<PAGE>
As filed with the Securities and Exchange Commission on November 28, 1995
Registration No. 33-______________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-8
Registration Statement Under
The Securities Act of 1933
--------------------
HEALTHSOUTH Corporation
(Exact Name of Registrant as Specified in its Charter)
--------------------
Delaware 63-0860407
(State or Other Jurisdiction (I.R.S. Employer Identification Number)
of Incorporation or Organization)
Two Perimeter Park South, Birmingham, Alabama 35243
-------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
SUTTER SURGERY CENTERS, INC. 1993 STOCK OPTION PLAN
SUTTER SURGERY CENTERS, INC. NON-QUALIFIED STOCK OPTION PLAN
AND AGREEMENT (SAIBENI)
SUTTER SURGERY CENTERS, INC. NON-QUALIFIED STOCK OPTION PLAN
AND AGREEMENT (SHAH)
SUTTER SURGERY CENTERS, INC. NON-QUALIFIED STOCK OPTION PLAN
AND AGREEMENT (AKELLA)
SUTTER SURGERY CENTERS, INC. NON-QUALIFIED STOCK OPTION PLAN
AND AGREEMENT (KELLY)
SUTTER SURGERY CENTERS, INC. NON-QUALIFIED STOCK OPTION PLAN
AND AGREEMENT (MAY)
(Full Title of the Plan)
Copy to:
RICHARD M. SCRUSHY
Chairman of the Board WILLIAM W. HORTON
and Chief Executive Officer Group Vice President--Legal Services
HEALTHSOUTH Corporation HEALTHSOUTH Corporation
Two Perimeter Park South, Suite 224W Two Perimeter Park South, Suite 224W
Birmingham, Alabama 35243 Birmingham, Alabama 35243
(205) 967-7116 (205) 967-7116
(Name and address of agent for service)
(Telephone number, including area code, of agent for service)
--------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after effective date of this Registration Statement.
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==================================================================================================================
Title of Proposed Maximum Proposed Maximum Amount of
Securities Amount to be Offering Price Aggregate Offering Registration
to be Registered Registered (1) per Share (2) Price (2) Fee (2)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, Par 175,449 shares $26.25 $4,605,536.25 $1,588.12
Value $.01 Per Share
==================================================================================================================
<FN>
(1) The amount being registered represents 175,449 authorized and unissued
shares reserved for issuance under the Plans.
<PAGE>
(2) In accordance with Rule 457(h) promulgated under the Securities Act of 1933,
these calculations are based upon a price of $26.25 per share, which represents
the average of the high and low prices for the shares as reported on the New
York Stock Exchange on November 21, 1995.
</FN>
</TABLE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
There are hereby incorporated by reference in this Registration
Statement, and specifically made a part hereof, the following documents
heretofore filed by HEALTHSOUTH Corporation (the "Company") with the Securities
and Exchange Commission (the "Commission"), pursuant to the Securities Exchange
Act of 1934 (the "Exchange Act"):
1. The Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994, as amended.
2. The Company's Proxy Statement used in connection with the
solicitation of proxies for the 1995 Annual Meeting of Stockholders,
held June 6, 1995.
3. HEALTHSOUTH's Quarterly Reports on Form 10-Q, as amended,
for the quarters ended March 31, June 30 and September 30, 1995.
4. HEALTHSOUTH's Current Report on Form 8-K, as amended, filed
January 13, 1995 (relating to the acquisition of ReLife, Inc.).
5. HEALTHSOUTH's Current Report on Form 8-K, as amended, filed
February 1, 1995 (relating to the acquisition of Surgical Health
Corporation).
6. HEALTHSOUTH's Current Report on Form 8-K, as amended, filed
February 21, 1995 (relating to the NovaCare Rehabilitation Hospitals
acquisition).
7. HEALTHSOUTH's Current Report on Form 8-K filed August 15,
1995 (relating to the acquisition of Surgical Health Corporation).
8. HEALTHSOUTH's Current Report on Form 8-K filed September 7,
1995 (relating to the acquisition of Sutter Surgery Centers, Inc.).
9. HEALTHSOUTH's Current Report on Form 8-K, as amended, filed
October 20, 1995 (relating to the acquisition of Surgical Care
Affiliates, Inc.).
10. HEALTHSOUTH's Current Report on Form 8-K filed October 30,
1995 (relating to the acquisition of Caremark Orthopedic Services
Inc.).
11. HEALTHSOUTH's Current Report on Form 8-K filed November
13, 1995 (relating to the consummation of the acquisition of Sutter
Surgery Centers, Inc.).
12. The description of HEALTHSOUTH's capital stock contained
in HEALTHSOUTH's Registration Statement on Form 8-A filed August 26,
1989.
II-1
<PAGE>
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the effective date of this Registration
Statement and prior to the filing of a post-effective amendment indicating that
all the securities offered hereby have been sold, or deregistering all such
securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the date
of filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
The legality of the issuance of the Common Stock offered pursuant to
this Registration Statement will be passed upon for the Company by Haskell
Slaughter Young & Johnston, Professional Association, 1200 AmSouth/Harbert
Plaza, 1901 Sixth Avenue North, Birmingham, Alabama 35203. At November 1, 1995,
attorneys with the firm of Haskell Slaughter Young & Johnston, Professional
Association, owned beneficially an aggregate of 9,930 shares and held
currently-exercisable options to acquire an additional 15,000 shares of the
Company's Common Stock.
Item 6. Indemnification of Directors and Officers.
In June 1986, Delaware enacted legislation which authorized
corporations to eliminate the personal liability of directors to corporations
and their stockholders for monetary damages for breach or alleged breach of
directors' fiduciary "duty of care". Under prior Delaware law, directors were
accountable to corporations and their stockholders for monetary damages for
conduct constituting gross negligence in the exercise of their duty of care.
Although the 1986 statute does not change directors' duty of care, it enables
corporations to limit available relief to equitable remedies such as injunction
or rescission. Numerous complaints, not involving the Company, alleging breach
of directors' duty of care have been filed in connection with corporate mergers
and acquisitions, and the 1986 statute limits available remedies of stockholders
in connection with these transactions as well as in other circumstances. The
1986 statute has no effect on a director's liability for: (a) breach of the
director's duty of loyalty; (b) acts or omissions not in good faith or involving
intentional misconduct or knowing violations of law; (c) a corporation's illegal
payment of dividends; and (d) approval of any transaction from which the
director derives an improper personal benefit.
Pursuant to this Delaware statute, the Company has included in its
Restated Certificate of Incorporation, which became effective on October 1,
1986, a provision to eliminate the personal liability of its Directors for
monetary damages for breach or alleged breach of their duty of care. In
addition, the Company's Bylaws provide that the Company shall indemnify its
Directors and officers to the full extent permitted by Delaware law, including
in circumstances in which indemnification is otherwise discretionary
II-2
<PAGE>
under Delaware law. The Company believes that these provisions are necessary to
attract and retain qualified persons as Directors and officers.
At present, there is no material pending litigation or proceeding
involving a Director or officer of the Company where indemnification will be
required or permitted. The Company is not aware of any material threatened
litigation or proceeding which may result in a claim for indemnification by any
Director or officer.
Item 7. Exemption from Registration Claimed.
Not applicable.
II-3
<PAGE>
Item 8. Exhibits.
Exhibits (numbered in accordance with Item 601 of Regulation S-K).
Exhibit No. Exhibit
---------- -------
4(a) Sutter Surgery Centers, Inc. 1993 Stock Option Plan
4(b) Sutter Surgery Centers, Inc. Nonqualified Stock Option Plan
and Agreement (Saibeni)
4(c) Sutter Surgery Centers, Inc. Nonqualified Stock Option Plan
and Agreement (Shah)
4(d) Sutter Surgery Centers, Inc. Nonqualified Stock Option Plan
and Agreement (Akella)
4(e) Sutter Surgery Centers, Inc. Nonqualified Stock Option Plan
and Agreement (Kelly)
4(f) Sutter Surgery Centers, Inc. Nonqualified Stock Option Plan
and Agreement (May)
5 Opinion of Haskell Slaughter Young & Johnston, Professional
Association.
23(a) Consent of Ernst & Young LLP.
23(b) Consent of Haskell Slaughter Young & Johnston, Professional
Association, is contained within Opinion of Counsel
included as Exhibit 5.
24 Powers of Attorney (See Signature Page).
Item 9. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(iii) to include any material information with
respect to the plan of distribution not previously disclosed
in the Registration Statement or any material change to such
information in the Registration Statement;
II-4
<PAGE>
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a Director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
Director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Birmingham, State of Alabama, on November 28, 1995.
HEALTHSOUTH Corporation
By /s/ RICHARD M. SCRUSHY
-------------------------------
Richard M. Scrushy
Chairman of the Board
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose name appears
below constitutes and appoints Richard M. Scrushy and Aaron Beam, Jr., and each
of them, his attorney-in-fact, with power of substitution for him or her in any
and all capacities, to sign any amendments, supplements or other instruments he
or she deems necessary or appropriate, and to file the same, with exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that said
attorney-in-fact or his substitute may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
RICHARD M. SCRUSHY
- -------------------------------------- Chairman of the Board November 28, 1995
(Richard M. Scrushy) and Chief Executive Officer
and Director
AARON BEAM, JR.
- -------------------------------------- Executive Vice President and November 28, 1995
(Aaron Beam, Jr.) Chief Financial Officer
(Principal Financial Officer)
WILLIAM T. OWENS
- -------------------------------------- Senior Vice President and Controller November 28, 1995
(William T. Owens) (Principal Accounting Officer)
RICHARD F. CELESTE Director November 28, 1995
- --------------------------------------
(Richard F. Celeste)
JOHN S. CHAMBERLIN Director November 28, 1995
- --------------------------------------
(John S. Chamberlin)
C. SAGE GIVENS Director November 28, 1995
- --------------------------------------
(C. Sage Givens)
CHARLES W. NEWHALL III Director November 28, 1995
- --------------------------------------
(Charles W. Newhall III)
II-6
<PAGE>
GEORGE H. STRONG Director November 28, 1995
- --------------------------------------
(George H. Strong)
PHILLIP C. WATKINS Director November 28, 1995
- --------------------------------------
(Phillip C. Watkins)
JAMES P. BENNETT Director November 28, 1995
- --------------------------------------
(James P. Bennett)
LARRY R. HOUSE Director November 28, 1995
- --------------------------------------
(Larry R. House)
ANTHONY J. TANNER Director November 28, 1995
- --------------------------------------
(Anthony J. Tanner)
P. DARYL BROWN Director November 28, 1995
- --------------------------------------
(P. Daryl Brown)
II-7
<PAGE>
</TABLE>
EXHIBIT 4(a)
1993 STOCK OPTION PLAN OF
SUTTER SURGERY CENTERS, INC.
ARTICLE 1. ESTABLISHMENT AND PURPOSE.
The Plan is being established to offer selected employees and directors
an opportunity to acquire a proprietary interest in the success of the Company,
or to increase such interest, by exercising Options to purchase Shares of the
Company's common Stock. Options granted under the Plan may include Nonstatutory
Options as well as ISO's intended to qualify under section 422 of the Code.
ARTICLE 2. DEFINITIONS.
2.01. "Board of Directors" shall mean the Board of Directors of the
Company, as constituted from time to time. 2.02. "Bonus Awards" shall mean
Performance Awards or Fixed Awards.
2.03. "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.04. "Committee" shall mean a committee of the Board of Directors, as
described in Section 3.01 and Section 3.02.
2.05. "Company" shall mean Sutter Surgery Centers, Inc., a Delaware
corporation.
2.06. "Employee" shall mean any individual who is a common-law employee
of the Company or of a Subsidiary.
2.07. "Exercise Price" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
2.08. "Fair Market Value" shall mean the fair market value of a Share,
as determined by the Committee in good faith. Such determination shall be
conclusive and binding on all persons.
2.09. "Fixed Awards" shall mean awards that are not contingent on the
performance of objectives but are contingent upon the continued employment of
the participant with the Company for a period specified by the Committee in the
award.
2.10. "ISO" shall mean an employee incentive stock option described in
section 422(b) of the Code.
<PAGE>
2.11. "Nonstatutory Option" shall mean a stock option not described in
section 422(b) or 423(b) of the Code.
2.12. "0ption" shall mean an ISO or Nonstatutory Option granted under
the Plan and entitling the holder to purchase Shares.
2.13. "0ptionee" shall mean an individual who holds an Option.
2.14. "Performance Awards" shall mean awards made in terms of stated
potential maximum dollars amount, percentage of compensation or number of
Shares, with the actual amount, percentage or number determined by the Committee
with reference to the level of performance over a period of time as determined
by the Committee.
2.15. "Plan" shall mean this 1993 Stock Option Plan of Sutter Surgery
Centers, Inc.
2.16. "Service" shall mean service as an Employee or director of the
Company.
2.17. "Share" shall mean one share of Stock, as adjusted in accordance
with Article 9, if applicable.
2.18. "Stock" shall mean the common Stock of the Company.
2.19. "Stock 0ption Agreement" shall mean the agreement between the
Company and an Optionee which contains the terms, conditions and restrictions
pertaining to his or her Option.
2.20. "Subsidiary " shall mean any corporation, if the Company or one
or more other Subsidiaries own not less than fifty percent (50%) of the total
combined voting power of all classes of outstanding stock of such corporation. A
corporation that attains the status of a Subsidiary on a date after the adoption
of the Plan shall be considered a Subsidiary commencing as of such date.
2.21. 'Total and Permanent Disability " shall mean that the Optionee is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted, or can be expected to last, for a continuous period
of not less than twelve (12) months.
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<PAGE>
ARTICLE 3. ADMINISTRATION.
3.01. Committee Membership. The Plan shall be administered by the
Committee, which shall consist of three (3) or more members of the Board of
Directors. The members of the Committee shall be appointed by the Board of
Directors. If no Committee has been appointed, the entire Board of Directors
shall constitute the Committee.
3.02. Ineligibility. No member of the Committee shall be eligible to
participate in this Plan or any stock purchase, bonus award, stock option, stock
appreciation right or other stock incentive plan of the Company except as
provided in Section 4.01B. No person may be a member of the Committee if, within
one (1) year prior to appointment to the Committee, such person participated, or
was eligible to participate, in this Plan or any stock purchase, bonus award,
stock option, stock appreciation right or other stock incentive plan of the
Company except as provided in Section 4.01B. Except for adjustment under Section
9.01 of Shares allocable or Options outstanding under the Plan to prevent
dilution or enlargement of rights, neither the Board nor the Committee shall
have any discretion to alter (i) the number of Shares subject to any stock
options granted to nonemployee directors under Section 4.01B, or (ii) the terms
under which such options are granted. The selection of any member of the
Committee is intended to qualify for exemption under Rule 16b-3, or its
successor, under such Act. Any provision of this Plan shall be construed
consistent with the applicability, interpretation and scope of Rule 16b-3, or
its successor, under such Act.
3.03. Committee Procedures. The Board of Directors shall designate one
of the members of the Committee as chairperson. The Committee may hold meetings
at such times and places as it shall determine. The acts of a majority of the
Committee members present at meetings at which a quorum exists, or acts reduced
to or approved in writing by all Committee members, shall be valid acts of the
Committee.
3.04. Committee Responsibilities. Subject to the provisions of the
Plan, the Committee shall have full authority and discretion to take the
following actions:
A. To interpret the Plan and to apply its provisions;
B. To adopt, amend or rescind rules, procedures and forms
relating to the Plan;
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<PAGE>
C. To authorize any person to execute, on behalf of the
Company, any instrument required to carry out the purposes of the Plan;
D. To determine when Options are to be granted under the Plan;
E. To select the Optionees;
F. To determine the number of Shares to be made subject to
each Option;
G. To prescribe the terms and conditions of each Option,
including (without limitation) the Exercise Price, to determine whether such
Option is to be classified as an ISO or as a Nonstatutory Option, and to specify
the provisions of the Stock Option Agreement relating to such Option;
H. To amend any outstanding Stock Option Agreement, subject to
applicable legal restrictions and to the consent of the Optionee who entered
into such agreement;
I. To prescribe the consideration for the grant of each Option
under the Plan and to determine the sufficiency of such consideration; and
J. To take any other actions deemed necessary or advisable for
the administration of the Plan.
All decisions, interpretations and other actions of the
Committee shall be final and binding on all Optionees and all persons deriving
their rights from an Optionee. No member of the Committee shall be liable for
any action that he or she has taken or has failed to take in good faith with
respect to the Plan or any Option.
3.05. Financial Reports. Not less often than annually, the Company
shall furnish to Optionees reports of its financial condition, unless such
Optionees have access to equivalent information through their employment. Such
reports need not be audited.
ARTICLE 4. ELIGIBILITY.
4.01. General Rule.
A. Each Employee shall be eligible for designation as an
Optionee by the Committee.
B. Nonemployee directors shall be granted nonqualified stock
options to purchase thirty thousand (30,000) Shares of the Company to each
individual who is a nonemployee director on the date this Plan is adopted and to
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<PAGE>
each individual who is first elected as a nonemployee director in lieu of any
salary or other compensation.
4.02. Ten Percent Shareholders. An Employee who owns more than ten
percent (10%) of the total combined voting power of all classes of outstanding
Stock of the Company or any of its Subsidiaries shall not be eligible for
designation as an Optionee of an ISO unless: (a) the Exercise Price is at least
one hundred ten percent (110%) of the Fair Market Value of a Share on the date
of grant; and (b) the Option by its terms is not exercisable after the
expiration of five (5) years from the date of grant.
4.03. Attribution Rules. For purposes of Section 4.02 above, in
determining Stock ownership, an Employee shall be deemed to own the Stock owned,
directly or indirectly, by or for his or her brothers, sisters, spouse,
ancestors and lineal descendants. Stock owned, directly or indirectly, by or for
a corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its shareholders, partners or beneficiaries. Stock
with respect to which such Employee holds an Option shall not be counted.
4.04. Outstanding Stock. For purposes of Section 4.02 above,
"outstanding Stock" shall include all Stock actually issued and outstanding
immediately after the grant. "Outstanding Stock" shall not include treasury
shares or shares authorized for issuance under outstanding Options held by the
Employee or by any other person.
ARTICLE 5. STOCK SUBJECT TO PLAN.
5.01. Basic Limitation. Shares offered under the Plan shall be
authorized but unissued Shares. The aggregate number of Shares which may be
issued under the Plan upon exercise of Options shall not exceed two million
(2,000,000) Shares, subject to adjustment pursuant to Article 9. The number of
Shares which are subject to Options outstanding at any time under the Plan shall
not exceed the number of Shares which then remain available for issuance under
the Plan. The Company, during the term of the Plan, shall at all times reserve
and keep available sufficient Shares to satisfy the requirements of the Plan.
5.02. Additional Shares. In the event that any outstanding Option for
any reason expires or is cancelled or otherwise terminated, the Shares allocable
to the unexercised portion of such Option shall again be available for the
purposes of the
-5-
<PAGE>
Plan. In the event that Shares issued under the Plan are reacquired by the
Company pursuant to a forfeiture provision, a right of repurchase or a right of
first refusal, such Shares shall again be available for the purposes of the
Plan.
ARTICLE 6. BONUS AWARDS.
6.01. Form of Award. Bonus Awards may be made to eligible officers and
other Employees in the form of any one or more of: (i) cash; or (ii) Shares of
Stock issued to the Employee but forfeitable and with restrictions on transfer
in any form consistent with this Plan. In addition, in the Committee's
discretion, the Company may satisfy all or any part of its obligation under a
Bonus Award payable in cash by delivering Shares of Stock with a then fair
market value equal to all or a part of the amount of such obligation.
