PHYSICIAN SUPPORT SYSTEMS, INC.
1996 STOCK OPTION PLAN
1. Purpose; Types of Awards; Construction.
The purpose of the 1996 Stock Option Plan (the "Plan") of Physician
Support Systems, Inc., a Delaware corporation (the "Company"), is to attract and
retain employees (including officers), directors and independent contractors of
the Company, or any Subsidiary or Affiliate which now exists or hereafter is
organized or acquired, and to furnish additional incentives to such persons by
encouraging them to acquire a proprietary interest in the Company. Pursuant to
Section 6 of the Plan, there may be granted Options, including "incentive stock
options" and "nonqualified stock options". The Plan is intended to satisfy the
requirements of Rule 16b-3 promulgated under Section 16 of the Exchange Act and
shall be interpreted in a manner consistent with the requirements thereof.
2. Definitions.
For purposes of the Plan, the following terms shall be defined as set
forth below:
(a) "Affiliate" means any entity if, at the time of granting
of an Option, (i) the Company, directly, owns at least 20% of the combined
voting power of all classes of stock of such entity or at least 20% of the
ownership interests in such entity or (ii) such entity, directly or indirectly,
owns at least 20% of the combined voting power of all classes of stock of the
Company.
(b) "Beneficiary" means the person, persons, trust or trusts
which have been designated by an Optionee in his or her most recent written
beneficiary designation filed with the Company to receive the benefits specified
under the Plan upon his or her death, or, if there is no designated Beneficiary
or surviving designated Beneficiary, then the person, persons, trust or trusts
entitled by will or the applicable laws of descent and distribution to receive
such benefits.
(c) "Board" means the Board of Directors of the Company.
(d) "Change in Control" means a change in control of the
Company which will be deemed to have occurred if:
(i) any "person," as such term is used in Sections
13(d) and 14(d) of the Exchange Act (other than an Exempt
Person), is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding voting
securities;
(ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the
Board, and any new director (other than a director designated
by a person who has entered into an agreement with the Company
to effect a transaction described in clause (i), (iii), or
(iv) of this Section 2(d)) whose election by the Board or
nomination for election by the Company's stockholders was
approved by a vote of at least a majority of the directors
then still in office who either were directors at the
beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute at least a majority thereof;
(iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other
corporation, other than (A) a merger or consolidation which
would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into
voting securities of the surviving or parent entity) 50% or
more of the combined voting power of the voting securities of
the Company or such surviving or parent entity outstanding
immediately after such merger or consolidation or (B) a merger
or consolidation effected to implement a recapitalization of
the Company (or similar transaction) in which no "person" (as
hereinbefore defined), other than an Exempt Person, acquired
50% or more of the combined voting power of the Company's then
outstanding securities; or
(iv) the stockholders of the Company approve of a
plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or
substantially all of the Company's assets (or any transaction
having a similar effect).
(e) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(f) "Committee" means the committee, consisting of at least
two members of the Board, established by the Board to administer the Plan, the
composition of which shall at all times satisfy the provisions of Rule 16b-3;
provided, however, that to the extent required for the Plan to comply with the
applicable provisions of Section 162(m) of the Code, "Committee" means either
such committee or a subcommittee of that committee, as the case may be, which
shall be constituted to comply with the applicable requirements of Rule 16b-3
and Section 162(m) of the Code and the regulations promulgated thereunder.
(g) "Company" means Physician Support Systems, Inc., a
corporation organized under the laws of the State of Delaware, or any successor
corporation.
(h) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, and as now or hereafter construed, interpreted and
applied by regulations, rulings and cases.
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(i) "Exempt Person" means (1) the Company, (2) any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, (3) any corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of
Stock, or (4) any person or group of persons who, immediately prior to the
adoption of this Plan, owned more than 50% of the combined voting power of the
Company's then outstanding voting securities.
(j) "Fair Market Value" means, with respect to Stock or other
property, the fair market value of such Stock or other property determined by
such methods or procedures as shall be established from time to time by the
Committee. Notwithstanding the foregoing, the per share Fair Market Value of
Stock as of a particular date shall mean (i) if the shares of Stock are then
listed on a national securities exchange, the closing sales price per share of
Stock on the national securities exchange on which the stock is principally
traded, for the last preceding date on which there was a sale of such Stock on
such exchange, or (ii) if the shares of Stock are then traded on the National
Market System of the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), the reported per share closing price of the Stock
on the day prior to such date or, if there was no such price reported for such
date, on the next preceding date for which such a price was reported, or (iii)
if the shares of Stock are then traded in an over-the-counter market other than
on the NASDAQ National Market System, the average of the closing bid and asked
prices for the shares of Stock in such over-the-counter market for the last
preceding date on which there was a sale of such Stock in such market, or (iv)
if the shares of Stock are not then listed on a national securities exchange or
traded in an over-the-counter market, such value as the Committee, in its sole
discretion, shall determine in good faith.
