SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant X
---
Filed by a Party other than the Registrant
---
Check the appropriate box:
X Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Rule 14a-11(c) or 14a-12
SHERIDAN HEALTHCARE, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
X No fee required
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
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SHERIDAN HEALTHCARE, INC.
4651 SHERIDAN STREET
SUITE 400
HOLLYWOOD, FLORIDA 33021
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 15, 1997
---------------
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders (the
"Annual Meeting") of Sheridan Healthcare, Inc. (the "Company") will be held on
Thursday, May 15, 1997 at 10:00 a.m. Florida time at the offices of the Company
at 4651 Sheridan Street, Hollywood, Florida 33021 for the following purposes:
1. To elect two Class II Directors of the Company to serve until the
2000 Annual Meeting of Stockholders and until their respective successors are
duly elected and qualified.
2. To consider and act upon a proposal to approve an amendment to the
Company's Third Amended and Restated Certificate of Incorporation to decrease
the number of authorized shares of common stock, par value $.01 per share, of
the Company from 30,000,000 to 20,000,000.
3. To consider and act upon a proposal to approve an amendment to the
Company's Second Amended and Restated 1995 Stock Option Plan (the "Option Plan")
to increase the total number of shares of common stock, par value $.01 per
share, of the Company that may be issued under the Option Plan from 750,000 to
1,350,000.
4. To consider and act upon any other matters that may properly be
brought before the Annual Meeting and at any adjournments or postponements
thereof.
Any action may be taken on the foregoing matters at the Annual Meeting
on the date specified above, or on any date or dates to which, by original or
later adjournment, the Annual Meeting may be adjourned, or to which the Annual
Meeting may be postponed.
The Board of Directors has fixed the close of business on March 21, 1997
as the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting and at any adjournments or postponements thereof.
Only stockholders of record of the Company's common stock, par value $.01 per
share, at the close of business on that date will be entitled to notice of and
to vote at the Annual Meeting and at any adjournments or postponements thereof.
You are requested to fill in and sign the enclosed form of proxy, which
is being solicited by the Board of Directors, and to mail it promptly in the
enclosed postage-prepaid envelope. Any proxy may be revoked by delivery of a
later dated proxy. Stockholders of record who attend the Annual Meeting may vote
in person, even if they have previously delivered a signed proxy.
By Order of the Board of Directors
Jay A. Martus, Esq.
Secretary
Hollywood, Florida
April __, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN,
DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE
PROVIDED. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH,
EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
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SHERIDAN HEALTHCARE, INC.
4651 SHERIDAN STREET
SUITE 400
HOLLYWOOD, FLORIDA 33021
---------------
PROXY STATEMENT
---------------
FOR 1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 15, 1997
April , 1997
---
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Sheridan Healthcare, Inc. (the "Company")
for use at the 1997 Annual Meeting of Stockholders of the Company to be held on
Thursday, May 15, 1997, and at any adjournments or postponements thereof (the
"Annual Meeting"). At the Annual Meeting, stockholders will be asked to vote
upon the election of two Class II Directors of the Company, to consider and act
upon a proposal to approve an amendment to the Company's Third Amended and
Restated Certificate of Incorporation (the "Certificate"), to consider and act
upon a proposal to approve an amendment to the Company's Second Amended and
Restated 1995 Stock Option Plan (The "Option Plan"), and to act upon any other
matters properly brought before them.
This Proxy Statement and the accompanying Notice of Annual Meeting and
Proxy Card are first being sent to stockholders on or about April __, 1997. The
Board of Directors has fixed the close of business on March 21, 1997 as the
record date for the determination of stockholders entitled to notice of and to
vote at the Annual Meeting (the "Record Date"). Only stockholders of record of
the Company's common stock, par value $.01 per share (the "Common Stock"), at
the close of business on the Record Date will be entitled to notice of and to
vote at the Annual Meeting. Holders of Common Stock outstanding as of the close
of business on the Record Date will be entitled to one vote for each share held
by them. As of the Record Date, there were 6,417,998 shares of Common Stock
outstanding and entitled to vote at the Annual Meeting.
The presence, in person or by proxy, of holders of at least a majority
of the total number of shares of Common Stock outstanding and entitled to vote
is necessary to constitute a quorum for the transaction of business at the
Annual Meeting. Both abstentions and broker non-votes (as defined below) will be
counted as present in determining the presence of a quorum. A plurality of votes
cast shall be sufficient for the election of directors. Abstentions and broker
non-votes will be disregarded in determining the "votes cast" for purposes of
electing directors and will not affect the election of the candidates receiving
a plurality of votes. The affirmative vote of the holders of a majority of the
shares of Common Stock outstanding and entitled to vote is required to approve
the amendment to the Certificate. Abstentions and broker non-votes will have the
effect of votes "against" the proposal to approve the amendment to the
Certificate. The affirmative vote of the holders of a majority of the shares of
Common Stock present or represented and entitled to vote is required to approve
the amendment to the Option Plan. Abstentions will be included in determining
the number of shares of Common Stock present or represented and entitled to vote
for purposes of approval of the proposal to amend the Option Plan, and will
therefore have the effect of votes "against" the proposal. Broker non-votes will
not be counted in determining the number of shares of Common Stock present or
represented and entitled to vote to approve the amendment to the Option Plan,
and will therefore not have the effect of votes either "for" or "against" the
proposal. A "broker non-vote" is a proxy from a broker or other nominee
indicating that such person has not received instructions from the beneficial
owner or other person entitled to vote the shares which are the subject of the
proxy on a particular matter with respect to which the broker or other nominee
does not have discretionary voting power.
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STOCKHOLDERS OF THE COMPANY ARE REQUESTED TO COMPLETE, SIGN, DATE AND
PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE. SHARES REPRESENTED BY A PROPERLY EXECUTED PROXY RECEIVED PRIOR TO THE
VOTE AT THE ANNUAL MEETING AND NOT REVOKED WILL BE VOTED AT THE ANNUAL MEETING
AS DIRECTED ON THE PROXY. IF A PROPERLY EXECUTED PROXY IS SUBMITTED AND NO
INSTRUCTIONS ARE GIVEN, THE PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES
FOR CLASS II DIRECTORS OF THE COMPANY NAMED IN THIS PROXY STATEMENT, FOR THE
PROPOSAL TO APPROVE THE AMENDMENT TO THE CERTIFICATE AND FOR THE PROPOSAL TO
APPROVE THE AMENDMENT TO THE OPTION PLAN. IT IS NOT ANTICIPATED THAT ANY MATTERS
OTHER THAN THOSE SET FORTH IN THIS PROXY STATEMENT WILL BE PRESENTED AT THE
ANNUAL MEETING. IF OTHER MATTERS ARE PRESENTED, PROXIES WILL BE VOTED IN
ACCORDANCE WITH THE DISCRETION OF THE PROXY HOLDERS.
A stockholder of record may revoke a proxy at any time before it has
been exercised by filing a written revocation with the Secretary of the Company
at the address of the Company set forth above; by filing a duly executed proxy
bearing a later date; or by appearing in person and voting by ballot at the
Annual Meeting. Any stockholder of record as of the Record Date attending the
Annual Meeting may vote in person whether or not a proxy has been previously
given, but the presence (without further action) of a stockholder at the Annual
Meeting will not constitute revocation of a previously given proxy.
The Company's 1996 Annual Report, including financial statements for the
fiscal year ended December 31, 1996, is being mailed to stockholders
concurrently with this Proxy Statement. The Annual Report, however, is not part
of the proxy solicitation material.
PROPOSAL 1: ELECTION OF DIRECTORS
INTRODUCTION
The Board of Directors of the Company consists of five members. At the
Annual Meeting, two Class II Directors will be elected to serve until the 2000
Annual Meeting of Stockholders and until their respective successors are duly
elected and qualified. The Board of Directors has nominated Lewis D. Gold, M.D.
and Henry E. Golembesky, M.D. to serve as the Class II Directors (the
"Nominees"). The Nominees are currently serving as directors of the Company. The
Board of Directors anticipates that the Nominees will serve, if elected, as
directors. However, if any person nominated by the Board of Directors is unable
to accept election, the proxies will be voted for the election of such other
person or persons as the Board of Directors may recommend. The Board of
Directors will consider a nominee for election to the Board of Directors
recommended by a stockholder of record if the stockholder submits the nomination
in compliance with the requirements of the Company's Amended and Restated
By-laws (the "By-laws"). See "Other Matters--Stockholder Proposals" for a
summary of these requirements.
RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE NOMINEES.
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INFORMATION REGARDING THE NOMINEES, OTHER DIRECTORS AND EXECUTIVE OFFICERS
The following biographical descriptions set forth certain information
with respect to the Nominees for election as directors at the Annual Meeting,
each director who is not up for election and the executive officers who are not
directors, based on information furnished to the Company by each director and
officer. The following information is as of March 1, 1997.
Nominees For Election As Directors - Term Expiring 2000
LEWIS D. GOLD, M.D. Dr. Gold joined the Company in 1985 as an
anesthesiologist and has been a director of the Company since 1988. He has
served as Executive Vice President Business Development since 1994. Dr. Gold
was also Chief of the Department of Anesthesia of Parkway Regional Medical
Center from 1990 to 1994. He is 40 years old.
4
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HENRY E. GOLEMBESKY, M.D. Dr. Golembesky has been a director of the
Company since November 1995. Dr. Golembesky has served as a health care
consultant to APM, Inc. from January 1, 1993 to present. From 1990 to 1992,
Dr. Golembesky served as President and Chief Executive Officer of UniMed
America, a physician services division of Unihealth. He is 51 years old.
Incumbent Directors - Term Expiring 1998
MITCHELL EISENBERG, M.D. Dr. Eisenberg joined the Company in 1982, has
been a director of the Company since 1985, has been President since 1989, and
has been Chairman of the Board and Chief Executive Officer since 1994. Prior
to joining the Company, Dr. Eisenberg was in private practice. He is 46 years
old.
NEIL A. NATKOW, D.O. Dr. Natkow was appointed to the Company's Board of
Directors in July 1996. Dr. Natkow serves as Senior Vice President Health Care
for Precision Response Corporation, a publicly traded company, where he is also
a member of the Board of Directors. From December 1993 until October 1995, Dr.
