50,416 7,250 N/A N/A N/A
Operations(6) 1994 N/A N/A N/A N/A N/A
Richard P. Caliri, 1996 133,333 60,000 N/A 200,000 0
Senior Vice President of 1995 N/A N/A N/A N/A N/A
Marketing(6) 1994 N/A N/A N/A N/A N/A
</TABLE>
- ----------------------------
(1) Salaries paid for services rendered have been listed in the year paid
with the exception of Mr. Kever. A retroactive salary adjustment of
$9,763 was made in February 1996 to reflect a salary change which
should have taken effect in June 1995.
(2) Cash bonuses have been listed in the year earned but were partially
paid in the following year.
(3) Except as indicated, the amount of perquisites, personal benefits and
other items paid to or for any Named Executive Officer, as determined
in accordance with the rules of the SEC relating to executive
compensation, did not exceed the lesser of $50,000 or 10% of salary and
bonus from the Company.
(4) All options granted to the Named Executive Officers were granted
pursuant to the Company's Amended and Restated 1995 Employee Stock
Incentive Plan (the "1995 Employee Plan") with exercise prices equal to
the fair market value (as defined in the plans) of the Common Stock on
the grant dates. During 1996, 1995 and 1994, the Company issued no
stock appreciation rights ("SARs") or restricted stock awards and
maintained no "long-term incentive plan," as such term is defined in
applicable SEC rules.
(5) In each of the years presented, the Company paid insurance premiums of
$5,057 and $3,125 for the benefit of Messrs. Goad and Kever,
respectively. In addition, $300 is included for each of Messrs. Goad
and Kever and Ms. Schweitzer for matching contributions to the
Company's 401(k) Profit Sharing Plan. Such contributions are 100%
vested.
(6) Messrs. McNamara and Caliri and Ms. Schweitzer joined the Company as of
February 1, 1996, March 6, 1996 and July 31, 1995, respectively;
therefore, such Named Executive Officer's compensation for the partial
year includes only compensation actually received by such person from
the Company for such year.
(7) Represents relocation, moving expenses and associated reimbursement
amounts.
8
<PAGE> 11
The following table summarizes certain information regarding stock
options granted to the Named Executive Officers during fiscal 1996. No SARs have
been granted by the Company.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
- -----------------------------------------------------------------------------------------------
PERCENT OF
TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO POTENTIAL REALIZABLE VALUE
UNDERLYING EMPLOYEES EXERCISE AT ASSUMED ANNUAL RATES
OPTIONS IN FISCAL PRICE EXPIRATION OF STOCK APPRECIATION FOR
NAME GRANTED (#) 1996 ($/SHARE) DATE OPTION TERM
- --------------------- ----------- ---------- --------- ---------- ----------------------
5%($) 10%($)
-----------------------
<S> <C> <C> <C> <C> <C> <C>
Kevin M. McNamara 25,000(1) 4.1% $20.25 1/31/06 318,378 806,832
25,000(1) 4.1% $25.00 1/31/06 393,059 996,089
Sheila H. Schweitzer 25,000(2) 4.1% $21.63 3/15/06 340,075 861,816
75,000(1) 12.2% $29.63 5/14/06 1,397,561 2,641,017
Richard P. Caliri 100,000(3) 16.3% $20.75 3/6/06 1,304,956 3,307,016
100,000(1) 16.3% $20.75 3/6/06 1,304,956 3,307,016
</TABLE>
- -----------------
(1) These options were granted pursuant to the 1995 Employee Plan and vest
on July 1, 2000.
(2) These options were granted pursuant to the 1995 Employee Plan and vest
in one-third increments annually beginning March 15, 1997.
(3) These options were granted pursuant to the 1995 Employee Plan and vest
in one-third increments annually beginning March 6, 1997.
The following table summarizes certain information with respect to
stock option exercises of the Named Executive Officers during fiscal 1996 and
fiscal 1996 year-end option values.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL 1996 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS HELD AT MONEY OPTIONS HELD AT
DECEMBER 31, 1996(2) DECEMBER 31, 1996(3)
(#) ($)
---------------------------- -------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE (#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------- ------------ -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Fred C. Goad, Jr. 30,000(4) 681,300(4) 376,667 333,333 12,248,643 9,354,157
Jim D. Kever N/A N/A 406,667 333,333 13,259,943 9,354,157
Kevin M. McNamara N/A N/A 0 150,000 0 2,693,750
Sheila H. Schweitzer N/A N/A 8,333 116,667 132,245 1,542,255
Richard P. Caliri N/A N/A 33,333 166,667 558,328 2,791,672
</TABLE>
- --------------------------
(1) Represents gain on exercise of options in the year ended December 31,
1996.
(2) Represents options that were exercisable or unexercisable as of
December 31, 1996.
(3) Value based on market value of the Common Stock on December 31, 1996,
$37.50, minus the aggregate exercise price.
(4) Shares indicated were transferred by gift to a trust for the benefit of
Mr. Goad's daughter. Mr. Goad disclaims beneficial ownership of these
securities.
9
<PAGE> 12
DIRECTORS' COMPENSATION
Members of the Board of Directors of the Company, other than those
directors who are employees of the Company, receive: (a) a monthly fee of $1,250
and (b) a fee of $1,000 per Board of Director or separately scheduled committee
meeting attended. In addition, each non-employee director is reimbursed for
out-of-pocket expenses incurred in attending Board of Director and committee
meetings. Non-employee directors are eligible to receive options for the
purchase of Common Stock pursuant to the Company's Amended and Restated 1995
Stock Option Plan for Outside Directors (the "1995 Director Plan"). Thereunder,
each director shall automatically, on the date of each Annual Meeting, be
granted and receive an option to purchase 2,000 shares of Common Stock. Options
granted under the 1995 Director Plan have an exercise price per share equal to
the fair market value on the date of grant. Directors who also are employees do
not receive any additional compensation for their services as directors or as
members of committees.
EMPLOYMENT AGREEMENTS
Fred C. Goad, Jr., Jim D. Kever, Kevin M. McNamara and Richard P.
Caliri are each employed by the Company under employment agreements. The
employment agreements of Messrs. Goad and Kever were assumed by the Company from
Old Envoy and had an initial term of one year. Mr. McNamara was employed as of
February 1, 1996 pursuant to a two year employment agreement, and Mr. Caliri was
employed as of March 6, 1996 in connection with the Company's acquisition of
National Electronic Information Corporation ("NEIC"). The initial term of Mr.
Caliri's employment agreement terminates December 31, 1997. Each of these
employment agreements are automatically extended for additional one-year periods
unless terminated by either party.
Under the terms of their respective employment agreements, Mr. Goad is
employed as Chairman and Co-Chief Executive Officer and Mr. Kever is employed as
President and Co-Chief Executive Officer at annual base salaries as determined
by the Compensation Committee, plus an annual bonus equal to the greater of .3%
of the Company's revenues for such year or the executive's base salary for such
year, provided, however, the Compensation Committee may exclude for purpose of
calculating the annual bonuses of Messrs. Goad and Kever any revenues derived as
the result of acquisitions by the Company. See "Compensation Committee Report on
Executive Compensation -- Co-Chief Executive Officers Compensation." Mr.