6.02. Performance Awards. The Committee may make grants of Performance
Awards to eligible officers, directors and Employees. An individual receiving a
Performance Award shall have no rights or interests of any kind in such award
until the conclusion of the performance period and the Committee's determination
that the level of achievement specified in the award has been achieved. The time
of vesting, if any, after reaching the designated level of achievement shall be
as specified in the award.
6.03. Fixed Awards. The Committee may grant Fixed Awards to eligible
officers, directors and Employees. The participant receiving a Fixed Award shall
not have any rights or interests of any kind in the award until the participant
satisfies the employment conditions set out in the Fixed Award.
6.04. Rights With Respect to Shares. If Shares of common Stock are
issued pursuant to an award, the participant shall have the right to vote the
Shares and to receive dividends thereon from the date of issuance until
forfeited.
ARTICLE 7. TERMS AND CONDITIONS OF OPTIONS.
7.01. Stock 0ption Agreement. Each grant of an Option under the Plan
shall be evidenced by a Stock Option Agreement between the Optionee and the
Company. Such Option shall be subject to all applicable terms and conditions of
the Plan and may be subject to any other terms and conditions which are not
inconsistent with the Plan and which the Committee deems appropriate for
inclusion in a Stock Option Agreement. The provisions of the various Stock
Option
-6-
<PAGE>
Agreements entered into under the Plan need not be identical. However, Options
granted to nonemployee directors shall become exercisable with respect to
twenty-five percent (25%) of the Shares subject thereto on each of the first
four (4) anniversaries of the date of grant and shall expire ten (10) years from
the date of grant.
7.02. Number of Shares. Each Stock Option Agreement shall specify the
maximum number of Shares that are subject to the Option and shall provide for
the adjustment of such number in accordance with Article 9. The Stock Option
Agreement shall also specify whether the Option is an ISO or a Nonstatutory
Option.
7.03. Exercise Price. Each Stock Option Agreement shall specify the
Exercise Price. The Exercise Price of an ISO shall not be less than one hundred
percent (100%) of the Fair Market Value of a Share on the date of grant, except
as otherwise provided in Section 4.02. The Exercise Price of a Nonstatutory
Option shall not be less than eighty-five percent (85%) of the Fair Market Value
of a Share on the date of grant. The Exercise Price to a nonemployee director
shall be one hundred percent (100%) of the Fair Market Value of a Share on the
date of grant. Subject to the preceding two sentences, the Exercise Price under
any Option shall be determined by the Committee at its sole discretion. The
Exercise Price shall be payable in a form described in Article 8.
7.04. Withholding Taxes. As a condition to the exercise of a
Nonstatutory Option, the Optionee shall make such arrangements as the Committee
may require for the satisfaction of any federal, state, local or foreign
withholding tax obligations that may arise in connection with the disposition of
Shares acquired by exercising an Option. An Option may provide that the Optionee
may elect to deliver to the Company (or authorize the Company to retain from the
Shares purchased upon exercise of such Option) whole Shares of Stock to satisfy
the Company's obligation to withhold federal, state and local income tax
required to be withheld in respect of such exercise. However, if an Optionee is
an executive officer or director of the Company (within the meaning of section
16 of the Securities Exchange Act of 1934), the Optionee may not make this
election during the six (6) month period beginning on the date of grant of such
Option and must elect either (i) at least six (6) months prior to the date on
which the amount of such withholding tax is determined; (ii) during the (10)
business day period beginning on the third business day
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<PAGE>
following each release of the Company's quarterly or annual summary of sales and
earnings; or (iii) in advance of such ten (10) business day period to be
effective within such ten (10) business day period. The Optionee's election
shall be irrevocable, but subject to disapproval by the Committee.
7.05. Exercisability and Term. Each Stock Option Agreement shall
specify the date when all or any installment of the Option is to become
exercisable. No Option shall be exercisable earlier than six (6) months from the
date of grant. The vesting of any Option shall be determined by the Committee at
its sole discretion. A Stock Option Agreement may provide for accelerated
exercisability in the event of the Optionee's death, Total and Permanent
Disability or retirement, a change in control with respect to the Company, or
other events. The Stock Option Agreement shall also specify the term of the
Option. The term shall not exceed ten (10) years from the date of grant, except
as otherwise provided in Section 4.02. Subject to the preceding sentence, the
Committee, at its sole discretion, shall determine when an Option is to expire.
7.06. Nontransferability. No Option shall be transferable by the
Optionee other than by will, by a beneficiary designation executed by the
Optionee and delivered to the Company or by the laws of descent and
distribution. An Option may be exercised during the lifetime of the Optionee
only by him or her or by his or her guardian or legal representative. No Option
or interest therein may be transferred, assigned, pledged or hypothecated by the
Optionee during his or her lifetime, whether by operation of law or otherwise,
or be made subject to execution, attachment or similar process.
7.07. Termination of Service (Except by Death. If an Optionee's Service
terminates for any reason other than his or her death, then his or her Option(s)
shall expire on the earliest of the following occasions:
A. The expiration date determined pursuant to Section 7.05
above;
B. The date ninety (90) days after the termination of his or
her Service for any reason other than Total and Permanent Disability; or
C. The date twelve (12) months after the termination of his or
her Service by reason of Total and Permanent Disability.
The Optionee may exercise all or part of his or her Option(s)
at any time before the expiration of such Option(s) under the preceding
sentence, but only to the extent that such Option(s) had become exercisable
before his or her Service
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<PAGE>
terminated or became exercisable as a result of the termination. The balance of
such Option(s) shall lapse when the Optionee's Service terminates. In the event
that the Optionee dies after the termination of his or her Service but before
the expiration of his or her Option(s), all or part of such Option(s) may be
exercised, prior to expiration, by the executors or administrators of the
Optionee's estate or by any person who has acquired such Option(s) directly from
him or her by bequest, beneficiary designation or inheritance, but only to the
extent that such Option(s) had become exercisable before his or her Service
terminated or became exercisable as a result of the termination.
7.08. Leaves of Absence. For purposes of Section 7.07 above, Service
shall be deemed to continue while the Optionee is on military leave, sick leave
or other bona fide leave of absence, as determined by the Committee. The
foregoing notwithstanding, in the case of an ISO granted under the Plan, Service
shall not be deemed to continue beyond the first ninety (90) days of such leave,
unless the Optionee's reemployment rights are guaranteed by statute or by
contract.
7.09. Death of 0ptionee. If an Optionee dies while he or she is in
Service, then his or her Option(s) shall expire on the earlier of the following
dates:
A. The expiration date determined pursuant to Section 7.05
above; or
B. The date twelve (12) months after his or her death.
All or part of the Optionee's Option(s) may be exercised at
any time before the expiration of such Option(s) under the preceding sentence by
the executors or administrators of his or her estate or by any person who has
acquired such Option(s) directly from him or her by bequest, beneficiary
designation or inheritance, but only to the extent that such Option(s) had
become exercisable before his or her death or became exercisable as a result of
his or her death. The balance of such Option(s) shall lapse when the Optionee
dies.
7.10. No Rights as a Stockholder. An Optionee, or an estate of Optionee
or transferee, pursuant to a qualified domestic relations order as defined by
the Code, of an Optionee, shall have no rights as a stockholder with respect to
any Shares covered by his or her Option until the date of the issuance of a
stock certificate for such Shares. No adjustments shall be made, except as
provided in Article 9.
7.11. Modification, Extension and Assumption of 0ptions. Within the
limitations of the Plan, the Committee may modify, extend or assume outstanding
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<PAGE>
Options or may accept the cancellation of outstanding Options, whether granted
by the Company or another issuer, in return for the grant of new Options for the
same or a different number of Shares and at the same or a different price. The
foregoing notwithstanding, no modification of an Option shall, without the
consent of the Optionee, impair his or her rights or increase his or her
obligations under such Option.
7.12. Restrictions on Transfer of Shares. Any Shares issued upon
exercise of an Option shall be subject to such special forfeiture conditions,
rights of repurchase, rights of first refusal and other transfer restrictions as
the Committee may determine. Such restrictions shall be set forth in the
applicable Stock Option Agreement and shall apply in addition to any general
restrictions that may apply to all holders of Shares.
ARTICLE 8. PAYMENT FOR SHARES.
8.01. General Rule. The entire Exercise Price of Shares issued under
the Plan shall be payable in lawful money of the United States of America at the
time when such Shares are purchased, except as follows:
A. In the case of an ISO granted under the Plan, payment shall
be made only pursuant to the express provisions of the applicable Stock Option
Agreement. However, the Committee, at its sole discretion, may specify in the
Stock Option Agreement that payment may be made in one or both of the forms
described in Sections 8.02 and 8.03 below.
B. In the case of a Nonstatutory Option granted under the
Plan, the Committee (at its sole discretion) may accept payment in one or both
of the forms described in Sections 8.02 and 8.03 below.
8.02. Surrender of Stock. To the extent that this Section 8.02 is
applicable and to the extent that applicable law permits, payment may be made
all or in part with Shares which have already been owned by the Optionee or his
or her representative for more than six (6) months and which are surrendered to
the Company in good form for transfer. Such Shares shall be valued at their Fair
Market Value on the date when the new Shares are purchased under the Plan.
8.03. Promissory Note. To the extent that this Section 8.03 is
applicable, a portion of the Exercise Price of Shares issued under the Plan may
be payable by a full-recourse promissory note; provided that: (a) the par value
of such Shares must
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<PAGE>
be paid in lawful money of the United States of America at the time when such
Shares are purchased; (b) the Shares are security for payment of the principal
amount of the promissory note and interest thereon; and (c) the interest rate
payable under the terms of the promissory note shall not be less than the
minimum rate, if any, required to avoid the imputation of additional interest
under the Code. Subject to the foregoing, the Committee, at its sole discretion,
shall specify the term, interest rate, amortization requirements, if any, and
other provisions of such note.
ARTICLE 9. ADJUSTMENT OF SHARES.
9.01. General. In the event of a subdivision of the outstanding Stock,
a declaration of a dividend payable in Shares, a declaration of a dividend
payable in a form other than Shares in an amount that has a material effect on
the value of Shares, a combination or consolidation of the outstanding Stock, by
reclassification or otherwise, into a lesser number of Shares, a
recapitalization or a similar occurrence, the Committee shall make appropriate
adjustments in one or more of: (a) the number of Shares available for future
grants under Article 5; (b) the number of Shares covered by each outstanding
Option; or (c) the Exercise Price under each outstanding Option.
9.02. Merger; Consolidation. In the event that the Company is a party
to a merger or consolidation, outstanding Options shall be subject to the
agreement of merger or consolidation. Such agreement shall provide for either:
(a) the assumption of outstanding Options by the surviving corporation or its
parent; (b) the continuation of outstanding Options by the Company, if the
Company is a surviving corporation; (c) the payment of a cash settlement equal
to (i) the difference between the amount to be paid for one Share under such
agreement and the Exercise Price multiplied by (ii) the number of Shares subject
to the Option, vested or unvested, or both, as determined by the Company; or (d)
the acceleration of the exercisability of outstanding Options followed by the
cancellation of Options not exercised, in all cases other than clause (c)
without the Optionees' consent. (The Optionees' consent shall be required for a
cash settlement.) Any cancellation shall not occur earlier than thirty (30) days
after such acceleration is effective and Optionees have been notified of such
acceleration. In the case of Options that have been outstanding for less than
twelve (12) months, a cancellation need not be preceded by an acceleration.
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<PAGE>
9.03. Reservation of Rights. Except as provided in this Article 9, an
Optionee shall have no rights by reason of: (a) any subdivision or consolidation
of shares of stock of any other class; (b) the payment of any dividend; or (c)
any other increase or decrease in the number of shares of stock of any other
class. Any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to an Option. The grant of an Option pursuant
to the Plan shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure, to merge or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.
ARTICLE 10. SECURITIES LAWS.
10.01. Compliance with Securities Laws. Shares shall not be issued
under the Plan unless the issuance and delivery of such Shares complies with, or
is exempt from, all applicable requirements of law, including, without
limitation, the Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder, state securities laws and regulations, and the
regulations of any stock exchange or automated quotation system on which the
Company's securities may then be listed.
10.02. Company Determination.
A. The Company shall have the absolute right to determine the
effective date of the exercise or vesting of any grant under this Plan after
determining that the issuance and delivery of any Shares to the holder will not
violate any state or federal securities or other laws.
B. Upon the request of the Company, the person receiving the
Shares shall provide to the Company in writing that all of the Shares to be
acquired shall be held for that person's own account without a view to any
distribution, that the Shares shall bear an appropriate legend to that effect,
and that such Shares will not be transferred or disposed of except in compliance
with applicable federal and state securities laws.
C. The Company has the complete discretion to defer the
effectiveness of any exercise of an Option granted under this Plan in order to
allow the issuance of the Shares to be made pursuant to registration or an
exemption for
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<PAGE>
registration in order to comply with federal or state securities laws. The
Company is not required to effect any registration of any of the Shares pursuant
to the Securities Act of 1933 or any comparable state statutes.
D. The Company shall inform the Optionee, in writing, of any
decision to delay the effective date of the Optionee's exercise of the Option.
During the period of the delay in the effective date, the Optionee may rescind
Optionee's election to exercise Optionee's Option at that time. To rescind the
election, Optionee must notify the Company, in writing, before the expiration of
the period to delay the effectiveness of the Option.
10.03. Effect of Public Offering. This provision shall take precedence
over any other provision of this Agreement. If the Company makes any public
offering and determines, in its sole discretion, that the number of outstanding
Stock Options must be reduced in order to comply with any federal or state law,
the Committee shall have the right to (a) accelerate the dates on which Options
granted under this Plan may be exercised; and (b) cancel any such accelerated
Options if the Options are not exercised within thirty (30) days after notice of
such acceleration has been given to the Optionee.
ARTICLE 11. NO EMPLOYMENT RIGHTS.
No provision of the Plan, or any Option granted under the Plan, shall
be construed to give any person any right to become, to be treated as, or to
remain an Employee. The Company and its Subsidiaries reserve the right to
terminate any person's Service at any time and for any reason.
ARTICLE 12. DURATION AND AMENDMENTS.
12.01. Term of the Plan. The Plan, as set forth herein, shall become
effective on the date of its adoption by the Board of Directors, subject to the
approval of the Company's stockholders. In the event that the stockholders fail
to approve the Plan within twelve (12) months after its adoption by the Board of
Directors, any Option grants already made shall be null and void, and no
additional Option grants shall be made after such date. The Plan shall terminate
automatically ten (10) years after its adoption by the Board of Directors and
may be terminated on any earlier date pursuant to Section 12.02 below.
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<PAGE>
12.02. Right to Amend or Terminate the Plan.
A. The Board of Directors may amend, suspend or terminate the
Plan at any time and for any reason; provided, however, that any amendment of
the Plan which (1) materially increases the benefits to the Plan participants,
(2) materially increases the number of Shares available for issuance under the
Plan except as provided in Article 9 or Section 4.01B, (3) change the number of
Shares subject to stock options to be granted to nonemployee directors under
Section 4.01B, (4) materially changes the class of persons who are eligible for
any grant of Options, or (5) adversely impacts the rights of participants under
awards or grants outstanding at the time of such amendment or termination, shall
be subject to the approval of the Company's stockholders. Stockholder approval
shall not be required for any other amendment of the Plan.
B. Notwithstanding Section 12.02A, Section 4.01B may not be
amended more often than once every six (6) months, other than to conform the
Plan to requirements of the Code, the Employee Retirement Income Security Act of
1974, as amended, or the rules and regulations thereunder.
12.03. Effect of Amendment or Termination. No Shares shall be issued
under the Plan after the termination thereof, except upon exercise of an Option
granted prior to such termination. The termination of the Plan, or any amendment
thereof, shall not affect any Share previously issued or any Option previously
granted under the Plan.
ARTICLE 13. EXECUTION.
To record the adoption of the Plan by the Board of Directors on 1993,
the Company has caused its authorized officer to execute the same.
SUTTER SURGERY CENTERS, INC., a
Delaware corporation
By /s/ August A. Saibeni
-------------------------------
August A. Saibeni, President
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<PAGE>
FIRST AMENDMENT TO 1993 STOCK OPTION PLAN OF
SUTTER SURGERY CENTERS, INC.
This First Amendment to 1993 Stock Option Plan, dated May 24, 1993 (the
"Plan") of Sutter Surgery Centers, Inc., a Delaware corporation (the "Company"),
is entered into as of July 23, 1993. All terms not defined herein shall have the
meaning set forth in the Plan.
Section 2.20 of the Plan is hereby amended to read in its entirety as
follows:
"Subsidiary" shall mean any entity, if the Company or one or more
of its subsidiaries own not less than fifty (50%) of the total combined
voting power of all the equity interests in such entity; provided,
however, if the Company receives a favorable response from the
Securities and Exchange Commission with respect to an interpretative
question under Rule 701 the Securities Act of 1933, as amended,
subsidiary shall also mean any limited partnership in which the Company
or one or more of its subsidiaries (I) own the controlling general
partnership interest and (ii) are included in the Company's
consolidated financial statements under generally accepted accounting
principles."
Section 4.02 of the Plan is hereby amended to read in its entirety as
follows:
"4.02. Ten Percent Shareholders.
"A. Any person eligible under the Plan who owns more than ten
percent (10%) of the total combined voting power of all classes of
outstanding Stock of the Company, the Company's parents, or the
Company's Subsidiaries shall not receive any Options unless the
Exercise Price is at least one hundred ten percent (110%) of the Fair
Market Value of a Share on the date of grant.
"B. Any employee who is required to receive Options in accordance
with Section 4.02A of the Plan, shall not be eligible for designation
as an Optionee of an ISO unless (a) the Exercise Price is calculated
based on Section 4.02A of the Plan and (b) the Option by its terms is
not exercisable after the expiration of five (5) years from the date of
grant."
<PAGE>
Section 7.01 of the Plan is amended by adding the following provision
to the end of Section 7.01:
"Further, Options granted to any other eligible person under the
Plan shall become exercisable with respect to at least twenty percent
(20%) of the Shares subject thereto on each of the first five (5) years
from the date of grant and shall expire ten (10) years from the date of
grant."
Section 7.03 of the Plan is hereby amended to read in its entirety as
follows:
"Section 7.03. Exercise Price. Each Stock Option Agreement shall
specify the Exercise Price. Except as required by Section 4.02 of the
Plan:
"A. The Exercise Price of an ISO shall not be less than one
hundred percent (100%) of the Fair Market Value of a Share on the date
of the grant.
"B. The Exercise Price of a Nonstatutory Option shall not be less
than eighty-five (85%) of the Fair Market Value of a Share on the date
of grant.
"C. The Exercise Price to a nonemployee director shall be one
hundred (100%) of the Fair Market Value of a Share on the date of
grant.
"Subject to the limitations set forth above, the Exercise Price
under any Option shall be determined by the Committee in its sole
discretion. The Exercise Price shall be payable in a form described in
Article 8."
Section 7.12 of the Plan is hereby amended by adding the following
provision to the end of Section 7.12:
"However, any provisions giving the Company the right to
repurchase the Shares upon the termination of an Optionee's employment
with the Company, or the Company's Subsidiaries shall only be in
accordance with the Rules of the California Commissioner of
Corporations (currently set forth in Section 260.140.41(k) of the Code
of Regulations), or under the rules of any applicable state securities
regulator."
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this First Amendment to 1993
Stock Option Plan of Sutter Surgery Centers, Inc., a Delaware corporation, to be
executed on its behalf by its officer duly authorized to act on behalf of the
Company.
COMPANY:
SUTTER SURGERY CENTERS, INC., a
Delaware corporation
By /s/ August A. Saibeni
--------------------------------
August A. Saibeni, President
and Chief Executive Officer
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<PAGE>
SECOND AMENDMENT TO
1993 STOCK OPTION PLAN OF
SUTTER SURGERY CENTERS, INC.