Natkow served as an executive officer of PCA Health Plans of Florida, a health
maintenance organization, most recently as its Chief Executive Officer. From
July 1992 to December 1993, Dr. Natkow was the President and Chief Executive
Officer of Family Health Plan, a health maintenance organization, and from June
1987 to July 1992, Dr. Natkow was the Vice President for Professional Affairs at
Southeastern University for Health Sciences. He is 50 years old.
Incumbent Director - Term Expiring 1999
ROBERT W. DALY. Mr. Daly has been a director of the Company since
November 1994. Mr. Daly has been a Managing Director of TA Associates, Inc.,
a venture capital firm ("TA Associates"), since January 1994. Mr. Daly was a
General Partner of TA Associates from July 1984 to December 1993. He is also
a director of Physician Reliance Network, Inc., a publicly traded company. He
is 45 years old.
Executive Officers Who Are Not Directors
MICHAEL F. SCHUNDLER. Mr. Schundler joined the Company in July 1996 as
Chief Operating Officer and currently serves as both Chief Operating Officer
and Chief Financial Officer. Previously, Mr. Schundler served as Vice
President - Operations at American Health Network from 1994 to 1996 and as
Chief Financial Officer of AdminiStar, Inc. from 1991 to 1994. Prior to that,
Mr. Schundler was Senior Vice President - Finance of Merrill Lynch Life
Insurance Co. and Family Life Insurance Co. He is 41 years old.
VALERIO J. TOYOS, M.D., M.B.A. Dr. Toyos joined the Company in 1995 as
a practicing physician and a manager of certain primary care operations
acquired by the Company in 1995. He has served the Company as Vice President
Primary Care Services since April 1996. Dr. Toyos was employed by CAC-United
HealthCare Plans of Florida, Inc. ("CAC-United") as Chief of Primary Care
Services from 1994 to 1995. From 1989 to 1994, Dr. Toyos owned three primary
care practices which were sold to CAC-United in 1994 and subsequently acquired
by the Company, and also operated an admitting panel service for CAC-United.
He is 37 years old.
GILBERT L. DROZDOW, M.D., M.B.A. Dr. Drozdow joined the Company in 1987
as an anesthesiologist and was a director of the Company from 1990 to 1994. He
served the Company as Vice President Medical Affairs from 1994 to February 1996
and has served as Vice President Hospital Based Services since February 1996. He
was also Chairman of the Department of Anesthesia at Westside Regional Medical
Center in 1994. He is 39 years old.
JAY A. MARTUS, ESQ. Mr. Martus joined the Company in 1994 as Vice
President, Secretary and General Counsel. Prior to joining the Company, he
was a partner with the law firm of Levey & Martus, P.A. Mr. Martus
represented the Company as outside general counsel from 1989 to 1994. He is
41 years old.
5
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company consists of five members and is
divided into three classes. The members of each class of Directors serve for
staggered three-year terms. The Board is composed of one Class I Director (Mr.
Daly), two Class II Directors (Drs. Gold and Golembesky), who are up for
election at the Annual Meeting, and two Class III Directors (Drs. Eisenberg and
Natkow). The terms of the Class III and Class I Directors will expire upon the
election and qualification of directors at the annual meetings of stockholders
held following the fiscal years ending December 31, 1997 and 1998, respectively.
At each annual meeting of stockholders, directors will be reelected or elected
for a full term of three years to succeed those directors whose terms are
expiring.
During 1996, the Board of Directors met seven times. Each director
attended at least 75% of the aggregate of (i) the total number of meetings of
the Board of Directors (held during the period for which such director served on
the Board of Directors) and (ii) the total number of meetings of all committees
of the Board of Directors on which such director served (during the periods for
which such director served on such committee or committees).
Audit Committee. The Board of Directors has established an Audit
Committee consisting of Mr. Daly and Dr. Golembesky (the "Audit Committee"). The
Audit Committee is responsible for making recommendations concerning the
engagement of independent public accountants, reviewing with the independent
public accountants the plans and results of the audit engagement, approving
professional services provided by the independent public accountants, reviewing
the independence of the independent public accountants, considering the range of
audit and non-audit fees and reviewing the adequacy of the Company's internal
accounting controls. The Audit Committee met once during 1996.
Compensation Committee. The Board of Directors has also established a
Compensation Committee consisting of Drs. Eisenberg and Natkow and Mr. Daly (the
"Compensation Committee"). The Compensation Committee reviews and recommends the
compensation arrangements for all directors and officers and approves such
arrangements for other senior level employees. The Compensation Committee also
administers and takes such other action as may be required in connection with
the Company's Executive Incentive Plan. The Compensation Committee met once
during 1996.
Option Committee. The Board of Directors has also established an
Option Committee consisting of Drs. Golembesky and Natkow and Mr. Daly (the
"Option Committee"). The Option Committee administers and takes such other
action as may be required in connection with the Option Plan. The Option
Committee met once during 1996.
The Board of Directors does not have a standing nominating committee.
The full Board of Directors performs the function of such a committee.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Directors. Directors of the Company who are also employees receive no
additional compensation for their services as a director. Non-employee directors
receive an annual director's fee of $5,000 for their service as directors. Each
non-employee director also receives $1,000 for personal attendance at any
meeting of the Board of Directors and $500 for each committee meeting attended
and each meeting of the full Board of Directors attended by telephone
conference. All directors of the Company are reimbursed for travel related
expenses incurred in attending meetings of the Board of Directors and its
committees.
The Option Plan provides that each new non-employee director of the
Company will receive, on the date he first becomes a director, an option not
intended to qualify as an incentive stock option under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") (a "Non-Qualified
Option"), to purchase up to 7,500 shares of Common Stock. Pursuant to this
provision, Dr. Natkow received such a Non-Qualified Option upon his election to
the Board of Directors on July 30, 1996. In addition, the Option Plan provides
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that each non-employee director serving in such capacity on the fifth business
day after each annual meeting of stockholders will also receive, on such date, a
Non-Qualified Option to purchase up to 2,500 shares of Common Stock. Pursuant to
this provision, Mr. Daly and Dr. Golembesky received grants of such
Non-Qualified Options on May 15, 1996. All options granted to directors under
the Option Plan vest in three equal installments, with one-third vesting on the
date of grant and an additional one-third vesting on each of the two successive
anniversaries thereof. All such options are granted with an exercise price per
share equal to the fair market value per share of Common Stock on the date of
grant and expire on the tenth anniversary of such date of grant.
Executive Officers. The following table sets forth the compensation
awarded to the Company's Chief Executive Officer and the four other most highly
compensated executive officers of the Company whose total salary and bonus
exceeded $100,000 during 1996.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term
Annual Compensation
Compensation Awards
---------------------- ------------ All Other
Salary Bonus Options Compensation(1)
Name and Principal Position Year ($) ($) (#) ($)
- ---- --- --------- -------- ---- ------- ------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Mitchell Eisenberg, M.D..................... 1996 275,712 -- 30,000 --
Chairman of the Board of Directors, ..... 1995 290,157 -- 26,956 20,760
President and Chief Executive............ 1994 227,895 75,641 -- 20,760
Officer
Valerio J. Toyos, M.D., M.B.A............... 1996 296,022 -- 28,500(2) --
Vice President Primary Care.............. 1995 137,846(3) -- 8,500 --
Services................................. 1994 -- -- -- --
Lewis D. Gold, M.D.......................... 1996 251,712 -- 20,000 --
Director and Executive Vice.............. 1995 256,534 -- 26,956 20,760
President Business Development........... 1994 225,000 75,641 -- 20,760
Gilbert L. Drozdow, M.D., M.B.A............. 1996 250,512 -- 20,000 --
Vice President Hospital Based Services... 1995 254,473 -- 5,392 20,760
............................................ 1994 225,000 75,641 -- 20,760
Jay A. Martus, Esq.......................... 1996 199,677 -- 20,000 --
Vice President, Secretary................ 1995 200,000 -- 16,174 --
and General Counsel...................... 1994 -- -- -- --
<FN>
(1) Represents contributions by the Company under its 401(k) Plan on behalf of each of Drs.
Eisenberg, Gold and Drozdow during 1994 and 1995.
(2) Includes options to purchase up to 8,500 shares of Common Stock granted during 1995 for
which the exercise price was adjusted during 1996. See "--10-Year Option Repricings."
(3) Represents salary paid to Dr. Toyos from June 5, 1995, the date on which
he began employment with the Company, to December 31, 1995.
</FN>
</TABLE>
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<TABLE>
OPTION GRANTS IN FISCAL YEAR 1996
Individual Grants
-------------------------
<CAPTION>
Potential Realizable
Value at Assumed
Number of Percent of Annual Rates of
Securities Total Options Stock Price
Underlying Granted to Appreciation
Options Employees Exercise or For Option Term(1)
Granted in Fiscal Base Price Expiration -------------------
Name (#) Year ($/sh) Date 5%($) 10%($)
---- -------- ----------- ----------- ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Mitchell Eisenberg, M.D............ 30,000(2) 11.3% $8.75 5/13/06 $165,085 $418,357
Valerio J. Toyos, M.D., M.B.A...... 20,000(3) 7.5% $7.50 4/29/06 $ 94,334 $239,061
................................... 8,500(4) 3.1%(5) $5.75 10/30/05 $131,118 $237,734
Lewis D. Gold, M.D................. 20,000(2) 7.5% $8.75 5/13/06 $110,057 $278,905
Gilbert L. Drozdow, M.D., M.B.A.... 20,000(3) 7.5% $7.50 4/29/06 $ 94,334 $239,061
Jay A. Martus, Esq................. 20,000(3) 7.5% $7.50 4/29/06 $ 94,334 $239,061
- ------------------
<FN>
(1) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These
gains are based upon assumed rates of stock price appreciation set by the
Securities and Exchange Commission ("SEC") of five percent and ten
percent compounded annually from the date the respective options were
granted. Actual gains, if any, are dependent on the performance of the
Common Stock. There can be no assurance that the amounts reflected will
be achieved.
(2) The options granted to Drs. Eisenberg and Gold vest ratably on each of
the first three anniversaries of May 13, 1996, the date of grant of such
options.