McNamara was employed as Senior Vice President and Chief Financial Officer at an
annual base salary of not less than $175,000, plus an annual bonus of up to 50%
of his then current base salary, subject to performance criteria as established
by the Chairman and President. Mr. Caliri was employed as Senior Vice President
of Marketing at an annual base salary of $160,000, plus an annual bonus of up to
$60,000, subject to performance criteria established by the Chairman and
President.
Under their employment agreements, the executives also have the right
to participate in the Company's annual incentive program and receive other
fringe benefits. The employment agreements entitle each executive to receive, in
addition to his annual salary and bonus, certain fringe benefits, including the
right to participate in all Company group benefit plans. In addition, Messrs.
McNamara and Caliri received certain payments for travel and moving expenses
associated with their relocation to Nashville.
The employment agreements also provide the executives with certain
enumerated benefits upon the occurrence of certain termination and change in
control events, as follows:
(a) If either (i) the Company at any time terminates the
executive's employment for cause (as defined in the Employment
Agreements), or (ii) before any change in control of the Company (as
defined in the Employment Agreements), the executive voluntarily
resigns while there is no material failure by the Company to perform
its obligations under his Employment Agreement, the executive will be
entitled to receive his base salary on a pro rata basis through the
date of termination.
10
<PAGE> 13
(b) If either (i) before an initial change in control event (as
defined in the Employment Agreements), the executive's employment is
terminated as a result of his failure to discharge his duties in a
manner consistent with the effective administration of the Company's
affairs, or (ii) before a change in control, the executive resigns as a
result of a material failure by the Company to perform its obligations
under his employment agreement, the executive will be entitled to a
lump sum payment equal to his base salary plus the average of his
annual bonus received during the two preceding years.
(c) If before the occurrence of an initial change in control
event, the Company terminates the executive's employment other than for
cause or a failure of the executive to discharge his duties in a manner
consistent with the effective administration of the Company's affairs,
the executive will be entitled to receive the greater of (i) his annual
base salary and average bonus or (ii) his base salary and bonuses due
for the unexpired term of his employment agreement.
(d) If either (i) after an initial change in control event occurs,
the Company terminates the executive's employment for any reason other
than cause or his death or disability, or (ii) after a change in
control, the executive voluntarily resigns, the Company will pay
Messrs. Goad and Kever a lump sum termination payment equal to 2.99
times the sum of the executive's then base annual salary and the
average of the annual bonuses received during the two preceding years.
In such event, Mr. McNamara will receive a lump sum termination payment
equal to two times the sum of his then current annual base salary and
average bonus and Mr. Caliri will receive a lump sum termination
payment equal to the sum of his then current annual base salary and
average bonus.
(e) Contemporaneously with the occurrence of a change in control,
the Board of Directors or Compensation Committee will accelerate all
outstanding options previously granted to the executives under any
Company stock option, stock appreciation or other employee incentive
plan that are not otherwise exercisable by the executives at the time
the change in control occurs.
Payments made to each of Messrs. Goad, Kever or McNamara under his
employment agreement (and all other incentive agreements of the Company to which
the executive is a party) will not be limited, in the event of a change in
control, by the provisions of Sections 280G and 4999 of the Internal Revenue
Code of 1986, as amended (the "Code"). Pursuant to each executive's employment
agreements, the Company will pay to the executive an amount equal to the excise
tax under Section 4999 of the Code, if any, incurred or to be incurred by the
executive by reason of the payments under his employment agreement, acceleration
of vesting of stock options, or payments under any other plan, agreement or
understanding between such executive and the Company, constituting Excess
Parachute Payments (as defined in the employment agreements and Sections 280G(b)
and 4999 of the Code), plus all excise taxes and federal, state and local income
taxes incurred or to be incurred by the executive with respect to receipt of the
payments thereunder. In addition, if any of Messrs. Goad, Kever or McNamara
institutes litigation brought in good faith to enforce any of his rights under
his employment agreement, the Company will indemnify the executive for his
reasonable attorney's fees and disbursements incurred in any such litigation.
Indemnification by the Company under such employment agreements is also provided
in the event an excise tax is assessed against the executive and such additional
payment was not previously paid to the executive. In such event, the Company
will indemnify the executive for the amount of such tax, including interest and
penalties incurred, reasonable fees and expenses and the related federal, state
and local income taxes incurred with respect to payment of the excise tax.
Each of the employment agreements also have non-competition provisions
applicable during the term of employment and thereafter as specified below, and
the parties thereto are required to maintain the confidential nature of trade
secrets and proprietary information. Pursuant to the terms of the employment
agreements, each of Messrs. Goad and Kever has agreed not to compete with the
Company for a period of 18 months following termination of their employment with
the Company. Each of Messrs. McNamara and Caliri has agreed not to compete with
the Company for a period of 12 months following termination of their employment
with the Company.
11
<PAGE> 14
In addition to the above provisions, Messrs. Goad and Kever have
entered into five-year non-competition agreements with the Company, of which FDC
is an express third-party beneficiary. Furthermore, in connection with the June
6, 1995 merger transaction involving Old Envoy and FDC, the Company entered into
a Management Services Agreement. The Company agreed, for a two-year period
ending June 5, 1997, to provide assistance to FDC in certain transition matters
involving the financial transaction business acquired by FDC. The Company agreed
to make the services of Fred C. Goad, Jr. and Jim D. Kever, as well as other
employees of the Company, available to FDC during such period to provide
transition services. No specific time requirements for the services of Messrs.
Goad and Kever are set forth in the Management Services Agreement. In exchange
for said services, the Company receives a fee of $1.5 million per annum, subject
to reduction (if any) pursuant to the right of offset provisions in the merger
agreement.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Gresham and Hirsch. No
executive officer or employee of the Company served during fiscal 1996 as a
member of the Compensation Committee. The Company has no required disclosures
regarding Compensation Committee interlocks and insider participation in
compensation decisions.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is composed entirely of directors who are
not employees of the Company and is responsible for developing and making
recommendations to the Board of Directors with respect to the Company's
executive compensation policies, including the compensation to be paid to the
Co-Chief Executive Officers and each of the other executive officers of the
Company.
The objectives of the Company's executive compensation program are to:
- Create incentives for and support the achievement of desired
Company performance and long-term appreciation in stock price.
- Provide compensation that will attract and retain superior
talent and reward performance.
- Align the executive's interests with the success of the
Company by placing a portion of pay at risk with payout
dependent upon corporate performance.
The Company's executive compensation program provides each executive
the opportunity to earn an overall level of compensation that is competitive
within the electronic transaction processing services industry, as well as
within a broader group of companies of comparable size and complexity to the
Company. The companies used for comparison are among the companies within the
Nasdaq Computer and Data Processing Stock Index used in the performance graph
set forth below under the heading "Stock Performance Graph." Actual compensation
levels may be greater or less than average competitive levels in surveyed
companies, as compensation is based upon annual and long-term Company
performance as well as individual performance. The Compensation Committee makes
its recommendations concerning executive compensation based on the external and
internal factors described below.
EXECUTIVE COMPENSATION PROGRAM
The Company has purposefully limited the components of its executive
compensation program to base salary, annual cash bonus and stock options. These
components are in addition to various benefits, including medical and savings
plans available generally to employees of the Company.
