SHERIDAN HEALTHCARE, INC.
SECOND AMENDED AND RESTATED 1995 STOCK OPTION PLAN
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1. PURPOSE
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This Second Amended and Restated 1995 Stock Option Plan (the "Plan"),
which was first adopted as the SAMA Holdings, Inc. 1995 Stock Option Plan
effective as of April 27, 1995 and first amended and restated on July 27, 1995,
is intended as a performance incentive for officers, employees, consultants,
directors and other key persons of Sheridan Healthcare, Inc. (the "Company"),
its Subsidiaries (as hereinafter defined) or their Affiliates (as hereinafter
defined) to enable the persons to whom options are granted (the "Optionees") to
acquire or increase a proprietary interest in the success of the Company. The
Company intends that this purpose will be effected by the granting of "incentive
stock options" ("Incentive Options") as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), and nonqualified stock options
("Nonqualified Options"). The term "Subsidiaries" includes any corporations in
which stock possessing fifty percent or more of the total combined voting power
of all classes of stock is owned directly or indirectly by the Company. The term
"Affiliates" includes all corporations or other entities controlling, controlled
by or under common control with the Company or any of its Subsidiaries and
includes any physician, professional corporation or other person to whom or
which the Company or any of its Subsidiaries provides services pursuant to a
management services agreement or similar arrangements.
2. OPTIONS TO BE GRANTED; ADMINISTRATION OF THE PLAN
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(a) Options granted under the Plan may be either Incentive
Options or Nonqualified Options, and shall be designated as such at the
time of grant. To the extent that any option intended to be an
Incentive Option shall fail to qualify as an "incentive stock option"
under the Code, such option shall be deemed to be a Nonqualified
Option. Each option granted hereunder shall be embodied in a written
agreement, as described in Section 4 hereof, that is signed by the
Optionee and an authorized officer of the Company.
(b) The Plan shall be administered either by the Board of
Directors of the Company (the "Board of Directors") or by a committee
(the "Option Committee") of not fewer than two directors of the Company
appointed by the Board of Directors (in either case, the
"Administrator"). None of the members of the Option Committee shall be
an officer or other full-time employee of the Company. It is the
intention of the Company that each member of the Option Committee shall
be a "Non-Employee Director" as that term is defined and interpreted
pursuant to Rule 16b-3(b)(3)(i) or any successor rule thereto
promulgated under the Securities Exchange Act of 1934, as amended (the
"Act"), and that, on and after the date the Plan becomes subject to
Section 162(m) of the Code, each member of the Option Committee shall
be an "outside director" as that term is defined and interpreted
pursuant to Section 162(m) of the Code and the regulations promulgated
thereunder. Subject to the foregoing requirements of Section 2(b), the
Compensation Committee of the Board of Directors may serve as the
Option Committee. Action by the Option Committee shall require the
affirmative vote of a majority of all its members.
(c) Subject to the terms and conditions of the Plan, the
Administrator shall have the power:
(i) To determine from time to time the options to be
granted to eligible persons under the Plan and to prescribe
the terms and provisions (which need not be identical) of
options (including without limitation, the number of shares
subject to each such option, the effects upon such options of
any change in control of the Company and any vesting
provisions with respect to such options) granted under the
Plan to such persons;
(ii) To construe and interpret the Plan and grants
thereunder and to establish, amend, and revoke rules and
regulations for administration of the Plan (including to
correct any defect or supply any omission, or reconcile any
inconsistency in the Plan, in any option agreement, or in any
related agreements, in the manner and to the extent the
Administrator shall deem necessary or expedient to make the
Plan fully effective);
(iii) To amend from time to time, as the
Administrator may determine is in the best interests of the
Company, the terms of any outstanding options, including
without limitation, to modify the vesting schedule, exercise
price or expiration date thereof in a manner not inconsistent
with the terms of the Plan; and
(iv) Generally, to exercise such powers and to
perform such acts as are deemed necessary or expedient to
promote the best interests of the Company with respect to the
Plan.
All decisions and determinations by the Administrator in the exercise
of these powers shall be final and binding upon the Company and the
Optionees.