This Second Amendment to 1993 Stock Option Plan, dated May 24, 1993
(the "Plan"), as amended by the First Amendment, dated as of July 23, 1993, of
Sutter Surgery Centers, Inc., a Delaware corporation (the "Company"), is dated
as of March 15, 1994. All terms not defined herein shall have the meaning set
forth in the Plan.
Section 2.21 of the Plan is hereby amended in its entirety by deleting
the entire Section 2.21.
Section 7.05 of the Plan is hereby amended to read in its entirety as
follows:
"7.05. Exercisability and Term. Each Stock Option Agreement shall
specify the date when all or any installment of the Option is to become
exercisable. No option shall be exercisable earlier than six (6) months
from the date of grant. The vesting of any Option shall be determined
by the Committee at its sole discretion. A Stock Option Agreement may
provide for accelerated exercisability in the event of the Optionee's
death, disability or retirement, or other events. However, a Stock
Option Agreement may not provide for accelerated exercisability in the
event of a change of control of the Company. The Stock Option Agreement
shall also specify the term of the Option. The term shall not exceed
ten (10) years from the date of the grant, except as otherwise provided
in Section 4.02. Subject to the preceding sentence, the Committee, at
its sole discretion, shall determine when an Option is to expire."
Section 7.07B of the Plan is hereby amended to read in its entirety as
follows:
"B. The date ninety days (90) days after the termination of his or
her Service for any reason other than a disability; or"
Section 7.07C of the Plan is hereby amended to read in its
entirety as follows: "C. The date twelve months (12) after the
termination of his or her Service by reason of a disability."
Section 7.12 of the Plan is hereby amended by deleting the word
"forfeiture" in the first sentence.
<PAGE>
Section 9.02 of the Plan is hereby amended to read in its entirety as
follows:
"9.02. Merger; Consolidation. In the event that the Company is a
party to a merger or consolidation, outstanding Options shall be
subject to the agreement of merger or consolidation. Such agreement
shall provide for either: (a) the assumption of outstanding Options by
the surviving corporation or its parent; (b) the continuation of
outstanding Options by the Company, if the Company is a surviving
corporation; (C) the payment of a cash settlement equal to (I) the
difference between the amount to be paid for one Share under such
agreement and the Exercise Price multiplied by (ii) the number of
vested Shares subject to the Option; or (d) the acceleration of the
exercisability of outstanding vested Options followed by the
cancellation of Options not exercised (including unvested options), in
all cases other than clause (C) without the Optionees' consent. (The
Optionees' consent shall be required for a cash settlement.) Any
cancellation shall not occur earlier than thirty (30) days after such
acceleration is effective and Optionees have been notified of such
acceleration. In the case of Options that have been outstanding for
less than twelve (12) months, a cancellation need not be preceded by an
acceleration."
IN WITNESS WHEREOF, the Company has caused this Second Amendment to
1993 Stock Option Plan, as amended, of Sutter Surgery Centers, Inc., a Delaware
corporation, to be executed on its behalf by its officer duly authorized to act
on behalf of the Company.
COMPANY:
SUTTER SURGERY CENTERS, INC., a
Delaware corporation
By /s/ August A. Saibeni
-----------------------------
August A. Saibeni, President
and Chief Executive Officer
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<PAGE>
EXHIBIT 4(b)
THE OPTION GRANTED PURSUANT TO THIS NONSTATUTORY STOCK OPTION AGREEMENT
(THE "OPTION") AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE OPTION OR THE SHARES UNDER THE SECURITIES ACT, OR AN OPINION OF COUNSEL,
WHICH IS SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS
NOT REQUIRED.
SUTTER SURGERY CENTERS, INC., NONQUALIFIED
STOCK OPTION PLAN AND AGREEMENT (SAIBENI)
THIS AGREEMENT is entered into as of December 1, 1992, between SUTTER
SURGERY CENTERS, INC., a Delaware corporation (the "Company"), and AUGUST A.
SAIBENI (the "Optionee").
Recitals
A. The Company's Board of Directors ("Board") has established this
Nonqualified Stock Option Plan and Agreement ("Agreement") in order to provide
the Optionee with an opportunity to acquire common stock of the Company; and
B. The Board has determined that it would be in the best interests of
the Company and its stockholders to grant the Nonqualified Stock Option
described in this Agreement to the Optionee as an inducement to enter into and
remain in the employ of the Company and as an incentive for extraordinary
efforts during such employment.
NOW, THEREFORE, it is agreed as follows:
Agreement
ARTICLE 1. GRANT OF OPTION.
1.01. Option. On the terms and conditions stated below, the Company
hereby grants to the Optionee the option to purchase One Million Thirty-One
Thousand Nine Hundred Ninety- Two (1,031,992) Shares for the sum of ONE DOLLAR
($1.00) per Share, the Fair Market Value of the Shares. This Option is not
intended to be an incentive stock option described in section 422 of the Code.
1.02. Representation and Warranty. The Company represents and warrants
that, as of the effective date of this Agreement:
<PAGE>
A. Nineteen Million Six Hundred Seven Thousand Eight Hundred
Forty- Three (19,607,843) shares of Common Stock are issued and outstanding;
B. The Common Stock subject to this Option represents
approximately five percent (5%) of the outstanding Common Stock assuming full
exercise of this Option; and
C. There are no outstanding options, warrants, conversion
rights or similar rights under which the Company is or may become obligated to
issue or sell any shares of Common Stock, except (I) as may be contemplated by
this Agreement, and (ii) pursuant to the Purchase Rights Agreement, dated as of
December 1, 1992, among the Company, E J Financial Investments, L.P., a Delaware
limited partnership ("EJF"), and Sutter Ambulatory Care Corporation, a
California nonprofit public benefit corporation ("SACC"); and
D. The execution and delivery of this Option and the
performance of the obligations of the Company have been duly authorized by all
corporate action on behalf of the Company.
ARTICLE 2. NO TRANSFER OR ASSIGNMENT OF OPTION.
Except as otherwise provided in this Agreement, this Option and the
rights and privileges conferred hereby shall not be transferred, assigned,
pledged or hypothecated in any way, whether by operation of law or otherwise,
and shall not be subject to sale under execution, attachment or similar process.
Except as otherwise provided herein, upon any transfer, assignment, pledge,
hypothecation or other disposition of this Option, or of any right or privilege
conferred hereby, contrary to the provisions hereof, or any sale under any
execution, attachment or similar process upon the rights and privileges
conferred hereby, this Option and the rights and privileges conferred hereby
shall immediately become null and void.
ARTICLE 3. RIGHT TO EXERCISE.
3.01. Vesting. Optionee may only exercise this Option to the extent it
is vested. Subject to the conditions stated in this Agreement, the right to
exercise this Option shall accrue in installments as follows:
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<PAGE>
Percentage of
Date Shares Exercisable
January 1, 1993 25.0000% (257,998 Shares)
February 1, 1993 and the first day of 1.5625% (16,125 Shares)
each month thereafter until
January 1, 1997
less, in the case of each vesting period, the number of Shares of common stock,
if any, previously purchased under the Option; provided, however, the right to
exercise any unexercised shares under this Option shall immediately become
exercisable in full, if EJF and SACC, and their respective affiliates, as
defined in the Stockholders Agreement, dated as of December 1, 1992, among the
Company, EJF and SACC (the "Stockholders Agreement"), collectively no longer
have the ability to cause the election of a majority of the Board of Directors
of the Company, through the terms of the Stockholders Agreement, or otherwise.
The Stockholders Agreement is hereby incorporated by reference.
Any other provision of this Agreement notwithstanding, if the Optionee
goes on a leave of absence in excess of six (6) months duration, other than a
sick leave or disability leave (to be determined in the sole discretion of the
Board), then the date when any installment of this Option would otherwise become
exercisable under the foregoing schedule shall be delayed for a period equal to
the duration of such leave of absence.
3.02. Periods of Nonexercisability. This Section 3.02 shall prevail
over any other portion of this Agreement. The Company shall have the right to
designate as many as two (2) periods of time, each of which shall not exceed
twelve (12) consecutive months in length, during which this Option shall not be
exercisable. The Company may only make such a designation if it reasonably
determines that such a limitation on exercise is reasonably likely to facilitate
(I) a lessening of any restriction on transfer pursuant to the Securities Act or
any state securities laws on any issuance of securities by the Company, (ii) the
registration or qualification of any securities by the Company under the
Securities Act or any state securities laws, or (iii) the perfection of any
exemption from the registration or qualification requirements of the Securities
Act or any applicable state securities laws for the issuance or transfer of any
securities. This limitation on exercise shall not alter the vesting schedule set
forth in Section 3.01 other than to limit the periods during which this Option
shall be exercisable. The Optionee shall be notified in writing in advance of
any such designation by the Company.
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<PAGE>
ARTICLE 4. EXERCISE PROCEDURES.
4.01. Notice of Exercise.
A. The Optionee may exercise this Option by giving notice to
the Secretary of the Company. In the notice, the Optionee shall specify (I) the
election to exercise this Option; (ii) the number of Shares to be issued; and
(iii) the form of payment for such Shares. The Optionee shall sign the notice.
The Optionee shall deliver the notice to the Secretary or Assistant Secretary of
the Company; and at the time of giving the notice, the Optionee shall make
payment in a form permissible under Article 5 for the full amount of the
Purchase Price. The notice shall be in the form attached as Exhibit 4.01.
B. A representative of the Optionee may exercise the Option on
behalf of the Optionee in accordance with the procedures of Section 4.01A. In
addition to the procedures of Section 4.01A, the representative shall provide
proof satisfactory to the Company of the representative's authority as a
condition of the representative's right to exercise this Option.
4.02. Issuance of Shares. After receiving a proper notice of exercise
and full payment for the Shares, the Company shall issue a certificate or
certificates for the Shares subject to the Option exercised by the Optionee,
registered in the name of the Optionee (or a person set forth in Section 6.04C),
or, if so specified in the notice of option exercise, in the names of the
Optionee and his spouse as community property or as joint tenants with right of
survivorship. The Company shall not issue Optionee any fractions of Shares. The
Company shall pay the Optionee, in cash, the Fair Market Value of any fractions
of Shares. The Company shall deliver any certificates representing the Shares to
the Optionee no later than thirty (30) days after receiving proper notice and
full payment for the Shares.
ARTICLE 5. PAYMENT FOR STOCK.
The Optionee shall pay for the entire Purchase Price in United States
dollars, or, at the Optionee's discretion:
The Optionee may elect to surrender Shares, in form appropriate for
transfer, towards payment of the Purchase Price, provided that the Company has
closed an Initial Public Offering. The Shares surrendered shall be valued at
their Fair Market Value as of the exercise date. The Optionee may only surrender
Shares if they have an aggregate Fair Market Value of at least TEN THOUSAND
DOLLARS ($10,000).
4-
<PAGE>
The combined amount paid in cash and the value of surrendered Shares
must equal the Purchase Price.
ARTICLE 6. TERM AND EXPIRATION.
6.01. Basic Term. This Option shall in any event expire on the tenth
(10th) anniversary of the Date of Grant unless extended due to a delay as
described in Section 3.02 with the delay occurring after the eighth (8th)
anniversary of the Date of Grant. If a delay in exercising this Option (as
described in Section 3.02) occurs after the eighth (8th) anniversary of the Date
of Grant, the term of this Option shall be extended by one day for each day of
such delay occurring after the eighth (8th) anniversary of the Date of Grant.
6.02. Termination of Service Resulting in Acceleration of Vesting. If
the Optionee's employment is terminated for any of the following reasons:
A. The Optionee's death, disability or incapacity;
B. Action by the Company pursuant to Section 9(d) of the
Employment Agreement between the Optionee and the Company, dated the date hereof
(the "Employment Agreement"), or otherwise without cause; or
C. Action by the Optionee pursuant to Section 9(e) of the
Employment Agreement, or otherwise for good reason; then, any portion of this
Option which is not then exercisable pursuant to Section 3.01 shall become
exercisable as of the date of termination of the Optionee's employment by the
Company (the "Termination Date").
6.03. Termination of Service Resulting in Termination of Nonvested
0ptions. If the Optionee's employment is terminated for any reason other than
set forth in Section 6.02 herein, then any portion of this Option which is not
then exercisable pursuant to Section 3.01 herein shall terminate on the
Termination Date. 6.04. Exercise of Options After Termination Date.
A. After the Termination Date, the Optionee may exercise any
portion of this Option (other than any portion which has terminated pursuant to
Section 6.03 hereof) on or before the ninetieth (90th) day after the end of the
calendar year in which the Termination Date occurs.
B. After the time period set forth in Section 6.04.A above has
expired, the Optionee shall no longer have any rights whatsoever hereunder.
C. All or part of this Option may be exercised at any time
before its expiration by the executors or administrators of the Optionee's
estate or by
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<PAGE>
any person who has acquired this Option directly from the Optionee by bequest,
beneficiary designation or inheritance.
6.05. Leaves of Absence. For purposes of this Article 6, the employment
relationship shall be deemed to continue during any period when the Optionee is
on military leave, sick leave or other bona fide leave of absence (to be
determined in the sole discretion of the Board).
ARTICLE 7. LEGALITY OF INITIAL ISSUANCE.
Shares shall be issued upon the exercise of this Option only if the
Company has determined that (I) it and the Optionee have taken any actions
required by law to register the Shares under the Securities Act or to perfect an
exemption from the registration requirements thereof; (ii) any applicable
listing requirement of any stock exchange or automated quotations system on
which the Shares are listed has been satisfied; and (iii) any other applicable
provision of state or federal securities law has been satisfied.
ARTICLE 8. REGISTRATION RIGHTS.
8.01. Form S-8 Registration. From and after (I) the completion of an
Initial Public Offering and (ii) the expiration of any lock-up period set forth
in the Company's underwriting agreement with the managing underwriters) of the
Company's Initial Public Offering, the Company shall register the Shares on Form
S-8 for sale pursuant to employee benefit plans of the Company; provided that,
(x) the optionee has given the Company at least sixty (60) days' written notice
of Optionee's request to register the Shares and (y) the registration of the
Shares is permitted by the rules of the Securities and Exchange Commission.
8.02. No Other Registration Rights. Other than as set forth in Section
8.01 above, the Company may, but shall not be obligated to, register or qualify
the resale of Shares by the Optionee under the Securities Act or any other
applicable law. The Company shall not be obligated to take any affirmative
action in order to cause such a resale of Shares to comply with any law.
ARTICLE 9. RESTRICTIONS ON TRANSFER OF SHARES.
9.01. Restrictions. Regardless of whether the offering and sale of
Shares have been registered under the Securities Act or have been registered or
qualifiedunder the securities laws of any state, the Company may impose
restrictions upon the sale, pledge or other transfer of such Shares (including
the placement of
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<PAGE>
appropriate legends on stock certificates) if, in the reasonable judgment of the
Company and its counsel, such restrictions are necessary or desirable in order
to achieve compliance with the Securities Act, the securities laws of any state
or any other law or with restrictions imposed by the Company's underwriters.
9.02. Investment Intent at Grant. The Optionee represents and agrees
that the Shares to be acquired upon exercising this Option will be acquired for
investment and not with a view to the sale or distribution thereof.
9.03. Investment Intent at Exercise. If the sale of Shares are not
registered under the Securities Act, but an exemption is available which
requires an investment representation or other representation, the Optionee
shall represent and agree at the time of exercise that the Shares being acquired
upon exercising this Option are being acquired for investment, and not with a
view to the sale or distribution thereof, and shall make such other
representations as are deemed necessary or appropriate by the Company and its
counsel.
9.04. Stockholders Agreement. Unless an Initial Public Offering has
been completed, the Optionee shall, upon exercise of any Options, execute and
deliver instruments necessary to cause the Optionee to become a party to the
Stockholders Agreement. Such instrument shall obligate the Optionee to vote his
Shares for the director nominees nominated by SACC or EJF.
9.05. Legend. All certificates evidencing Shares acquired under this
Agreement in an unregistered transaction shall bear the following restrictive
legends (and such other restrictive legends as are required or deemed advisable
under the provisions of any applicable law):
A. THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH
REGISTRATION IS NOT REQUIRED; and
B. Any legend required by the Stockholders Agreement.
9.06. Removal of Legends. If, in the reasonable opinion of the Company
and its counsel, any legend placed on a stock certificate representing Shares
sold under this Agreement is no longer required, the holder of such certificate
shall be entitled to exchange such certificate for a certificate representing
the same number of Shares but lacking such legend.
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<PAGE>
ARTICLE 10. SHARES AND ADJUSTMENTS.
10.01. General. If there is a subdivision of the outstanding Shares, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the value
of Shares, a combination or consolidation of the outstanding Shares (by
reclassification or otherwise) into a lesser number of Shares, a
recapitalization or a similar occurrence, the Board shall make all appropriate
adjustments in both (I) the number of Shares covered by this Option; and (ii)
the Exercise Price.
10.02. Merger; Consolidation; Sale; Liquidation. If the Company is (I)
a party to a merger or consolidation and the Company is not the surviving
corporation, (ii) if there is a sale of all or substantially all of the
Company's assets other than a sale or transfer to a Subsidiary, or (iii) if
there is a dissolution or liquidation of the Company (each referred to herein as
a "Trigger Event"), the Optionee shall, upon a Trigger Event, have the right
(immediately prior to the Trigger Event) to exercise this Option in whole or in
part without regard to the vesting schedule set forth in Section 3.01. The
Option shall terminate after the Trigger Event has taken place. The Company
shall exercise its best efforts to keep Optionee informed in advance of when a
Trigger Event may or will occur.
10.03. Reservation of Rights. Except as provided in Articles 10 and 11,
the Optionee shall have no rights by reason of (I) any subdivision or
consolidation of shares of stock of any class; (ii) the payment of any dividend;
or (iii) any other increase or decrease in the number of shares of stock of any
class. Any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of the Shares subject to this Option. The grant of this Option
shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure, to merge or consolidate or to dissolve, liquidate, sell or
transfer all or any part of its business or assets.
ARTICLE 11. OPTIONEE PURCHASE RIGHTS.
If, at any time, or from time to time, prior to the Initial Public
Offering, the Company issues or sells any shares of its common stock (other than
shares issued to employees or directors pursuant to employee benefit plans and
shares issued in stock splits or dividends), the Company agrees to notify the
Optionee in writing of the terms of the issuance. The Optionee shall thereupon
be entitled to purchase
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<PAGE>
from the Company a number of shares of common stock of the Company such that the
Optionee owns the same percentage of common stock of the Company after the
issuance as before the issuance. The Optionee's percentage ownership shall be
calculated assuming full exercise of this Option. The Optionee shall exercise
his purchase rights under this Article 11 within thirty (30) days from receipt
of notification from the Company. The Optionee shall purchase any shares
acquired under this Article 11 on the same terms and conditions as those
provided to the other investors in such offering.
ARTICLE 12. MISCELLANEOUS PROVISIONS.
12.01. Withholding Taxes. If the Company determines that it is required
to withhold foreign, federal, state or local tax as a result of the exercise of
this Option, the Optionee, as a condition to the exercise of this Option, shall
make arrangements satisfactory to the Company to enable the Company to satisfy
all withholding requirements.
12.02. Rights as a Stockholder. The Optionee shall not have any rights
as a stockholder with respect to any Shares subject to this Option until such
Shares have been issued as provided in Section 4.02.
12.03. No Employment Rights. Nothing in this Agreement shall be
construed as giving the Optionee the right to continue as an Employee. The terms
of the Optionee's employment with the Company are set forth in the Employment
Agreement. The Company reserves the right to terminate the Optionee's employment
at any time, with or without cause, subject to any written Employment Agreement
between the Optionee and the Company to the contrary.
12.04. Notice. Any notice required by the terms of this Agreement shall
be given in writing and shall be deemed effective upon personal delivery or two
(2) days after the date of deposit with the United States Postal Service, by
registered or certified mail with postage and fees prepaid and addressed to the
party entitled to such notice at the address shown below such party's signature
on this Agreement, or at such other address as such party may designate by ten
(10) days' advance written notice to the other party to this Agreement.