12
<PAGE> 15
Base Salary
Base salary levels were subjectively determined for the Company's
executives by the Compensation Committee, which it believes are generally less
than the amounts reported as paid to senior executives with similar
responsibilities at other companies in the electronic transaction processing
services industry. The employment agreements set forth the base salary and
bonus, termination, severance and change in control arrangements for each of the
Named Executive Officers (except Ms. Schweitzer), and the Compensation Committee
believes the agreements adequately provide for the continued services and
attention of such officers. See "Employment Agreements." The level of fixed
compensation set in the employment agreements and that is paid to other
executives is consistent with the Company's historical practice of combining
comparatively limited fixed pay for its most senior executives with performance
based cash bonuses and longer-term incentives provided by stock option grants.
Base salaries of managers and other senior employees are recommended by Messrs.
Goad and Kever, as Co-Chief Executive Officers, based on objective and
subjective factors including various indicators of performance such as
acquisition of new customers, retention of existing customer base and the
development of new products for the Company.
Bonuses
The Company's annual incentive program for executives provides direct
financial incentives in the form of an annual cash bonus to executives who
achieve their business unit's and the Company's annual goals. The Compensation
Committee directs management to establish the threshold, target and optimal
goals for Company and business unit performance at the beginning of each fiscal
year. Individual performance also may be taken into account in determining
bonuses. The Compensation Committee fixed the amount of the total bonus payable
to each executive based on a percentage of such executive's base salary (other
than as specified pursuant to employment agreements) and granted to Messrs. Goad
and Kever, as Co-Chief Executive Officers, subjective discretion as to the
allocation of that bonus. During 1996, the stated Company performance objectives
were met and the Compensation Committee approved bonuses for individual officers
as recommended by the Co-Chief Executive Officers. Bonuses payable to the Named
Executive Officers (except Ms. Schweitzer) for 1996 were determined by the
provisions of their respective employment agreements, which were approved by the
Compensation Committee at the time executed. See "Employment Agreements."
Contractual provisions relating to bonuses contained in employment agreements
are earned based on the established performance criteria, but are not in
addition to the bonus amounts specified in the annual bonus incentive program.
Stock Options
The 1995 Employee Plan is the Company's stock option program for
executives and other employees. The stock option program is designed to align
executive and shareholder long-term interests by creating a strong and direct
link between executive pay and shareholder return, and to enable the Company's
executives to develop and maintain a significant, long-term ownership position
in Common Stock. The 1995 Employee Plan is administered by the Compensation
Committee.
Awards under the 1995 Employee Plan may be made to key employees,
including executive officers, of the Company and any subsidiaries or affiliates
of the Company, and to consultants of the Company, its subsidiaries or
affiliates, but may not be granted to any director who is not an employee of the
Company. Actual awards are made only at the discretion of the Compensation
Committee.
During 1996, the Compensation Committee granted options under the 1995
Employee Plan to purchase an aggregate of 611,000 shares of Common Stock, of
which 350,000 shares were subject to options granted to the Named Executive
Officers at exercise prices ranging from $20.25 to $29.63, which were equal to
the fair market value at the dates of grant based upon the reported sales price
on the Nasdaq Stock Market. See "Option Grants in Last Fiscal Year." The
Compensation Committee will continue to evaluate the number of options granted
to employees and the
13
<PAGE> 16
percentage of shares granted to the Named Executive Officers. Stock options are
granted in part to reward the executives for their strategic management of the
Company and to motivate the executives and other recipients to improve
shareholder value by increasing the value of this component of their respective
compensation packages.
CO-CHIEF EXECUTIVE OFFICERS COMPENSATION
The Compensation Committee believes the compensation of the Co-Chief
Executive Officers is consistent with its general policies concerning executive
compensation and is appropriate in light of the Company's financial objectives
and performance. Mr. Goad and Mr. Kever are employed pursuant to the terms of
employment agreements, which are described in this Proxy Statement. See
"Employment Agreements." Messrs. Goad and Kever currently each are paid a base
salary of $175,000 and were each paid a bonus of $175,000 for 1996 as compared
to $183,160 for 1995. Under the terms of their respective employment agreements,
Messrs. Goad and Kever are entitled to a bonus equal to the greater of their
annual base salary (currently $175,000) or .3% of the Company's revenues for the
year; provided, however, the Compensation Committee has the discretion to
exclude for purposes of calculating such bonus the revenues derived as a result
of acquisitions by the Company. Because of the extraordinary increase in the
Company's revenue resulting from recent acquisitions by the Company, the
Compensation Committee determined in 1996 that basing the Co-Chief Executive
Officers' bonuses on revenues no longer was appropriate. The Compensation
Committee concluded that operating results will be a more meaningful measure of
corporate performance on a going forward basis and, therefore, determined that
the Co-Chief Executive Officers' annual bonus for 1996 and in the future will be
measured based on their annual base salary and the achievement of corporate
operating results, consistent with the cash bonus incentive program for other
executives. As of the Record Date, Mr. Goad owned 221,506 shares of Common Stock
and held vested options to purchase an additional 376,667 shares and unvested
options to purchase an additional 333,333 shares. As of the same date, Mr. Kever
owned 220,615 shares of Common Stock and held vested options to purchase an
additional 406,667 shares and unvested options to purchase an additional 333,333
shares. The Compensation Committee believes that the significant equity
interests in the Company held by Messrs. Goad and Kever align their interests
with the interests of shareholders. The Compensation Committee further believes
Messrs. Goad and Kever have managed the Company well in a challenging business
climate and have done an excellent job in coordinating the transition of the
current Company from Old Envoy, the merger of Old Envoy with FDC, and in
completing the integration of recent acquisitions.
SECTION 162(M) PROVISIONS
The Omnibus Budget Reconciliation Act passed by Congress in 1993
imposes a limitation, included as Section 162(m) of the Code, on the
deductibility of certain compensation paid to chief executive officers and
certain other executive officers of publicly traded companies. Compensation paid
to these officers in excess of $1,000,000 cannot be claimed as a tax deduction
by such companies unless such compensation qualifies for an exemption as
performance-based compensation under Section 162(m) of the Code. It is
anticipated that compensation in respect of stock options and SARs (if any)
granted under the 1995 Employee Plan will qualify for an exemption as
performance-based compensation under Section 162(m) of the Code, if the exercise
price per share for such options and SARs is at least equal to the fair market
value per share of the Common Stock on the date of grant. Other awards (if any)
granted under the 1995 Employee Plan are not expected to qualify for an
exemption as performance-based compensation.
W. Marvin Gresham
Laurence E. Hirsch
14
<PAGE> 17
STOCK PERFORMANCE GRAPH
The following line graph compares the percentage change in the
Company's cumulative shareholder return on the Common Stock with that of The
Nasdaq Stock Market Index and the Nasdaq Computer and Data Processing Stock
Index (Standard Industrial Classification, Industry Group No. 737) over the
period of time from June 7, 1995, (the initial trading date of the Common Stock)
through December 31, 1996. The respective returns assume reinvestment of any
dividends paid.
[GRAPH]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
06/07/95 12/31/95 12/31/96
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
ENVOY Corporation 100 227 492
- --------------------------------------------------------------------------------
NASDAQ 100 120 148
- --------------------------------------------------------------------------------
NASDAQ Computer & Data Processing Stocks 100 123 152
- --------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 18
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 6, 1996, the Company acquired all of the outstanding common
stock of NEIC, a processor and clearinghouse for electronic medical, dental and
hospital transactions. The aggregate cash purchase price was approximately $94.3
million, consisting of $86.2 million paid to NEIC stockholders on the date of
closing, $2.2 million paid to certain NEIC stockholders on August 1, 1996 and
transaction and acquisition costs of approximately 5.9 million. The acquisition
was financed through equity issuances of $45.1 million and a $50 million credit
facility.