(d) Delegation of Authority to Grant Options. The
Administrator, in its discretion, may delegate to the Chief Executive
Officer of the Company or any Subsidiary all or part of the
Administrator's authority and duties with respect to Options, including
the granting thereof, to individuals who are not subject to the
reporting and other provisions of Section 16 of the Act and, on and
after the date the Plan becomes subject to Section 162(m) of the Code,
who also are not "covered employees" within the meaning of Section
162(m) of the Code. The Administrator may revoke or amend the terms of
a delegation at any time, but such action shall not invalidate any
prior actions of the Administrator's delegate or delegates that were
consistent with the terms of the Plan.
3. STOCK SUBJECT TO THE OPTIONS
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The stock granted under the Plan, or subject to the options granted
under the Plan, shall be shares of the Company's authorized but unissued Common
Stock, par value $.01 per share (the "Common Stock"), which may either be
authorized but unissued shares or treasury shares or shares previously reserved
for issuance upon exercise of options under the Plan, and allocable to one or
more options (or portions of options) which have expired or been canceled or
terminated (other than by exercise). The total number of shares that may be
issued under the Plan shall not exceed an aggregate of 750,000 hares of Common
Stock. Options with respect to no more than 250,000 shares of Common Stock may
be granted to any one individual during any one calendar year period. Such
number of shares shall be subject to adjustment as provided in Section 7 hereof.
4. ELIGIBILITY
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(a) Incentive Options may be granted only to employees of the
Company or its Subsidiaries, including members of the Board of
Directors who are also employees of the Company or its Subsidiaries,
who are eligible to receive an Incentive Stock Option under the Code.
Nonqualified Options may be granted to officers, other employees and
directors of the Company or its Subsidiaries, and to consultants and
other key persons who provide services to the Company or its
Subsidiaries or their Affiliates (regardless of whether they are also
employees) and to such other persons as the Administrator may select
from time to time, provided, however, that no Nonqualified Options may
be granted under the Plan to any person while serving as a member of
the Option Committee except as provided in Section 4(d) hereof.
(b) No person shall be eligible to receive any Incentive
Option under the Plan if, at the date of grant, such person
beneficially owns stock representing in excess of ten percent of the
voting power of all outstanding capital stock of the Company, unless
notwithstanding anything in this Plan to the contrary (i) the purchase
price for Common Stock subject to such option is at least 110% of the
fair market value of such Common Stock at the time of the grant and
(ii) the option by its terms is not exercisable more than five years
from the date of grant thereof.
(c) Notwithstanding any other provision of the Plan, the
aggregate fair market value (determined as of the time the option is
granted) of the Common Stock with respect to which Incentive Options
are exercisable for the first time by any individual during any
calendar year (under all plans of the Company and its parent and
Subsidiaries) shall not exceed $100,000. Any option granted under the
Plan in excess of the foregoing limitations shall be deemed to be a
Nonqualified Option.
(d) (i) (A) Each non-employee member of the Board of
Directors of the Company serving in such
capacity upon consummation of the Company's
initial public offering shall automatically
be granted on such date a Nonqualified
Option to purchase 7,500 shares of Common
Stock.
(B)Each person who first becomes a non-
employee member of the Board of Directors
of the Company after the consummation of
the Company's initial public offering
shall automatically be granted on the date
such person first becomes a director a
Nonqualified Option to purchase 7,500
shares of Common Stock.
(C)Each non-employee member of the Board of
Directors of the Company serving in such
capacity on the fifth business day after
each annual meeting of stockholders ,
beginning with the 1996 annual meeting,
shall automatically be granted on such day
a Nonqualified Option to purchase 2,500
shares of Common Stock.
(ii) The purchase price per share of Common Stock of
each Nonqualified Option granted to a member of the
Board of Directors pursuant to this Section 4(d) shall be the
fair market value of the Common Stock on the date the option
is granted.
(iii) Options granted under this Section 4(d) shall
become exercisable in three equal installments, with one-third
becoming exercisable on the date of grant and an additional
one-third on each of the two successive anniversaries thereof
and shall expire no later than the tenth anniversary of the
grant date.
(iv) The provisions of this Section 4(d) shall apply
only to automatic grants of Nonqualified Options to
non-employee directors, and shall not be deemed to modify,
limit or otherwise apply to any other provisions of the Plan
or to any option granted thereunder to any other person,
including options granted to non-employee directors otherwise
than pursuant to this Section 4(d).