12.05. Entire Agreement. This Agreement constitutes the entire contract
between the parties hereto with regard to the subject matter hereof.
12.06. Choice of Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware (exclusive of
its laws
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<PAGE>
regarding the conflict of laws), as such laws are applied to contracts entered
into and performed in such state.
12.07. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. THE OPTIONEE AND
THE COMPANY HEREBY CONSENT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE COUNTY OF THE COMPANY'S HEADQUARTERS (AT THE TIME ANY ACTION
IS INSTITUTED), AND IRREVOCABLY AGREE THAT, UNLESS BOTH PARTIES ELECT OTHERWISE,
ALL ACTIONS OR PROCEEDINGS RELATED TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH
COURTS. THE PARTIES ACCEPT THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND WAIVE
ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT MAY BE MADE BY MAILING IT BY
REGISTERED OR CERTIFIED MAIL TO THE PARTIES AT THE ADDRESS PROVIDED ON THE
SIGNATURE PAGE HEREIN, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY THE PARTIES TO
BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. NOTHING HEREIN SHALL EFFECT
THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
ARTICLE 13. DEFINITIONS.
13.01. Board. Shall mean the Board of Directors of the Company, as
constituted from time to time.
13.02. Code. Shall mean the Internal Revenue Code of 1986, as amended.
13.03. Date of Grant. Shall mean the date on which the Board resolved
to grant this Option, which is also the date as of which this Agreement is
entered into.
13.04. Employee. Shall mean any individual who is a common law employee
of the Company or of a Subsidiary.
13.05. Exercise Price. Shall mean the amount for which one (1) Share
may be purchased upon exercise of this Option as specified in Section 1.01.
13.06 Fair Market Value. Shall mean as of the date of this Agreement,
ONE DOLLAR ($1.00) per share. After the date of this Agreement, it shall mean
for each share: (I) the average of the closing prices per share of the common
stock as reported in The Wall Street Journal for the last twenty (20) business
days prior to the
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<PAGE>
exercise date if shares of the Common Stock are either listed on a national
securities exchange or traded on the NASDAQ/National Market System; (ii) the
average bid and asked prices for the last twenty (20) business days prior to the
exercise date as furnished by two (2) members of the National Association of
Securities Dealers, Inc., selected for that purpose from time to time by the
Company and reasonably acceptable to the Optionee if shares of the Common stock
are not so listed, admitted or traded; or (iii) the price determined below, if
the formulas set forth in clauses (I) and (ii) above are inapplicable:
The price, as of the exercise date determined by an investment banker
selected by the mutual agreement of the Company and the Optionee (the "Mutually
Acceptable Investment Banker"). If the parties are unable to select a Mutually
Acceptable Investment Banker, the price shall be determined, as of the exercise
date, by a single arbitrator selected in accordance with the provisions of the
American Arbitration Association located in Chicago. To the extent possible,
this arbitrator shall have at least ten (10) years of experience in the
investment banking industry and shall be familiar with valuing companies engaged
in the surgery center business.
13.07. Initial Public Offering. Initial Public Offering shall mean an
initial public primary offering by underwriters on a firm commitment or best
efforts basis in which the Common Stock is listed on a national securities
exchange or traded on the Automated Quotation System of the National Association
of Securities Dealers or other over-the-counter- market.
13.08. Option. Shall mean an employee stock option not described in
sections 422(b) or 423(b) of the Code granted under this Agreement and entitling
the Optionee to purchase Shares.
13.09. Purchase Price. Shall mean the Exercise Price multiplied by the
number of Shares with respect to which this Option is being exercised.
13.10. Securities Act. Shall mean the Securities Act of 1933, as
amended.
13.11. Share. Shall mean one (1) share of Common Stock, as adjusted in
accordance with Article 10 (if applicable).
13.12. Subsidiary. Shall mean any corporation, if the Company or one
(1) or more other Subsidiaries own, individually or collectively, not less than
fifty percent (50%) of the total combined voting power of all classes of
outstanding stock of such corporation.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its officer duly authorized, and the Optionee has
personally executed this Agreement.
OPTIONEE:
---------------------------------
AUGUST A. SAIBENI
Address:
-------------------------
-------------------------
COMPANY:
SUTTER SURGERY CENTERS, INC., a
Delaware corporation
By
--------------------------------
Its
-------------------------------
Address: 2800 L Street
Sacramento, CA 95816
<PAGE>
EXHIBIT 4.01
OPTION EXERCISE FORM
Date:_________________
NONQUALIFIED STOCK OPTION
EXERCISE FORM
Sutter Surgery Centers, Inc.
Attention: Secretary
- ----------------------------
- ----------------------------
The undersigned elects to exercise the option to purchase ___________
(________) shares of common stock (the "Shares") of Sutter Surgery Centers,
Inc., ("Company"), in accordance with the nonqualified stock option granted to
the undersigned by Company as of , 1992, pursuant to a Nonqualified Stock Option
Plan and Agreement (the "Agreement").
Prior to the issuance of these Shares, I will make full payment of the
Purchase Price for the Shares by one of the following methods as indicated:
[ ] In cash in the amount of
[ ] By tender of Shares of the Company having a Fair Market Value
when combined with other forms of payment of not less than the
Purchase Price (shares may only be tendered if the Company has
completed an Initial Public Offering (as defined in the
Agreement)).
Please issue the Shares to ___________________________________[i.e.,
Optionee; Optionee and spouse as community property; or Optionee and spouse as
joint tenants]. .
I represent and agree that I am over eighteen (18) years of age, that I
am acquiring the Shares for investment and that I have no present intention to
transfer, sell or otherwise dispose of such Shares, except as permitted pursuant
to the Agreement and in compliance with applicable securities laws.
<PAGE>
I further acknowledge and understand that the Shares must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from such registration is available. I further acknowledge and
understand that, except as set forth in the Agreement, the Company is under no
obligation to register the Shares and that, in the absence of registration, the
Shares may not be transferred. I understand that the instrument evidencing the
Shares will be imprinted with legends which prohibit the transfer of the Shares
unless they are registered or such registration is not required in the opinion
of counsel satisfactory to Company. I do not have any contract, agreement or
arrangement with any persons to sell, transfer or grant participations to such
person or to any third person with respect to any of the Shares.
I am aware of the adoption of Rule 144 by the Securities and Exchange
Commission, promulgated under the Securities Act, which permits limited public
resale of securities acquired on a nonpublic offering subject to the
satisfaction of certain conditions, including, among other things: The
availability of certain public information about Company, the resale occurring
not less than two (2) years after the party has purchased and paid for the
securities to be sold, the sale being through a broker in an unsolicited
"broker's transaction," and the amount of securities being sold during any three
(3)-month period not exceeding specified limitations (generally, one percent
(1%) of the total amount outstanding).
I agree to obtain the consent of my spouse to this exercise.*
My address of record is:
-------------------------------------
-------------------------------------
and my Social Security number is:
-------------------------------------
Very truly yours,
-------------------------------------
Name:
- ------------------------------
* The Consent of Spouse should be in the form attached to the Nonqualified Stock
Option Exercise Form.
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<PAGE>
CONSENT OF SPOUSE
The undersigned, being the spouse of ______________________, does
hereby acknowledge that she has read and is familiar with the provisions of the
above Nonqualified Stock Option Exercise Form and the Agreement, and she hereby
agrees thereto and joins therein to the extent, if any, that her agreement and
joinder may be necessary.
DATED:
---------------------------
-------------------------------------
(Signature)
Print Name:
--------------------------
Receipt of the above is hereby
acknowledged:
SUTTER SURGERY CENTERS, INC.
By
-------------------------------
Its
-------------------------------
Dated:
-------------------------------
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<PAGE>
EXHIBIT 4(c)
SUTTER SURGERY CENTERS, INC., NONQUALIFIED
STOCK OPTION PLAN AND AGREEMENT (SHAH)
THIS AGREEMENT is entered into as of May 16, 1994, between SUTTER
SURGERY CENTERS, INC., a Delaware corporation (the "Company"), and MAHENDRA G.
SHAH, PH.D. (the "Optionee").
Recitals
The Company's Board has established this Agreement in order to fulfill
the Company's obligation under Section 3 of the Consulting Agreement by
providing the Optionee with an opportunity to acquire common stock of the
Company;
NOW, THEREFORE, it is agreed as follows:
Agreement
ARTICLE 1. GRANT OF OPTION.
On the terms and conditions stated below, the Company hereby grants to
the Optionee the option to purchase FIFTEEN THOUSAND SIX HUNDRED TWENTY-FIVE
(15,625) Shares for the sum of ONE DOLLAR ($1.00) per Share, the Fair Market
Value of the Shares. This Option is not intended to be an incentive stock option
described in section 422 of the Code.
ARTICLE 2. NO TRANSFER OR ASSIGNMENT OF OPTION.
Except as otherwise provided in this Agreement, this Option and the
rights and privileges conferred hereby shall not be transferred, assigned,
pledged or hypothecated in any way, whether by operation of law or otherwise,
and shall not be subject to sale under execution, attachment or similar process.
Except as otherwise provided herein, upon any transfer, assignment, pledge,
hypothecation or other disposition of this Option, or of any right or privilege
conferred hereby, contrary to the provisions hereof, or any sale under any
execution, attachment or similar process upon the rights and privileges
conferred hereby, this Option and the rights and privileges conferred hereby
shall immediately become null and void.
<PAGE>
ARTICLE 3. RIGHT TO EXERCISE.
3.01. Vesting. Optionee may exercise this Option only to the extent that
the Optionee's interest in this Option has vested. Subject to the conditions
stated in this Agreement, the right to exercise this Option shall accrue in
installments as follows:
No. of Percentage of
Vesting Period Shares Shares Exercisable
May 16,1995 3,125 20%
May 16,1996 6,250 40%
May 16,1997 9,375 60%
May 16,1998 12,500 80%
May 15,1999 15,625 100%
Total 15,625 100%
In the case of each vesting period, the number of Shares of common stock,
if any, previously purchased under this Option shall be deducted from the amount
of Shares Optionee is entitled, to acquire. Any other provision of this
Agreement notwithstanding, if the Optionee does not provide consulting services
under the Consulting Agreement for any reason, and (I) the Consulting Agreement
is still in effect, and (ii) the Company has provided the Optionee with written
notice that, although the Consulting Agreement is still in effect, the Optionee
is not currently providing consulting services to the Company (referred to
herein as a "Lapse Notice"), then the date when any installment of this Option
would otherwise become exercisable under the foregoing schedule shall be delayed
for a period equal to the duration of the Lapse Notice. The Lapse Notice shall
be of no further effect once the Company has notified the Optionee that the
Lapse Notice has terminated.
3.02. Periods of Nonexercisability. This Section 3.02 shall prevail over
any other portion of this Agreement. The Company shall have the right to
designate as many as two (2) periods of time, each of which shall not exceed
twelve (12) consecutive months in length, during which this Option shall not be
exercisable. The Company may only make such a designation if it reasonably
determines that such a limitation on exercise is reasonably likely to facilitate
(I) a lessening of any restriction on transfer pursuant to the Securities Act or
any state
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<PAGE>
securities laws on any issuance of securities by the Company, (ii) the
registration or qualification of any securities by the Company under the
Securities Act or any state securities laws, or (iii) the perfection of any
exemption from the registration or qualification requirements of the Securities
Act or any applicable state securities laws for the issuance or transfer of any
securities. This limitation on exercise shall not alter the vesting schedule set
forth in Section 3.01 other than to limit the periods during which this Option
shall be exercisable. The Optionee shall be notified in writing in advance of
any such designation by the Company.
3.03. Listing, Registration or Qualification of Shares. If the listing,
registration or qualification of the Shares subject to this Option on any
securities exchange or under any state or federal law or if the consent or
approval of any regulatory body is necessary in connection with the granting of
this Option or the delivery or purchase of Shares, this Option may not be
exercised, in whole or in part, until such listing, registration, qualification,
consent or approval has been effected or obtained. The Company shall make every
reasonable effort to effect or obtain any such listing, registration,
qualification, consent or approval as may be required.
ARTICLE 4. EXERCISE PROCEDURES.
4.01. Notice of Exercise.
A. The Optionee may exercise this Option by giving notice to the
Chief Financial Officer of the Company. In the notice, the Optionee shall
specify (I) the election to exercise this Option; (ii) the number of Shares to
be issued; and (iii) the form of payment for such Shares. The Optionee shall
sign the notice. The Optionee shall deliver the notice to the Chief Financial
Officer of the Company; and at the time of giving the notice, the Optionee shall
make payment in a form permissible under Article 5 for the full amount of the
Purchase Price. The notice shall be in the form attached as Exhibit 4.01.
B. A representative of the Optionee may exercise this Option on
behalf of the Optionee in accordance with the procedures of Section 4.0l.A. In
addition to the procedures of Section 4.0l.A., the representative shall provide
proof satisfactory to the Company of the representative's authority as a
condition of the representative's right to exercise this Option.
4.02. Issuance of Shares. After receiving a proper notice of exercise and
full payment for the Shares, the Company shall issue a certificate or
certificates for the Shares subject to this Option exercised by the Optionee,
registered in the name of
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<PAGE>
the Optionee (or a person set forth in Section 6.03), or, if so specified in the
notice of option exercise, in the names of the Optionee and the Optionee's
spouse as community property or as joint tenants with right of survivorship. The
Company shall deliver any certificates representing the Shares to the Optionee.
ARTICLE 5. PAYMENT FOR STOCK.
The Optionee shall pay for the entire Purchase Price in United States
dollars, or, at Optionee's discretion, Optionee may elect to surrender Shares
provided the Shares have been held for more than six (6) months and provided the
Shares are surrendered to the Company in good form for transfer and the transfer
will not cause Optionee or the Company to be in violation of the Securities Act,
the Securities Exchange Act, or state securities laws.
The combined amount paid in cash and the value of surrendered Shares
must equal the Purchase Price. The Board shall determine the value of any
surrendered Shares.
ARTICLE 6. TERM AND EXPIRATION.
6.01. Basic Term. This Option shall expire on May 15, 2000 unless
extended due to a delay as described in Section 3.02 with the delay occurring
after the second (2nd) anniversary of the Date of Grant. If a delay in
exercising this Option (as described in Section 3.02) occurs after the second
(2nd) anniversary of the Date of Grant, the term of this Option shall be
extended by one day for each day of such delay occurring after the second (2nd)
anniversary of the Date of Grant.
6.02. Termination of Service (Except by Death). If the Optionee's
Service terminates for any reason other than death, then this Option shall
expire on the earliest of the following occasions:
A. The date determined pursuant to Section 6.01, above;
B. The date twelve (12) months after the termination of
Optionee's Service without cause by the Company pursuant to Section 10.A. of the
Consulting Agreement; or
C. The date ninety (90) days after the termination of Optionee's
Service for any reason other than termination of Optionee's Service without
cause by the Company pursuant to Section 10.A. of the Consulting Agreement.
The Optionee may exercise all or part of this Option at any time
before its expiration under the preceding sentence, but only to the extent that
this
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<PAGE>
Option had become vested before the Optionee's Service terminated, and the
balance of this Option shall lapse when the Optionee's Service terminates. If
the Optionee dies after the termination of Service but before the expiration of
this Option, all or part of this Option may be exercised (prior to expiration)
by the executors or administrators of the Optionee's estate or by any person who
has acquired this Option directly from the Optionee by bequest, beneficiary
designation or inheritance but only to the extent that this Option had become
vested before the Optionee's Service terminated.
6.03. Death of 0ptionee. If the Optionee dies while in Service, then
this Option shall expire on the earlier of the following dates:
A. The expiration date determined pursuant to Section 6.01
above; or
B. The date twelve (12) months after the Optionee's death.
All or part of this Option may be exercised at any time before
its expiration under the preceding sentence by the executors or administrators
of the Optionee's estate or by any person who has acquired this Option directly
from the Optionee by bequest, beneficiary designation or inheritance but only to
the extent that such Option(s) had become vested before the Optionee's death or
became exercisable as a result of the Optionee's death. The balance of such
Option(s) shall lapse when the Optionee dies.
ARTICLE 7. LEGALITY OF INITIAL ISSUANCE.
Shares shall be issued upon the exercise of this Option only if the
Company has determined that (I) it and the Optionee have taken any actions
required by law to register the Shares under the Securities Act or to perfect an
exemption from the registration requirements thereof; (ii) any applicable
listing requirement of any stock exchange or automated quotations system on
which the Shares are listed has been satisfied; and (iii) any other applicable
provision of state or federal securities law has been satisfied.
ARTICLE 8. REGISTRATION RIGHTS.
The Company may, but shall not be obligated to, register or qualify the
resale of Shares by the Optionee under the Securities Act or any other
applicable law. The Company shall not be obligated to take any affirmative
action in order to cause a resale of Shares to comply with any law. However, the
Company has granted this
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<PAGE>
Option pursuant to the terms of Rule 701 under the Securities Act and the
Optionee may resell Shares, provided the Optionee complies with the provisions
described in the Option Exercise Form, attached as Exhibit 4.01.
ARTICLE 9. RESTRICTIONS ON TRANSFER OF SHARES.
9.01. Restrictions. Regardless of whether the offering and sale of Shares
under this Agreement have been registered under the Securities Act or have been
registered or qualified under the securities laws of any state, the Company may
impose restrictions upon the sale, pledge or other transfer of such Shares
(including the placement of appropriate legends on stock certificates) if, in
the judgment of the Company and its counsel, such restrictions are necessary or
desirable in order to achieve compliance with the Securities Act, the securities
laws of any state or any other law or with restrictions imposed by the Company's
underwriters.
9.02. Administration. Any determination by the Company and its counsel in
connection with any of the matters set forth in this Article 9 shall be
conclusive and binding on the Optionee and all other persons.
9.03. Investment Purpose. The Optionee hereby represents that any Shares of
common stock purchased upon exercise of this Option will be purchased for
investment and not with a view to the distribution thereof within the meaning of
the Securities Act. As a condition precedent to any exercise of this Option, the
Optionee agrees that, if requested by the Board, he or she will promptly submit
a written statement in a form satisfactory to counsel for the Company to the
effect that such representation is true and correct as of the date of purchase
of any Shares hereunder.
A. As a further condition precedent to any exercise of this Option,
the Optionee shall comply with all regulations and requirements of any
regulatory authority having control of, or supervision over, the issuance of the
common stock of the Company and, in connection therewith, shall execute any
documents which the Board deems necessary or advisable, provided that the
Optionee shall not be required to bear any expense associated with such
compliance.
B. By accepting this Option, the Optionee agrees that the Optionee
shall not, directly or indirectly, without the prior written consent of the
Company, sell, offer, contract to sell, pledge, grant any option to purchase or
otherwise dispose of any Shares of common stock acquired by exercise of this
Option for a period beginning on the date of the Initial Public Offering and
ending one
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<PAGE>
hundred eighty (180) days after the date that Shares of common stock are
released by the Company's underwriters for sale to the public in an Initial
Public Offering. Nothing in this Option shall be construed as requiring the
Company to complete or attempt an Initial Public Offering.
C. Each stock certificate issued by the Company to the Optionee upon
the Optionee's exercise of the Option granted shall bear such legend as the
Company deems necessary or desirable to reflect the provisions of this Section
9.03.
ARTICLE 10. SHARES AND ADJUSTMENTS.
10.01. General. If there is a subdivision of the outstanding Shares, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the value
of Shares, a combination or consolidation of the outstanding Shares (by
reclassification or otherwise) into a lesser number of Shares, a
recapitalization or a similar occurrence, the Board shall make all appropriate
adjustments in both (I) the number of Shares covered by this Option; and (ii)
the Exercise Price.