On March 6, 1996, General Atlantic Partners 25, L.P. ("GAP 25") and GAP
Coinvestment Partners, L.P. ("GAP Coinvestment") acquired an aggregate of
2,800,000 shares (2,417,171 and 382,829 shares, respectively) of Series B
Preferred Stock from the Company for $30.1 million. William E. Ford, a director
of the Company, is a managing member of General Atlantic Partners LLC, which is
the general partner of GAP 25. GAP Coinvestment is a limited partnership formed
under the laws of the State of New York, and the partners of GAP Coinvestment
who are authorized and empowered to vote and dispose of the securities held by
GAP Coinvestment are the managing members of General Atlantic Partners LLC.
On March 6, 1996, First Union Capital Partners, Inc. ("Capital
Partners") acquired 930,233 shares of Series B Preferred Stock from the Company
for $10 million. At the same time, the Company entered into a $50 million credit
agreement with an affiliate of Capital Partners, First Union National Bank of
North Carolina (as agent), and various lenders.
Southcoast Capital Corporation ("Southcoast") is an investment banking
firm in which G. Walter Loewenbaum II, a director of the Company, serves as an
executive officer and owns 47% of the outstanding voting stock. Southcoast
received a placement fee of $150,000 in connection with the private placement of
333,333 shares of the Common Stock for an aggregate purchase price of $5
million. The shares were issued in connection with funding of the cash purchase
price for the acquisition of NEIC. The fee payable to Southcoast was negotiated
and agreed to in connection with the closing of the NEIC acquisition on March 6,
1996.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and directors, and
persons who beneficially own more than ten percent of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the SEC and The Nasdaq Stock Market. The executive officers,
directors and greater than ten percent shareholders are required by federal
securities regulations to furnish the Company with copies of all Section 16(a)
forms they file.
Based solely on the Company's review of the copies of such forms and
written representations from certain reporting persons furnished to the Company,
the Company believes that its executive officers, directors, and greater than
ten percent beneficial owners were in compliance with all applicable filing
requirements.
16
<PAGE> 19
PROPOSAL TWO - APPROVAL OF ENVOY CORPORATION EMPLOYEE STOCK PURCHASE PLAN
GENERAL
The Company believes in providing the opportunity for its employees to
obtain a proprietary interest in the Company. To that end, on February 21, 1997
the Board of Directors voted to adopt, subject to shareholder approval, the
Envoy Corporation Employee Stock Purchase Plan (the "Stock Purchase Plan"). A
summary of the Stock Purchase Plan follows, but this summary is qualified in its
entirety by reference to the full text of the Stock Purchase Plan, which is
attached as Exhibit A to this Proxy Statement.
The Stock Purchase Plan provides eligible employees of the Company and
its subsidiaries the opportunity to purchase shares of Common Stock at a
discounted price through accumulated payroll deductions. The purpose of the
Stock Purchase Plan is to attract and retain individuals with a high degree of
training, experience, expertise and ability, to provide an opportunity for such
individuals to acquire a proprietary interest in the success of the Company and
to more closely align their interests with those of the Company's shareholders.
ELIGIBILITY
In order to be eligible to participate in the Stock Purchase Plan, an
individual must be an employee of the Company or one of its subsidiaries and
must have been employed in such capacity for a period of at least six months
prior to the first day of any Option Period (as defined below); provided,
however, any employee whose customary employment is twenty hours per week or
less or whose customary employment is for not more than five months in any
calendar year is not eligible to participate in the Stock Purchase Plan. Also,
any employee who is a five percent or greater shareholder of the Company's
voting stock is not eligible to participate in the Stock Purchase Plan.
If the Company acquires or creates a new subsidiary, employees of such
subsidiary will automatically become eligible to participate in the Stock
Purchase Plan, unless otherwise determined by the Board of Directors. Where a
subsidiary is acquired, its employees will be given credit for service with the
acquired subsidiary prior to the acquisition for purposes of satisfying the
requirement of six months continuous employment. As of April 1, 1997
approximately 387 employees were eligible to participate in the Stock Purchase
Plan.
PARTICIPATION
Participation in the Stock Purchase Plan is voluntary and eligible
employees may enroll by specifying the amount of the employee's compensation to
be deducted during each payroll period for the purchase of shares of Common
Stock. The Stock Purchase Plan operates on the basis of successive three month
periods commencing on (i) July 1 and ending on September 30; (ii) October 1 and
ending on December 31; (iii) January 1 and ending on March 31; and (iv) April 1
and ending on June 30 (each of which is hereinafter referred to as an "Option
Period"). Assuming shareholder approval is obtained, the first Option Period
will begin on July 1, 1997.
Pursuant to the terms of the Stock Purchase Plan, eligible employees of
the Company may elect to deduct up to fifteen percent (15%) of their base pay
per pay period (subject to the limitations set forth below) to be used to
purchase shares of Common Stock on the last trading day of each Option Period
(the "Exercise Date"). On the Exercise Date, the amount deducted from each
participant's salary over the course of the Option Period will be used to
purchase shares of Common Stock at a purchase price equal to the lesser of (i)
85% of the closing market price of the Common Stock on the Exercise Date or (ii)
85% of the closing market price of the Common Stock on the first trading date of
each Option Period (the "Grant Date"). Purchases by each participant are limited
to 200 shares of Common Stock per Option Period and not more than $25,000 of
Common Stock in any calendar year. If the total number of shares of Common Stock
to be purchased by all participants on an Exercise Date exceeds the number of
shares of Common Stock remaining authorized for issuance under the Stock
Purchase Plan, a pro-rata allocation of the shares of Common Stock available for
issuance will be made among participants.
17
<PAGE> 20
To be eligible or to change the amount of withholding for an Option
Period, a participant must have completed an enrollment form specifying the
amount to be withheld no later than fifteen (15) days prior to the commencement
of an Option Period. An employee may at any time elect to withdraw from the
Stock Purchase Plan and to have the employee's contributions returned to him or
her, unless such withdrawal request is within fifteen (15) days of the Exercise
Date in an Option Period. In such a case, the employees's contributions during
such Option Period will be used to purchase shares on the Exercise Date for the
benefit of the participant.
Upon termination of employment as a result of death, disability or
retirement during an Option Period, no further contributions will be made to a
participant's account. In such an event, the participant or his or her legal
representative may elect to withdraw the balance of the participant's account,
but if no such request is made, the balance will be used to purchase shares of
Common Stock on the next Exercise Date. In the event of a termination of a
participant's employment for a reason other than death, disability or retirement
during an Option Period, no further contributions will be made and the remaining
balance will be paid in cash to the former employee.