(3) These options granted to Drs. Toyos and Drozdow and Mr. Martus vest in
full on April 29, 2006 so long as the applicable optionholder is employed
with the Company or one of its subsidiaries as of that date. The vesting
of such options will be accelerated in accordance with the following
schedule in the event that the Company's earnings per share for the
fiscal year ending December 31, 1997 ("1997 EPS") reaches the following
thresholds: (i) 25% of the options will vest on March 31, 1998 if 1997
EPS is between $0.52 and $0.53; (ii) 50% of the options will vest on
March 31, 1998 if 1997 EPS is between $0.54 and $0.55; (iii) 75% of the
options will vest on March 31, 1998 if 1997 EPS is between $0.56 and
$0.57; and (iv) 100% of the options will vest on March 31, 1998 if 1997
EPS is equal to or greater than $0.58.
(4) These options, which were granted to Dr. Toyos is 1995, but for which the
exercise price was adjusted in 1996, vest ratably on each of the first
five anniversaries of October 30, 1995, the date of grant of such
options.
(5) The number of total options granted during 1996 used in calculating this
percentage includes the 8,500 options which were granted to Dr. Toyos in
1995 for which the exercise price was adjusted during 1996 but excludes
options granted prior to 1996 held by any other person which were
"repriced" in 1996.
</FN>
</TABLE>
Option Exercises And Year-end Holdings. The following table sets forth
the aggregate number of options exercised in 1996 and the value of options held
at the end of 1996 by the Company's Chief Executive Officer and four other most
highly compensated executive officers whose total salary and bonus exceeded
$100,000 during 1996.
8
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<TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1996 AND
FISCAL YEAR-END 1996 OPTION VALUES
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised in-the-Money
Options Options
at Fiscal at Fiscal
Shares Year-End (#) Year-End ($)
Acquired On Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable(1)
- ------------- --------------- -------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Mitchell Eisenberg, M.D.... 0 0 21,565/35,391 $114,187/$28,545
Valerio J. Toyos, M.D., M.B.A.. 0 0 1,700/26,800 $213/$850
Lewis D. Gold, M.D......... 0 0 21,565/25,391 $114,187/28,545
Gilbert L. Drozdow, M.D.,
M.B.A.................... 0 0 3,235/22,157 $17,129/$11,421
Jay A. Martus, Esq......... 0 0 9,704/26,470 $51,383/$34,259
- ------------------
<FN>
(1) Based on $5.875 per share, the price of the last reported trade of the
Common Stock on the Nasdaq National Market on December 31, 1996.
</FN>
</TABLE>
Option Repricing. The following table sets forth information regarding
certain options held by one of the Company's four most highly compensated
executive officers whose total salary and bonus exceeded $100,000 during 1996
which were "repriced" during 1996.
<TABLE>
10-YEAR OPTION REPRICINGS
<CAPTION>
Length Of
Market Original
Number Of Price Of Exercise Option Term
Securities Stock At Price At Remaining At
Underlying Time Of Time Of New Date Of
Options Repricing Or Repricing Or Exercise Repricing Or
Repriced Amendment Amendment Price Amendment
Name Date (#) ($) ($) ($)
---- ---- ----------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Valerio J. Toyos, 12/18/96 8,500 5.75 13.00 5.75 8 years and
M.D., M.B.A. 10 months
Vice President
Primary Care
Services
</TABLE>
- ------------------
EXECUTIVE INCENTIVE PLAN
The Company has established an Executive Incentive Plan (the "Incentive
Plan") pursuant to which the Compensation Committee has the discretion to
determine those officers and key employees of the Company who will be eligible
for bonuses if certain financial and business objectives are achieved. The
formula for determining bonuses under the Incentive Plan is established annually
by the Compensation Committee. The Compensation Committee bases these formulas
upon the achievement of financial goals (such as earnings per share, specified
revenue levels, maintenance of positive cash flow or addition of economic value)
and business objectives. The Compensation Committee may change formulas during a
particular year and may, from time to time, designate additional employees as
9
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participants in the Incentive Plan. The terms of the Incentive Plan may be
amended by the Board of Directors at any time. See "Compensation Committee
Report on Executive Compensation - Executive Incentive Plan" for a description
of the bonus formula established by the Compensation Committee for the 1997
fiscal year.
EMPLOYMENT ARRANGEMENTS WITH EXECUTIVE OFFICERS
The Company has entered into employment agreements with each of Drs.
Eisenberg, Gold, Toyos and Drozdow and Mr. Martus. The term of each of the
agreements with Drs. Eisenberg, Gold and Drozdow and Mr. Martus ends on December
31, 1999. Thereafter each agreement is renewable for a one-year term. The term
of the agreement with Dr. Toyos ends on June 5, 2000.
The agreements with Drs. Eisenberg and Gold may be terminated (i) by
the Company without cause (as defined in the agreements) upon 30 days written
notice, (ii) upon the death or permanent disability of the executive, and (iii)
by the executive upon the occurrence of certain events including the failure of
the Company to pay the executive's salary or provide certain benefits to which
the executive is entitled, certain relocations of the Company's offices, and a
material breach of the employment agreement by the Company. The employment
agreements provide for a continuation of base salary and certain benefits for a
period of one year following any such termination, as well as the pro rata
portion of any bonus to which the executive would otherwise have been entitled
if such executive had remained employed by the Company for the remainder of the
calendar year of his termination. Each employment agreement also provides for
termination upon mutual consent, for cause, and by the executive upon 90 days'
written notice (60 days' notice following certain reductions in medical
malpractice liability insurance), in which event the Company has no further
obligation to the executive other than the obligations to pay accrued but unpaid
salary, provide certain continuing medical malpractice insurance coverage and
make salary payments pursuant to a non-competition provision in the employment
agreement, as described below. Each agreement also requires the Company to
continue to provide each of Drs. Eisenberg and Gold with medical malpractice
insurance coverage for claims arising during the term of the agreement, to the
extent the executive was covered prior to his termination, for a period of two
years from the date of termination for any reason other than by the executive
following specified reductions in insurance coverage by the Company. Each of
Drs. Eisenberg and Gold are subject to certain restrictions on competition with
the Company for a period of three years following termination of such
executive's employment for any reason, provided that the Company continues to
pay such executives their salaries during such three year period.
The agreements with Dr. Drozdow and Mr. Martus may be terminated (i) by
the Company without cause (as defined in the agreements) upon 30 days written
notice, (ii) upon the death or permanent disability of the executive, and (iii)
by the executive upon the occurrence of certain events including the failure of
the Company to pay the executive's salary or to provide certain benefits to
which the executive is entitled, certain relocations of the Company's offices,
and material breach of the employment agreement by the Company. The employment
agreements provide for a continuation of base salary and certain benefits for a
period of six months following any such termination. Each employment agreement
also provides for termination upon mutual consent, for cause, and by the
executive upon 90 days' written notice (60 days' notice following certain
reductions in medical malpractice liability insurance in the case of Dr.
Drozdow), in which event the Company has no further obligation to the executive
other than the payment of accrued but unpaid salary. The agreement with Dr.
Drozdow also requires the Company to continue to provide Dr. Drozdow with
medical malpractice insurance coverage for claims arising during the term of the
agreement, to the extent Dr. Drozdow was covered prior to his termination, for a
period of two years from the date of termination for any reason other than by
Dr. Drozdow following specified reductions in insurance coverage by the Company.
Each of Dr. Drozdow and Mr. Martus are subject to certain restrictions on
competition with the Company for a period of one year following termination of
such executive's employment for any reason.
The agreement with Dr. Toyos may be terminated by the Company (i) upon
the death or permanent disability of Dr. Toyos, and (ii) for cause (as defined
in the agreement) upon 30 days written notice. In the event of termination
pursuant to either of those provisions, the Company has no further obligation to
Dr. Toyos other than the obligation to pay accrued but unpaid salary. The
agreement may be terminated by Dr. Toyos upon 30 days written notice if the
10
<PAGE>
Company fails to perform its obligations under the agreement, in which event the
Company has no further obligation to Dr. Toyos other than the obligation to pay
accrued but unpaid salary. The agreement requires the Company to continue to
provide Dr. Toyos with medical malpractice insurance coverage for claims arising
during the term of the agreement, to the extent Dr. Toyos was covered prior to
his termination, for a period of four years from the date of termination. Dr.
Toyos is subject to certain restrictions on competition with the Company for a
period of one year following termination of his employment; provided, however,
that if the agreement expires pursuant to its terms on the anticipated
expiration date, the restrictions on competition do not apply to Dr. Toyos
unless the Company agrees to pay Dr. Toyos the sum of $250,000 within 30 days of
such expiration.
STOCK PERFORMANCE GRAPH
The following graph provides a comparison of cumulative total
stockholder return for the period from October 31, 1995 (the date on which the
Common Stock was first publicly traded) through December 31, 1996, among the
Company, the Nasdaq Stock Market-US Companies Index (the "Nasdaq-US Index") and
the Center for Research in Security Prices ("CRSP") Nasdaq Stock Market-Health
Services Index (the "CRSP-Health Services Index"). The Stock Performance Graph
assumes an investment of $100 in each of the Company and the two indices, and
the reinvestment of any dividends. The historical information set forth below is
not necessarily indicative of future performance. Data for the Nasdaq-US Index
and the CRSP-Health Services Index was provided to the Company by CRSP.
10/31/95 12/29/95 12/31/96
The Company $100.00 $95.10 $46.08
Nasdaq-US Index $100.00 $101.82 $125.22
CRSP-Health Services Index $100.00 $117.88 $117.84
Prepared By The Center For Research In Security Prices
Produced on 2/19/97 including data to 12/31/96.
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
In connection with the Company's initial public offering in November
1995, the Board of Directors established a Compensation Committee, which
consists of Drs. Eisenberg and Natkow and Mr. Daly. Prior to the establishment
of the Compensation Committee, decisions with respect to compensation of
executive officers were made by the full Board of Directors. The Compensation
Committee is responsible for setting base salaries for executive officers and
awarding bonuses under the Company's Executive Incentive Plan. In addition to
administering executive compensation, the Compensation Committee also reviews
from time to time succession planning for senior management. The overall
objectives of the Company's executive compensation program, as established by
the Board of Directors and confirmed by the Compensation Committee, are to:
o attract, retain and reward experienced, highly motivated executives
who contribute to the Company's growth;
o reward executives based on individual and corporate performance; and
to
o align executives' goals with those of the stockholders through grants
grants of stock options.