10.02. Merger; Consolidation; Sale; Liquidation. If the Company is a party
to a merger or consolidation or if there is a sale of all or substantially all
of the Company's assets other than a sale or transfer to a Subsidiary, this
Option shall be subject to the agreement of merger, consolidation or sale. Such
agreement may, as determined by the Board, provide for: (I) the assumption of
this Option by the surviving corporation or its parent; (ii) its continuation by
the Company, if the Company is the surviving corporation; (iii) payment for a
cash settlement equal to (a) the difference between the amount to be paid for
one (1) Share under such agreement and the Exercise Price multiplied by (b) the
number of Shares subject to the Option, vested or unvested, or both, as
determined by the Company; or (iv) the acceleration of the vesting of this
Option, followed by the cancellation of this Option if not exercised, in all
other cases other than clause (iii) without the Optionee's consent. (The
Optionee's consent shall be required for a cash settlement.) A cancellation
shall not occur earlier than thirty (30) days after such acceleration is
effective and the Optionee has been notified of such acceleration. If this
Option has been outstanding for less than twelve (12) months, a cancellation
need not be preceded by an acceleration.
10.03. Reservation of Rights. Except as provided in Article 10, the
Optionee shall have no rights by reason of (I) any subdivision or consolidation
of
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<PAGE>
shares of stock of any class; (ii) the payment of any dividend; or (iii) any
other increase or decrease in the number of shares of stock of any class. Any
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or Exercise Price of the
Shares subject to this Option. The grant of this Option shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
ARTICLE 11. MISCELLANEOUS PROVISIONS.
11.01. Withholding Taxes. If the Company determines that it is required to
withhold foreign, federal, state or local taxes as a result of the exercise of
this Option, the Optionee, as a condition to the exercise of this Option, shall
make arrangements satisfactory to the Company to enable the Company to satisfy
all withholding requirements.
11.02. Rights as a Stockholder. The Optionee shall not have any rights as a
stockholder with respect to any Shares subject to this Option until such Shares
have been issued as provided in Section 4.02.
11.03. No Employment or Directorship Rights. Nothing in this Agreement
shall be construed as giving the Optionee the right to become or be treated as
an Employee of the Company or a member of the Board of the Company.
11.04. Notice. Any notice required by the terms of this Agreement shall be
given in writing and shall be deemed effective upon personal delivery or two (2)
days after the date of deposit with the United States Postal Service, by
registered or certified mail with postage and fees prepaid and addressed to the
party entitled to such notice at the address shown below such party's signature
on this Agreement, or at such other address as such party may designate by ten
(10) days' advance written notice to the other party to this Agreement.
11.05. Entire Agreement. This Agreement and the Consulting Agreement
constitute the entire contract between the parties hereto with regard to the
subject matter hereof and supersede all prior and contemporaneous agreements,
representations, warranties and understandings of the parties.
11.06. Choice of Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California (exclusive of its
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<PAGE>
laws regarding the conflict of laws), as such laws are applied to contracts
entered into and performed in such state. The state courts of California shall
have exclusive jurisdiction over any judicial proceeding relating to any dispute
arising out of the interpretation, performance or breach of this Agreement.
ARTICLE 12. DEFINITIONS.
12.01. Agreement. Shall mean this Nonqualified Stock Option Plan and
Agreement.
12.02. Board. Shall mean the Board of Directors of the Company, as
constituted from time to time.
12.03. Code. Shall mean the Internal Revenue Code of 1986, as amended.
12.04. Consulting Agreement. Shall mean the Consulting Agreement, effective
as of May 16, 1994, by and between the Company and the Optionee.
12.05. Date of Grant. Shall mean the date as of which this Agreement is
entered into.
12.06. Employee. Shall mean any individual who is a common law employee of
the Company or of a Subsidiary.
12.07. Exercise Price. Shall mean the amount for which one (1) Share may be
purchased upon exercise of this Option as specified in Section 1.01.
12.08. Fair Market Value. Shall mean the fair market value of a Share, as
determined by the Board in good faith. Such determination shall be conclusive
and binding on all persons.
12.09. Initial Public Offering. Shall mean an initial public primary
offering by underwriters on a firm commitment or best efforts basis in which it
is expected that the common stock will become listed on a national securities
exchange or traded on the Automated Quotation System of the National Association
of Securities Dealers or other over-the-counter-market.
12.10. 0ption. Shall mean a stock option not described in sections 422(b)
or 423(b) of the Code granted under this Agreement and entitling the Optionee to
purchase Shares.
12.11. Purchase Price. Shall mean the Exercise Price multiplied by the
number of Shares with respect to which this Option is being exercised.
12.12. Securities Act. Shall mean the Securities Act of 1933, as amended.
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<PAGE>
12.13. Securities Exchange Act. Shall mean the Securities Exchange Act of
1934, as amended.
12.14. Service. Shall mean consulting service of the Optionee pursuant to
the Consulting Agreement.
12.15. Share. Shall mean one (1) share of Common Stock, as adjusted in
accordance with Article 10 (if applicable).
12.16. Subsidiary. Shall mean any corporation, if the Company or one (1) or
more other Subsidiaries own, individually or collectively, not less than fifty
percent (50%) of the total combined voting power of all classes of outstanding
stock of such corporation.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by its officer duly authorized, and the Optionee has personally
executed this Agreement.
OPTIONEE:
_____________________________________
MAHENDRA G. SHAH, PH.D.
Address: ____________________________
____________________________
COMPANY:
SUTTER SURGERY CENTERS, INC., a
Delaware corporation
By __________________________________
Its _________________________________
Address: 1201 Alhambra Blvd., Ste. 330
Sacramento, CA 95816
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<PAGE>
EXHIBIT 4.01
OPTION EXERCISE FORM
<PAGE>
Date: ____________________________
NONQUALIFIED STOCK OPTION
EXERCISE FORM
Sutter Surgery Centers, Inc.
Attention: Chief Financial Officer
1201 Alhambra Boulevard, Suite 330
Sacramento, CA 95816
The undersigned elects to exercise the option to purchase ____________
(_________) shares of common stock (the "Shares") of Sutter Surgery Centers,
Inc. (the "Company"), in accordance with the nonqualified stock option granted
to the undersigned by the Company as of May 16, 1994, pursuant to a Nonqualified
Stock Option Plan and Agreement (the "Agreement").
Prior to the issuance of these Shares, I will make full payment of the
purchase price for the Shares by one of the following methods as indicated:
[ ] In cash in the amount of
[ ] By tender of Shares of the Company owned by the undersigned for
more than six (6) months, having a fair market value when combined
combined with other forms of payment of not less than the
purchase price.
Please issue the Shares to __________________________________ [i.e.,
Optionee; Optionee and spouse as community property; or Optionee and spouse as
joint tenants with right of survivorship].
I represent and agree that I am over eighteen (18) years of age and
that I have no present intention to transfer, sell or otherwise dispose of such
Shares, except as permitted to the Agreement and in compliance with applicable
securities laws.
<PAGE>
I acknowledge and understand that the Company has granted the Option
pursuant to the terms of Rule 701 under the Securities Act and that the
following provisions relating to the resale of my Shares shall apply:
(A) If I am not an affiliate of the Company, as defined
in Rule 144 of the Securities Act of 1933 ("Securities Act"),
I may resell my Shares ninety (90) days after the Company
becomes subject to the reporting requirements of section 13 or
15(d) of the Securities Exchange Act of 1934 ("Exchange Act")
(e.g., ninety (90) days after the Company's Initial Public
Offering); provided I comply with Rule 144 of the Securities
Act's manner of sale limitations set forth in Rule 144(f)
(e.g., my Shares are sold in a "broker's transaction" or to a
"market maker"); or
(B) If I am an affiliate of the Company, as defined in
Rule 144 of the Securities Act, I may resell my shares ninety
(90) days after the Company becomes subject to the reporting
requirements of section 13 or 15(d) of the Exchange Act (e.g.,
ninety (90) days after the Company's Initial Public Offering);
provided I comply with all of the provisions of Rule 144 of
the Securities Act, other than Rule 144(d) (holding period
requirement).
I further acknowledge and understand that, if, for any reason, the
Shares are not covered by the exemption contained in Rule 701 of the Securities
Act, the Shares must be sold under the provisions of Rule 144. These provisions
include, among other things: the availability of certain public information
about the Company, the Shares being held for a minimum of two (2) years, the
sale being made (I) through a broker in an unsolicited "broker's transaction" or
(ii) to a market maker, and the amount of securities being sold during any three
(3) month period not exceeding specified limitations (generally, one percent
(1%) of the total amount outstanding).
Moreover, I further acknowledge and understand that if the Company has
registered the Shares on Form S-8 (or any successor form), the following
provisions shall apply:
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<PAGE>
(A) If I am not an affiliate of the Company, I may freely
resell my Shares, subject to any contractual obligations I may
have to the Company; or
(B) If I am an affiliate of the Company, I may resell my
Shares, subject to (I) the provisions of Rule 144 of the
Securities Act, other than Rule 144(d) (holding period
requirement); and (ii) any contractual obligations I have to
the Company.
I understand that the Shares may be subject to the restrictions on
transfer set forth in Article 9 of the Agreement.
I agree to obtain the consent of my spouse for any such agreement which
may be required by Company.
My address of record is:
---------------------------------
---------------------------------
and my Social Security number is:
----------------------------------
Very truly yours,
----------------------------------
MAHENDRA G. SHAH, PH.D.
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<PAGE>
The undersigned, being the spouse of _____________________________,
does hereby acknowledge that he or she has read and is familiar with the
provisions of the above Nonqualified Stock Option Exercise Form and the
Agreement, and he or she hereby agrees thereto and joins therein to the extent,
if any, that his or her agreement and joinder may be necessary.
DATED:
---------------------------
-------------------------------------
Signature
-------------------------------------
Print Name
Receipt of the above is hereby
acknowledged:
SUTTER SURGERY CENTERS, INC.,
a Delaware corporation
By
-----------------------------------
its
----------------------------------
Dated:
-------------------------------
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<PAGE>
EXHIBIT 4(d)
SUTTER SURGERY CENTERS, INC., NONQUALIFIED
STOCK OPTION PLAN AND AGREEMENT (AKELLA)
THIS AGREEMENT is entered into as of May 16, 1994, between SUTTER
SURGERY CENTERS, INC., a Delaware corporation (the 'Company"), and RAO S. AKELLA
(the "Optionee").
Recitals
The Company's Board has established this Agreement in order to fulfill
the Company's obligation under Section 3 of the Consulting Agreement by
providing the Optionee with an opportunity to acquire common stock of the
Company;
NOW, THEREFORE, it is agreed as follows:
Agreement
ARTICLE 1. GRANT OF OPTION.
On the terms and conditions stated below, the Company hereby grants to
the Optionee the option to purchase NINE THOUSAND THREE HUNDRED SEVENTY-FIVE
(9,375) Shares for the sum of ONE DOLLAR ($1.00) per Share, the Fair Market
Value of the Shares. This Option is not intended to be an incentive stock option
described in section 422 of the Code.
ARTICLE 2. NO TRANSFER OR ASSIGNMENT OF OPTION.
Except as otherwise provided in this Agreement, this Option and the
rights and privileges conferred hereby shall not be transferred, assigned,
pledged or hypothecated in any way, whether by operation of law or otherwise,
and shall not be subject to sale under execution, attachment or similar process.
Except as otherwise provided herein, upon any transfer, assignment, pledge,
hypothecation or other disposition of this Option, or of any right or privilege
conferred hereby, contrary to the provisions hereof, or any sale under any
execution, attachment or similar process upon the rights and privileges
conferred hereby, this Option and the rights and privileges conferred hereby
shall immediately become null and void.
<PAGE>
ARTICLE 3. RIGHT TO EXERCISE.
3.01. Vesting. Optionee may exercise this Option only to the extent
that the Optionee's interest in this Option has vested. Subject to the
conditions stated in this Agreement, the right to exercise this Option shall
accrue in installments as follows:
No. of Percentage of
Vesting Period Shares Shares Exercsable
May 16,1995 1,875 20%
May 16,1996 3,750 40%
May 16,1997 5,625 60%
May 16,1998 7,500 80%
May 15,1999 9,375 100%
Total 9,375 100%
In the case of each vesting period, the number of Shares of common
stock, if any, previously purchased under this Option shall be deducted from the
amount of Shares Optionee is entitled to acquire. Any other provision of this
Agreement notwithstanding, if the Optionee does not provide consulting services
under the Consulting Agreement for any reason, and (I) the Consulting Agreement
is still in effect, and (ii) the Company has provided the Optionee with written
notice that, although the Consulting Agreement is still in effect, the Optionee
is not currently providing consulting services to the Company (referred to
herein as a "Lapse Notice"), then the date when any installment of this Option
would otherwise become exercisable under the foregoing schedule shall be delayed
for a period equal to the duration of the Lapse Notice. The Lapse Notice shall
be of no further effect once the Company has notified the Optionee that the
Lapse Notice has terminated.
3.02. Periods of Nonexercisability. This Section 3.02 shall prevail
over any other portion of this Agreement. The Company shall have the right to
designate as many as two (2) periods of time, each of which shall not exceed
twelve (12) consecutive months in length, during which this Option shall not be
exercisable. The Company may only make such a designation if it reasonably
determines that such a limitation on exercise is reasonably likely to facilitate
(I) a lessening of any restriction on transfer pursuant to the Securities Act or
any state
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<PAGE>
securities laws on any issuance of securities by the Company, (ii) the
registration or qualification of any securities by the Company under the
Securities Act or any state securities laws, or (iii) the perfection of any
exemption from the registration or qualification requirements of the Securities
Act or any applicable state securities laws for the issuance or transfer of any
securities. This limitation on exercise shall not alter the vesting schedule set
forth in Section 3.01 other than to limit the periods during which this Option
shall be exercisable. The Optionee shall be notified in writing in advance of
any such designation by the Company.
3.03. Listing, Registration or Qualification of Shares. If the listing,
registration or qualification of the Shares subject to this Option on any
securities exchange or under any state or federal law or if the consent or
approval of any regulatory body is necessary in connection with the granting of
this Option or the delivery or purchase of Shares, this Option may not be
exercised, in whole or in part, until such listing, registration, qualification,
consent or approval has been effected or obtained. The Company shall make every
reasonable effort to effect or obtain any such listing, registration,
qualification, consent or approval as may be required.
ARTICLE 4. EXERCISE PROCEDURES.
4.01. Notice of Exercise.
A. The Optionee may exercise this Option by giving notice to the Chief
Financial Officer of the Company. In the notice, the Optionee shall specify (I)
the election to exercise this Option; (ii) the number of Shares to be issued;
and (iii) the form of payment for such Shares. The Optionee shall sign the
notice. The Optionee shall deliver the notice to the Chief Financial Officer of
the Company; and at the time of giving the notice, the Optionee shall make
payment in a form permissible under Article 5 for the full amount of the
Purchase Price. The notice shall be in the form attached as Exhibit 4.01.
B. A representative of the Optionee may exercise this Option on behalf
of the Optionee in accordance with the procedures of Section 4.0l.A. In addition
to the procedures of Section 4.0l.A., the representative shall provide proof
satisfactory to the Company of the representative's authority as a condition of
the representative's right to exercise this Option.
4.02. Issuance of Shares. After receiving a proper notice of exercise and
full payment for the Shares, the Company shall issue a certificate or
certificates for the Shares subject to this Option exercised by the Optionee,
registered in the name of
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<PAGE>
the Optionee (or a person set forth in Section 6.03), or, if so specified in the
notice of option exercise, in the names of the Optionee and the Optionee's
spouse as community property or as joint tenants with right of survivorship. The
Company shall deliver any certificates representing the Shares to the Optionee.
ARTICLE 5. PAYMENT FOR STOCK.
The Optionee shall pay for the entire Purchase Price in United States
dollars, or, at Optionee's discretion, Optionee may elect to surrender Shares
provided the Shares have been held for more than six (6) months and provided the
Shares are surrendered to the Company in good form for transfer and the transfer
will not cause Optionee or the Company to be in violation of the Securities Act,
the Securities Exchange Act, or state securities laws.
The combined amount paid in cash and the value of surrendered Shares
must equal the Purchase Price. The Board shall determine the value of any
surrendered Shares.
ARTICLE 6. TERM AND EXPIRATION.
6.01. Basic Term. This Option shall expire on May 15, 2000 unless
extended due to a delay as described in Section 3.02 with the delay occurring
after the second (2nd) anniversary of the Date of Grant. If a delay in
exercising this Option (as described in Section 3.02) occurs after the second
(2nd) anniversary of the Date of Grant, the term of this Option shall be
extended by one day for each day of such delay occurring after the second (2nd)
anniversary of the Date of Grant.
6.02. Termination of Service (Except by Death). If the Optionee's
Service terminates for any reason other than death, then this Option shall
expire on the earliest of the following occasions:
A. The date determined pursuant to Section 6.01, above;
B. The date twelve (12) months after the termination of
Optionee's Service without cause by the Company pursuant to Section 10.A. of the
Consulting Agreement; or
C. The date ninety (90) days after the termination of Optionee's
Service for any reason other than termination of Optionee's Service without
cause by the Company pursuant to Section 10.A. of the Consulting Agreement.
The Optionee may exercise all or part of this Option at any time
before its expiration under the preceding sentence, but only to the extent that
this
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<PAGE>
Option had become vested before the Optionee's Service terminated, and the
balance of this Option shall lapse when the Optionee's Service terminates. If
the Optionee dies after the termination of Service but before the expiration of
this Option, all or part of this Option may be exercised (prior to expiration)
by the executors or administrators of the Optionee's estate or by any person who
has acquired this Option directly from the Optionee by bequest, beneficiary
designation or inheritance, but only to the extent that this Option had become
vested before the Optionee's Service terminated.
6.03. Death of 0ptionee. If the Optionee dies while in Service, then
this Option shall expire on the earlier of the following dates:
A. The expiration date determined pursuant to Section 6.01
above; or
B. The date twelve (12) months after the Optionee's death.
All or part of this Option may be exercised at any time before
its expiration under the preceding sentence by the executors or administrators
of the Optionee's estate or by any person who has acquired this Option directly
from the Optionee by bequest, beneficiary designation or inheritance but only to
the extent that such Option(s) had become vested before the Optionee's death or
became exercisable as a result of the Optionee's death. The balance of such
Option(s) shall lapse when the Optionee dies.
ARTICLE 7. LEGALITY OF INITIAL ISSUANCE.
Shares shall be issued upon the exercise of this Option only if the
Company has determined that (I) it and the Optionee have taken any actions
required by law to register the Shares under the Securities Act or to perfect an
exemption from the registration requirements thereof; (ii) any applicable
listing requirement of any stock exchange or automated quotations system on
which the Shares are listed has been satisfied; and (iii) any other applicable
provision of state or federal securities law has been satisfied.
ARTICLE 8. REGISTRATION RIGHTS.
The Company may, but shall not be obligated to, register or qualify the
resale of Shares by the Optionee under the Securities Act or any other
applicable law. The Company shall not be obligated to take any affirmative
action in order to cause a resale of Shares to comply with any law. However, the
Company has granted this
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<PAGE>
Option pursuant to the terms of Rule 701 under the Securities Act and the
Optionee may resell Shares, provided the Optionee complies with the provisions
described in the Option Exercise Form, attached as Exhibit 4.01.
ARTICLE 9. RESTRICTIONS ON TRANSFER OF SHARES.
9.01. Restrictions. Regardless of whether the offering and sale of
Shares under this Agreement have been registered under the Securities Act or
have been registered or qualified under the securities laws of any state, the
Company may impose restrictions upon the sale, pledge or other transfer of such
Shares (including the placement of appropriate legends on stock certificates)
if, in the judgment of the Company and its counsel, such restrictions are
necessary or desirable in order to achieve compliance with the Securities Act,
the securities laws of any state or any other law or with restrictions imposed
by the Company's underwriters.