FEDERAL INCOME TAX CONSEQUENCES
The Stock Purchase Plan is intended to qualify for favorable tax
treatment under Section 423 of the Code. Pursuant to the Code, participants
generally would not immediately recognize income for federal tax purposes of the
amount of the initial discount when shares of Common Stock are purchased. If the
recipient of Common Stock under the Stock Purchase Plan disposes of the shares
before the end of the holding period (two years after the Grant Date), he or she
generally will recognize ordinary income in the year of disposition in an amount
equal to the difference between his or her purchase price and the market value
of the Common Stock on the Exercise Date. The excess (if any) of the amount
received upon disposition over the market value on the Exercise Date will be
taxed as capital gain. If a disposition does not occur until after the
expiration of the holding period, the recipient generally will recognize
ordinary income in the year of disposition equal to the lesser of (i) the
original discount on the shares of Common Stock assuming the shares had been
purchased on the Grant Date or (ii) the excess of the fair market value of such
shares on the date of disposition over the price paid by the recipient on the
Exercise Date. The excess (if any) of the amount received upon disposition over
the tax basis (i.e., purchase price plus amount taxed as ordinary income) will
be taxed as capital gain. The Company generally will not be entitled to a tax
deduction for compensation expense of the original sales to participants, but
may be entitled to a deduction if a participant disposes of Common Stock
received under the Stock Purchase Plan prior to the expiration of the applicable
holding periods.
ADMINISTRATION
A committee composed of one or more individuals to whom authority is
delegated by the Board of Directors (the "Plan Administrator") will administer
the Stock Purchase Plan. The Plan Administrator will administer the Stock
Purchase Plan and keep records of the contribution account balance of each
participant, interpret the Stock Purchase Plan, and determine all questions
arising as to eligibility, contributions, determination of the Exercise Price
and all other matters of administration. The Plan Administrator may delegate any
or all of the foregoing duties. The initial Plan Administrator shall be the
Compensation Committee. All costs and expenses of administering the Stock
Purchase Plan shall be paid by the Company. No brokerage commissions will be
charged on a participant's purchase of Common Stock.
AMENDMENT
The Board of Directors may at any time amend the Stock Purchase Plan in
any respect, including termination of the Stock Purchase Plan, without notice to
participants. If the Stock Purchase Plan is terminated, all options outstanding
at the time of termination shall become null and void and the balance in each
participant's contribution account shall be paid to that participant. Without
the approval of the shareholders of the Company, however, the Stock Purchase
Plan may not be amended to increase the number of shares reserved under the
Stock Purchase Plan (except pursuant to certain changes in the capital structure
of the Company).
18
<PAGE> 21
NUMBER OF SHARES UNDER STOCK PURCHASE PLAN
The Company has reserved, subject to shareholder approval, 1,000,000
shares of Common Stock for issuance under the Stock Purchase Plan. The aggregate
number of shares of Common Stock reserved under the Stock Purchase Plan and the
calculation of the Exercise Price shall be adjusted by the Plan Administrator
(subject to direction by the Board of Directors) in an equitable manner to
reflect changes in the capitalization of the Company, including, but not limited
to, such changes as result from merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, combination of shares, exchange of shares and change in corporate
structure. If any such adjustment would create a fractional share of Common
Stock or a right to acquire a fractional share of Common Stock, such fractional
share shall be disregarded and the number of shares available under the Stock
Purchase Plan and the number of shares covered under any options granted
pursuant to the Stock Purchase Plan shall be the next lower number of shares,
rounding all fractions downward.
RIGHT AS A SHAREHOLDER
At the time funds are used to purchase Common Stock under the Stock
Purchase Plan, a participant shall have all the rights and privileges of a
shareholder of the Company with respect to whole shares purchased under the
Stock Purchase Plan, whether or not certificates representing such shares have
been issued. A participant's rights under the Stock Purchase Plan are not
transferable, except by will and the laws of decent and distribution.
NEW PLAN BENEFITS
It is not possible to determine how may eligible employees will
participate in the Stock Purchase Plan in the future. Therefore, it is not
possible to determine with certainty the dollar value or number of shares of
Common Stock that will be distributed under the Stock Purchase Plan.
RECOMMENDATION
The Board of Directors believes it is in the best interests of the
Company and its shareholders to adopt the Stock Purchase Plan. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THIS PROPOSAL.
PROPOSAL THREE - RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
Upon recommendation of the Audit Committee, the Board of Directors has
appointed Ernst & Young LLP, independent public accountants, to audit the
accounts of the Company for fiscal 1997 and recommends that shareholders vote to
ratify such selection. A representative of Ernst & Young LLP is expected to be
present at the Annual Meeting, will have an opportunity to make a statement if
he or she so desires, and is expected to be available to respond to appropriate
questions. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
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DEADLINE FOR SUBMISSION TO SHAREHOLDERS
OF PROPOSALS TO BE PRESENTED AT THE
1998 ANNUAL MEETING OF SHAREHOLDERS
Any proposal intended to be presented for action at the 1998 Annual
Meeting of Shareholders by any shareholder of the Company must be received by
the Secretary of the Company not later than December 28, 1997 in order for such
proposal to be considered for inclusion in the Company's Proxy Statement and
proxy relating to its 1998 Annual Meeting of Shareholders. Nothing in this
paragraph shall be deemed to require the Company to include any shareholder
proposal that does not meet all the requirements for such inclusion established
by the SEC at the time in effect.
METHOD OF COUNTING VOTES
Unless a contrary choice is indicated, all duly executed proxies will
be voted in accordance with the instructions set forth on the proxy card.
Abstentions and "non-votes" will be counted for purposes of determining a
quorum. Proposals submitted for shareholder approval, other than the election of
directors, will be approved if the votes for exceed the votes against each
proposal; therefore, abstentions will have no effect on such proposals. Because
directors are elected by a plurality of the votes cast, abstentions also are not
considered in the election of directors. A "non-vote" occurs when a nominee
holding shares for a beneficial owner votes on one proposal, but does not vote
on another proposal because the nominee does not have discretionary voting power
and has not received instructions from the beneficial owner.
MISCELLANEOUS
To avoid unnecessary expense, it is important that proxies be returned
promptly. Therefore, shareholders who do not expect to attend in person are
urged, regardless of the number of shares of stock they own, to date, sign and
return the enclosed proxies promptly.
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EXHIBIT A
ENVOY CORPORATION EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
INTRODUCTION
1.1 ESTABLISHMENT OF PLAN.
ENVOY Corporation, a Tennessee corporation ("ENVOY") with principal
offices located in Nashville, Tennessee, adopts the following employee stock
purchase plan for its eligible employees, effective on July 1, 1997. This Plan
shall be known as the ENVOY Corporation Employee Stock Purchase Plan.
1.2 PURPOSE.
The purpose of this Plan is to provide an opportunity for eligible
employees of the Employer to become shareholders of ENVOY. It is believed that
broad-based employee participation in the ownership of the business will help to
achieve the unity of purpose conducive to the continued growth of the Employer
and to the mutual benefit of its employees and shareholders.
1.3 QUALIFICATION.
This Plan is intended to be an employee stock purchase plan which
qualifies for favorable Federal income tax treatment under Section 423 of the
Code.
1.4 RULE 16B-3 COMPLIANCE.
This Plan is intended to comply with Rule 16b-3 under the Securities
Exchange Act of 1934, and should be interpreted in accordance therewith.
ARTICLE II
DEFINITIONS
As used herein, the following words and phrases shall have the meanings
specified below:
2.1 Board of Directors. The Board of Directors of ENVOY Corporation.
2.2 Closing Market Price. The last sale price of the Stock as reported
in the Nasdaq National Market System (or other over-the-counter market or an
exchange, if applicable) on the date specified; or if no sales occurred on such
day, at the mean between the closing "bid" and "asked" prices on such day;
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but if there should be any material alteration in the present system of
reporting sales prices of such Stock, or if such Stock should no longer be
listed on Nasdaq's National Market System (or other over-the-counter market or
an exchange), the market value of the Stock as of a particular date shall be
determined in such a method as shall be specified by the Plan Administrator.