5. TERMS OF THE OPTION AGREEMENTS
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Subject to the terms and conditions of the Plan, each option agreement
shall contain such provisions as the Administrator shall from time to time deem
appropriate. Option agreements need not be identical, but each option agreement
by appropriate language shall include the substance of all of the following
provisions:
(a) Expiration; Termination of Employment. Notwithstanding any
other provision of the Plan or of any option agreement, each option
shall expire not later than the date specified in the option agreement,
which date in the case of any Incentive Option shall not be later than
the tenth anniversary of the date on which the option was granted. If
an Optionee's employment with the Company and its Subsidiaries
terminates for any reason, the Administrator may in its discretion
provide, at any time, that any outstanding option granted to such
Optionee under the Plan shall be exercisable for such period following
termination of employment as may be specified by the Administrator,
subject to the expiration date of such option.
(b) Exercise. Each option shall be exercisable in such
installments (which need not be equal) and at such times as may be
designated by the Administrator. To the extent not exercised,
installments shall accumulate and be exercisable, in whole or in part,
at any time after becoming exercisable, but not later than the date the
option expires.
(c) Purchase Price. The purchase price per share of Common
Stock subject to each option shall be determined by the Administrator;
provided, however, that the purchase price per share of Common Stock
subject to each Incentive Option shall be not less than the fair market
value of the Common Stock on the date such Incentive Option is granted.
For the purposes of the Plan, the fair market value of the Common Stock
shall be determined in good faith by the Administrator; provided,
however, that (i) if the Common Stock is admitted to quotation on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ") Small-Cap Market on the date the option is granted, the fair
market value shall not be less than the average of the highest bid and
lowest asked prices of the Common Stock on NASDAQ reported for such
date, (ii) if the Common Stock is admitted to trading on a national
securities exchange or the NASDAQ National Market on the date the
option is granted, the fair market value shall not be less than the
closing price reported for the Common Stock on such exchange or system
for such date or, if no sales were reported for such date, for the last
date preceding such date for which a sale was reported, and (iii) the
fair market value of the Common Stock on the effective date of the
registration statement for the Company's initial public offering shall
be the initial offering price.
(d) Rights of Optionees. No Optionee shall be deemed for any
purpose to be the owner of any shares of Common Stock subject to any
option unless and until (i) the option shall have been exercised
pursuant to the terms thereof, (ii) all requirements under applicable
law and regulations shall have been complied with to the satisfaction
of the Company, (iii) the Company shall have issued and delivered the
shares to the Optionee, and (iv) the Optionee's name shall have been
entered as a stockholder of record on the books of the Company.
Thereupon, the Optionee shall have full voting, dividend and other
ownership rights with respect to such shares of Common Stock.
(e) Transfer. No option granted hereunder shall be
transferable by the Optionee other than by will or by the laws of
descent and distribution, and such option may be exercised during the
Optionee's lifetime only by the Optionee, or his or her guardian or
legal representative. Notwithstanding the foregoing, the Administrator
may permit an optionee to transfer, without consideration for the
transfer, a Nonqualified Option to members of his immediate family, to
trusts for the benefit of such family members, to partnerships in which
such family members are the only partners, or to charitable
organizations, provided that the transferee agrees in writing with the
Company to be bound by all of the terms and conditions of this Plan and
the applicable option agreement.
6. METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE
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(a) Any option granted under the Plan may be exercised by the
Optionee in whole or in part by delivering to the Company on any
business day a written notice specifying the number of shares of Common
Stock the Optionee then desires to purchase (the "Notice").
(b) Payment for the shares of Common Stock purchased pursuant
to the exercise of an option shall be made either: (i) in cash, or by
certified or bank check or other payment acceptable to the Company,
equal to the option exercise price for the number of shares specified
in the Notice (the "Total Option Price"); (ii) if authorized by the
applicable option agreement and if permitted by law, by delivery of
shares of Common Stock that the optionee may freely transfer having a
fair market value, determined by reference to the provisions of Section
5(c) hereof, equal to or less than the Total Option Price, plus cash in
an amount equal to the excess, if any, of the Total Option Price over
the fair market value of such shares of Common Stock; or (iii) by the
Optionee delivering the Notice to the Company together with irrevocable
instructions to a broker to promptly deliver the Total Option Price to
the Company in cash or by other method of payment acceptable to the
Company; provided, however, that the Optionee and the broker shall
comply with such procedures and enter into such agreements of indemnity
or other agreements as the Company shall prescribe as a condition of
payment under this clause (iii).