9.02. Administration. Any determination by the Company and its
counsel in connection with any of the matters set forth in this Article 9 shall
be conclusive and binding on the Optionee and all other persons.
9.03. Investment Purpose. The Optionee hereby represents that any
Shares of common stock purchased upon exercise of this Option will be purchased
for investment and not with a view to the distribution thereof within the
meaning of the Securities Act. As a condition precedent to any exercise of this
Option, the Optionee agrees that, if requested by the Board, he or she will
promptly submit a written statement in a form satisfactory to counsel for the
Company to the effect that such representation is true and correct as of the
date of purchase of any Shares hereunder.
A. As a further condition precedent to any exercise of this
Option, the Optionee shall comply with all regulations and requirements of any
regulatory authority having control of, or supervision over, the issuance of the
common stock of the Company and, in connection therewith, shall execute any
documents which the Board deems necessary or advisable, provided that the
Optionee shall not be required to bear any expense associated with such
compliance.
B. By accepting this Option, the Optionee agrees that the
Optionee shall not, directly or indirectly, without the prior written consent of
the Company, sell, offer, contract to sell, pledge, grant any option to purchase
or other-wise dispose of any Shares of common stock acquired by exercise of this
Option for a period beginning on the date of the Initial Public Offering and
ending one
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<PAGE>
hundred eighty (180) days after the date that Shares of common stock are
released by the Company's underwriters for sale to the public in an Initial
Public Offering. Nothing in this Option shall be construed as requiring the
Company to complete or attempt an Initial Public Offering.
C. Each stock certificate issued by the Company to the
Optionee upon the Optionee's exercise of the Option granted shall bear such
legend as the Company deems necessary or desirable to reflect the provisions of
this Section 9.03.
ARTICLE 10. SHARES AND ADJUSTMENTS.
10.01. General. If there is a subdivision of the outstanding Shares, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the value
of Shares, a combination or consolidation of the outstanding Shares (by
reclassification or otherwise) into a lesser number of Shares, a
recapitalization or a similar occurrence, the Board shall make all appropriate
adjustments in both (I) the number of Shares covered by this Option; and (ii)
the Exercise Price.
10.02. Merger; Consolidation; Sale; Liquidation. If the Company is a party
to a merger or consolidation or if there is a sale of all or substantially all
of the Company's assets other than a sale or transfer to a Subsidiary, this
Option shall be subject to the agreement of merger, consolidation or sale. Such
agreement may, as determined by the Board, provide for: (I) the assumption of
this Option by the surviving corporation or its parent; (ii) its continuation by
the Company, if the Company is the surviving corporation; (iii) payment for a
cash settlement equal to (a) the difference between the amount to be paid for
one (1) Share under such agreement and the Exercise Price multiplied by (b) the
number of Shares subject to the Option, vested or unvested, or both, as
determined by the Company; or (iv) the acceleration of the vesting of this
Option, followed by the cancellation of this Option if not exercised, in all
other cases other than clause (iii) without the Optionee's consent. (The
Optionee's consent shall be required for a cash settlement.) A cancellation
shall not occur earlier than thirty (30) days after such acceleration is
effective and the Optionee has been notified of such acceleration. If this
Option has been outstanding for less than twelve (12) months, a cancellation
need not be preceded by an acceleration.
10.03. Reservation of Rights. Except as provided in Article 10, the
Optionee shall have no rights by reason of (I) any subdivision or consolidation
of
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<PAGE>
shares of stock of any class; (ii) the payment of any dividend; or (iii) any
other increase or decrease in the number of shares of stock of any class. Any
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or Exercise Price of the
Shares subject to this Option. The grant of this Option shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
ARTICLE 11. MISCELLANEOUS PROVISIONS.
11.01. Withholding Taxes. If the Company determines that it is required to
withhold foreign, federal, state or local taxes as a result of the exercise of
this Option, the Optionee, as a condition to the exercise of this Option, shall
make arrangements satisfactory to the Company to enable the Company to satisfy
all withholding requirements.
11.02. Rights as a Stockholder. The Optionee shall not have any rights as a
stockholder with respect to any Shares subject to this Option until such Shares
have been issued as provided in Section 4.02.
11.03. No Employment or Directorship Rights. Nothing in this Agreement
shall be construed as giving the Optionee the right to become or be treated as
an Employee of the Company or any Subsidiary or a member of the Board.
11.04. Notice. Any notice required by the terms of this Agreement shall be
given in writing and shall be deemed effective upon personal delivery or two (2)
days after the date of deposit with the United States Postal Service, by
registered or certified mail with postage and fees prepaid and addressed to the
party entitled to such notice at the address shown below such party's signature
on this Agreement, or at such other address as such party may designate by ten
(10) days' advance written notice to the other party to this Agreement.
11.05. Entire Agreement. This Agreement and the Consulting Agreement
constitute the entire contract between the parties hereto with regard to the
subject matter hereof and supersede all prior and contemporaneous agreements,
representations, warranties and understandings of the parties.
11.06. Choice of Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California (exclusive of its
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<PAGE>
laws regarding the conflict of laws), as such laws are applied to contracts
entered into and performed in such state. The state courts of California shall
have exclusive jurisdiction over any judicial proceeding relating to any dispute
arising out of the interpretation, performance or breach of this Agreement.
ARTICLE 12. DEFINITIONS.
12.01. Agreement. Shall mean this Nonqualified Stock Option Plan and
Agreement.
12.02. Board. Shall mean the Board of Directors of the Company, as
constituted from time to time.
12.03. Code. Shall mean the Internal Revenue Code of 1986, as amended.
12.04. Consulting Agreement. Shall mean the Consulting Agreement, effective
as of May 16, 1994, by and between the Company and the Optionee.
12.05. Date of Grant. Shall mean the date as of which this Agreement is
entered into.
12.06. Employee. Shall mean any individual who is a common law employee of
the Company or of a Subsidiary.
12.07. Exercise Price. Shall mean the amount for which one (1) Share may be
purchased upon exercise of this Option as specified in Section 1.01.
12.08. Fair Market Value. Shall mean the fair market value of a Share, as
determined by the Board in good faith. Such determination shall be conclusive
and binding on all persons.
12.09. Initial Public Offering. Shall mean an initial public primary
offering by underwriters on a firm commitment or best efforts basis in which it
is expected that the common stock will become listed on a national securities
exchange or traded on the Automated Quotation System of the National Association
of Securities Dealers or other over-the-counter-market.
12.10. Option. Shall mean a stock option not described in sections 422(b)
or 423(b) of the Code granted under this Agreement and entitling the Optionee to
purchase Shares.
12.11. Purchase Price. Shall mean the Exercise Price multiplied by the
number of Shares with respect to which this Option is being exercised.
12.12. Securities Act. Shall mean the Securities Act of 1933, as amended.
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<PAGE>
12.13. Securities Exchange Act. Shall mean the Securities Exchange Act of
1934, as amended.
12.14. Service. Shall mean consulting service of the Optionee pursuant to
the Consulting Agreement.
12.15. Share. Shall mean one (1) share of Common Stock, as adjusted in
accordance with Article 10 (if applicable).
12.16. Subsidiary. Shall mean any corporation, if the Company or one (1) or
e other Subsidiaries own, individually or collectively, not less than fifty
percent (50%) of the total combined voting power of all classes of outstanding
stock of such corporation.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by its officer duly authorized, and the Optionee has personally
executed this Agreement.
OPTIONEE:
______________________________
RAO S. AKELLA
Address:
COMPANY:
SUTTER SURGERY CENTERS, INC., a
Delaware corporation
By ______________________________
Its _______________________________
Address: 201 Alhambra Blvd., Ste. 330
Sacramento, CA 95816
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<PAGE>
EXHIBIT 4.01
OPTION EXERCISE FORM
<PAGE>
Date: ___________________________
NONQUALIFIED STOCK OPTION
EXERCISE FORM
Sutter Surgery Centers, Inc.
Attention: Chief Financial Officer
1201 Alhambra Boulevard, Suite 330
Sacramento, CA 95816
The undersigned elects to exercise the option to purchase ) shares of
common stock (the "Shares") of Sutter Surgery Centers, Inc. (the "Company"), in
accordance with the nonqualified stock option granted to the undersigned by the
Company as of May 16, 1994, pursuant to a Nonqualified Stock Option Plan and
Agreement (the "Agreement").
Prior to the issuance of these Shares, I will make full payment of the
purchase price for the Shares by one of the following methods as indicated:
[ ] In cash in the amount of ______________________________________.
[ ] By tender of Shares of the Company owned by the undersigned for
more than six (6) months, having a fair market value when combined
with other forms of payment of not less than the purchase price.
Please issue the Shares to _____________________________________[i.e.,
Optionee; Optionee and spouse as community property; or Optionee and spouse as
joint tenants with right of survivorship].
I represent and agree that I am over eighteen (18) years of age and
that I have no present intention to transfer, sell or otherwise dispose of such
Shares, except as permitted pursuant to the Agreement and in compliance with
applicable securities laws.
<PAGE>
I acknowledge and understand that the Company has granted the Option
pursuant to the terms of Rule 701 under the Securities Act and that the
following provisions relating to the resale of my Shares shall apply:
(A) If I am not an affiliate of the Company, as defined in
Rule 144 of the Securities Act of 1933 ("Securities Act"), I may resell
my Shares ninety (90) days after the Company becomes subject to the
reporting requirements of section 13 or 15(d) of the Securities
Exchange Act of 1934 ("Exchange Act") (e.g., ninety (90) days after the
Company's Initial Public Offering); provided I comply with Rule 144 of
the Securities Act's manner of sale limitations set forth in Rule
144(f) (e.g., my Shares are sold in a "broker's transaction" or to a
"market maker"); or
(B) If I am an affiliate of the Company, as defined in Rule
144 of the Securities Act, I may resell my shares ninety (90) days
after the Company becomes subject to the reporting requirements of
section 13 or 15(d) of the Exchange Act (e.g., ninety (90) days after
the Company's Initial Public Offering); provided I comply with all of
the provisions of Rule 144 of the Securities Act, other than Rule
144(d) (holding period requirement).
I further acknowledge and understand that, if, for any reason, the
Shares are not covered by the exemption contained in Rule 701 of the Securities
Act, the Shares must be sold under the provisions of Rule 144. These provisions
include, among other things: the availability of certain public information
about the Company, the Shares being held for a minimum of two (2) years, the
sale being made (I) through a broker in an unsolicited "broker's transaction" or
(ii) to a market maker, and the amount of securities being sold during any three
(3) month period not exceeding specified limitations (generally, one percent
(1%) of the total amount outstanding).
Moreover, I further acknowledge and understand that if the Company has
registered the Shares on Form S-8 (or any successor form), the following
provisions shall apply:
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(A) If I am not an affiliate of the Company, I may freely
resell my Shares, subject to any contractual obligations I may have to
the Company; or
(B) If I am an affiliate of the Company, I may resell my
Shares, subject to (I) the provisions of Rule 144 of the Securities
Act, other than Rule 144(d) (holding period requirement); and (ii) any
contractual obligations I have to the Company.
I understand that the Shares may be subject to the restrictions on
transfer set forth in Article 9 of the Agreement.
I agree to obtain the consent of my spouse for any such agreement which
may be required by Company.
My address of record is:
___________________________
___________________________
and my Social Security number is: _________________________________.
Very truly yours,
_________________________________
RAO S. AKELLA
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<PAGE>
The undersigned, being the spouse of ________________________________
does hereby acknowledge that he or she has read and is familiar with the
provisions of the above Nonqualified Stock Option Exercise Form and the
Agreement, and he or she hereby agrees thereto and joins therein to the extent,
if any, that his or her agreement and joinder may be necessary.
DATED: ______________________________________
_____________________________
Signature
_____________________________
Print Name
Receipt of the above is hereby
acknowledged:
SUTTER SURGERY CENTERS, INC.,
a Delaware corporation
By _______________________________
Its _______________________________
Dated: ____________________________
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<PAGE>
EXHIBIT 4(e)
SUTTER SURGERY CENTERS, INC., NONQUALIFIED
STOCK OPTION PLAN AND AGREEMENT (KELLY)
THIS AGREEMENT is entered into as of May 16, 1994, between SUTTER
SURGERY CENTERS, INC., a Delaware corporation (the "Company"), and TIMOTHY R.
KELLY (the "Optionee").
Recitals
The Company's Board has established this Agreement in order to fulfill
the Company's obligation under Section 3 of the Consulting Agreement by
providing the Optionee with an opportunity to acquire common stock of the
Company;
NOW, THEREFORE, it is agreed as follows:
Agreement
ARTICLE 1. GRANT OF OPTION.
On the terms and conditions stated below, the Company hereby grants to
the Optionee the option to purchase TWENTY-FIVE THOUSAND (25,000) Shares for the
sum of ONE DOLLAR ($1.00) per Share, the Fair Market Value of the Shares. This
Option is not intended to be an incentive stock option described in section 422
of the Code.
ARTICLE 2. NO TRANSFER OR ASSIGNMENT OF OPTION.
Except as otherwise provided in this Agreement, this Option and the
rights and privileges conferred hereby shall not be transferred, assigned,
pledged or hypothecated in any way, whether by operation of law or otherwise,
and shall not be subject to sale under execution, attachment or similar process.
Except as otherwise provided herein, upon any transfer, assignment, pledge,
hypothecation or other disposition of this Option, or of any right or privilege
conferred hereby, contrary to the provisions hereof-, or any sale under any
execution, attachment or similar process upon the rights and privileges
conferred hereby, this Option and the rights and privileges conferred hereby
shall immediately become null and void.
<PAGE>
ARTICLE 3. RIGHT TO EXERCISE.
3.01. Vesting. Optionee may exercise this Option only to the extent
that the Optionee's interest in this Option has vested. Subject to the
conditions stated in this Agreement, the right to exercise this Option shall
accrue in installments as follows:
No. of Percentage of
Vesting Period Shares Shares Exercisable
May 16,1995 5,000 20%
May 16,1996 10,000 40%
May 16,1997 15,000 60%
May 16,1998 20,000 80%
May 15,1999 25,000 100%
Total 25,000 100%
In the case of each vesting period, the number of Shares of common
stock, if any, previously purchased under this Option shall be deducted from the
amount of Shares Optionee is entitled to acquire. Any other provision of this
Agreement notwithstanding, if the Optionee does not provide consulting services
under the Consulting Agreement for any reason, and (i) the Consulting Agreement
is still in effect, and (ii) the Company has provided the Optionee with written
notice that, although the Consulting Agreement is still in effect, the Optionee
is not currently providing consulting services to the Company (referred to
herein as a "Lapse Notice"), then the date when any installment of this Option
would otherwise become exercisable under the foregoing schedule shall be delayed
for a period equal to the duration of the Lapse Notice. The Lapse Notice shall
be of no further effect once the Company has notified the Optionee that the
Lapse Notice has terminated.
3.02. Periods of Nonexercisability . This Section 3.02 shall prevail
over any other portion of this Agreement. The Company shall have the right to
designate as many as two (2) periods of time, each of which shall not exceed
twelve (12) consecutive months in length, during which this Option shall not be
exercisable. The Company may only make such a designation if it reasonably
determines that such a limitation on exercise is reasonably likely to facilitate
(i) a lessening of any restriction on transfer pursuant to the Securities Act or
any state
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<PAGE>
securities laws on any issuance of securities by the Company, (ii) the
registration or qualification of any securities by the Company under the
Securities Act or any state securities laws, or (iii) the perfection of any
exemption from the registration or qualification requirements of the Securities
Act or any applicable state securities laws for the issuance or transfer of any
securities. This limitation on exercise shall not alter the vesting schedule set
forth in Section 3.01 other than to limit the periods during which this Option
shall be exercisable. The Optionee shall be notified in writing in advance of
any such designation by the Company.
3.03. Listing, Registration or Qualification of Shares. If the listing,
registration or qualification of the Shares subject to this Option on any
securities exchange or under any state or federal law or if the consent or
approval of any regulatory body is necessary in connection with the granting of
this Option or the delivery or purchase of Shares, this Option may not be
exercised, in whole or in part, until such listing, registration, qualification,
consent or approval has been effected or obtained. The Company shall make every
reasonable effort to effect or obtain any such listing, registration,
qualification, consent or approval as may be required.
ARTICLE 4. EXERCISE PROCEDURES.
4.01. Notice of Exercise.
A. The Optionee may exercise this Option by giving notice to
the Chief Financial Officer of the Company. In the notice, the Optionee shall
specify (i) the election to exercise this Option; (ii) the number of Shares to
be issued; and (iii) the form of payment for such Shares. The Optionee shall
sign the notice. The Optionee shall deliver the notice to the Chief Financial
Officer of the Company; and at the time of giving the notice, the Optionee shall
make payment in a form permissible under Article 5 for the full amount of the
Purchase Price. The notice shall be in the form attached as Exhibit 4.01.
B. A representative of the Optionee may exercise this Option
on behalf of the Optionee in accordance with the procedures of Section 4.0l.A.
In addition to the procedures of Section 4.0l.A., the representative shall
provide proof satisfactory to the Company of the representative's authority as a
condition of the representative's right to exercise this Option.
4.02. Issuance of Shares. After receiving a proper notice of exercise
and full payment for the Shares, the Company shall issue a certificate or
certificates for the Shares subject to this Option exercised by the Optionee,
registered in the name of
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<PAGE>
the Optionee (or a person set forth in Section 6.03), or, if so specified in the
notice of option exercise, in the names of the Optionee and the Optionee's
spouse as community property or as joint tenants with right of survivorship. The
Company shall deliver any certificates representing the Shares to the Optionee.
ARTICLE 5. PAYMENT FOR STOCK.
The Optionee shall pay for the entire Purchase Price in United States
dollars, or, at Optionee's discretion, Optionee may elect to surrender Shares
provided the Shares have been held for more than six (6) months and provided the
Shares are surrendered to the Company in good form for transfer and the transfer
will not cause Optionee or the Company to be in violation of the Securities Act,
the Securities Exchange Act, or state securities laws.
The combined amount paid in cash and the value of surrendered Shares
must equal the Purchase Price. The Board shall determine the value of any
surrendered Shares.
ARTICLE 6. TERM AND EXPIRATION.
6.01. Basic Term. This Option shall expire on May 15, 2000 unless
extended due to a delay as described in Section 3.02 with the delay occurring
after the second (2nd) anniversary of the Date of Grant. If a delay in
exercising this Option (as described in Section 3.02) occurs after the second
(2nd) anniversary of the Date of Grant, the term of this Option shall be
extended by one day for each day of such delay occurring after the second (2nd)
anniversary of the Date of Grant.
6.02. Termination of Service (Except by Death). If the Optionee's
Service terminates for any reason other than death, then this Option shall
expire on the earliest of the following occasions:
A. The date determined pursuant to Section 6.01, above;
B. The date twelve (12) months after the termination of
Optionee's Service without cause by the Company pursuant to Section 10.A. of the
Consulting Agreement; or
C. The date ninety (90) days after the termination of
Optionee's Service for any reason other than termination of Optionee's Service
without cause by the Company pursuant to Section 10.A. of the Consulting
Agreement.
The Optionee may exercise all or part of this Option at any
time before its expiration under the preceding sentence, but only to the extent
that this
4-
<PAGE>
Option had become vested before the Optionee's Service terminated, and the
balance of this Option shall lapse when the Optionee's Service terminates. If
the Optionee dies after the termination of Service but before the expiration of
this Option, all or part of this Option may be exercised (prior to expiration)
by the executors or administrators of the Optionee's estate or by any person who
has acquired this Option directly from the Optionee by bequest, beneficiary
designation or inheritance but only to the extent that this Option had become
vested before the Optionee's Service terminated.