2.3 Code. The Internal Revenue Code of 1986, as amended from time to
time.
2.4 Commencement Date. The first day of each Option period. The first
Commencement Date shall be July 1, 1997.
2.5 Contribution Account. As set forth in Article V, the account
established on behalf of a Participant to which shall be credited the amount of
the Participant's contribution.
2.6 Effective Date. July 1, 1997.
2.7 Employee. Each employee of an Employer except:
(i) any employee whose customary employment is twenty
(20) hours per week or less, or
(ii) any employee whose customary employment is for not
more than five months in any calendar year.
2.8 Employer. ENVOY and any corporation which is a Subsidiary of ENVOY
(except for a Subsidiary which by resolution of the Board of Directors is
expressly not authorized to become a participating Employer). The term
"Employer" shall include any corporation into which an Employer may be merged or
consolidated or to which all or substantially all of its assets may be
transferred, provided such corporation does not affirmatively disavow this Plan.
2.9 Exercise Date. The last trading date of each Option Period on the
Nasdaq National Market System.
2.10 Exercise Price. The price per share of the Stock to be charged to
Participants at the Exercise Date, as determined in Section 6.3.
2.11 Five-Percent Shareholder. An Employee who owns five percent (5%)
or more of the total combined voting power or value of all classes of stock of
ENVOY or any Subsidiary thereof. In determining this five percent test, shares
of stock which the Employee may purchase under outstanding options, warrants or
other convertible securities, as well as stock attributed to the Employee from
members of his family or otherwise under Section 424(d) of the Code, shall be
treated as stock owned by the Employee in the numerator, but shares of stock
which may be issued under options, warrants or other convertible securities
shall not be counted in the total of outstanding shares in the denominator.
2.12 Grant Date. The first trading date of each Option Period on the
Nasdaq National Market System (or other over-the-counter market or an exchange,
if applicable).
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2.13 Nasdaq. The National Association of Securities Dealers Automated
Quotation System.
2.14 Option Period. Successive periods of three (3) months (i)
commencing on July 1 and ending on September 30; (ii) commencing on October 1
and ending on December 31; (iii) commencing on January 1 and ending on March 31;
and (iv) commencing on April 1 and ending on June 30.
2.15 Participant. Any Employee of an Employer who has met the
conditions for eligibility as provided in Article IV and who has elected to
participate in the Plan.
2.16 Plan. ENVOY Corporation Employee Stock Purchase Plan.
2.17 Plan Administrator. The committee composed of one or more
individuals to whom authority is delegated by the Board of Directors to
administer the Plan. The initial committee shall be the Compensation Committee
of the Board of Directors.
2.18 Stock. Those shares of common stock, no par value per share, of
ENVOY which are reserved pursuant to Section 6.1 for issuance upon the exercise
of options granted under this Plan.
2.19 Subsidiary. Any corporation in an unbroken chain of corporations
beginning with ENVOY each of which (other than the last corporation in the
chain) owns stock possessing fifty percent (50%) or more of the combined voting
power of all classes of stock in one of the other corporations in such chain.
ARTICLE III
SHAREHOLDER APPROVAL
3.1 SHAREHOLDER APPROVAL REQUIRED.
Without the approval of the shareholders of ENVOY, no amendment to this
Plan shall increase the number of shares reserved under the Plan, other than as
provided in Section 10.3. Approval by shareholders must comply with applicable
provisions of the corporate charter and bylaws of ENVOY and with Tennessee law
prescribing the method and degree of shareholder approval required for issuance
of corporate stock or options.
ARTICLE IV
ELIGIBILITY AND PARTICIPATION
4.1 CONDITIONS.
Each Employee shall become eligible to become a Participant for each
Option Period on its Commencement Date if such Employee has been employed by the
Employer for a continuous period of at least six (6) months prior to the
Commencement Date. No Employee who is a Five-Percent Shareholder
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shall be eligible to participate in the Plan. Notwithstanding anything to the
contrary contained herein, no individual who is not an Employee shall be granted
an option to purchase Stock under the Plan.
4.2 APPLICATION FOR PARTICIPATION.
Each Employee who becomes eligible to participate shall be furnished a
summary of the Plan and an enrollment form. If such Employee elects to
participate hereunder, Employee shall complete such form and file it with
Employer no later than fifteen (15) days prior to the next Commencement Date or,
in the case of the first Commencement Date, no later than June 15, 1997. The
completed enrollment form shall indicate the amount of Employee contribution
authorized by the Employee. If no new enrollment form is filed by a Participant
in advance of any Option Period after the initial Option Period, that
Participant shall be deemed to have elected to continue to participate with the
same contribution previously elected (subject to the limit of 15% of base pay).
If any Employee does not elect to participate in any given Option Period, such
Employee may elect to participate on any future Commencement Date so long as
such Employee continues to meet the eligibility requirements.
4.3 DATE OF PARTICIPATION.
All Employees who elect to participate shall be enrolled in the Plan
commencing with the first paydate after the Commencement Date following their
submission of the enrollment form. Upon becoming a Participant, the Participant
shall be bound by the terms of this Plan, including any amendments whenever
made.
4.4 ACQUISITION OR CREATION OF SUBSIDIARY.
If the stock of a corporation is acquired by ENVOY or another Employer
so that the acquired corporation becomes a Subsidiary, or if a Subsidiary is
created, the Subsidiary in either case shall automatically become an Employer
and its Employees shall become eligible to participate in the Plan on the first
Commencement Date after the acquisition or creation of the Subsidiary, as the
case may be. In the case of an acquisition, credit shall be given to Employees
of the acquired Subsidiary for service with such corporation prior to the
acquisition for purposes of satisfying the requirement of Section 4.1 of six (6)
months continuous employment. Notwithstanding the foregoing, the Board of
Directors may by appropriate resolutions (i) provide that the acquired or newly
created Subsidiary shall not be a participating Employer, (ii) specify that the
acquired or newly created Subsidiary will become a participating Employer on a
date other than the first Commencement Date after the acquisition or creation,
or (iii) attach any conditions whatsoever (including denial of credit for prior
service) to eligibility of the employees of the acquired or newly created
Subsidiary.
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ARTICLE V
CONTRIBUTION ACCOUNT
5.1 EMPLOYEE CONTRIBUTIONS.
The enrollment form signed by each Participant shall authorize the
Employer to deduct from the Participant's compensation an after-tax amount in an
exact number of dollars during each payroll period not less than ten dollars
($10.00) for a bi-weekly payroll period nor more than an amount which is fifteen
percent (15%) of the Participant's base pay on the Commencement Date. The dollar
amount deducted each payday shall be credited to the Participant's Contribution
Account. Participant contributions will not be permitted to commence at any time
during the Option Period other than on a Commencement Date. No interest will
accrue on any contributions or on the balance in a Participant's Contribution
Account.