11
<PAGE>
In order to implement this philosophy for 1997, the Compensation
Committee will review the individual elements of executive compensation,
including salaries, incentive compensation awards and the terms of employment
agreements with a view towards enhancing the profitability of the Company and
closely aligning the financial interests of the Company's officers with those of
its stockholders.
BASE SALARY
To date, the Compensation Committee has not established a formal policy
for determining base salary ranges for executive positions, as the vast majority
of the Company's executive officers are now compensated in accordance with the
terms of employment agreements approved by the Board of Directors and entered
into prior to the establishment of the Compensation Committee.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
In determining the compensation of the Chief Executive Officer, the
Compensation Committee applies the same philosophy and procedures as are applied
to other executive officers. As with the other executive officers, the Chief
Executive Officer is currently compensated in accordance with the terms of an
employment agreement approved by the Board of Directors and entered into prior
to the establishment of the Compensation Committee.
EXECUTIVE INCENTIVE PLAN
The Compensation Committee is responsible for awarding bonuses under the
Incentive Plan. Pursuant to the Incentive Plan, the Compensation Committee
determines those officers and other key employees of the Company who will be
eligible for bonuses if the objectives established by the Compensation Committee
for the applicable period are met. For the fiscal year ending December 31, 1997,
the Compensation Committee has declared Drs. Eisenberg, Gold and Drozdow,
Messrs. Martus and Schundler and Dennis L. Gates eligible for bonuses under the
Incentive Plan. In order to incentivize these individuals to focus their efforts
on the Company's financial performance, the Compensation Committee has
established a bonus formula for 1997 (the "1997 Formula") based on the Company's
1997 earnings per share, as reported in the Company's 1997 audited financial
statements ("1997 EPS"). The 1997 Formula provides that in the event 1997 EPS is
equal to or exceeds $0.58, the eligible employees will receive, in the
aggregate, bonuses in an amount equal to 20% of the product of the excess of
1997 EPS over $0.56 multiplied by the number of shares used in determining 1997
EPS. Of the aggregate amount of bonuses determined by the 1997 Formula, 25%
shall be awarded to Dr. Eisenberg, 5% shall be awarded to each of Drs. Gold and
Drozdow and Messrs. Martus, Schundler and Gates and the remaining 50% shall be
distributed to officers and key employees at the discretion of Dr. Eisenberg.
The 1997 Formula provides that no bonuses will be awarded pursuant to the
Incentive Plan for the 1997 fiscal year if 1997 EPS is less than $0.58.
REPORT ON STOCK OPTION REPRICINGS
On December 18, 1996, the Option Committee adjusted the exercise price
in respect of 8,500 options held by Valerio J. Toyos, M.D., M.B.A. which had
been granted on October 30, 1995 from $13.00 per share to $5.75 per share. The
Option Committee, in consideration of the fact that the $13.00 exercise price
previously in effect was well above the recent historical trading price of the
Common Stock, believed that such repricing was an important step to provide Dr.
Toyos with a meaningful equity incentive and to reincentivize Dr. Toyos to
improve value to the Company's stockholders. The amended exercise price of $5.75
per share was equal to the fair market value per share of Common Stock on
December 18, 1996, the date of the repricing.
MITCHELL EISENBERG, M.D.
ROBERT W. DALY
NEIL A. NATKOW, D.O.
12
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Company's executive compensation is determined by the Compensation
Committee of the Company's Board of Directors, which consists of Drs. Eisenberg
and Natkow and Mr. Daly. Dr. Eisenberg serves as Chief Executive Officer of the
Company.
CERTAIN TRANSACTIONS
SHERIDAN MEDICAL HEALTHCORP, P.C.
As a result of certain prohibitions on the practice of medicine by
business corporations in New York, Sheridan Medical Healthcorp, P.C. ("Sheridan
Medical") was organized under the laws of the State of New York on October 28,
1993. Dr. Drozdow is the only stockholder of Sheridan Medical. The Company has
maintained an affiliation with Sheridan Medical through a management services
agreement pursuant to which the Company provides all physician management
services to the physicians affiliated with Sheridan Medical in exchange for a
management fee. During 1996, the Company received approximately $2,850,000 in
fees from Sheridan Medical under this agreement.
SHERIDAN HEALTHCARE OF TEXAS, P.A.
As a result of certain prohibitions on the practice of medicine by
business corporations in Texas, Sheridan Healthcare of Texas, P.A.
("Sheridan-Texas") was organized under the laws of the State of Texas on August
18, 1995. Dr. Drozdow is the only stockholder of Sheridan-Texas. The Company has
entered into a management services agreement with Sheridan-Texas pursuant to
which the Company provides all physician management services to the physicians
affiliated with Sheridan-Texas in exchange for a management fee. During 1996,
the Company received approximately $55,000 in fees from Sheridan-Texas under
this arrangement.
SHERIDAN HEALTHCARE OF CALIFORNIA MEDICAL GROUP, INC.
As a result of certain prohibitions on the practice of medicine by
business corporations in California, Sheridan Healthcare of California Medical
Group, Inc. ("Sheridan-California") was organized under the laws of the state of
California on August 18, 1995. Dr. Drozdow is the only stockholder of
Sheridan-California. Although no physician management services were provided by
the Company for Sheridan-California during 1996, the Company expects to receive
fees from the provision of such services in the future.
ARTHRITIS AND RHEUMATIC DISEASE SPECIALTIES, P.A.
The Company also maintains an affiliation with Arthritis and Rheumatic
Disease Specialties, P.A. ("ARDS"), under which ARDS provides certain physician
management services to the Company. ARDS is also wholly-owned by Dr. Drozdow.
During 1996, the Company paid approximately $1,550,000 in fees to ARDS in
exchange for the provision of these physician management services.
PROPOSAL 2: APPROVAL OF AN AMENDMENT TO
THE COMPANY'S THIRD AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
On February 26, 1997 the Board of Directors declared that an amendment
to the Certificate to decrease the number of authorized shares of Common Stock
from 30,000,000 to 20,000,000 would be advisable and resolved to submit the
proposed amendment to the Company's stockholders for their approval at the
Annual Meeting.
13
<PAGE>
The proposed decrease in the number of shares of authorized Common Stock
has been recommended by the Board of Directors as a means of reducing the
Company's annual franchise tax liability to the State of Delaware. The State of
Delaware assesses annual franchise taxes on all corporations organized under its
General Corporation Law at rates based in part on the number of shares of
capital stock a corporation has authorized. Although there can be no assurance
that the Delaware franchise tax rates in effect for 1996 will not be changed or
that the method of calculating franchise tax liability based in part on a
corporation's number of shares of authorized capital stock will not be amended,
the Board of Directors believes that the proposed amendment to the Certificate,
if approved by the stockholders, will significantly reduce the Company's
Delaware franchise tax liability for 1997.
As of the Record Date, there were 6,417,998 shares of Common Stock
issued and outstanding and an additional 750,000 shares of Common Stock reserved
for issuance under the Option Plan. In the event that the stockholders approve
the proposal to amend the Option Plan (see "Proposal 3: Approval of an Amendment
to the Second Amended and Restated 1995 Stock Option Plan"), there will be an
additional 600,000 shares reserved for issuance thereunder. The Board of
Directors believes that 20,000,000 shares of authorized Common Stock is
sufficient to fulfill the Company's obligations under the Option Plan as well as
its current general corporate needs such as future stock dividends or stock
splits or issuances pursuant to future equity financings or acquisitions.
If the stockholders approve the proposal, the first paragraph of Article
IV of the Certificate would be amended to read as follows: "The total number of
shares of capital stock which the Corporation shall have the authority to issue
is Twenty-Six Million (26,000,000) shares of which (i) Twenty Million
(20,000,000) shares shall be Common Stock, par value $.01 per share (the "Common
Stock"), (ii) One Million (1,000,000) shares shall be Class A Common Stock, par
value $.01 per share (the "Class A Common Stock" and together with the Common
Stock, the "Common Shares") and (iii) Five Million (5,000,000) shares shall be
Preferred Stock, par value $.01 per share (the "Preferred Stock")."
If the stockholders approve the proposal to amend the Certificate, the
Company will file a Certificate of Amendment with the Secretary of State of the
State of Delaware, at which time the amendment will become effective.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENT TO THE CERTIFICATE.
PROPOSAL 3: APPROVAL OF AN AMENDMENT
TO THE COMPANY'S SECOND AMENDED AND RESTATED
1995 STOCK OPTION PLAN
INTRODUCTION
On February 26, 1997, the Board of Directors adopted, subject to
stockholder approval at the Annual Meeting, an amendment to the Option Plan (the
"Plan Amendment") pursuant to which the number of shares of Common Stock
reserved for issuance under the Option Plan will be increased from 750,000 to
1,350,000. The effect of the Plan Amendment is reflected in full on Exhibit A
attached hereto.
The Board of Directors believes that the Company's growth and long-term
success depend in large part upon retaining and motivating key management
personnel and that such retention and motivation can be achieved in part through
the grant of stock options. The Board of Directors also believes that stock
options can play an important role in the success of the Company by encouraging
and enabling the directors, officers and other employees of the Company, upon
whose judgment, initiative and efforts the Company depends for sustained growth
and profitability, to acquire a proprietary interest in the long-term
performance of the Company. The Board of Directors anticipates that providing
such persons with a direct stake in the Company will assure a closer
identification of the interests of the participants in the Option Plan with
those of the Company, thereby stimulating the efforts of such participants to
promote the Company's future success and strengthen their desire to remain with
the Company. The Board of Directors believes that the proposed increase in the
number of shares issuable under the Option Plan will help the Company accomplish
these goals and will keep the Company's equity incentive compensation
competitive with that of its competitors.
14
<PAGE>
As of the date of this Proxy Statement, options to purchase all 750,000
shares of Common Stock currently reserved for issuance under the Option Plan
have been granted and remain outstanding. In addition, options to purchase an
additional 267,981 shares of Common Stock have been granted under the Option
Plan, subject to stockholder approval of the Plan Amendment at the Annual
Meeting. If the Plan Amendment is approved by the stockholders, these 267,981
shares will come out of the additional 600,000 shares of Common Stock reserved
for issuance, and 332,019 shares of Common Stock will remain available for
issuance under the Option Plan. If the Plan Amendment is not approved by the
stockholders, the 267,981 additional options will automatically be cancelled.
RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENT TO THE OPTION PLAN.
SUMMARY OF THE OPTION PLAN
The following description of certain features of the Option Plan is
intended to be a summary only. The summary is qualified in its entirety by the
full text of the Option Plan which is attached hereto as Exhibit A and which
indicates the effect of the Plan Amendment.
Number Of Shares Issuable. Subject to adjustment for stock splits, stock
dividends and similar events, 750,000 shares of Common Stock are currently
authorized and reserved for issuance under the Option Plan. If adopted, the Plan
Amendment would increase the number of shares of Common Stock authorized and
reserved for issuance to 1,350,000. Shares of Common Stock underlying any grants
of options under the Option Plan which expire or are cancelled or terminated
(other than by exercise) shall be added back to the shares of Common Stock
available for issuance under the Option Plan.
Plan Administration; Eligibility. The Option Plan provides that it shall
be administered by the full Board of Directors or a committee of non-employee
directors as appointed by the Board of Directors from time to time (the "Option
Committee"). The Option Committee currently consists of Mr. Daly and Drs.
Golembesky and Natkow. The Board of Directors may discontinue or amend the
Option Plan at any time provided that the rights and obligations under any
option issued prior to an amendment to the Option Plan can not be adversely
affected by such amendment without the consent of the optionee. The Option
Committee has full power to select, from among the persons eligible for awards
under the Option Plan, the individuals to whom awards will be granted, to make
any combination of awards to participants, and to determine the specific terms
of each award, subject to the provisions of the Option Plan. Incentive Options
(as defined below) may be granted only to officers or other employees of the
Company or its subsidiaries, including members of the Board of Directors who are
also employees of the Company or its subsidiaries. Non-Qualified Options (as
defined below) may be granted or issued to officers or other employees of the
Company, directors and to consultants and other key persons who provide services
to the Company (regardless of whether they are also employees), and to such
other persons as the Option Committee may select from time to time.
Material Terms Of Options. The Option Plan permits the grant of (i)
options to purchase shares of Common Stock intended to qualify as incentive
stock options under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code") ("Incentive Options"), and (ii) options that do not so qualify
("Non-Qualified Options"). In order to comply with the requirements of Section
162(m) of the Code, the Option Plan provides that options with respect to no
15
<PAGE>
more than 250,000 shares of Common Stock may be granted to any one individual
during any one calendar year. The exercise price of each option granted under
the Option Plan is determined by the Option Committee but, in the case of
Incentive Options, may not be less than 100% of the fair market value of the
underlying shares on the date of grant. No Incentive Option may be granted under
the Option Plan to any employee of the Company or any subsidiary who owns at the
date of grant shares of stock representing in excess of 10% of the voting power
of all classes of stock of the Company or a parent or a subsidiary unless the
exercise price for the stock subject to such option is at least 110% of the fair
market value of such stock at the time of grant and the option term does not
exceed five years. Each option may be exercised only by the optionee during his
or her lifetime. As of the close of business on February 28, 1997, the fair
market value of a share of Common Stock was $9.00, as determined by the price of
a share of the Common Stock on the Nasdaq National Market ("Nasdaq").
The term of each option is fixed by the Option Committee and, in the
case of an Incentive Option, may not exceed ten years from the date of grant.
Except with respect to the automatic grants of options which are made to
non-employee directors on the date they become directors and on the fifth
business day after each annual meeting of stockholders, which provide for a
fixed vesting schedule, the Option Committee determines at what time or times
each option may be exercised and, subject to the provisions of the Option Plan,
the period of time during which options may be exercised, if any, after
termination of employment for any reason. Options may be made exercisable in
installments, and the exercisability of options may be accelerated by the Option
Committee. Upon exercise of options, the option exercise price must be paid in
full (i) in cash or by certified or bank check or other instrument acceptable to
the Option Committee, (ii) if the applicable option agreement permits, by
delivery of shares of Common Stock already owned by the optionee, or (iii)
through a "cashless" exercise procedure, subject to certain limitations.
The Option Plan provides that in the case of certain transactions
constituting a change in control of the Company, all outstanding options shall
become fully exercisable whether or not such options were exercisable
immediately prior thereto. In addition, the Option Plan and the options issued
thereunder shall terminate upon the effectiveness of any such transaction or
event, unless provision is made in connection with such transaction for the
assumption of options theretofore granted, or the substitution for such options
of new options of the successor entity or parent thereof, with appropriate
adjustment as to the number and kind of shares and the per share exercise
prices. In the event of such termination, each holder of outstanding options
shall be permitted to exercise all options for a period of at least 15 days
prior to the date of such termination.
Tax Aspects Under The U.S. Internal Revenue Code. Under current federal
tax law, an employee who receives a Non-Qualified Option does not generally
realize any taxable income at the time the option is granted. However, upon the
exercise of such an option, the employee will recognize ordinary income measured
by the excess of the then fair market value of the Common Stock over the
exercise price, and the Company generally will be entitled to a tax deduction
for a corresponding amount. On the other hand, an employee who receives an
Incentive Option does not generally realize any taxable income at the time the
option is granted or at the time it is exercised. The excess of the fair market
value of the Common Stock on the date of exercise over the exercise price is a
"tax preference item," however, that may cause the employee to be subject to the
alternative minimum tax. Upon the sale of stock received upon exercise of any
Incentive Option, the optionee will recognize a capital gain or loss or,
depending on the holding period of the shares of Common Stock, ordinary income,
equal to the difference between the sale price and the exercise price. The
Company is not entitled to a tax deduction with respect to the grant or exercise
of an Incentive Option.
Certain Amendments. On February 26, 1997, the same date on which it
adopted the Plan Amendment, the Board of Directors adopted certain other
amendments (the "Section 16 Amendments") to the Option Plan in order to ensure
that, among other things, the provisions of the Option Plan comply with the
regulations promulgated under Section 16 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), as such regulations had recently been amended.
The Section 16 Amendments do not require the approval of stockholders.
Option Plan Benefits. The following table sets forth the option grants
to the individuals and groups identified below that were made on February 26,
1997 under the Option Plan subject to stockholder approval of the Plan Amendment
at the Annual Meeting. These grants were made from the 600,000 additional shares
of Common Stock reserved under the Option Plan that stockholders are being asked
to approve. If the Plan Amendment is approved, the options will have an exercise
price equal to the fair market value on the date of such approval. If the Plan
Amendment is not approved by the stockholders, the option grants set forth below
will be cancelled.
16
<PAGE>
<TABLE>
OPTIONS GRANTED UNDER THE OPTION PLAN
<CAPTION>
Dollar Value Number of
Name and Position ($) Options
----------------------------------------------------------------------------------------------
<S> <C> <C>
Mitchell Eisenberg, M.D..................................... 0 89,327
Chairman of the Board of Directors, President and
Chief Executive Officer
Valerio J. Toyos, M.D., M.B.A............................... 0 0
Vice President Primary Care Services
Lewis D. Gold, M.D.......................................... 0 62,529
Director and Executive Vice President Business
Development
Gilbert L. Drozdow, M.D., M.B.A............................. 0 26,798
Vice President Hospital Based Services
Jay A. Martus, Esq.......................................... 0 26,798
Vice President, Secretary and General Counsel
Executive Officers as a Group............................... 0 267,981
Non-Executive Director Group................................ 0 0
Non-Executive Officer Employee Group........................ 0 0
- -----------------------------
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth as of March 1, 1997 (except as noted
below) certain information regarding the beneficial ownership of Common Stock by
(i) each person or "group" (as that term is defined in Section 13(d)(3) of the
Exchange Act) known by the Company to be the beneficial owner of more than 5% of
the Company's Common Stock, (ii) the Company's Chief Executive Officer and the
four (4) other most highly compensated executed officers whose total salary and
bonus exceeded $100,000 during 1996, (iii) each director and nominee for
director of the Company and (iv) all directors and executive officers of the
Company as a group (nine (9) persons). Except as otherwise indicated, each
person listed below has sole voting and investment power over the shares of
Common Stock shown as beneficially owned.
17
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Percent of
Name Beneficially Owned Common Stock(1)
- ---- ------------------ ---------------
<S> <C> <C>
TA Associates, Inc.
125 High Street
Boston, MA 02110.............................. 1,756,110(2) 27.4%
Chestnut Investors
c/o MVP Ventures
45 Milk Street
Boston, MA 02109.............................. 198,210(3) 3.1
NationsBank Investment Corporation
c/o NationsBank Leveraged Capital
NationsBank Corporate Center, 10th Floor
100 North Tryon Street
Charlotte, North Carolina 28202-4006.......... 438,695(4) 6.8
Kaufmann Fund, Inc.
140 E. 45th Street, 43rd Floor
New York, New York 10017...................... 773,000(5) 12.0
Mitchell Eisenberg............................... 192,580(6) 3.0
Valerio J. Toyos ............................... 37,146(7) *
Lewis D. Gold ............................... 136,435(8) 2.1
Gilbert L. Drozdow............................... 46,380(9) *
Jay A. Martus ............................... 20,486(10) *
Robert W. Daly ............................... 25,337(11) *
Henry E. Golembesky.............................. 6,667(12) *
Neil A. Natkow ............................... 5,500(13) *
All directors and executive officers
as a group (9 persons)........................... 480,531(14) 7.4%
* Less than one percent
<FN>
(1) The number of shares of Common Stock outstanding used in calculating the
percentage for each listed person includes the shares of Common Stock
underlying the options held by such person or entity that are exercisable
within 60 days of March 1, 1997 but excludes shares of Common Stock
underlying options held by any other person.
(2) Includes 957,630 shares owned by Advent VII L.P., 488,599 shares owned by
Advent Atlantic and Pacific II L.P., 95,755 shares owned by Advent New
York L.P., 195,456 shares owned by Advent Industrial II Limited
Partnership, and 18,670 shares owned by TA Venture Investors Limited
Partnership.
(3) Includes 97,689 shares owned by Chestnut III Limited Partnership and
100,521 shares owned by Chestnut Capital International III Limited
Partnership.