6.03. Death of 0ptionee. If the Optionee dies while in Service, then
this Option shall expire on the earlier of the following dates:
A. The expiration date determined pursuant to Section 6.01
above; or
B. The date twelve (12) months after the Optionee's death. All
or part of this Option may be exercised at any time before its expiration under
the preceding sentence by the executors or administrators of the Optionee's
estate or by any person who has acquired this Option directly from the Optionee
by bequest, beneficiary designation or inheritance but only to the extent that
such Option(s) had become vested before the Optionee's death or became
exercisable as a result of the Optionee's death. The balance of such Option(s)
shall lapse when the Optionee dies.
ARTICLE 7. LEGALITY OF INITIAL ISSUANCE.
Shares shall be issued upon the exercise of this Option only if the
Company has determined that (i) it and the Optionee have taken any actions
required by law to register the Shares under the Securities Act or to perfect an
exemption from the registration requirements thereof; (ii) any applicable
listing requirement of any stock exchange or automated quotations system on
which the Shares are listed has been satisfied; and (iii) any other applicable
provision of state or federal securities law has been satisfied.
ARTICLE 8. REGISTRATION RIGHTS.
The Company may, but shall not be obligated to, register or qualify the
resale of Shares by the Optionee under the Securities Act or any other
applicable law. The Company shall not be obligated to take any affirmative
action in order to cause a resale of Shares to comply with any law. However, the
Company has granted this
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<PAGE>
Option pursuant to the terms of Rule 701 under the Securities Act and the
Optionee may resell Shares, provided the Optionee complies with the provisions
described in the Option Exercise Form, attached as Exhibit 4.01.
ARTICLE 9. RESTRICTIONS ON TRANSFER OF SHARES.
9.01. Restrictions. Regardless of whether the offering and sale of
Shares under this Agreement have been registered under the Securities Act or
have been registered or qualified under the securities laws of any state, the
Company may impose restrictions upon the sale, pledge or other transfer of such
Shares (including the placement of appropriate legends on stock certificates)
if, in the judgment of the Company and its counsel, such restrictions are
necessary or desirable in order to achieve compliance with the Securities Act,
the securities laws of any state or any other law or with restrictions imposed
by the Company's underwriters.
9.02. Administration. Any determination by the Company and its counsel
in connection with any of the matters set forth in this Article 9 shall be
conclusive and binding on the Optionee and all other persons.
9.03. Investment Purpose. The Optionee hereby represents that any
Shares of common stock purchased upon exercise of this Option will be purchased
for investment and not with a view to the distribution thereof within the
meaning of the Securities Act. As a condition precedent to any exercise of this
Option, the Optionee agrees that, if requested by the Board, he or she will
promptly submit a written statement in a form satisfactory to counsel for the
Company to the effect that such representation is true and correct as of the
date of purchase of any Shares hereunder.
A. As a further condition precedent to any exercise of this
Option, the Optionee shall comply with all regulations and requirements of any
regulatory authority having control of, or supervision over, the issuance of the
common stock of the Company and, in connection therewith, shall execute any
documents which the Board deems necessary or advisable, provided that the
Optionee shall not be required to bear any expense associated with such
compliance.
B. By accepting this Option, the Optionee agrees that the
Optionee shall not, directly or indirectly, without the prior written consent of
the Company, sell, offer, contract to sell, pledge, grant any option to purchase
or otherwise dispose of any Shares of common stock acquired by exercise of this
Option for a period beginning on the date of the Initial Public Offering and
ending one
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<PAGE>
hundred eighty (180) days after the date that Shares of common stock are
released by the Company's underwriters for sale to the public in an Initial
Public Offering. Nothing in this Option shall be construed as requiring the
Company to complete or attempt an Initial Public Offering.
C. Each stock certificate issued by the Company to the
Optionee upon the Optionee's exercise of the Option granted shall bear such
legend as the Company deems necessary or desirable to reflect the provisions of
this Section 9.03.
ARTICLE 10. SHARES AND ADJUSTMENTS.
10.01. General. If there is a subdivision of the outstanding Shares, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the value
of Shares, a combination or consolidation of the outstanding Shares (by
reclassification or otherwise) into a lesser number of Shares, a
recapitalization or a similar occurrence, the Board shall make all appropriate
adjustments in both (i) the number of Shares covered by this Option; and (ii)
the Exercise Price.
10.02. Merger; Consolidation; Sale; Liquidation. If the Company is a
party to a merger or consolidation or if there is a sale of all or substantially
all of the Company's assets other than a sale or transfer to a Subsidiary, this
Option shall be subject to the agreement of merger, consolidation or sale. Such
agreement may, as determined by the Board, provide for: (i) the assumption of
this Option by the surviving corporation or its parent; (ii) its continuation by
the Company, if the Company is the surviving corporation; (iii) payment for a
cash settlement equal to (a) the difference between the amount to be paid for
one (1) Share under such agreement and the Exercise Price multiplied by (b) the
number of Shares subject to the Option, vested or unvested, or both, as
determined by the Company; or (iv) the acceleration of the vesting of this
Option, followed by the cancellation of this Option if not exercised, in all
other cases other than clause (iii) without the Optionee's consent. (The
Optionee's consent shall be required for a cash settlement.) A cancellation
shall not occur earlier than thirty (30) days after such acceleration is
effective and the Optionee has been notified of such acceleration. If this
Option has been outstanding for less than twelve (12) months, a cancellation
need not be preceded by an acceleration.
10.03. Reservation of Rights. Except as provided in Article 10, the
Optionee shall have no rights by reason of (i) any subdivision or consolidation
of
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<PAGE>
shares of stock of any class; (ii) the payment of any dividend; or (iii) any
other increase or decrease in the number of shares of stock of any class. Any
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or Exercise Price of the
Shares subject to this Option. The grant of this Option shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
ARTICLE 11. MISCELLANEOUS PROVISIONS.
11.01. Withholding Taxes. If the Company determines that it is required
to withhold foreign, federal, state or local taxes as a result of the exercise
of this Option, the Optionee, as a condition to the exercise of this Option,
shall make arrangements satisfactory to the Company to enable the Company to
satisfy all withholding requirements.
11.02. Rights as a Stockholder. The Optionee shall not have any rights
as a stockholder with respect to any Shares subject to this Option until such
Shares have been issued as provided in Section 4.02.
11.03. No Employment or Directorship Rights. Nothing in this Agreement
shall be construed as giving the Optionee the right to become or be treated as
an Employee of the Company or any Subsidiary or a member of the Board.
11.04. Notice. Any notice required by the terms of this Agreement shall
be given in writing and shall be deemed effective upon personal delivery or two
(2) days after the date of deposit with the United States Postal Service, by
registered or certified mail with postage and fees prepaid and addressed to the
party entitled to such notice at the address shown below such party's signature
on this Agreement, or at such other address as such party may designate by ten
(10) days' advance written notice to the other party to this Agreement.
11.05. Entire Agreement. This Agreement and the Consulting Agreement
constitute the entire contract between the parties hereto with regard to the
subject matter hereof and supersede all prior and contemporaneous agreements,
representations, warranties and understandings of the parties.
11.06. Choice of Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California (exclusive of
its
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<PAGE>
laws regarding the conflict of laws), as such laws are applied to contracts
entered into and performed in such state. The state courts of California shall
have exclusive jurisdiction over any judicial proceeding relating to any dispute
arising out of the interpretation, performance or breach of this Agreement.
ARTICLE 12. DEFINITIONS.
12.01. Agreement. Shall mean this Nonqualified Stock Option Plan and
Agreement.
12.02. Board. Shall mean the Board of Directors of the Company, as
constituted from time to time.
12.03. Code. Shall mean the Internal Revenue Code of 1986, as amended.
12.04. Consulting Agreement. Shall mean the Consulting Agreement,
effective as of May 16, 1994, by and between the Company and the Optionee.
12.05. Date of Grant. Shall mean the date as of which this Agreement is
entered into.
12.06. Employee. Shall mean any individual who is a common law employee
of the Company or of a Subsidiary.
12.07. Exercise Price. Shall mean the amount for which one (1) Share
may be purchased upon exercise of this Option as specified in Section 1.01.
12.08. Fair Market Value. Shall mean the fair market value of a Share,
as determined by the Board in good faith. Such determination shall be conclusive
and binding on all persons.
12.09. Initial Public Offering. Shall mean an initial public primary
offering by underwriters on a firm commitment or best efforts basis in which it
is expected that the common stock will become listed on a national securities
exchange or traded on the Automated Quotation System of the National Association
of Securities Dealers or other over-the-counter-market.
12.10. 0ption. Shall mean a stock option not described in sections
422(b) or 423(b) of the Code granted under this Agreement and entitling the
Optionee to purchase Shares.
12.11. Purchase Price. Shall mean the Exercise Price multiplied by the
number of Shares with respect to which this Option is being exercised.
12.12. Securities Act. Shall mean the Securities Act of 1933, as
amended.
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<PAGE>
12.13. Securities Exchange Act. Shall mean the Securities Exchange Act
of 1934, as amended.
12.14. Service. Shall mean consulting service of the Optionee pursuant
to the Consulting Agreement.
12.15. Share. Shall mean one (1) share of Common Stock, as adjusted in
accordance with Article 10 (if applicable).
12.16. Subsidiary. Shall mean any corporation, if the Company or one
(1) or more other Subsidiaries own, individually or collectively, not less than
fifty percent (50%) of the total combined voting power of all classes of
outstanding stock of such corporation.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its officer duly authorized, and the Optionee has
personally executed this Agreement.
OPTIONEE:
----------------------------------
TIMOTHY R. KELLY
Address:
---------------------------
---------------------------
COMPANY:
SUTTER SURGERY CENTERS, INC., a
Delaware corporation
By
-------------------------------
Its
-------------------------------
Address: 1201 Alhambra BlvD., Ste. 330
Sacramento, CA 95816
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<PAGE>
EXHIBIT 4.01
OPTION EXERCISE FORM
<PAGE>
Date: __________________
NONQUALIFIED STOCK OPTION
EXERCISE FORM
Sutter Surgery Centers, Inc.
Attention: Chief Financial Officer
1201 Alhambra Boulevard, Suite 330
Sacramento, CA 95816
The undersigned elects to exercise the option to purchase_______________
(__________) shares of common stock (the "Shares") of Sutter Surgery Centers,
Inc. (the "Company"), in accordance with the nonqualified stock option granted
to the undersigned by the Company as of May 16, 1994, pursuant to a Nonqualified
Stock Option Plan and Agreement (the "Agreement").
Prior to the issuance of these Shares, I will make full payment of the
purchase price for the Shares by one of the following methods as indicated:
[ ] In cash in the amount of
[ ] By tender of Shares of the Company owned by the undersigned
for more than six (6) months, having a fair market value when
combined with other forms of payment of not less than the
purchase price.
Please issue the Shares to ____________________________________[i.e.,
Optionee; Optionee and spouse as community property; or Optionee and spouse as
joint tenants with right of survivorship].
I represent and agree that I am over eighteen (18) years of age and
that I have no present intention to transfer, sell or otherwise dispose of such
Shares, except as permitted pursuant to the Agreement and in compliance with
applicable securities laws.
<PAGE>
I acknowledge and understand that the Company has granted the Option
pursuant to the terms of Rule 701 under the Securities Act and that the
following provisions relating to the resale of my Shares shall apply:
(A) If I am not an affiliate of the Company, as defined
in Rule 144 of the Securities Act of 1933 ("Securities Act"),
I may resell my Shares ninety (90) days after the Company
becomes subject to the reporting requirements of section 13 or
15(d) of the Securities Exchange Act of 1934 ("Exchange Act")
(e.g., ninety (90) days after the Company's Initial Public
Offering); provided I comply with Rule 144 of the Securities
Act's manner of sale limitations set forth in Rule 144(f)
(e.g., my Shares are sold in a "broker's transaction" or to a
"market maker"); or
(B) If I am an affiliate of the Company, as defined in
Rule 144 of the Securities Act, I may resell my shares ninety
(90) days after the Company becomes subject to the reporting
requirements of section 13 or 15(d) of the Exchange Act (e.g.,
ninety (90) days after the Company's Initial Public Offering);
provided I comply with all of the provisions of Rule 144 of
the Securities Act, other than Rule 144(d) (holding period
requirement).
I further acknowledge and understand that, if, for any reason, the
Shares are not covered by the exemption contained in Rule 701 of the Securities
Act, the Shares must be sold under the provisions of Rule 144. These provisions
include, among other things: the availability of certain public information
about the Company, the Shares being held for a minimum of two (2) years, the
sale being made (i) through a broker in an unsolicited "broker's transaction" or
(ii) to a market maker, and the amount of securities being sold during any three
(3) month period not exceeding specified limitations (generally, one percent
(1%) of the total amount outstanding).
Moreover, I further acknowledge and understand that if the Company has
registered the Shares on Form S-8 (or any successor form), the following
provisions shall apply:
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<PAGE>
(A) If I am not an affiliate of the Company, I may freely
resell my Shares, subject to any contractual obligations I may
have to the Company; or
(B) If I am an affiliate of the Company, I may resell my
Shares, subject to (i) the provisions of Rule 144 of the
Securities Act, other than Rule 144(d) (holding period
requirement); and (ii) any contractual obligations I have to
the Company.
I understand that the Shares may be subject to the restrictions on
transfer set forth in Article 9 of the Agreement.
I agree to obtain the consent of my spouse for any such agreement which
may be required by Company.
My address of record is:
---------------------------
---------------------------
and my Social Security number is:
---------------------------
Very truly yours,
-------------------------------------
TIMOTHY R. KELLY
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<PAGE>
The undersigned, being the spouse of _______________________________,
does hereby acknowledge that he or she has read and is familiar with the
provisions of the above Nonqualified Stock Option Exercise Form and the
Agreement, and he or she hereby agrees thereto and joins therein to the extent,
if any, that his or her agreement and joinder may be necessary.
DATED:
---------------------------
--------------------------------
Signature
--------------------------------
Print Name
Receipt of the above is hereby
acknowledged:
SUTTER SURGERY CENTERS, INC.,
a Delaware corporation
By
-------------------------------
Its
------------------------------
Dated:
---------------------------
<PAGE>
EXHIBIT 4(f)
SUTTER SURGERY CENTERS, INC., NONQUALIFIED
STOCK OPTION PLAN AND AGREEMENT (MAY)
THIS AGREEMENT is entered into as of May 16,1994, between SUTTER
SURGERY CENTERS, INC., a Delaware corporation (the "Company"), and ROBERT G. MAY
(the "Optionee").
Recitals
The Company's Board has established this Agreement in order to fulfill
the Company's obligation under Section 3 of the Consulting Agreement by
providing the Optionee with an opportunity to acquire common stock of the
Company;
NOW, THEREFORE, it is agreed as follows:
Agreement
ARTICLE 1. GRANT OF OPTION.
On the terms and conditions stated below, the Company hereby grants to
the Optionee the option to purchase FIFTEEN THOUSAND SIX HUNDRED TWENTY-FIVE
(15,625) Shares for the sum of ONE DOLLAR ($1.00) per Share, the Fair Market
Value of the Shares. This Option is not intended to be an incentive stock option
described in section 422 of the Code.
ARTICLE 2. NO TRANSFER OR ASSIGNMENT OF OPTION.
Except as otherwise provided in this Agreement, this Option and the
rights and privileges conferred hereby shall not be transferred, assigned,
pledged or hypothecated in any way, whether by operation of law or otherwise,
and shall not be subject to sale under execution, attachment or similar process.
Except as otherwise provided herein, upon any transfer, assignment, pledge,
hypothecation or other disposition of this Option, or of any right or privilege
conferred hereby, contrary to the provisions hereof, or any sale under any
execution, attachment or similar process upon the rights and privileges
conferred hereby, this Option and the rights and privileges conferred hereby
shall immediately become null and void.
<PAGE>
ARTICLE 3. RIGHT TO EXERCISE.
3.01. Vesting. Optionee may exercise this Option only to the extent
that the Optionee's interest in this Option has vested. Subject to the
conditions stated in this Agreement, the right to exercise this Option shall
accrue in installments as follows:
No. of Percentage of
Vesting Period Shares Shares Exercisable
May 16,1995 3,125 20%
May 16,1996 6,250 40%
May 16,1997 9,375 60%
May 16,1998 12,500 80%
May 15,1999 15,625 100%
Total 15,625 100%
In the case of each vesting period, the number of Shares of common
stock, if any, previously purchased under this Option shall be deducted from the
amount of Shares Optionee is entitled to acquire. Any other provision of this
Agreement notwithstanding, if the Optionee does not provide consulting services
under the Consulting Agreement for any reason, and (i) the Consulting Agreement
is still in effect, and (ii) the Company has provided the Optionee with written
notice that, although the Consulting Agreement is still in effect, the Optionee
is not currently providing consulting services to the Company (referred to
herein as a "Lapse Notice"), then the date when any installment of this Option
would otherwise become exercisable under the foregoing schedule shall be delayed
for a period equal to the duration of the Lapse Notice. The Lapse Notice shall
be of no further effect once the Company has notified the Optionee that the
Lapse Notice has terminated.
3.02. Periods of Nonexercisability. This Section 3.02 shall prevail
over any other portion of this Agreement. The Company shall have the right to
designate as many as two (2) periods of time, each of which shall not exceed
twelve (12) consecutive months in length, during which this Option shall not be
exercisable. The Company may only make such a designation if it reasonably
determines that such a limitation on exercise is reasonably likely to facilitate
(i) a lessening of any restriction on transfer pursuant to the Securities Act or
any state
-2-
<PAGE>
securities laws on any issuance of securities by the Company, (ii) the
registration or qualification of any securities by the Company under the
Securities Act or any state securities laws, or (iii) the perfection of any
exemption from the registration or qualification requirements of the Securities
Act or any applicable state securities laws for the issuance or transfer of any
securities. This limitation on exercise shall not alter the vesting schedule set
forth in Section 3.01 other than to limit the periods during which this Option
shall be exercisable. The Optionee shall be notified in writing in advance of
any such designation by the Company.
3.03. Listing, Registration or Qualification of Shares. If the listing,
registration or qualification of the Shares subject to this Option on any
securities exchange or under any state or federal law or if the consent or
approval of any regulatory body is necessary in connection with the granting of
this Option or the delivery or purchase of Shares, this Option may not be
exercised, in whole or in part, until such listing, registration, qualification,
consent or approval has been effected or obtained. The Company shall make every
reasonable effort to effect or obtain any such listing, registration,
qualification, consent or approval as may be required.
ARTICLE 4. EXERCISE PROCEDURES.
4.01. Notice of Exercise.
A. The Optionee may exercise this Option by giving notice to
the Chief Financial Officer of the Company. In the notice, the Optionee shall
specify (i) the election to exercise this Option; (ii) the number of Shares to
be issued; and (iii) the form of payment for such Shares. The Optionee shall
sign the notice. The Optionee shall deliver the notice to the Chief Financial
Officer of the Company; and at the time of giving the notice, the Optionee shall
make payment in a form permissible under Article 5 for the full amount of the
Purchase Price. The notice shall be in the form attached as Exhibit 4.01.
B. A representative of the Optionee may exercise this Option
on behalf of the Optionee in accordance with the procedures of Section 4.0l.A.
In addition to the procedures of Section 4.0l.A., the representative shall
provide proof satisfactory to the Company of the representative's authority as a
condition of the representative's right to exercise this Option.
4.02. Issuance of Shares. After receiving a proper notice of exercise
and full payment for the Shares, the Company shall issue a certificate or
certificates for the Shares subject to this Option exercised by the Optionee,
registered in the name of
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<PAGE>
the Optionee (or a person set forth in Section 6.03), or, if so specified in the
notice of option exercise, in the names of the Optionee and the Optionee's
spouse as community property or as joint tenants with right of survivorship. The
Company shall deliver any certificates representing the Shares to the Optionee.
