EXHIBIT 4.5
HCIA Inc. 1995 Non-Employee Directors Stock Option
Plan, as amended
HCIA INC.
1995 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
As Amended Through August 7, 1996
1. Definitions
For purposes of the Plan:
(a) "Annual Award" means an award of Options pursuant to Section 5(b)
of the Plan.
(b) "Annual Meeting" means an annual meeting of the Company's
stockholders.
(c) "Board" means the Board of Directors of the Company.
(d) "Change in Control" means
(i) the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) of the Exchange Act), other than (A) an
employee benefit plan (or related trust) sponsored or maintained by
the Company or any of its affiliates or (B) AMBAC Inc., a Delaware
corporation ("AMBAC"), AMBAC Indemnity Corporation, a Wisconsin stock
insurance corporation ("AIC") or any of their respective affiliates,
of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 30% or more of the then outstanding voting
securities of the Company entitled to vote generally in the election
of directors or of equity securities having a value equal to 30% or
more of the total value of all equity securities of the Company,
provided, however, that any securities of the Company acquired by any
individual, entity or group directly from AMBAC, AIC or any of their
respective affiliates, or from an underwriter or placement agent (or
other person or entity performing similar services) who acquired such
securities directly from AMBAC, AIC or any of their respective
affiliates, shall not be included in the number of shares acquired by
such individual, entity or group for purposes of determining whether a
Change in Control has occurred; or
(ii) individuals who as of the Offering Date constitute the
Board, and subsequently elected members of the Board whose election is
approved or recommended by at least a majority of such current members
or their successors whose election was so approved or recommended,
cease for any reason to constitute at least a majority of such Board.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Committee" means the committee designated by the Board pursuant to
Section 3(c) of the Plan.
(g) "Common Stock" means the Common Stock of the Company, par value $.01
per share, or such other class or kind of shares or other securities as may be
applicable under Section 12.
(h) "Company" means HCIA Inc., a Maryland corporation, or any successor to
substantially all its business.
(i) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(k) "Fair Market Value" means the average of the highest and the lowest
quoted selling prices of the Common Stock as reported on the National
Association of Securities Dealers Automated Quotation System National Market
System or such other national securities exchange as may be designated by the
Committee or, in the event that the Common Stock is not listed for trading on a
national securities exchange, the average of the highest and lowest quoted
selling prices of the Common Stock as reported by the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"), in any such case for
the applicable valuation date or, if there were no sales on such valuation date,
for the most recent day for which there was such a sale.
(l) "Initial Award" means an award of Options pursuant to Section 5(a) of
the Plan.
(m) "Non-Employee Director" means a member of the Board who is not an
employee of the Company or any of its subsidiaries and is not an employee of
AMBAC, AIC or any of their respective subsidiaries while AMBAC and AIC maintain,
in the aggregate, an equity interest in the Company representing 25% or more of
the voting power of the Company's outstanding voting stock.
(n) "Offering Date" means the effective date of the Company's registration
statement no. 33-88226 relating to the initial public offering of the Common
Stock.
(o) "Option" means an option to purchase shares of Common Stock awarded to
a Non-Employee Director pursuant to the Plan.
(p) "Option Shares" means the shares of Common stock issuable upon exercise
of an Option.
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(q) "Permanent Disability" means a physical or mental impairment rendering
a Non-Employee Director substantially unable to function as a member of the
Board for any period of six consecutive months. Any dispute as to whether a
Non-Employee Director is Permanently Disabled shall be resolved by a physician
mutually acceptable to the Non-Employee Director and the Company, whose decision
shall be final and binding upon the Non-Employee Director and the Company.
(r) "Plan" means the HCIA Inc. 1995 Non-Employee Directors Stock Option
Plan as described herein.
(s) "Retirement" means a Non-Employee Director ceasing to be a member of
the Board as a result of retirement from the Board in accordance with the
retirement policy then applicable to Board members.
(t) "1933 Act" means the Securities Act of 1933, as amended.
2. Purpose
The purpose of the Plan is to retain the services of qualified persons who
are not employees of the Company to serve as members of the Board and to secure
for the Company the benefits of the incentives inherent in increased Common
Stock ownership by Non-Employee Directors, by granting to such person options to
purchase shares of Common Stock.
3. Shares Available; Administration
(a) Subject to the provisions of Section 12 of the Plan, the maximum number
of shares of Common Stock which may be issued under the Plan shall not exceed
200,000 shares. Either authorized and unissued shares of Common Stock or
treasury shares may be delivered upon exercise of Options awarded pursuant to
the Plan.
(b) If Options have been forfeited to the Company as described in Section
6(d), the Options Shares underlying such Options shall again be available for
issuance in connection with future awards under the Plan.