(4) Includes 296,638 shares of Class A (non-voting) Common Stock which are
convertible into Common Stock of the option of NationsBank Investment
Corporation upon the occurrence of certain events. As a result,
NationsBank Investment Corporation may be deemed to beneficially own the
number of shares of Common Stock into which the shares of Class A Common
Stock so held are convertible.
(5) The indicated ownership is as of February 21, 1997 and is based solely on a Schedule 13G/A
provided by this entity to the Company.
(6) Includes 151,015 shares owned by the Eisenberg Family Limited
Partnership, a Florida limited partnership. Dr. Eisenberg acts as the
sole general partner of this limited partnership and exercises sole
voting and investment power with respect to such shares. Also includes
options to purchase up to 21,565 shares of Common Stock.
(7) Includes options to purchase up to 1,700 shares of Common Stock.
(8) Includes 107,870 shares owned by the Gold Family Limited Partnership,
Ltd., a Florida limited partnership. Dr. Gold acts as the sole general
partner of this limited partnership and exercises sole voting and
investment power with respect to such shares. Also includes options to
purchase up to 21,565 shares of Common Stock.
(9) Includes 43,145 shares owned by the Drozdow Family Limited Partnership, a
Florida limited partnership. Drozdow Family GP Corp., a Florida
corporation owned by Dr. Drozdow and his wife as tenants by the
entireties, is the general partner of this limited partnership. Dr.
Drozdow, in his capacity as the sole director and officer of the general
partner of the limited partnership, exercises sole voting and investment
power with respect to such shares. Also includes options to purchase up
to 3,235 shares of Common Stock.
(10) Includes options to purchase up to 9,704 shares of Common Stock.
(11) Includes 18,670 shares of Common Stock held by TA Venture Investors
Limited Partnership, and options to purchase up to 6,667 shares of Common
Stock. Mr. Daly disclaims beneficial ownership of the shares of Common
Stock held by TA Venture Investors Limited Partnership, except to the
extent of 2,260 shares as to which he holds a pecuniary interest. Does
not include any shares beneficially owned by Advent VII L.P., Advent
Atlantic and Pacific II L.P., Advent New York L.P., and Advent Industrial
II Limited Partnership, as to which Mr.
Daly disclaims beneficial ownership.
(12) Represents options to purchase up to 6,667 shares of Common Stock.
(13) Includes options to purchase up to 2,500 shares of Common Stock.
(14) Does not include shares beneficially owned by TA Associates, Inc. or the Chestnut
Investors, except to the extent disclosed in footnote 11 with respect to the number of
shares beneficially owned by Mr. Daly.
</FN>
</TABLE>
18
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who beneficially own (directly or
indirectly) more than 10% of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the SEC
and Nasdaq. Officers, directors and greater than 10% stockholders are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file. To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no other
reports were required during or with respect to the fiscal year ended December
31, 1996, all Section 16(a) filing requirements applicable to its executive
officers, directors and greater than 10% stockholders were satisfied, except
that Dr. Eisenberg inadvertently failed to file on a timely basis two reports
relating to transactions which took place in May 1996 and August 1996,
respectively; Dr. Gold inadvertently failed to file on a timely basis a report
relating to a May 1996 transaction; Dr. Natkow inadvertently failed to file on a
timely basis an initial report relating to becoming a director of the Company in
July 1996; Mr. Schundler inadvertently failed to file on a timely basis (i) an
initial report relating to becoming an executive officer of the Company in July
1996 and (ii) two reports relating to transactions which took place in August
1996 and December 1996, respectively; Dr. Toyos inadvertently failed to file on
a timely basis (i) an initial report relating to becoming an executive officer
of the Company in April 1996 and (ii) a report relating to a transaction which
took place in December 1996; and Mr. Gates inadvertently failed to file on a
timely basis a report relating to a transaction which took place in December
1996.
OTHER MATTERS
INDEPENDENT AUDITORS
The accounting firm of Arthur Andersen LLP has served as the Company's
independent auditors since November 1994 and will continue to do so for the 1997
fiscal year. A representative of Arthur Andersen LLP will be present at the
Annual Meeting, will be given an opportunity to make a statement if he or she so
desires and will be available to respond to appropriate questions.
MARKET VALUE
On December 31, 1996, the closing price of a share of Common Stock on
Nasdaq was $5.875.
Expenses of Solicitation
The cost of solicitation of proxies will be borne by the Company. In an
effort to have as large a representation at the Annual Meeting as possible,
special solicitation of proxies may, in certain instances, be made personally or
by telephone, telegraph or mail by one or more employees of the Company. The
Company also may reimburse brokers, banks, nominees and other fiduciaries for
postage and reasonable clerical expenses of forwarding the proxy material to
their principals who are beneficial owners of the Common Stock.
STOCKHOLDER PROPOSALS
Any stockholder proposals submitted pursuant to Exchange Act Rule 14a-8
and intended to be presented at the Company's 1998 annual meeting of
stockholders must be received by the Company on or before [120 DAYS BEFORE THE
DATE OF THE ANNIVERSARY OF THIS PROXY] to be eligible for inclusion in the proxy
statement and form of proxy to be distributed by the Board of Directors in
connection with such meeting.
Any stockholder proposals intended to be presented at the Company's 1998
Annual Meeting, other than a stockholder proposal submitted pursuant to Exchange
Act Rule 14a-8, must be received in writing at the principal executive office of
the Company no later than March 1, 1998, nor prior to January 15, 1998, together
with all supporting documentation required by the Company's By-laws.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement which will be presented for action at the
Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the best judgment of the proxy holders.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR 1996
(INCLUDING FINANCIAL STATEMENTS AND SCHEDULES THERETO), WHICH WAS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION ON MARCH 31, 1997, WILL BE PROVIDED WITHOUT
CHARGE TO ANY PERSON TO WHOM THIS PROXY STATEMENT IS MAILED UPON THE WRITTEN
REQUEST OF ANY SUCH PERSON TO JAY A. MARTUS, ESQ., SECRETARY, VICE PRESIDENT AND
GENERAL COUNSEL, SHERIDAN HEALTHCARE, INC., 4651 SHERIDAN STREET, SUITE 400,
HOLLYWOOD, FLORIDA 33021.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO THE
COMPANY. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD
TODAY.
19
<PAGE>
EXHIBIT A
SHERIDAN HEALTHCARE, INC.
Second Amended and Restated 1995 Stock Option Plan
1. PURPOSE
-------
This Second Amended and Restated 1995 Stock Option Plan (the "Plan"),
which was first adopted as the SAMA Holdings, Inc. 1995 Stock Option Plan
effective as of April 27, 1995 and first amended and restated on July 27, 1995,
is intended as a performance incentive for officers, employees, consultants,
directors and other key persons of Sheridan Healthcare, Inc. (the "Company"),
its Subsidiaries (as hereinafter defined) or their Affiliates (as hereinafter
defined) to enable the persons to whom options are granted (the "Optionees") to
acquire or increase a proprietary interest in the success of the Company. The
Company intends that this purpose will be effected by the granting of "incentive
stock options" ("Incentive Options") as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), and nonqualified stock options
("Nonqualified Options"). The term "Subsidiaries" includes any corporations in
which stock possessing fifty percent or more of the total combined voting power
of all classes of stock is owned directly or indirectly by the Company. The term
"Affiliates" includes all corporations or other entities controlling, controlled
by or under common control with the Company or any of its Subsidiaries and
includes any physician, professional corporation or other person to whom or
which the Company or any of its Subsidiaries provides services pursuant to a
management services agreement or similar arrangements.
2. OPTIONS TO BE GRANTED; ADMINISTRATION OF THE PLAN
-------------------------------------------------
(a) Options granted under the Plan may be either Incentive Options or
Nonqualified Options, and shall be designated as such at the time of
grant. To the extent that any option intended to be an Incentive Option
shall fail to qualify as an "incentive stock option" under the Code, such
option shall be deemed to be a Nonqualified Option. Each option granted
hereunder shall be embodied in a written agreement, as described in
Section 4 hereof, that is signed by the Optionee and an authorized officer
of the Company.
(b) The Plan shall be administered either by the Board of Directors of
the Company (the "Board of Directors") or by a committee (the "Option
Committee") of not fewer than two directors of the Company appointed by
the Board of Directors (in either case, the "Administrator"). None of the
members of the Option Committee shall be an officer or other full-time
employee of the Company. It is the intention of the Company that each
member of the Option Committee shall be a "Non-Employee Director" as that
term is defined and interpreted pursuant to Rule 16b-3(b)(3)(i) or any
successor rule thereto promulgated under the Securities Exchange Act of
1934, as amended (the "Act"), and that, on and after the date the Plan
becomes subject to Section 162(m) of the Code, each member of the Option
Committee shall be an "outside director" as that term is defined and
interpreted pursuant to Section 162(m) of the Code and the regulations
promulgated thereunder. Subject to the foregoing requirements of Section
2(b), the Compensation Committee of the Board of Directors may serve as
the Option Committee. Action by the Option Committee shall require the
affirmative vote of a majority of all its members.
(c) Subject to the terms and conditions of the Plan, the Administrator
shall have the power:
(i) To determine from time to time the options to be
granted to eligible persons under the Plan and to prescribe the
terms and provisions (which need not be identical) of options
(including without limitation, the number of shares subject to
each such option, the effects upon such options of any change
in control of the Company and any vesting provisions with
respect to such options) granted under the Plan to such
persons;
20
<PAGE>
(ii) To construe and interpret the Plan and grants
thereunder and to establish, amend, and revoke rules and
regulations for administration of the Plan (including to
correct any defect or supply any omission, or reconcile any
inconsistency in the Plan, in any option agreement, or in any
related agreements, in the manner and to the extent the
Administrator shall deem necessary or expedient to make the
Plan fully effective);
(iii) To amend from time to time, as the
Administrator may determine is in the best interests of the
Company, the terms of any outstanding options, including
without limitation, to modify the vesting schedule, exercise
price or expiration date thereof in a manner not inconsistent
with the terms of the Plan; and
(iv) Generally, to exercise such powers and to
perform such acts as are deemed necessary or expedient to
promote the best interests of the Company with respect to the
Plan.