(c) The delivery of certificates representing shares of Common
Stock to be purchased pursuant to the exercise of an option will be
contingent upon the Company's receipt of the Total Option Price and of
any written representations from the Optionee required by the
Administrator, and the fulfillment of any other requirements contained
in the option agreement or applicable provisions of law (including
payment of any amount required to be withheld by the Company pursuant
to applicable law).
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION
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(a) If the shares of the Company's Common Stock as a whole are
increased, decreased, changed into or exchanged for a different number
or kind of shares or securities of the Company, whether through merger,
consolidation, reorganization, recapitalization, reclassification,
stock dividend, stock split, combination of shares, exchange of shares,
change in corporate structure or the like, an appropriate and
proportionate adjustment shall be made in the number and kind of shares
subject to the Plan, and in the number, kind, and per share exercise
price of shares subject to unexercised options or portions thereof
granted prior to any such change. In the event of any such adjustment
in an outstanding option, the Optionee thereafter shall have the right
to purchase the number of shares under such option at the per share
price, as so adjusted, which the Optionee could purchase at the total
purchase price applicable to the option immediately prior to such
adjustment.
(b) Adjustments under this Section 7 shall be determined by
the Administrator and such determinations shall be conclusive. The
Administrator shall have the discretion and power in any such event to
determine and to make effective provision for acceleration of the time
or times at which any option or portion thereof shall become
exercisable. No fractional shares of Common Stock shall be issued under
the Plan on account of any adjustment specified above.
8. EFFECT OF CERTAIN TRANSACTIONS
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(a) In the case of a Change of Control (as defined below), all
outstanding options shall automatically become fully exercisable
whether or not such options were exercisable immediately prior thereto.
Unless provision is made in connection with such Change of Control for
the assumption of options theretofore granted, or the substitution for
such options of new options of the successor entity or parent thereof
(with appropriate adjustment as to the number and kind of shares and
the per share exercise prices, as provided in Section 7), the Plan and
the options issued hereunder shall terminate upon the effectiveness of
such Change of Control. In the event of such termination, all
outstanding options shall be exercisable in full for at least fifteen
days prior to the date of such termination whether or not otherwise
exercisable during such period.
(b) "Change of Control" shall mean the occurrence of any one
of the following events:
(i) any "person," as such term is used in Sections
13(d) and 14(d) of the Act (other than the Company, any of its
Subsidiaries, or any trustee, fiduciary or other person or
entity holding securities under any employee benefit plan or
trust of the Company of any of its Subsidiaries), together
with all "affiliates" and "associates" (as such terms are
defined in Rule 12b-2 under the Act) of such person, shall
become the "beneficial owner" (as such term is defined in Rule
13d-3 under the Act), directly or indirectly, of securities of
the Company representing in excess of 50% of either (A) the
combined voting power of the Company's then outstanding
securities having the right to vote in an election of the
Company's Board of Directors ("Voting Securities") or (B) the
then outstanding shares of Common Stock of the Company (in
either such case other than as a result of an acquisition of
securities directly from the Company); or
(ii) persons who, as of the effective date of the
Plan, constitute the Company's Board of Directors (the
"Incumbent Directors") cease for any reason, including,
without limitation, as a result of a tender offer, proxy
contest, merger or similar transaction, to constitute at least
a majority of the Board, provided that any person becoming a
director of the Company subsequent to the Effective Date whose
election or nomination for election was approved by a vote of
at least a majority of the Incumbent Directors shall, for
purposes of this Plan, be considered an Incumbent Director; or
(iii) the stockholders of the Company shall approve
(A) any consolidation or merger of the Company or any
Subsidiary where the stockholders of the Company immediately
prior to the consolidation or merger, would not, immediately
after the consolidation or merger, beneficially own (as such
term is defined in Rule 13d-3 under the Act), directly or
indirectly, shares representing in the aggregate 80% or more
of the voting shares of the corporation issuing cash or
securities in the consolidation or merger (or of its ultimate
parent corporation, if any), (B) any sale, lease, exchange or
other transfer (in one transaction or a series of transactions
contemplated or arranged by any party as a single plan) of all
or substantially all of the assets of the Company or (C) any
plan or proposal for the liquidation or dissolution of the
Company.