(k) "ISO" means any Option intended to be and designated as an
incentive stock option within the meaning of Section 422 of the Code.
(l) "NQSO" means any Option not designated as an ISO.
(m) "Option" means a right, granted to an Optionee under
Section 6(b) of the Plan, to purchase shares of Stock. An Option may be either
an ISO or an NQSO, provided that ISOs may be granted only to employees of the
Company or a Subsidiary.
(n) "Optionee" means a person who, as an employee, director or
independent contractor of the Company, a Subsidiary or an Affiliate, has been
granted an Option.
(o) "Plan" means this Physician Support Systems, Inc. 1996
Stock Option Plan, as amended from time to time.
(p) "Rule 16b-3" means Rule 16b-3, as from time to time in
effect, promulgated by the Securities and Exchange Commission under Section 16
of the Exchange Act, including any successor to such Rule.
(q) "Stock" means the common stock, par value $.001 per share,
of the Company.
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(r) "Stock Option Agreement" means any written agreement,
contract, or other instrument or document evidencing an Option.
(s) "Subsidiary" means any corporation in which the Company,
directly or indirectly, owns stock possessing 50% or more of the total combined
voting power of all classes of stock of such corporation.
3. Administration.
The Plan shall be administered by the Committee. The Committee shall
have the authority in its discretion, subject to and not inconsistent with the
express provisions of the Plan, to administer the Plan and to exercise all the
powers and authorities either specifically granted to it under the Plan or
necessary or advisable in the administration of the Plan, including, without
limitation, the authority to grant Options; to determine the persons to whom and
the time or times at which Options shall be granted; to determine the type and
number of Options to be granted, the number of shares of Stock to which Options
may relate and the terms, conditions, restrictions and performance criteria
relating to any Options; to determine whether, to what extent, and under what
circumstances Options may be settled, canceled, forfeited, exchanged, or
surrendered; to make adjustments in the terms and conditions of, and the
criteria and performance objectives included in, Options in recognition of
unusual or non-recurring events affecting the Company or any Subsidiary or
Affiliate or the financial statements of the Company or any Subsidiary or
Affiliate, or in response to changes in applicable laws, regulations, or
accounting principles; to designate Affiliates; to construe and interpret the
Plan and any Options; to prescribe, amend and rescind rules and regulations
relating to the Plan; to determine the terms and provisions of the Stock Option
Agreements (which need not be identical for each Optionee); and to make all
other determinations deemed necessary or advisable for the administration of the
Plan.
The Committee may appoint a chairperson and a secretary and may make
such rules and regulations for the conduct of its business as it shall deem
advisable, and shall keep minutes of its meetings. All determinations of the
Committee shall be made by a majority of its members either present in person or
participating by conference telephone at a meeting or by written consent. The
Committee may delegate to one or more of its members or to one or more agents
such administrative duties as it may deem advisable, and the Committee or any
person to whom it has delegated duties as aforesaid may employ one or more
persons to render advice with respect to any responsibility the Committee or
such person may have under the Plan. All decisions, determinations and
interpretations of the Committee shall be final and binding on all persons,
including the Company, and any Subsidiary, Affiliate or Optionee (or any person
claiming any rights under the Plan from or through any Optionee) and any
stockholder.
No member of the Board or Committee shall be liable for any action
taken or determination made in good faith with respect to the Plan or any Option
granted hereunder.
4. Eligibility.
Options may be granted to employees (including officers), directors and
independent contractors of the Company and its present or future Subsidiaries
and Affiliates, in the discretion
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of the Committee. In determining the person to whom Options shall be granted and
the type of Options granted (including the number of shares to be covered by
such Options), the Committee shall take into account such factors as the
Committee shall deem relevant in connection with accomplishing the purposes of
the Plan.
