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,
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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 1,350,000 shares 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.
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(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.
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(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.
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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.
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(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,
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(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)
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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.
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3. 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
APPROVED BY STOCKHOLDERS: MAY 15, 1997