Notwithstanding the foregoing, a "Change of Control" shall not be
deemed to have occurred for purposes of the foregoing clause (i) solely as the
result of an acquisition of securities by the Company which, by reducing the
number of shares of Common Stock or other Voting Securities outstanding,
increases (x) the proportionate number of shares of Common Stock beneficially
owned by any person in excess of 50% or more of the shares of Common Stock then
outstanding or (y) the proportionate voting power represented by the Voting
Securities beneficially owned by any person in excess of 50% or more of the
combined voting power of all then outstanding Voting Securities; provided,
however, that if any person referred to in clause (x) or (y) of this sentence
shall thereafter become the beneficial owner of any additional shares of Common
Stock or other Voting Securities (other than pursuant to a stock split, stock
dividend, or similar transaction), then a "Change of Control" shall be deemed to
have occurred for purposes of the foregoing clause (i).
9. TAX WITHHOLDING
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(a) Payment by Optionee. Each Optionee shall, no later than
the date as of which the value of any option granted hereunder or of
any Common Stock issued upon the exercise of such option first becomes
includible in the gross income of the Optionee for federal income tax
purposes (the "Tax Date"), pay to the Company, or make arrangements
satisfactory to the Administrator regarding payment of any federal,
state, or local taxes of any kind required by law to be withheld with
respect to such income. In the event that an Optionee has not made the
arrangements described in this Section 9(a) and has not made an
election under this Section 9(b) on or before the Tax Date, the Company
is hereby authorized to withhold the amount of any federal, state or
local taxes of any kind required by law with respect to such income
from any payment otherwise due to the Optionee.
(b) Payment in Shares. Subject to approval by the
Administrator, an Optionee may elect to have such tax withholding
obligation satisfied, in whole or in part, by (i) authorizing the
Company to withhold from shares of Common Stock to be issued pursuant
to an option exercise a number of shares with an aggregate fair market
value (determined by the Administrator in accordance with Section 5(c)
as of the date the withholding is effected) that would satisfy the
withholding amount due, or (ii) transferring to the Company shares of
Common Stock owned by the Optionee with an aggregate fair market value
(determined by the Administrator in accordance with Section 5(c) as of
the date the withholding is effected) that would satisfy the
withholding amount due.
10. AMENDMENT OF THE PLAN
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The Board of Directors may discontinue the Plan or amend the Plan at
any time, and from time to time, subject to any required regulatory approval,
provided that any such amendment is also approved by the stockholders of the
Company if it would materially increase the benefits accruing to Optionees under
the Plan, or to the extent required by the Code to ensure that Incentive Options
granted under the Plan are qualified under Section 422 of the Code or if
determined by the Administrator to be necessary or advisable for purposes of the
Act or otherwise. Except as otherwise provided, an amendment shall be binding
upon options previously granted under the Plan unless the amendment adversely
affects the rights of an Optionee, in which event the consent of the Optionee
shall be required with respect to any portion of such amendment having such
effect.
11. NONEXCLUSIVITY OF THE PLAN
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Neither the adoption of the Plan by the Board of Directors nor the
submission of the Plan to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board of Directors to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock or stock options otherwise than under
the Plan, and such arrangements may be either applicable generally or only in
specific cases. Neither the Plan nor any option granted hereunder shall be
deemed to confer upon any employee any right to continued employment with the
Company or its Subsidiaries or their Affiliates.
12. GOVERNMENT AND OTHER REGULATIONS; GOVERNING LAW
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(a) The obligation of the Company to sell and deliver shares
of Common Stock with respect to options granted under the Plan shall be
subject to all applicable laws, rules and regulations, including all
applicable federal and state securities laws, and the obtaining of all
such approvals by governmental agencies as may be deemed necessary or
appropriate by the Administrator.
(b) The Plan shall be governed by Delaware law, except to the
extent that such law is preempted by federal law.
13. EFFECTIVE DATE OF THE PLAN; STOCKHOLDER APPROVAL
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The Plan shall become effective upon the date that it is approved by
the Board of Directors of the Company; provided, however, that the Plan shall be
subject to the approval of the Company's stockholders in accordance with
applicable laws and regulations within twelve months of such effective date. No
options granted under the Plan prior to such stockholder approval may be
exercised until such approval has been obtained. No options may be granted under
the Plan after the tenth anniversary of the effective date of the Plan.
* * *
APPROVED BY BOARD OF DIRECTORS: JULY 27, 1995
APPROVED BY STOCKHOLDERS: AUGUST 17, 1995
AMENDED BY BOARD OF DIRECTORS: FEBRUARY 26, 1997