(c) The Plan will be administered by a committee designated by the Board
and composed exclusively of members of the Board who are not Non-Employee
Directors (the "Committee"). The Committee may adopt rules and regulations
necessary to carry out the Plan's purposes. The Committee's interpretation and
construction of any Plan provision shall be final and conclusive.
4. Eligibility
Options awarded pursuant to the Plan shall be granted only to Non-Employee
Directors.
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5. Awards
(a) Initial Award. On the date of a Non-Employee Director's initial
election or appointment to the Board (or in the case of a Non-Employee Director
who is a member of the Board as of the Offering Date, on the Offering Date),
such Non-Employee Director (including any Non-Employee Director reelected or
reappointed after a period of at least 12 calendar months during which he did
not serve on the Board) shall be granted an Initial Award consisting of an
Option to purchase 5,000 shares of Common Stock. Such Option shall have a per
share exercise price equal to the Fair Market Value of the Common Stock on the
date of award and shall be subject to the vesting schedule provided for in
Section 6(a) and the other terms and conditions provided for herein.
(b) Annual Awards. At each Annual Meeting, commencing with the Annual
Meeting held in 1995 subsequent to the Offering Date, each person who has served
as a member of the Board during the period elapsed since the immediately
preceding Annual Meeting (or in the case of the Annual Meeting held in 1995,
each person who has served as a member of the Board since the Offering Date),
and who has, during all or a portion of such service, been a Non-Employee
Director for purposes of the Plan shall be granted as of the date of such Annual
Meeting an Annual Award consisting of an Option to purchase 5,000 shares of
Common Stock (or such lesser number determined by multiplying 5,000 by a
fraction, the numerator of which is the number of full or partial months since
the immediately preceding Annual Meeting (or Offering Date, if applicable)
during which such person served on the Board in the capacity of a Non-Employee
Director, and the denominator of which is the number of full or partial months
since the immediately preceding Annual Meeting (or Offering Date, if
applicable)). Such Option shall have a per share exercise price equal to the
Fair Market Value of the Common Stock on the date of award and shall be subject
to the vesting schedule provided for in Section 6(b) and the other terms and
conditions provided for herein.
6. Vesting
(a) Vesting of Initial Awards. Initial Awards shall vest and become
exercisable as follows:
(i) An Initial Award made other than in connection with a Non-Employee
Director's initial election to the Board at an Annual Meeting shall vest
and become exercisable in two equal installments as of the first and second
anniversaries of the date of grant, provided that the Non-Employee Director
remains in service as a member of the Board until the relevant vesting
date.
(ii) An Initial Award made in connection with a Non-Employee
Director's initial election to the Board at an Annual Meeting shall vest
and become exercisable as to 50% of the Options Shares subject to the
Option constituting such Initial Award as of the date of the first Annual
Meeting following the date of award, and as to the remaining 50% of the
Option Shares subject to such Option as of the date of the second Annual
Meeting following the date of award, provided the Non-Employee Director to
whom such Annual Award was made
continues in service as a member of the Board until the relevant vesting
date (whether or not the Non-Employee Director is nominated for reelection
at the Annual Meeting held on either vesting date, and whether or not, if
nominated, he is reelected).
(b) Vesting of Annual Awards. Each Annual Award shall vest and become
exercisable as of the date of the first Annual Meeting following the date of
award, provided the Non-Employee Director to whom such Annual Award was made
continues in service as a member of the Board until the vesting date (whether or
not the Non-Employee Director is nominated for reelection at the Annual Meeting
held on such vesting date, and whether or not, if nominated, he is reelected).
(c) Accelerated Vesting. Notwithstanding anything to the contrary in
Sections 6(a) and 6(b), an Option shall become fully vested and exercisable upon
the first to occur of (i) a Non-Employee ceasing to be a member of the Board as
a result of death, Permanent Disability or Retirement, or (ii) a Change in
Control of the Company.
(d) Forfeiture. In the event of a Non-Employee Director's termination of
service as a member of the Board for any reason other than death, Permanent
Disability or Retirement prior to the satisfaction of any vesting period
requirement hereof, the unvested portion of any Options awarded to the
Non-Employee Director shall be forfeited to the Company as of the date of
termination of service, and the Non-Employee Director shall have no further
right or interest therein.
7. Term of Options
(a) Ten-Year Term. Each Option shall expire ten years from its date of
award, subject to earlier termination as provided herein.