5. Stock Subject to the Plan.
The maximum number of shares of Stock reserved for the grant of Options
under the Plan shall be 853,500 shares of Stock, subject to adjustment as
provided herein. Such shares may, in whole or in part, be authorized but
unissued shares or shares that shall have been or may be reacquired by the
Company in the open market, in private transactions or otherwise. The number of
shares of Stock available for issuance under the Plan shall be reduced by the
number of shares of Stock subject to outstanding Options. If any shares subject
to an Option are forfeited, canceled, exchanged or surrendered or if an Option
otherwise terminates or expires without a distribution of shares to the
Optionee, the shares of Stock with respect to such Option shall, to the extent
of any such forfeiture, cancellation, exchange, surrender, termination or
expiration, again be available for Options under the Plan.
In the event that the Committee shall determine that any dividend or
other distribution (whether in the form of cash, Stock, or other property),
recapitalization, stock split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event, affects the Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Optionee under the Plan, then the Committee shall make such equitable
changes or adjustments as it deems necessary or appropriate to any or all of (i)
the number and kind of shares of Stock which may thereafter be issued in
connection with Options, (ii) the number and kind of shares of Stock issued or
issuable in respect of outstanding Options, and (iii) the exercise price, grant
price, or purchase price relating to any Option; provided that, with respect to
ISOs, such adjustment shall be made in accordance with Section 424(h) of the
Code.
6. Specific Terms of Options.
(a) General. The term of each Option shall be for such period
as may be determined by the Committee. The Committee may make rules relating to
Options, and may impose on any Option or the exercise thereof, at the date of
grant or thereafter, such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee shall determine.
(b) Options. The Committee is authorized to grant Options to
Optionees on the following terms and conditions:
(i) Type of Option. The Stock Option Agreement
evidencing the grant of an Option under the Plan shall
designate the Option as an ISO (in the event its terms, and
the individual to whom it is granted, satisfy the requirements
for ISOs under the Code), or an NQSO.
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(ii) Exercise Price. The exercise price per share of
Stock purchasable under an Option shall be determined by the
Committee; provided that, in the case of an ISO, such exercise
price shall be not less than the Fair Market Value of a share
of Stock on the date of grant of such Option or such other
exercise price as may be required by the Code, and in no event
shall the exercise price for the purchase of shares of Stock
be less than par value. The exercise price for Stock subject
to an Option may be paid in cash or by an exchange of Stock
previously owned by the Optionee, or a combination of both, in
an amount having a combined value equal to such exercise
price. Any shares of Stock exchanged upon the exercise of any
Option shall be valued at the Fair Market Value on the date on
which such shares are exchanged. An Optionee also may elect to
pay all or a portion of the aggregate exercise price by having
shares of Stock with a Fair Market Value on the date of
exercise equal to the aggregate exercise price withheld by the
Company or sold by a broker-dealer under circumstances meeting
the requirements of 12 C.F.R. ss. 220 or any successor
thereof.
(iii) Term and Exercisability of Options. The date on
which the Committee adopts a resolution expressly granting an
Option shall be considered the day on which such Option is
granted; provided that, Option grants made prior to approval
of the Plan by requisite vote of the Company's stockholders
shall be deemed to have been granted on the date of such
approval. Options shall be exercisable over the exercise
period (which shall not exceed ten years from the date of
grant), at such times and upon such conditions as the
Committee may determine, as reflected in the Stock Option
Agreement. An Option may be exercised to the extent of any or
all full shares of Stock as to which the Option has become
exercisable, by giving written notice of such exercise to the
Company's Secretary and paying the exercise price as described
in Section 6(b)(ii).
(iv) Termination of Employment, etc. An Option may
not be exercised unless the Optionee is then in the employ of,
is then a director of, or then maintains an independent
contractor relationship with, the Company or any Subsidiary or
Affiliate (or a company or a parent or subsidiary company of
such company issuing or assuming the Option in a transaction
to which Section 424(a) of the Code applies), and unless the
Optionee has continuously maintained any of such
relationships, since the date of grant of the Option; provided
that, the Stock Option Agreement may contain provisions
extending the exercisability of Options, in the event of
specified terminations, to a date not later than the
expiration date of such Option. The Committee may establish a
period during which the Beneficiaries of an Optionee who died
while an employee, director or independent contractor of the
Company or any Subsidiary or Affiliate or during any extended
period referred to in the immediately preceding proviso may
exercise those Options which were exercisable on the date of
the Optionee's death; provided that no Option shall be
exercisable after its expiration date.
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(v) Nontransferability. Options shall not be
transferrable by an Optionee except by will or the laws of
descent and distribution or, if then permitted under Rule
16b-3, pursuant to a qualified domestic relations order as
defined under the Code or Title I of the Employee Retirement
Income Security Act of 1974, as amended, or the rules
thereunder, and shall be exercisable during the lifetime of an
Optionee only by such Optionee or his guardian or legal
representative.