All decisions and determinations by the Administrator in the exercise of
these powers shall be final and binding upon the Company and the
Optionees.
(d) Delegation of Authority to Grant Options. The Administrator, in its
---------------------------------------- discretion, may delegate
to the Chief Executive Officer of the Company or any Subsidiary all
or part of the Administrator's authority and duties with respect to
Options, including the granting thereof, to individuals who are not
subject to the reporting and other provisions of Section 16 of the Act
and, on and after the date the Plan becomes subject to Section
162(m) of the Code, who also are not "covered employees" within the
meaning of Section 162(m) of the Code. The Administrator may revoke
or amend the terms of a delegation at any time, but such action shall
not invalidate any prior actions of the Administrator's delegate
or delegates that were consistent with the terms of the Plan.
3. STOCK SUBJECT TO THE OPTIONS
----------------------------
The stock granted under the Plan, or subject to the options granted
under the Plan, shall be shares of the Company's authorized but unissued Common
Stock, par value $.01 per share (the "Common Stock"), which may either be
authorized but unissued shares or treasury shares or shares previously reserved
for issuance upon exercise of options under the Plan, and allocable to one or
more options (or portions of options) which have expired or been canceled or
terminated (other than by exercise). The total number of shares that may be
issued under the Plan shall not exceed an aggregate of 1,350,000 shares of
========= Common Stock.
Options with respect to no more than 250,000 shares of Common Stock may be
granted to any one individual during any one calendar year period. Such number
of shares shall be subject to adjustment as provided in Section 7 hereof.
4. ELIGIBILITY
-----------
(a) Incentive Options may be granted only to employees of the Company
or its Subsidiaries, including members of the Board of Directors who are
also employees of the Company or its Subsidiaries, who are eligible to
receive an Incentive Stock Option under the Code. Nonqualified Options
may be granted to officers, other employees and directors of the Company
or its Subsidiaries, and to consultants and other key persons who
provide services to the Company or its Subsidiaries or their Affiliates
(regardless of whether they are also employees) and to such other
persons as the Administrator may select from time to time, provided,
however, that no Nonqualified Options may be granted under the Plan to
any person while serving as a member of the Option Committee except as
provided in Section 4(d) hereof.
(b) No person shall be eligible to receive any Incentive Option under
the Plan if, at the date of grant, such person beneficially owns stock
representing in excess of ten percent of the voting power of all
outstanding capital stock of the Company, unless notwithstanding
anything in this Plan to the contrary (i) the purchase price for Common
Stock subject to such option is at least 110% of the fair market value
of such Common Stock at the time of the grant and (ii) the option by its
terms is not exercisable more than five years from the date of grant
thereof.
21
<PAGE>
(c) Notwithstanding any other provision of the Plan, the aggregate fair
market value (determined as of the time the option is granted) of the
Common Stock with respect to which Incentive Options are exercisable for
the first time by any individual during any calendar year (under all
plans of the Company and its parent and Subsidiaries) shall not exceed
$100,000. Any option granted under the Plan in excess of the foregoing
limitations shall be deemed to be a Nonqualified Option.
(d) (i) (A) Each non-employee member of the Board
of Directors of the Company serving
in such capacity upon consummation of
the Company's initial public offering
shall automatically be granted on
such date a Nonqualified Option to
purchase 7,500 shares of Common
Stock.
(B) Each person who first becomes a
non-employee member of the Board of
Directors of the Company after the
consummation of the Company's initial
public offering shall automatically
be granted on the date such person
first becomes a director a
Nonqualified Option to purchase 7,500
shares of Common Stock.
(C) Each non-employee member of the Board
of Directors of the Company serving
in such capacity on the fifth
business day after each annual
meeting of stockholders, beginning
with the 1996 annual meeting, shall
automatically be granted on such day
a Nonqualified Option to purchase
2,500 shares of Common Stock.
(ii) The purchase price per share of Common Stock of
each Nonqualified Option granted to a member of the Board of
Directors pursuant to this Section 4(d) shall be the fair
market value of the Common Stock on the date the option is
granted.
(iii) Options granted under this Section 4(d) shall
become exercisable in three equal installments, with one-third
becoming exercisable on the date of grant and an additional
one-third on each of the two successive anniversaries thereof
and shall expire no later than the tenth anniversary of the
grant date.
(iv) The provisions of this Section 4(d) shall apply
only to automatic grants of Nonqualified Options to
non-employee directors, and shall not be deemed to modify,
limit or otherwise apply to any other provisions of the Plan or
to any option granted thereunder to any other person, including
options granted to non-employee directors otherwise than
pursuant to this Section 4(d).
5. TERMS OF THE OPTION AGREEMENTS
------------------------------
Subject to the terms and conditions of the Plan, each option agreement
shall contain such provisions as the Administrator shall from time to time deem
appropriate. Option agreements need not be identical, but each option agreement
by appropriate language shall include the substance of all of the following
provisions:
(a) Expiration; Termination of Employment. Notwithstanding any other
------------------------------------------ provision of the Plan or of
any option agreement, each option shall expire not later than the date
specified in the option agreement, which date in the case of any
Incentive Option shall not be later than the
22
<PAGE>
tenth anniversary of the date on which the option was granted. If an
Optionee's employment with the Company and its Subsidiaries terminates
for any reason, the Administrator may in its discretion provide, at any
time, that any outstanding option granted to such Optionee under the
Plan shall be exercisable for such period following termination of
employment as may be specified by the Administrator, subject to the
expiration date of such option.
(b) Exercise. Each option shall be exercisable in such installments
-------- (which need not be equal) and at such times as may be
designated by the Administrator. To the extent not exercised,
installments shall accumulate and be exercisable, in whole or in part,
at any time after becoming exercisable, but not later than the date the
option expires.
(c) Purchase Price. The purchase price per share of Common Stock
--------------- subject to each option shall be determined
by the Administrator; provided, however, that the purchase price per
share of Common Stock subject to each Incentive Option shall be not less
than the fair market value of the Common Stock on the date such
Incentive Option is granted. For the purposes of the Plan, the fair
market value of the Common Stock shall be determined in good faith
by the Administrator; provided, however, that (i) if the Common Stock
is admitted to quotation on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") Small-Cap Market on the
date the option is granted, the fair market value shall not be less
than the average of the highest bid and lowest asked prices of the
Common Stock on NASDAQ reported for such date, (ii) if the Common
Stock is admitted to trading on a national securities exchange or the
NASDAQ National Market on the date the option is granted, the fair
market value shall not be less than the closing price reported for the
Common Stock on such exchange or system for such date or, if no sales
were reported for such date, for the last date preceding such date
for which a sale was reported, and (iii) the fair market value of the
Common Stock on the effective date of the registration statement
for the Company's initial public offering shall be the initial offering
price.
(d) Rights of Optionees. No Optionee shall be deemed for any purpose to
------------------- be the owner of any shares of Common Stock
subject to any option unless and until (i) the option shall have been
exercised pursuant to the terms thereof, (ii) all requirements under
applicable law and regulations shall have been complied with to the
satisfaction of the Company, (iii) the Company shall have issued and
delivered the shares to the Optionee, and (iv) the Optionee's name shall
have been entered as a stockholder of record on the books of the
Company. Thereupon, the Optionee shall have full voting, dividend and
other ownership rights with respect to such shares of Common Stock.
(e) Transfer. No option granted hereunder shall be transferable by the
-------- Optionee other than by will or by the laws of descent and
distribution, and such option may be exercised during the Optionee's
lifetime only by the Optionee, or his or her guardian or legal
representative. Notwithstanding the foregoing, the Administrator may
permit an optionee to transfer, without consideration for the transfer,
a Nonqualified Option to members of his immediate family, to trusts
for the benefit of such family members, to partnerships in which such
family members are the only partners, or to charitable organizations,
provided that the transferee agrees in writing with the Company to be
bound by all of the terms and conditions of this Plan and the applicable
option agreement.
6. METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE
---------------------------------------------
(a) Any option granted under the Plan may be exercised by the Optionee
in whole or in part by delivering to the Company on any business day a
written notice specifying the number of shares of Common Stock the
Optionee then desires to purchase (the "Notice").
(b) Payment for the shares of Common Stock purchased pursuant to the
exercise of an option shall be made either: (i) in cash, or by certified
or bank check or other payment acceptable to the Company, equal to the
option exercise price for the number of shares specified in the Notice
(the "Total Option Price"); (ii) if authorized by the applicable option
agreement and if permitted by law, by delivery of shares of Common Stock
that the optionee may freely transfer having a fair market value,
23
<PAGE>
determined by reference to the provisions of Section 5(c) hereof, equal
to or less than the Total Option Price, plus cash in an amount equal to
the excess, if any, of the Total Option Price over the fair market value
of such shares of Common Stock; or (iii) by the Optionee delivering the
Notice to the Company together with irrevocable instructions to a broker
to promptly deliver the Total Option Price to the Company in cash or by
other method of payment acceptable to the Company; provided, however,
that the Optionee and the broker shall comply with such procedures and
enter into such agreements of indemnity or other agreements as the
Company shall prescribe as a condition of payment under this clause
(iii).
(c) The delivery of certificates representing shares of Common Stock to
be purchased pursuant to the exercise of an option will be contingent
upon the Company's receipt of the Total Option Price and of any written
representations from the Optionee required by the Administrator, and the
fulfillment of any other requirements contained in the option agreement
or applicable provisions of law (including payment of any amount
required to be withheld by the Company pursuant to applicable law).
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION
-----------------------------------------
(a) If the shares of the Company's Common Stock as a whole are
increased, decreased, changed into or exchanged for a different number
or kind of shares or securities of the Company, whether through merger,
consolidation, reorganization, recapitalization, reclassification, stock
dividend, stock split, combination of shares, exchange of shares, change
in corporate structure or the like, an appropriate and proportionate
adjustment shall be made in the number and kind of shares subject to the
Plan, and in the number, kind, and per share exercise price of shares
subject to unexercised options or portions thereof granted prior to any
such change. In the event of any such adjustment in an outstanding
option, the Optionee thereafter shall have the right to purchase the
number of shares under such option at the per share price, as so
adjusted, which the Optionee could purchase at the total purchase price
applicable to the option immediately prior to such adjustment.