(b) Exercise Following Certain Terminations of Service. If a Non-Employee
Director's service as a member of the Board terminates for any reason other than
death, Permanent Disability or Retirement, the Non-Employee Director shall have
the right, subject to the terms and conditions hereof, to exercise the Option,
to the extent it has vested as of the date of such termination of service, at
any time within six months after the date of such termination, subject to the
earlier expiration of the Option as provided in Section 7(a). At the end of such
six-month period the Option shall expire.
(c) Exercise Following Termination of Service Due to Death, Permanent
Disability or Retirement. If a Non-Employee Director's service as a member of
the Board terminates by reason of death, Permanent Disability or Retirement, all
Options awarded to such Non-Employee Director may be exercised by such
Non-Employee Director, or by his or her estate, personal representative or
beneficiary, as the case may be, at any time within one year after the date of
termination of service, subject to the earlier expiration of the Option as
provided in Section 7(a). At the end of such one-year period the Option shall
expire.
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(d) Exercise Following Termination of Service Subject to Company Policies
and Procedures on Insider Trading. Any exercise of an Option pursuant to Section
7(b) or 7(c) following termination of a Non-Employee Director's service as a
member of the Board for any reason other than death shall be subject to, and
shall be permitted only to the extent such exercise complies with, the policies
and procedures of the Company concerning insider trading that were applicable to
the Non-Employee Director on the date of such termination of service (as such
policies and procedures may be amended by the Company during the period provided
in Section 7(b) or 7(c), as the case may be, for exercise of the Option).
8. Time and Manner of Exercise
(a) Notice of Exercise. Subject to the other terms and conditions hereof, a
Non-Employee Director may exercise any Options (to the extent vested) by giving
written notice of exercise to the Company, provided, however, that no less than
10 Option Shares may be purchased upon any exercise of the Option unless the
number of Option Shares purchased at such time is the total number of Option
Shares in respect of which an Option is then exercisable, and provided, further,
that in no event shall an Option be exercisable for a fractional share. The date
of exercise of an Option shall be the later of (i) the date on which the Company
receives such written notice or (ii) the date on which the conditions provided
in Section 8(b) are satisfied. Notwithstanding any other provision of the Plan
or of the notice of award relating to an Option provided for in Section 9, no
Option may be exercised, whether in whole or in part, and no Option Shares will
be issued by the Company in respect of any such attempted exercise, at any time
when such exercise is prohibited by Company policy then in effect concerning
transactions by a Non-Employee Director in the Company's securities. In the
event that a Non-Employee Director gives written notice of exercise to the
Company at a time when such exercise is prohibited by such policy, the Company
in its sole discretion may disregard such notice of exercise or may consider
such notice to be delivered as of the first date that the Non-Employee Director
is permitted to exercise such option in accordance with such Company policy.
(b) Payment. Prior to the issuance of a certificate pursuant to Section
8(e) hereof evidencing the Option Shares in respect of which all or a portion of
an Option shall have been exercised, a Non-Employee Director shall have paid to
the Company the Option Price for all Option Shares purchased pursuant to the
exercise of such Option. Payment may be made by personal check, bank draft or
postal or express money order (such modes of payment are collectively referred
to as "cash") payable to the order of the Company in U.S. dollars or in shares
of Common Stock already owned by the Non-Employee Director valued at their Fair
Market Value as of the last business day preceding the date of exercise, or in
any combination of cash or such shares as the compensation committee of the
Board in it sole discretion may approve. Payment of the exercise price in shares
of Common Stock shall be made by delivering to the Company the share
certificate(s) representing the required number of shares, with the Non-Employee
Director signing his or her name on the back, or by attaching executed stock
powers (the signature of the Non-Employee Director must be guaranteed in either
case).
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(c) Stockholder Rights. A Non-Employee Director shall have no rights as a
stockholder with respect to any shares of Common Stock issuable upon exercise of
an Option until a certificate evidencing such shares shall have been issued to
the Non-Employee Director pursuant to Section 8(e), and no adjustment shall be
made for dividends or distributions or other rights in respect of any share for
which the record date is prior to the date upon which the Non-Employee Director
shall become the holder of record thereof.
(d) Limitation on Exercise. No Option shall be exercisable unless the
Common Stock subject thereto has been registered under the Securities Act and
qualified under applicable state "blue sky" laws in connection with the offer
and sale thereof, or the Company has determined that an exemption from
registration under the Securities Act and from qualification under such state
"blue sky" laws is available.
(e) Issuance of Shares. Subject to the foregoing conditions, as soon as is
reasonably practicable after its receipt of a proper notice of exercise and
payment of the Option Price for the number of shares with respect to which the
Option is exercised, the Company shall deliver to the Non-Employee Director (or
following the Non-Employee Director's death, such other person entitled to
exercise the Option), at the principal office of the Company or at such other
location as may be acceptable to the Company and the Non-Employee Director (or
such other person), one or more stock certificates for the appropriate number of
shares of Common Stock issued in connection with such exercise. Such shares
shall be fully paid and nonassessable and shall be issued in the name of the
Non-Employee Director (or such other person).
