1
EXHIBIT 10.12
DATE: FEBRUARY 21, 1997
AMENDED AND RESTATED ENVOY CORPORATION
1995 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
1. PURPOSE
The purposes of the Plan are to advance the interests of the Company
and its shareholders by attracting and retaining the highest quality of
experienced persons as Outside Directors and to align the interests of the
Outside Directors more closely with the interests of the Company's shareholders.
2. DEFINITIONS
For purposes of the Plan, the following terms shall have the meanings
indicated below:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any successor thereto.
(c) "Company" shall mean Envoy Corporation, a corporation
organized under the laws of the State of Tennessee, or any
successor corporation.
(d) "Disability" means permanent and total disability within the
meaning of Section 22(e)(3) of the Code, as determined by the
Board.
(e) "Exercise Date" shall mean the date on which the Company
receives the notice of exercise of an Option from an Optionee
as set forth in Section 7(d).
(f) "Fair Market Value" shall mean, as of a given date, (i) the
average bid and asked prices for the Stock on The Nasdaq Stock
Market's National Market for the last preceding date on which
there was a sale of the Stock, or (ii) if the Stock is not
traded on The Nasdaq Stock Market's National Market, the fair
market value of a share of Stock as determined by the Board in
good faith.
(g) "Option" shall mean an option granted to an Outside Director
pursuant to the Plan.
(h) "Optionee" shall mean an Outside Director who has been
granted an Option pursuant to the Plan.
2
(i) "Outside Director" shall mean any member of the Board who has
not served as an employee of the Company or ENVOY Corporation,
a Delaware corporation, at any time during the two-year period
preceding the date on which an Option is granted to such
Optionee.
(j) "Plan" shall mean the 1995 Stock Option Plan for Outside
Directors, as amended and restated.
(k) "Stock" shall mean the Common Stock, without par value, of
the Company.
3. ADMINISTRATION
The Plan shall be administered by the Board. The Board is authorized to
interpret the Plan and may from time to time adopt such rules and regulations,
not inconsistent with the provisions of the Plan, as it may deem advisable to
carry out the Plan; provided, however, that the Board shall have no discretion
with respect to designating the recipient of an Option, the number of shares of
Stock that are subject to an Option or the per share exercise price for an
Option. All decisions made by the Board in construing the provisions of the Plan
shall be final.
4. ELIGIBILITY
Each Outside Director shall be eligible to participate under the Plan.
5. STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in Paragraph 9, not more than 60,000
shares of Stock may be issued with respect to the Options granted under the
Plan. Such shares that are reserved for issuance under the Plan are authorized
but unissued shares of Stock. Shares of Stock subject to an Option shall, upon
the expiration or termination of any such Option to the extent unexercised,
again be available for grant under the Plan.
6. GRANT OF OPTIONS
Options will be awarded under this Plan pursuant to the following
formula: Each Outside Director shall receive on the date of the annual meeting
of the Company's shareholders, commencing with the 1996 annual meeting of
shareholders, an option grant for the purchase of 2,000 shares of Stock (subject
to adjustment as provided in Paragraph 9). In addition, an initial option grant
for the purchase of 2,000 shares of Stock shall be made to each Outside Director
then serving on the later of April 1, 1995, or completion of the distribution
2
3
of the Company's stock by ENVOY Corporation (subject to adjustment as provided
in Paragraph 9). The exercise price of each Option granted under this Plan shall
be the Fair Market Value on the date of grant.
7. TERMS AND CONDITIONS OF OPTIONS
(a) Term
Options shall vest on the first anniversary of the date of
grant and shall be exercisable in whole or part at any time
upon fulfillment of the vesting period.
In no event may an Option be exercisable:
(i) Until the Optionee shall have completed at
least one year of continued service as a director of the
Company after the date such Option is granted; or
(ii) For more than ten years from the date of
grant.
Whether an authorized leave of absence shall constitute
termination of service as a director shall be determined by
the Board. In the event of the death or Disability of an
Optionee during his service as a director, all his unexercised
Options shall immediately become exercisable and may be
exercised (by his personal representative in the event of such
death) for a period of three years following the date of such
death or one year following the date of such Disability, but
in no event after the respective expiration dates of such
Options. In the event of the termination of an Optionee's
service as a director for cause, any Options held by him under
the Plan not theretofore exercised shall terminate immediately
upon such termination of service as a director and may not be
exercised thereafter. The Board in its sole discretion may
determine that an Optionee's service as a director was
terminated for cause, if it finds that the Optionee willfully
violated any of the Company's policies on ethical business
conduct or engaged in any activity or conduct during his
service as a director which was inimical to the best interests
of the Company. If an Optionee's service as a director is
terminated for any reason other than by his death or
Disability or by the Company for cause, his Options, to the
extent then exercisable, may be exercised within one year
immediately following the date of termination, but in no event
after the respective expiration dates of such Options.