5.2 MODIFICATION OF CONTRIBUTION RATE.
No change shall be permitted in a Participant's amount of withholding
except upon a Commencement Date, and then only if the Participant files a new
enrollment form with the Employer at least fifteen (15) days in advance of the
Commencement Date designating the desired withholding rate. Notwithstanding the
foregoing, a Participant may notify the Employer at any time that Participant
wishes to discontinue the Participant's contributions (except during the last 15
days of the Option Period). This notice shall be in writing and on such forms as
provided by the Employer and shall become effective as of a date provided on the
form not more than thirty (30) days following its receipt by the Employer. The
Participant shall become eligible to recommence contributions on the next
Commencement Date.
5.3 WITHDRAWAL OF CONTRIBUTIONS.
A Participant may elect to withdraw the balance of his Contribution
Account at any time during the Option Period prior to the Exercise Date (except
during the last 15 days of the Option Period). The option granted to a
Participant shall be canceled upon his withdrawal of the balance in his
Contribution Account. This election to withdraw must be in writing on such forms
as may be provided by the Employer. If contributions are withdrawn in this
manner, further contributions during that Option Period will be discontinued in
the same manner as provided in Section 5.2, and the Participant shall become
eligible to recommence contributions on the next Commencement Date.
ARTICLE VI
ISSUANCE AND EXERCISE OF OPTIONS
6.1 RESERVED SHARES OF STOCK.
ENVOY shall reserve one million (1,000,000) shares of Stock for
issuance upon exercise of the options granted under this Plan.
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6.2 ISSUANCE OF OPTIONS.
On the Grant Date each Participant shall be deemed to receive an option
to purchase Stock with the number of shares and Exercise Price determined as
provided in this Article VI, subject to the maximum limit specified in Section
6.6(a). All such options shall be automatically exercised on the following
Exercise Date, except for options which are canceled when a Participant
withdraws the balance of his Contribution Account or which are otherwise
terminated under the provisions of this Plan.
6.3 DETERMINATION OF EXERCISE PRICE.
The Exercise Price of the options granted under this Plan for any
Option Period shall be the lesser of
(i) eighty-five percent (85%) of the Closing Market Price
of the Stock on the Exercise Date, or
(ii) eighty-five percent (85%) of the Closing Market Price
of the Stock on the Grant Date.
6.4 PURCHASE OF STOCK.
On an Exercise Date, all options shall be automatically exercised,
except that the options of a Participant who has terminated employment pursuant
to Section 7.1 or who has withdrawn all his contribution shall expire. The
Contribution Account of each Participant shall be used to purchase the maximum
number of shares of Stock (including fractional shares) determined by dividing
the Exercise Price into the balance of the Participant's Contribution Account.
6.5 TERMS OF OPTIONS.
Options granted under this Plan shall be subject to such amendment or
modification as the Employer shall deem necessary to comply with any applicable
law or regulation, including but not limited to Section 423 of the Code, and
shall contain such other provisions as the Employer shall from time to time
approve and deem necessary.
6.6 LIMITATIONS ON OPTIONS.
The options granted hereunder are subject to the following limitations:
(a) No Participant shall be permitted to purchase during any
calendar year Common Stock under this Plan (and any other plan of the
Employer or Subsidiary which is qualified under Section 423 of the
Code) having a market value in excess of $25,000 (as determined on the
Grant Date for the Option Period during which each such share of Common
Stock is purchased).
(b) No option may be granted to a Participant if the
Participant immediately after the option is granted would be a
Five-Percent Shareholder.
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(c) No Participant may assign, transfer or otherwise alienate
any options granted to him under this Plan, otherwise than by will or
the laws of descent and distribution, and such options must be
exercised during the Participant's lifetime only by the Participant.
6.7 PRO-RATA REDUCTION OF OPTIONED STOCK.
If the total number of shares of Stock to be purchased under option by
all Participants on an Exercise Date exceeds the number of shares of Stock
remaining authorized for issuance under Section 6.1, a pro-rata allocation of
the shares of Stock available for issuance will be made among Participants in
proportion to their respective Contribution Account balances on the Exercise
Date, and any money remaining in the Contribution Accounts shall be returned to
the Participants.
6.8 STATE SECURITIES LAWS.
Notwithstanding anything to the contrary contained herein, the Company
shall not be obligated to issue shares of Stock to any Participant if to do so
would violate any State securities law applicable to the sale of Stock to such
Participant. In the event that the Company refrains from issuing shares of Stock
to any Participant in reliance on this Section, the Company shall return to such
Participant the amount in such Participant's Contribution Account that would
otherwise have been applied to the purchase of Stock.
ARTICLE VII
TERMINATION OF PARTICIPATION
7.1 TERMINATION OF EMPLOYMENT.
Any Employee whose employment with the Employer is terminated during
the Option Period prior to the Exercise Date for any reason except death,
disability or retirement at or after age 65 shall cease being a Participant
immediately. The balance of that Participant's Contribution Account shall be
paid to such Participant as soon as practical after his termination. The option
granted to such Participant shall be null and void.
7.2 DEATH.
If a Participant should die while employed by the Employer, no further
contributions on behalf of the deceased Participant shall be made. The legal
representative of the deceased Participant may elect to withdraw the balance in
said Participant's Contribution Account by notifying the Employer in writing
prior to the Exercise Date in the Option Period during which the Participant
died. In the event no election to withdraw is made prior to the Exercise Date,
the balance accumulated in the deceased Participant's Contribution Account shall
be used to purchase shares of Stock in accordance with Section 6.4. Any money
remaining which is insufficient to purchase a whole share shall be paid to the
legal representative.
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7.3 RETIREMENT.
If a Participant should retire from the employment of the Employer at
or after attaining age 65, no further contributions on behalf of the retired
Participant shall be made. The Participant may elect to withdraw the balance in
his Contribution Account by notifying the Employer in writing prior to the
Exercise Date in the Option Period during which the Participant retired. In the
event no election to withdraw is made prior to the Exercise Date, the balance
accumulated in the retired Participant's Contribution Account shall be used to
purchase shares of Stock in accordance with Section 6.4, and any money remaining
which is insufficient to purchase a whole share shall be paid to the retired
Participant.
7.4 DISABILITY.
If a Participant should terminate employment with the Employer on
account of disability, as determined by reference to the definition of
"disability" in the Employer's long-term disability plan, no further
contributions on behalf of the disabled Participant shall be made. The
Participant may elect to withdraw the balance in his Contribution Account by
notifying the Employer in writing prior to the Exercise Date in the Option
Period during which the Participant became disabled. In the event no election to
withdraw is made prior to the Exercise Date, the balance accumulated in the
disabled Participant's Contribution Account shall be used to purchase shares of
Stock in accordance with Section 6.4, and any money remaining which is
insufficient to purchase a whole share shall be paid to the disabled
Participant.
ARTICLE VIII
OWNERSHIP OF STOCK
8.1 STOCK CERTIFICATES.
Stock purchased through exercise of the options granted hereunder shall
be uncertificated. However, certificates will be issued as soon as practical at
the written request of the Participant, in the name of the Participant, jointly
in the name of the Participant and a member of the Participant's family, or to
the Participant as custodian for the Participant's child under the applicable
jurisdiction's Gift to Minors Act.
8.2 PREMATURE SALE OF STOCK.
If a Participant (or former Participant) sells or otherwise disposes of
any shares of Stock obtained under this Plan
(i) prior to two (2) years after the Grant Date of the
option under which such shares were obtained, or
(ii) prior to one (1) year after the Exercise Date on
which such shares were obtained,
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that Participant (or former Participant) must notify the Employer immediately in
writing concerning such disposition.