(f) Tax Withholding. The Company shall have the right, prior to the
delivery of any certificates evidencing shares of Common Stock to be issued upon
full or partial exercise of an Option, to require a Non-Employee Director to
remit to the Company any amount sufficient to satisfy any Federal, state or
local tax withholding requirements. The Company may permit the Non-Employee
Director to satisfy, in whole or in part, such obligation to remit taxes, by
directing the Company to withhold shares of Common Stock that would otherwise be
received by the Non-Employee Director, pursuant to such rules as the Committee
may establish from time to time. The Company shall also have the right to deduct
from all cash payments made pursuant to or in connection with the Option any
Federal, state or local taxes required to be withheld with respect to such
payments.
(g) Restrictions on Transfer. An Option may not be transferred, pledged,
assigned, or otherwise disposed of, except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined in
the Code or Title I of ERISA ("QDRO"). The Option shall be exercisable, during
the Participant's lifetime, only by the Participant or by the person to whom the
Option has been transferred pursuant to a QDRO. No assignment or transfer of the
Option, or of the rights represented thereby, whether voluntary or involuntary,
by operation of law or otherwise, except by will or the laws of descent and
distribution or pursuant to a QDRO, shall vest in the assignee or transferee any
interest or right in the Option, but immediately upon any attempt to assign or
transfer the Option the same shall terminate and be of no force or effect.
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(h) Non-qualified Status of Options. Options awarded under the Plan are not
intended to qualify, and shall not be treated, as an "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended.
9. Notice of Award
The terms and conditions of each award of Options shall be embodied in a
notice of award which shall contain terms and conditions not inconsistent with
the Plan and which shall incorporate the Plan by reference. Each notice of award
shall state the date on which the Options were granted, the number of shares
subject to such Option and the per share exercise price therefor.
10. Effective Date; Term of the Plan
The effective date of the Plan shall be the Offering Date. Unless earlier
terminated in accordance with Section 11 below, the term of the Plan shall
expire on the tenth anniversary of the Offering Date. After such date, no
further awards of Options may be made hereunder, but previously granted awards
shall remain outstanding subject to the terms hereof.
11. Amendments
The Board may at any time and from time to time alter, amend, suspend or
terminate the Plan in whole or in part, provided, however, that in no event may
the provisions of the Plan respecting eligibility to participate or the timing
or amount of awards be amended more frequently than once every six months, other
than to comport with changes in the Code, ERISA or any rules or regulations
thereunder, provided, further, that any amendment which under the requirements
of applicable law must be approved by the stockholders of the Company shall not
be effective unless and until such stockholder approval has been obtained in
compliance with such law, and provided, further, that any amendment that must be
approved by the stockholders of the Company in order to maintain the continued
qualification of the Plan under Rule 16b-3 under the Exchange Act, or any
successor provision, shall not be effective unless and until such stockholder
approval has been obtained in compliance with such rule. No termination or
amendment of the Plan may, without the consent of the Non-Employee Director,
affect any such person's rights under the provisions of the Plan with respect to
awards of Options which were made prior to such action.
12. Adjustment of and Changes in Common Stock
In the event of any merger, consolidation, recapitalization,
reclassification, stock dividend, distribution of property, special cash
dividend, or other change in corporate structure affecting the Common Stock, the
Committee shall make such adjustments, if any, as it considers necessary or
appropriate in the number and class of shares subject to Options or authorized
to be awarded hereunder, in order to prevent dilution or enlargement of rights.
Any new or additional
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Options awarded pursuant to such adjustments shall be subject to all of the
terms and conditions of the Plan.
13. No Right to Reelection
Nothing in the Plan shall be deemed to create any obligation on the part of
the Board to nominate any of its members for reelection by the Company's
stockholders, nor confer upon any Non-Employee Director the right to remain a
member of the Board for any period of time, or at any particular rate of
compensation.
14. Governing Law
The Plan and all notices issued or agreements entered into under the Plan
shall be construed in accordance with and governed by the laws of the State of
Maryland.
15. No Restriction on Right of Company to Effect Corporate Changes
The Plan shall not affect in any way the right or power of the Company or
its stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of stock
or of options, warrants or rights to purchase stock or of bonds, debentures,
preferred or prior preference stocks whose rights are superior to or affect the
Common Stock or the rights thereof or which are convertible into or exchangeable
for Common Stock, or the dissolution or liquidation of the Company, or any sale
or transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.