(b) Exercise of Options
An Option shall be exercised by delivering to the Corporate
Secretary of the Company a written notice of exercise in the
form prescribed by the Corporate
3
4
Secretary for use from time to time. Such notice of exercise
shall indicate the number of shares for which the Option is to
be exercised and shall be accompanied by the full exercise
price for the portion of the Option to be exercised.
(c) Form of Payment
The exercise price may be paid in cash (including certified or
cashier's check, bank draft or money order), Stock which is
free and clear of all liens, claims or other encumbrances by
third parties, or a combination of Stock and cash. The Stock
so delivered shall be valued at the Fair Market Value as of
the Exercise Date. No shares of Stock shall be issued or
delivered until full payment therefor has been made.
(d) Non-Transferability
Unless determined otherwise by the Board, no Option shall be
assignable or transferable by the Optionee, except by will or
pursuant to applicable laws of descent and distribution and,
during the life of an Optionee, an Option shall be exercisable
only by such Optionee or such Optionee's legal representative.
If the Board makes an Option (including any currently
outstanding Option) transferable, such Option shall contain
such additional terms and conditions as the Board deems
appropriate.
(e) No Rights as Shareholders
Neither an Optionee nor an Optionee's legal representative
shall have any rights as shareholders of the Stock unless and
until certificates for shares of Stock are registered in his
or her name in satisfaction of a duly exercised Option.
8. WITHHOLDING TAXES
Whenever the Company grants, issues or transfers shares of Stock under
the Plan, the Company shall have the right to require the Optionee to remit to
the Company an amount sufficient to satisfy any federal, state and local
withholding tax requirements prior to the delivery of any certificate for such
shares. The Company shall have the right to retain sufficient shares of Stock to
cover the amount of any tax required by any government to be withheld or
otherwise deducted or paid with respect to the exercise of the Options. The
Stock so retained shall be valued at the Fair Market Value as of the date of
such retention.
4
5
9. CAPITAL ADJUSTMENTS AND CORPORATE REORGANIZATIONS
In the event of any change in the outstanding shares of Stock by reason
of a stock dividend, split or combination, or recapitalization or
reclassification, or reorganization, merger or consolidation, in which the
Company is the surviving corporation or other similar change affecting the
Stock, the number of shares then subject to Options and for which Options may
thereafter be granted and the price per share of Stock payable upon exercise or
surrender of such Options shall be appropriately adjusted by the Board to
reflect such change. No fractional shares shall be issued as a result of such
adjustment. In the event of a dissolution of the Company or a reorganization,
merger or consolidation in which the Company is not the surviving corporation,
the Company by action of its Board shall either (i) terminate outstanding and
unexercised Options as of the effective date of such dissolution, merger or
consolidation by giving notice to each Optionee of its intention to do so and
permitting the exercise, during the period prior to such effective date to be
specified by the Board, of all outstanding and unexercised Options or portions
thereof; provided, however, that no Option shall become exercisable hereunder
either after the expiration date thereof or prior to six (6) months from the
date of grant thereof, or (ii) in the case of such reorganization, merger or
consolidation, arrange for an appropriate substitution of shares or other
securities of the corporation with which the Company is reorganized, merged or
consolidated in lieu of the shares which are subject to any outstanding and
unexercised Options.
10. EFFECTIVE DATE AND TERM OF THE PLAN
The Plan was effective as of February 2, 1995. Subject to Section 11
hereof, the Board in its discretion may terminate the Plan at any time with
respect to any shares for which Options have not theretofore been granted.
Except with respect to Options then outstanding, if not sooner forfeited or
terminated, the Plan shall terminate upon, and no further Options shall be
granted after, February 2, 2005.
11. AMENDMENTS
The Board shall have the right to alter or amend the Plan or any part
thereof from time to time provided that:
(a) no change in any Option theretofore granted may be made which
would impair the rights of an Optionee without the consent of
such Optionee;
(b) Plan provisions may not be amended more than once every (6)
six months, other than to comport with changes in the Code,
the Employee Retirement Income Security Act, or the rules
thereunder; and
(c) the Board may not make any alteration or amendment which
would materially increase the benefits accruing to
participants under the Plan, increase the
5
6
aggregate number of shares of Stock which may be issued
pursuant to provisions of the Plan or extend the terms of the
Plan, without the approval of the shareholders of the Company.
6