(b) Adjustments under this Section 7 shall be determined by the
Administrator and such determinations shall be conclusive. The
Administrator shall have the discretion and power in any such event to
determine and to make effective provision for acceleration of the time
or times at which any option or portion thereof shall become
exercisable. No fractional shares of Common Stock shall be issued under
the Plan on account of any adjustment specified above.
8. EFFECT OF CERTAIN TRANSACTIONS
------------------------------
(a) In the case of a Change of Control (as defined below), all
outstanding options shall automatically become fully exercisable whether
or not such options were exercisable immediately prior thereto. Unless
provision is made in connection with such Change of Control for the
assumption of options theretofore granted, or the substitution for such
options of new options of the successor entity or parent thereof (with
appropriate adjustment as to the number and kind of shares and the per
share exercise prices, as provided in Section 7), the Plan and the
options issued hereunder shall terminate upon the effectiveness of such
Change of Control. In the event of such termination, all outstanding
options shall be exercisable in full for at least fifteen days prior to
the date of such termination whether or not otherwise exercisable during
such period.
(b) "Change of Control" shall mean the occurrence of any one
of the following events:
(i) any "person," as such term is used in Sections
13(d) and 14(d) of the Act (other than the Company, any of its
Subsidiaries, or any trustee, fiduciary or other person or
entity holding securities under any employee benefit plan or
trust of the Company of any of its Subsidiaries), together with
all "affiliates" and "associates" (as such terms are defined in
Rule 12b-2 under the Act) of such person, shall become the
"beneficial owner" (as such term is defined in Rule 13d-3 under
24
<PAGE>
the Act), directly or indirectly, of securities of the Company
representing in excess of 50% of either (A) the combined voting
power of the Company's then outstanding securities having the
right to vote in an election of the Company's Board of
Directors ("Voting Securities") or (B) the then outstanding
shares of Common Stock of the Company (in either such case
other than as a result of an acquisition of securities directly
from the Company); or
(ii) persons who, as of the effective date of the
Plan,constitute the Company's Board of Directors (the"Incumbent
Directors") cease for any reason, including, without
limitation, as a result of a tender offer, proxy contest,
merger or similar transaction, to constitute at least a
majority of the Board, provided that any person becoming a
director of the Company subsequent to the Effective Date whose
election or nomination for election was approved by a vote of
at least a majority of the Incumbent Directors shall, for
purposes of this Plan, be considered an Incumbent Director; or
(iii) the stockholders of the Company shall approve
(A) any consolidation or merger of the Company or any
Subsidiary where the stockholders of the Company immediately
prior to the consolidation or merger, would not, immediately
after the consolidation or merger, beneficially own (as such
term is defined in Rule 13d-3 under the Act), directly or
indirectly, shares representing in the aggregate 80% or more of
the voting shares of the corporation issuing cash or securities
in the consolidation or merger (or of its ultimate parent
corporation, if any), (B) any sale, lease, exchange or other
transfer (in one transaction or a series of transactions
contemplated or arranged by any party as a single plan) of all
or substantially all of the assets of the Company or (C) any
plan or proposal for the liquidation or dissolution of the
Company.
Notwithstanding the foregoing, a "Change of Control" shall not be
deemed to have occurred for purposes of the foregoing clause (i) solely as the
result of an acquisition of securities by the Company which, by reducing the
number of shares of Common Stock or other Voting Securities outstanding,
increases (x) the proportionate number of shares of Common Stock beneficially
owned by any person in excess of 50% or more of the shares of Common Stock then
outstanding or (y) the proportionate voting power represented by the Voting
Securities beneficially owned by any person in excess of 50% or more of the
combined voting power of all then outstanding Voting Securities; provided,
however, that if any person referred to in clause (x) or (y) of this sentence
shall thereafter become the beneficial owner of any additional shares of Common
Stock or other Voting Securities (other than pursuant to a stock split, stock
dividend, or similar transaction), then a "Change of Control" shall be deemed to
have occurred for purposes of the foregoing clause (i).
9. TAX WITHHOLDING
---------------
(a) Payment by Optionee. Each Optionee shall, no later than the date as
------------------- of which the value of any option granted
hereunder or of any Common Stock issued upon the exercise of such option
first becomes includible in the gross income of the Optionee for
federal income tax purposes (the "Tax Date"), pay to the Company, or
make arrangements satisfactory to the Administrator regarding payment
of any federal, state, or local taxes of any kind required by law to
be withheld with respect to such income. In the event that an Optionee
has not made the arrangements described in this Section 9(a) and has
not made an election under this Section 9(b) on or before the Tax Date,
the Company is hereby authorized to withhold the amount of any federal,
state or local taxes of any kind required by law with respect to such
income from any payment otherwise due to the Optionee.
(b) Payment in Shares. Subject to approval by the Administrator, an
----------------- Optionee may elect to have such tax withholding
obligation satisfied, in whole or in part,by (i) authorizing the Company
to withhold from shares of Common Stock to be issued pursuant to an
option exercise a number of shares with an aggregate fair market value
(determined by the Administrator in accordance with Section 5(c)
as of the date the withholding is effected) that would satisfy the
withholding amount due, or (ii) transferring to the Company shares of
Common Stock owned by the Optionee with an aggregate fair market value
(determined by the Administrator in accordance with Section 5(c)
as of the date the withholding is effected) that would satisfy the
withholding amount due.
25
<PAGE>
10. AMENDMENT OF THE PLAN
---------------------
The Board of Directors may discontinue the Plan or amend the Plan at
any time, and from time to time, subject to any required regulatory approval,
provided that any such amendment is also approved by the stockholders of the
Company if it would materially increase the benefits accruing to Optionees under
the Plan, or to the extent required by the Code to ensure that Incentive Options
granted under the Plan are qualified under Section 422 of the Code or if
determined by the Administrator to be necessary or advisable for purposes of the
Act or otherwise. Except as otherwise provided, an amendment shall be binding
upon options previously granted under the Plan unless the amendment adversely
affects the rights of an Optionee, in which event the consent of the Optionee
shall be required with respect to any portion of such amendment having such
effect.
11. NONEXCLUSIVITY OF THE PLAN
--------------------------
Neither the adoption of the Plan by the Board of Directors nor the
submission of the Plan to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board of Directors to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock or stock options otherwise than under
the Plan, and such arrangements may be either applicable generally or only in
specific cases. Neither the Plan nor any option granted hereunder shall be
deemed to confer upon any employee any right to continued employment with the
Company or its Subsidiaries or their Affiliates.
12. GOVERNMENT AND OTHER REGULATIONS; GOVERNING LAW
-----------------------------------------------
(a) The obligation of the Company to sell and deliver shares of Common
Stock with respect to options granted under the Plan shall be subject to
all applicable laws, rules and regulations, including all applicable
federal and state securities laws, and the obtaining of all such
approvals by governmental agencies as may be deemed necessary or
appropriate by the Administrator.
(b) The Plan shall be governed by Delaware law, except to the extent
that such law is preempted by federal law.
13. EFFECTIVE DATE OF THE PLAN; STOCKHOLDER APPROVAL
------------------------------------------------
The Plan shall become effective upon the date that it is approved by
the Board of Directors of the Company; provided, however, that the Plan shall be
subject to the approval of the Company's stockholders in accordance with
applicable laws and regulations within twelve months of such effective date. No
options granted under the Plan prior to such stockholder approval may be
exercised until such approval has been obtained. No options may be granted under
the Plan after the tenth anniversary of the effective date of the Plan.
* * *
Approved by Board of Directors: July 27, 1995
Approved by Stockholders: August 17, 1995
Amended by Board of Directors: February 26, 1997
Approved by Stockholders: May 15, 1997
======================================
26
<PAGE>
SHERIDAN HEALTHCARE, INC.
4651 SHERIDAN STREET, SUITE 400, HOLLYWOOD, FLORIDA 33021
PROXY FOR COMMON STOCK
P
R THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
O
X
Y The undersigned hereby appoints Mitchell Eisenberg, M. D. and Jay A. Martus,
Esq., and each of them, proxies with full power of substitution to vote for and
on behalf of the undersigned at the Annual Meeting of Stockholders of Sheridan
Healthcare, Inc. (the "Company"), to be held at the offices of the Company at
4651 Sheridan Street, Suite 400, Hollywood, Florida 33021 on Thursday, May 15,
1997 at 10:00 a.m., Florida time, and at any adjournments or postponements
thereof, hereby granting full power and authority to act on behalf of the
undersigned at said meeting and any adjournments or postponements thereof. The
undersigned hereby revokes any proxy previously given in connection with such
meeting and acknowledges receipt of the Notice of Annual Meeting of Stockholders
and Proxy Statement and the 1996 Annual Report to Stockholders.
CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE
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Please mark votes as in this example.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO INSTRUCTION IS INDICATED WITH
RESPECT TO PROPOSALS 1, 2 OR 3 BELOW, THE UNDERSIGNED'S VOTES WILL BE CAST "FOR"
EACH OF SUCH MATTERS. The undersigned's votes will be cast in accordance with
the proxies' discretion on such other business as may properly come before the
meeting or any adjournments or postponements thereof. PLEASE SIGN AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
1. Proposal to elect Lewis D. Gold, M.D. and Henry E. Golembesky, M.D. as
Class II Directors of the Company, each for a three-year term to
continue until the 2000 Annual Meeting of Stockholders and until the
successor of each is duly elected and qualified.
FOR BOTH WITHHELD --------------------------------
FROM BOTH Withheld as to the nominee noted
above
2. Proposal to approve the amendment to the Company's Third Amended
and Restated Certificate of Incorporation to decrease the number
of authorized shares of Common Stock of the Company from 30,000,000
to 20,000,000.
FOR AGAINST ABSTAIN
3. Proposal to approve the amendment to the Company's Second Amended and
Restated 1995 Stock Option Plan to increase the number of shares of Common
Stock of the Company that may be issued thereunder from 750,000 to
1,350,000.
FOR AGAINST ABSTAIN
4. To consider and act upon such other business as may properly come before
the meeting or any adjournments or postponements thereof.
For joint accounts, each owner should sign. Executors,
Signature: Date
------------------- -------- administrators, trustees, corporate
officers and others acting in a representative capacity should give full title
Signature: Date
------------------ -------- or authority.
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