ARTICLE IX
ADMINISTRATION AND AMENDMENT
9.1 ADMINISTRATION.
The Plan Administrator shall (i) administer the Plan and keep records
of the Contribution Account balance of each Participant, (ii) interpret the
Plan, and (iii) determine all questions arising as to eligibility to
participate, amount of contributions permitted, determination of the Exercise
Price, and all other matters of administration. The Plan Administrator shall
have such duties, powers and discretionary authority as may be necessary to
discharge the foregoing duties, and may delegate any or all of the foregoing
duties to any individual or individuals (including officers or other Employees
who are Participants). The Board of Directors shall have the right at any time
and without notice to remove or replace any individual or committee of
individuals serving as Plan Administrator. All determinations by the Plan
Administrator shall be conclusive and binding on all persons. Any rules,
regulations, or procedures that may be necessary for the proper administration
or functioning of this Plan that are not covered in this Plan document shall be
promulgated and adopted by the Plan Administrator.
9.2 AMENDMENT.
The Board of Directors of the Employer may at any time amend the Plan
in any respect, including termination of the Plan, without notice to
Participants. If the Plan is terminated, all options outstanding at the time of
termination shall become null and void and the balance in each Participant's
Contribution Account shall be paid to that Participant. Notwithstanding the
foregoing, no amendment of the Plan as described in Section 3.1 shall become
effective until and unless such amendment is approved by the shareholders of
ENVOY.
ARTICLE X
MISCELLANEOUS
10.1 EXPENSES.
The Employer will pay all expenses of administering this Plan that may
arise in connection with the Plan.
10.2 NO CONTRACT OF EMPLOYMENT.
Nothing in this Plan shall be construed to constitute a contract of
employment between an Employer and any Employee or to be an inducement for the
employment of any Employee. Nothing contained in this
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Plan shall be deemed to give any Employee the right to be retained in the
service of an Employer or to interfere with the right of an Employer to
discharge any Employee at any time, with or without cause, regardless of the
effect which such discharge may have upon him as a Participant of the Plan.
10.3 ADJUSTMENT UPON CHANGES IN STOCK.
The aggregate number of shares of Stock reserved for purchase under the
Plan as provided in Section 6.1, and the calculation of the Exercise Price as
provided in Section 6.3, shall be adjusted by the Plan Administrator (subject to
direction by the Board of Directors) in an equitable manner to reflect changes
in the capitalization of ENVOY, including, but not limited to, such changes as
result from merger, consolidation, reorganization, recapitalization, stock
dividend, dividend in property other than cash, stock split, combination of
shares, exchange of shares and change in corporate structure. If any adjustment
under this Section 10.3 would create a fractional share of Stock or a right to
acquire a fractional share of Stock, such fractional share shall be disregarded
and the number of shares available under the Plan and the number of shares
covered under any options granted pursuant to the Plan shall be the next lower
number of shares, rounding all fractions downward.
10.4 EMPLOYER'S RIGHTS.
The rights and powers of any Employer shall not be affected in any way
by its participation in this Plan, including but not limited to the right or
power of any Employer to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or any part of its business or
assets.
10.5 LIMIT ON LIABILITY.
No liability whatever shall attach to or be incurred by any past,
present or future shareholders, officers or directors, as such, of ENVOY or any
Employer, under or by reason of any of the terms, conditions or agreements
contained in this Plan or implied therefrom, and any and all liabilities of any
and all rights and claims against ENVOY, an Employer, or any shareholder,
officer or director as such, whether arising at common law or in equity or
created by statute or constitution or otherwise, pertaining to this Plan, are
hereby expressly waived and released by every Participant as a part of the
consideration for any benefits under this Plan; provided, however, no waiver
shall occur, solely by reason of this Section 10.5, of any right which is not
susceptible to advance waiver under applicable law.
10.6 GENDER AND NUMBER.
For the purposes of the Plan, unless the contrary is clearly indicated,
the use of the masculine gender shall include the feminine, and the singular
number shall include the plural and vice versa.
10.7 GOVERNING LAW.
The validity, construction, interpretation, administration and effect
of this Plan, and any rules or regulations promulgated hereunder, including all
rights or privileges of any Participants hereunder, shall be governed
exclusively by and in accordance with the laws of the State of Tennessee, except
that the Plan
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shall be construed to the maximum extent possible to comply with Section 423 of
the Code and the Treasury regulations promulgated thereunder.
10.8 HEADINGS.
Any headings or subheadings in this Plan are inserted for convenience
of reference only and are to be ignored in the construction of any provisions
hereof.
10.9 SEVERABILITY.
If any provision of this Plan is held by a court to be unenforceable or
is deemed invalid for any reason, then such provision shall be deemed
inapplicable and omitted, but all other provisions of this Plan shall be deemed
valid and enforceable to the full extent possible under applicable law.
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APPENDIX A
ENVOY CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON THURSDAY, JUNE 19, 1997.
The undersigned hereby appoints Fred C. Goad, Jr. and Jim D. Kever, and
either of them, as proxies, with full power of substitution, to vote all shares
of the undersigned as shown on the reverse side of this proxy at the Annual
Meeting of Shareholders of ENVOY Corporation at 10:00 a.m., local time, on
Thursday, June 19, 1997 at the Sheraton Music City Hotel, 777 McGavock Pike,
Nashville, Tennessee, and any adjournments thereof.
PROPOSAL ONE - ELECTION OF DIRECTORS:
[ ] FOR all of the following Class II nominees (except as indicated to the
contrary below):
W. Marvin Gresham Richard A. McStay Harlan F. Seymour
AGAINST the following nominees (please print name or names)
------------------------------------------------------------------------
WITHHOLD AUTHORITY (ABSTAIN) to vote for the following nominees (please
print name or names)
------------------------------------------------------------------------
[ ] AGAINST all nominees [ ] WITHHOLD AUTHORITY (ABSTAIN) to vote for all
nominees
PROPOSAL TWO - APPROVAL OF ENVOY CORPORATION EMPLOYEE STOCK PURCHASE PLAN:
[ ] FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY (ABSTAIN)
PROPOSAL THREE - RATIFICATION OF APPOINTMENT OF ERNST & YOUNG LLP:
[ ] FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY (ABSTAIN)
IMPORTANT: PLEASE DATE AND SIGN THIS PROXY ON THE REVERSE SIDE.
YOUR SHARES WILL BE VOTED IN ACCORDANCE WITH YOUR INSTRUCTIONS. IF NO CHOICE
IS SPECIFIED, SHARES WILL BE VOTED FOR THE NOMINEES IN THE ELECTION OF
DIRECTORS, FOR APPROVAL OF THE ENVOY CORPORATION EMPLOYEE STOCK PURCHASE PLAN
AND FOR THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP.
Date: ____________________ , 1997.
PLEASE SIGN HERE
AND RETURN PROMPTLY
-----------------------------
-----------------------------
Please sign exactly as your
name appears at left. If
shares are registered in the
names of two or more persons,
each should sign. Executors,
administrators, trustees,
guardians and attorneys
should show their full
titles. If a corporation is
shareholder, the corporate
officer should sign in full
corporate name and title,
such as President or other
officer. If a partnership or
limited liability company is
shareholder, please sign in
such organization's name by
an authorized person.
- --------------------------------------------------------------------------------
If you have changed your address, please PRINT your new address on this line.