ARTICLE 5. PAYMENT FOR STOCK.
The Optionee shall pay for the entire Purchase Price in United States
dollars, or, at Optionee's discretion, Optionee may elect to surrender Shares
provided the Shares have been held for more than six (6) months and provided the
Shares are surrendered to the Company in good form for transfer and the transfer
will not cause Optionee or the Company to be in violation of the Securities Act,
the Securities Exchange Act, or state securities laws.
The combined amount paid in cash and the value of surrendered Shares
must equal the Purchase Price. The Board shall determine the value of any
surrendered Shares.
ARTICLE 6. TERM AND EXPIRATION.
6.01. Basic Term. This Option shall expire on May 15, 2000 unless
extended due to a delay as described in Section 3.02 with the delay occurring
after the second (2nd) anniversary of the Date of Grant. If a delay in
exercising this Option (as described in Section 3.02) occurs after the second
(2nd) anniversary of the Date of Grant, the term of this Option shall be
extended by one day for each day of such delay occurring after the second (2nd)
anniversary of the Date of Grant.
6.02. Termination of Service (Except by Death). If the Optionee's
Service terminates for any reason other than death, then this Option shall
expire on the earliest of the following occasions:
A. The date determined pursuant to Section 6.01, above;
B. The date twelve (12) months after the termination of
Optionee's Service without cause by the Company pursuant to Section 10.A. of the
Consulting Agreement; or
C. The date ninety (90) days after the termination of
Optionee's Service for any reason other than termination of Optionee's Service
without cause by the Company pursuant to Section 10.A. of the Consulting
Agreement.
The Optionee may exercise all or part of this Option at any
time before it sexpiration under the preceding sentence, but only to the extent
that this
-4-
<PAGE>
Option had become vested before the Optionee's Service terminated, and the
balance of this Option shall lapse when the Optionee's Service terminates. If
the Optionee dies after the termination of Service but before the expiration of
this Option, all or part of this Option may be exercised (prior to expiration)
by the executors or administrators of the Optionee's estate or by any person who
has acquired this Option directly from the Optionee by bequest, beneficiary
designation or inheritance, but only to the extent that this Option had become
vested before the Optionee's Service terminated.
6.03. Death of Optionee. If the Optionee dies while in Service, then
this Option shall expire on the earlier of the following dates:
A. The expiration date determined pursuant to Section 6.01
above;or
B. The date twelve (12) months after the Optionee's death.
All or part of this Option may be exercised at any time before
its expiration under the preceding sentence by the executors or administrators
of the Optionee's estate or by any person who has acquired this Option directly
from the Optionee by bequest, beneficiary designation or inheritance but only to
the extent that such Option(s) had become vested before the Optionee's death or
became exercisable as a result of the Optionee's death. The balance of such
Option(s) shall lapse when the Optionee dies.
ARTICLE 7. LEGALITY OF INITIAL ISSUANCE.
Shares shall be issued upon the exercise of this Option only if the
Company has determined that (i) it and the Optionee have taken any actions
required by law to register the Shares under the Securities Act or to perfect an
exemption from the registration requirements thereof; (ii) any applicable
listing requirement of any stock exchange or automated quotations system on
which the Shares are listed has been satisfied; and (iii) any other applicable
provision of state or federal securities law has been satisfied.
ARTICLE 8. REGISTRATION RIGHTS.
The Company may, but shall not be obligated to, register or qualify the
resale of Shares by the Optionee under the Securities Act or any other
applicable law. The Company shall not be obligated to take any affirmative
action in order to cause a resale of Shares to comply with any law. However, the
Company has granted this
-5-
<PAGE>
Option pursuant to the terms of Rule 701 under the Securities Act and the
Optionee may resell Shares, provided the Optionee complies with the provisions
described in the Option Exercise Form, attached as Exhibit 4.01.
ARTICLE 9. RESTRICTIONS ON TRANSFER OF SHARES.
9.01. Restrictions. Regardless of whether the offering and sale of
Shares under this Agreement have been registered under the Securities Act or
have been registered or qualified under the securities laws of any state, the
Company may impose restrictions upon the sale, pledge or other transfer of such
Shares (including the placement of appropriate legends on stock certificates)
if, in the judgment of the Company and its counsel, such restrictions are
necessary or desirable in order to achieve compliance with the Securities Act,
the securities laws of any state or any other law or with restrictions imposed
by the Company's underwriters.
9.02. Administration. Any determination by the Company and its counsel
in connection with any of the matters set forth in this Article 9 shall be
conclusive and binding on the Optionee and all other persons.
9.03. Investment Purpose. The Optionee hereby represents that any
Shares of common stock purchased upon exercise of this Option will be purchased
for investment and not with a view to the distribution thereof within the
meaning of the Securities Act. As a condition precedent to any exercise of this
Option, the Optionee agrees that, if requested by the Board, he or she will
promptly submit a written statement in a form satisfactory to counsel for the
Company to the effect that such representation is true and correct as of the
date of purchase of any Shares hereunder.
A. As a further condition precedent to any exercise of this
Option, the Optionee shall comply with all regulations and requirements of any
regulatory authority having control of, or supervision over, the issuance of the
common stock of the Company and, in connection therewith, shall execute any
documents which the Board deems necessary or advisable, provided that the
Optionee shall not be required to bear any expense associated with such
compliance.
B. By accepting this Option, the Optionee agrees that the
Optionee shall not, directly or indirectly, without the prior written consent of
the Company, sell, offer, contract to sell, pledge, grant any option to purchase
or otherwise dispose of any Shares of common stock acquired by exercise of this
Option for a period beginning on the date of the Initial Public Offering and
ending one
-6-
<PAGE>
hundred eighty (180) days after the date that Shares of common stock are
released by the Company's underwriters for sale to the public in an Initial
Public Offering. Nothing in this Option shall be construed as requiring the
Company to complete or attempt an Initial Public Offering.
C. Each stock certificate issued by the Company to the
Optionee upon the Optionee's exercise of the Option granted shall bear such
legend as the Company deems necessary or desirable to reflect the provisions of
this Section 9.03.
ARTICLE 10. SHARES AND ADJUSTMENTS.
10.01. General. If there is a subdivision of the outstanding Shares, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the value
of Shares, a combination or consolidation of the outstanding Shares (by
reclassification or otherwise) into a lesser number of Shares, a
recapitalization or a similar occurrence, the Board shall make all appropriate
adjustments in both (i) the number of Shares covered by this Option; and (ii)
the Exercise Price.
10.02. Merger; Consolidation; Sale; Liquidation. If the Company is a
party to a merger or consolidation or if there is a sale of all or substantially
all of the Company's assets other than a sale or transfer to a Subsidiary, this
Option shall be subject to the agreement of merger, consolidation or sale. Such
agreement may, as determined by the Board, provide for: (i) the assumption of
this Option by the surviving corporation or its parent; (ii) its continuation by
the Company, if the Company is the surviving corporation; (iii) payment for a
cash settlement equal to (a) the difference between the amount to be paid for
one (1) Share under such agreement and the Exercise Price multiplied by (b) the
number of Shares subject to the Option, vested or unvested, or both, as
determined by the Company; or (iv) the acceleration of the vesting of this
Option, followed by the cancellation of this Option if not exercised, in all
other cases other than clause (iii) without the Optionee's consent. (The
Optionee's consent shall be required for a cash settlement.) A cancellation
shall not occur earlier than thirty (30) days after such acceleration is
effective and the Optionee has been notified of such acceleration. If this
Option has been outstanding for less than twelve (12) months, a cancellation
need not be preceded by an acceleration.
10.03. Reservation of Rights. Except as provided in Article 10, the
Optionee shall have no rights by reason of (i) any subdivision or consolidation
of
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<PAGE>
shares of stock of any class; (ii) the payment of any dividend; or (iii) any
other increase or decrease in the number of shares of stock of any class. Any
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or Exercise Price of the
Shares subject to this Option. The grant of this Option shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
ARTICLE 11. MISCELLANEOUS PROVISIONS.
11.01. Withholding Taxes. If the Company determines that it is required
to withhold foreign, federal, state or local taxes as a result of the exercise
of this Option, the Optionee, as a condition to the exercise of this Option,
shall make arrangements satisfactory to the Company to enable the Company to
satisfy all withholding requirements.
11.02. Rights as a Stockholder. The Optionee shall not have any rights
as a stockholder with respect to any Shares subject to this Option until such
Shares have been issued as provided in Section 4.02.
11.03. No Employment or Directorship Rights. Nothing in this Agreement
shall be construed as giving the Optionee the right to become or be treated as
an Employee of the Company or a member of the Board of the Company.
11.04. Notice. Any notice required by the terms of this Agreement shall
be given in writing and shall be deemed effective upon personal delivery or two
(2) days after the date of deposit with the United States Postal Service, by
registered or certified mail with postage and fees prepaid and addressed to the
party entitled to such notice at the address shown below such party's signature
on this Agreement, or at such other address as such party may designate by ten
(10) days' advance written notice to the other party to this Agreement.
11.05. Entire Agreement. This Agreement and the Consulting Agreement
constitute the entire contract between the parties hereto with regard to the
subject matter hereof and supersede all prior and contemporaneous agreements,
representations, warranties and understandings of the parties.
11.06. Choice of Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California (exclusive of
its
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<PAGE>
laws regarding the conflict of laws), as such laws are applied to contracts
entered into and performed in such state. The state courts of California shall
have exclusive jurisdiction over any judicial proceeding relating to any dispute
arising out of the interpretation, performance or breach of this Agreement.
ARTICLE 12. DEFINITIONS.
12.01. Agreement. Shall mean this Nonqualified Stock Option Plan and
Agreement.
12.02. Board. Shall mean the Board of Directors of the Company, as
constituted from time to time.
12.03. Code. Shall mean the Internal Revenue Code of 1986, as amended.
12.04. Consulting Agreement. Shall mean the Consulting Agreement,
effective as of May 16, 1994, by and between the Company and the Optionee.
12.05. Date of Grant. Shall mean the date as of which this Agreement is
entered into.
12.06. Employee. Shall mean any individual who is a common law employee
of the Company or of a Subsidiary.
12.07. Exercise Price. Shall mean the amount for which one (1) Share
may be purchased upon exercise of this Option as specified in Section 1.01.
12.08. Fair Market Value. Shall mean the fair market value of a Share,
as determined by the Board in good faith. Such determination shall be conclusive
and binding on all persons.
12.09. Initial Public Offering. Shall mean an initial public primary
offering by underwriters on a firm commitment or best efforts basis in which it
is expected that the common stock will become listed on a national securities
exchange or traded on the Automated Quotation System of the National Association
of Securities Dealers or other over-the-counter-market.
12.10. 0ption. Shall mean a stock option not described in sections
422(b) or 423(b) of the Code granted under this Agreement and entitling the
Optionee to purchase Shares.
12.11. Purchase Price. Shall mean the Exercise Price multiplied by the
number of Shares with respect to which this Option is being exercised.
12.12. Securities Act. Shall mean the Securities Act of 1933, as
amended.
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<PAGE>
12.13. Securities Exchange Act. Shall mean the Securities Exchange Act
of 1934, as amended.
12.14. Service. Shall mean consulting service of the Optionee pursuant
to the Consulting Agreement.
12.15. Share. Shall mean one (1) share of Common Stock, as adjusted in
accordance with Article 10 (if applicable).
12.16. Subsidiary. Shall mean any corporation, if the Company or one
(1) or more other Subsidiaries own, individually or collectively, not less than
fifty percent (50%) of the total combined voting power of all classes of
outstanding stock of such corporation.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its officer duly authorized, and the Optionee has
personally executed this Agreement.
OPTIONEE:
------------------------------------
ROBERT G. MAY
Address:
----------------------------
----------------------------
COMPANY:
SUTTER SURGERY CENTERS, INC., a
Delaware corporation
By
----------------------------------
Its
----------------------------------
Address: 201 Alhambra Blvd., Ste. 330
Sacramento, CA 95816
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<PAGE>
EXHIBIT 4.01
OPTION EXERCISE FORM
<PAGE>
Date:___________________
NONQUALIFIED STOCK OPTION
EXERCISE FORM
Sutter Surgery Centers, Inc.
Attention: Chief Financial Officer
1201 Alhambra Boulevard, Suite 330
Sacramento, CA 95816
The undersigned elects to exercise the option to purchase______________
(__________) shares of common stock (the "Shares") of Sutter Surgery Centers,
Inc. (the "Company"), in accordance with the nonqualified stock option granted
to the undersigned by the Company as of May 16, 1994, pursuant to a Nonqualified
Stock Option Plan and Agreement (the "Agreement").
Prior to the issuance of these Shares, I will make full payment of the
purchase price for the Shares by one of the following methods as indicated:
[ ] In cash in the amount of
[ ] By tender of Shares of the Company owned by the undersigned
for more than six (6) months, having a fair market value when
combined with other forms of payment of not less than the
purchase price.
Please issue the Shares to ____________________________________[i.e.,
Optionee; Optionee and spouse as community property; or Optionee and spouse as
joint tenants with right of survivorship].
I represent and agree that I am over eighteen (18) years of age and
that I have no present intention to transfer, sell or otherwise dispose of such
Shares, except as permitted pursuant to the Agreement and in compliance with
applicable securities laws.
<PAGE>
I acknowledge and understand that the Company has granted the Option
pursuant to the terms of Rule 701 under the Securities Act and that the
following provisions relating to the resale of my Shares shall apply:
(A) If I am not an affiliate of the Company, as defined
in Rule 144 of the Securities Act of 1933 ("Securities Act"),
I may resell my Shares ninety (90) days after the Company
becomes subject to the reporting requirements of section 13 or
15(d) of the Securities Exchange Act of 1934 ("Exchange Act")
(e.g., ninety (90) days after the Company's Initial Public
Offering); provided I comply with Rule 144 of the Securities
Act's manner of sale limitations set forth in Rule 144(f)
(e.g., my Shares are sold in a "broker's transaction" or to a
"market maker"); or
(B) If I am an affiliate of the Company, as defined in
Rule 144 of the Securities Act, I may resell my shares ninety
(90) days after the Company becomes subject to the reporting
requirements of section 13 or 15(d) of the Exchange Act (e.g.,
ninety (90) days after the Company's Initial Public Offering);
provided I comply with all of the provisions of Rule 144 of
the Securities Act, other than Rule 144(d) (holding period
requirement).
I further acknowledge and understand that, if, for any reason, the
Shares are not covered by the exemption contained in Rule 701 of the Securities
Act, the Shares must be sold under the provisions of Rule 144. These provisions
include, among other things: the availability of certain public information
about the Company, the Shares being held for a minimum of two (2) years, the
sale being made (i) through a broker in an unsolicited "broker's transaction" or
(ii) to a market maker, and the amount of securities being sold during any three
(3) month period not exceeding specified limitations (generally, one percent
(1%) of the total amount outstanding).
Moreover, I further acknowledge and understand that if the Company has
registered the Shares on Form S-8 (or any successor form), the following
provisions shall apply:
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<PAGE>
(A) If I am not an affiliate of the Company, I may freely
resell my Shares, subject to any contractual obligations I may
have to the Company; or
(B) If I am an affiliate of the Company, I may resell my
Shares, subject to (i) the provisions of Rule 144 of the
Securities Act, other than Rule 144(d) (holding period
requirement); and (ii) any contractual obligations I have to
the Company.
I understand that the Shares may be subject to the restrictions on
transfer set forth in Article 9 of the Agreement.
I agree to obtain the consent of my spouse for any such agreement which
may be required by Company.
My address of record is:
---------------------------
---------------------------
and my Social Security number is:
---------------------------
Very truly yours,
---------------------------
ROBERT G. MAY
-3-
<PAGE>
The undersigned, being the spouse of _______________________________,
does hereby acknowledge that he or she has read and is familiar with the
provisions of the above Nonqualified Stock Option Exercise Form and the
Agreement, and he or she hereby agrees thereto and joins therein to the extent,
if any, that his or her agreement and joinder may be necessary.
DATED:
---------------------------
--------------------------------
Signature
--------------------------------
Print Name
Receipt of the above is hereby
acknowledged:
SUTTER SURGERY CENTERS, INC.,
a Delaware corporation
By
-------------------------------
Its
------------------------------
Dated:
---------------------------
<PAGE>
Exhibit 5
Haskell Slaughter Young & Johnston,
Professional Association
1200 AmSouth/Harbert Plaza
1901 Sixth Avenue North
Birmingham, Alabama 35203-2618
November 27, 1995
HEALTHSOUTH Corporation
Two Perimeter Park South
Birmingham, Alabama 35243
Re: Registration Statement on Form S-8 --
Sutter Surgery Centers, Inc. 1993 Stock Option Plan;
Sutter Surgery Centers, Inc. Non-Qualified Stock
Options Plans and Agreements
Gentlemen:
We have served as counsel for HEALTHSOUTH Corporation, a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended, of an aggregate of 175,449 shares (the
"Shares") of the Company's authorized Common Stock, par value $.01 per share, to
be issued to participants of the Company's Sutter Surgery Centers, Inc. 1993
Stock Option Plan, Sutter Surgery Centers, Inc. Non-Qualified Stock Option Plan
and Agreement (Saibeni), Sutter Surgery Centers, Inc. Non-Qualified Stock Option
Plan and Agreement (Shah), Sutter Surgery Centers, Inc. Non-Qualified Stock
Option Plan and Agreement (Akella), Sutter Surgery Centers, Inc. Non-Qualified
Stock Option Plan and Agreement (Kelly), and Sutter Surgery Centers, Inc.
Non-Qualified Stock Option Plan and Agreement (May) (the "Plans"), pursuant to
the Company's Registration Statement on Form S-8 relating thereto (the
"Registration Statement"). This opinion is furnished to you pursuant to the
requirements of Form S-8.
In connection with this opinion, we have examined and are familiar with
originals or copies (certified or otherwise identified to our satisfaction) of
such documents, corporate records and other instruments relating to the
incorporation of the Company and to the authorization and issuance of the Shares
and the authorization and adoption of the Plan as we have deemed necessary and
appropriate.
Based upon the foregoing, and having regard for such legal
considerations we have deemed relevant, it is our opinion that:
<PAGE>
HEALTHSOUTH Corporation
November 27, 1995
Page 2
1. The Shares have been duly authorized.
2. Upon issuance, sale and delivery of the Shares as contemplated in
the Registration Statement and the Plans, the Shares will be legally issued,
fully paid and nonassessable.
We do hereby consent to the reference to our firm under the heading
"Interests of Named Experts and Counsel" in the Registration Statement and to
the filing of this Opinion as an Exhibit thereto.
Very truly yours,
HASKELL SLAUGHTER YOUNG & JOHNSTON
Professional Association
By /s/ GWEN L. WINDLE
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Gwen L. Windle
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EXHIBIT 23(a)
Consent of Ernst & Young LLP,
Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the Sutter Surgery Centers, Inc. 1993 Stock Option Plan,
Sutter Surgery Centers, Inc. Non-Qualified Stock Option Plan and Agreement
(SAIBENI), Sutter Surgery Centers, Inc. Non-Qualified Stock Option Plan and
Agreement (SHAH), Sutter Surgery Centers, Inc. Non-Qualified STock Option Plan
and Agreement (AKELLA), Sutter Surgery Centers, Inc. Non-Qualified Stock Option
Plan and Agreement (KELLY) and Sutter Surgery Centers, Inc. Non-Qualified Stock
Option Plan and Agreement (MAY) of HEALTHSOUTH Corporation of our report dated
March 1, 1995, except for Notes 2 and 17 as to which the date is June 13, 1995,
with respect to the consolidated financial statements and schedule of
HEALTHSOUTH Corporation included in its Annual Report (Form 10-K) for the year
ended December 31, 1994, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Birmingham, Alabama
November 27, 1995