(vi) Other Provisions. Options may be subject to such
other conditions as the Committee may prescribe in its
discretion.
7. Change in Control Provisions.
In the event of a Change in Control, any and all Options then
outstanding shall become fully exercisable and vested, whether or not
theretofore vested and exercisable.
8. General Provisions.
(a) Compliance with Legal and Exchange Requirements. The Plan,
the granting and exercising of Options thereunder, and the other obligations of
the Company under the Plan and any Stock Option Agreement, shall be subject to
all applicable federal and state laws, rules and regulations, and to such
approvals by any regulatory or governmental agency as may be required. The
Company, in its discretion, may postpone the issuance or delivery of Stock under
any Option until completion of such stock exchange listing or registration or
qualification of such Stock or other required action under any state, federal or
foreign law, rule or regulation as the Company may consider appropriate, and may
require any Optionee to make such representations and furnish such information
as it may consider appropriate in connection with the issuance or delivery of
Stock in compliance with applicable laws, rules and regulations.
(b) No Right to Continued Employment, etc. Nothing in the Plan
or in any Option granted or Stock Option Agreement entered into pursuant to the
Plan shall confer upon any Optionee the right to continue in the employ of, or
to continue as a director of or an independent contractor to, the Company, any
Subsidiary or any Affiliate, as the case may be, or to be entitled to any
remuneration or benefits not set forth in the Plan or such Stock Option
Agreement or to interfere with or limit in any way the right of the Company or
any such Subsidiary or Affiliate to terminate such Optionee's employment,
directorship or independent contractor relationship.
(c) Taxes. The Company or any Subsidiary or Affiliate is
authorized to withhold from any Option granted, any payment relating to an
Option under the Plan (including from a distribution of Stock), or any other
payment to an Optionee, amounts of withholding and other taxes due in connection
with any transaction involving an Option, and to take such other action as the
Committee may deem advisable to enable the Company and an Optionee to satisfy
obligations for the payment of withholding taxes and other tax obligations
relating to any Option. This authority shall include authority to withhold or
receive Stock or other property and to make cash payments in respect thereof in
satisfaction of an Optionee's tax obligations.
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(d) Amendment and Termination of the Plan. The Board may at
any time and from time to time alter, amend, suspend, or terminate the Plan in
whole or in part; provided that, no amendment which requires stockholder
approval in order for the Plan to continue to comply with Rule 16b-3 shall be
effective unless the same shall be approved by the requisite vote of the
stockholders of the Company entitled to vote thereon. Notwithstanding the
foregoing, no amendment shall affect adversely any of the rights of any
Optionee, without such Optionee's consent, under any Option theretofore granted
under the Plan.
(e) No Rights to Options; No Stockholder Rights. No Optionee
shall have any claim to be granted any Option under the Plan, and there is no
obligation for uniformity of treatment of Optionees. Except as provided
specifically herein, an Optionee or a transferee of an Option shall have no
rights as a stockholder with respect to any shares covered by the Option until
the date of the issuance of a stock certificate to such Optionee for such
shares.
(f) Unfunded Status of Options. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation. Nothing
contained in the Plan or any Option shall give any such Optionee any rights that
are greater than those of a general creditor of the Company.
(g) No Fractional Shares. No fractional shares of Stock shall
be issued or delivered pursuant to the Plan or any Option. The Committee shall
determine whether cash, other Options, or other property shall be issued or paid
in lieu of such fractional shares or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.
(h) Governing Law. The Plan and all determinations made and
actions taken pursuant hereto shall be governed by the laws of the State of
Delaware without giving effect to the conflict of laws principles thereof.
(i) Effective Date; Plan Termination. The Plan shall take
effect upon its adoption by the Board (the "Effective Date"), but the Plan (and
any grants of Options made prior to the stockholder approval mentioned herein),
shall be subject to the approval of the holder(s) of a majority of the issued
and outstanding shares of voting securities of the Company entitled to vote,
which approval must occur within twelve months of the date the Plan is adopted
by the Board. In the absence of such approval, such Options shall be null and
void.
The Board may terminate the Plan at any time with respect to
any shares of Stock that are not subject to Options. Unless terminated earlier
by the Board, the Plan shall terminate ten years after the effective date and no
Options shall be granted under the Plan after such date. Termination of the Plan
under this Section 8(i) will not affect the rights and obligations of any
Optionee with respect to Options grated prior to termination.
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