SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 1 to
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-12
AMERIPATH, INC.
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(Name of Registrant as Specified in its Charter)
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(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 No.:
(3) Filing Party:
(4) Date Filed:
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AMERIPATH, INC.
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 3, 2001
To the Stockholders of AmeriPath, Inc.:
NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Stockholders
(the "Annual Meeting") of AmeriPath, Inc., a Delaware corporation (the "Company"
or " AmeriPath"), will be held at the Palm Beach Gardens Marriott Hotel, 4000
RCA Boulevard, Palm Beach Gardens, Florida, at 11:00 a.m., local time, on
Thursday, May 3, 2001, for the following purposes:
(1) To elect two (2) members to the Company's Board of
Directors to hold office until the 2004 Annual Meeting or until their
successors are duly elected and qualified;
(2) To consider and vote upon a proposal to amend the
Company's Amended and Restated Certificate of Incorporation to increase
the number of authorized shares of Common Stock, par value $.01 per
share (the "Common Stock") of the Company from 30,000,000 shares to
60,000,000 shares;
(3) To consider and vote upon a proposal to approve the
Company's 2001 Stock Option Plan;
(4) To ratify the reappointment of Deloitte & Touche LLP as
the Company's independent public accountants; and
(5) To transact such other business as may properly come
before the Annual Meeting and any adjournments or postponements
thereof.
The Board of Directors has fixed the close of business on March 23,
2001 as the record date for determining those stockholders entitled to notice
of, and to vote at, the Annual Meeting and any adjournments or postponements
thereof.
Whether or not you expect to be present, please sign, date and return
the enclosed proxy card in the enclosed pre-addressed envelope as promptly as
possible. No postage is required if mailed in the United States.
By Order of the Board of Directors,
Gregory A. Marsh
Secretary
Riviera Beach Florida
April 5, 2001
THIS IS AN IMPORTANT MEETING AND ALL STOCKHOLDERS ARE ENCOURAGED TO ATTEND THE
MEETING IN PERSON. THOSE STOCKHOLDERS WHO ARE UNABLE TO ATTEND ARE RESPECTFULLY
URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE.
STOCKHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING,
REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON AT THE MEETING.
2001 ANNUAL MEETING OF STOCKHOLDERS
OF
AMERIPATH, INC.
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PROXY STATEMENT
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TIME, DATE AND PLACE OF ANNUAL MEETING
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of AmeriPath, Inc., a Delaware corporation (the
"Company" or "Ameripath"), of proxies from the holders of the Company's Common
Stock, par value $.01 per share (the "Common Stock"), for use at the 2001 Annual
Meeting of Stockholders of the Company to be held at the Palm Beach Gardens
Marriott Hotel, 4000 RCA Boulevard, Palm Beach Gardens, Florida, at 11:00 a.m.,
local time, on Thursday, May 3, 2001, and at any adjournments or postponements
thereof (the "Annual Meeting").
The approximate date that this Proxy Statement and the enclosed form of
proxy are first being sent to stockholders is April 5, 2001. Stockholders should
review the information in this Proxy Statement together with the Company's
Annual Report to Stockholders for the year ended December 31, 2000 which
accompanies this Proxy Statement. The Company's principal executive offices are
located at 7289 Garden Road, Suite 200, Riviera Beach, Florida 33404, and its
telephone number is (561) 845-1850.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should any stockholder giving the proxy so desire. Stockholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Company's
Secretary at the Company's headquarters a written revocation or duly executed
proxy bearing a later date; however, no such revocation will be effective until
written notice of the revocation is received by the Company at or prior to the
Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Stockholders and the enclosed proxy is to be borne
by the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone. The Company's employees will
receive no compensation for soliciting proxies other than their regular
salaries. The Company may request banks, brokers and other custodians, nominees
and fiduciaries to forward copies of the proxy material to their principals and
to request authority for the execution of proxies. The Company may reimburse
such persons for their expenses in doing so. The Company has also retained D.F.
King & Co, Inc. to assist in soliciting proxies from its stockholders. The fees
of such firm are estimated to be $5,000 plus reimbursement of out of pocket
expenses.
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, the Company's stockholders will consider and
vote upon the following matters:
(1) To elect two (2) members to the Company's Board of
Directors to hold office until the 2004 Annual Meeting or until their
successors are duly elected and qualified;
(2) To consider and vote upon a proposal to amend the
Company's Amended and Restated Certificate of Incorporation to increase
the number of authorized shares of Common Stock of the Company from
30,000,000 shares to 60,000,000 shares;
(3) To consider and vote upon a proposal to approve the
Company's 2001 Stock Option Plan;
(4) To ratify the reappointment of Deloitte & Touche LLP as
the Company's independent public accountants; and
(5) To transact such other business as may properly come
before the Annual Meeting and any adjournments or postponements
thereof.
If you sign and return the enclosed proxy, the proxies named therein
will have authority to vote your shares of AmeriPath's Common Stock at the
Annual Meeting as indicated therein. Unless you indicate otherwise on the
enclosed proxy, all shares of AmeriPath Common Stock represented by valid
proxies (including your shares) received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth herein)
will be voted (a) for the election of the respective nominees for director named
below, (b) in favor of the proposal to amend the Company's Amended and Restated
Certificate of Incorporation to increase the number of authorized shares of
Common Stock of the Company from 30,000,000 shares to 60,000,000 shares; (c) in
favor of the proposal to approve the Company's 2001 Stock Option Plan, (d) in
favor of ratification of the reappointment of Deloitte & Touche LLP as the
Company's independent public accountants, and (e) by the proxies in their
discretion upon any other proposals that may properly come before the meeting.
In the event a stockholder specifies a different choice by means of the enclosed
proxy, his shares will be voted in accordance with the specification so made.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on March 23, 2001
as the record date (the "Record Date") for determining stockholders of the
Company entitled to notice of and to vote at the Annual Meeting. As of March 16,
2001, there were 24,941,749 shares of Common Stock issued and outstanding, all
of which are entitled to be voted at the Annual Meeting. Each share of Common
Stock is entitled to one vote on each matter submitted to stockholders for
approval at the Annual Meeting. Stockholders do not have the right to cumulate
their votes for directors.
The attendance, in person or by proxy, of the holders of a majority of
the outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum for stockholders to take action at the meeting.
If a quorum is present at the Annual Meeting, the nominees for director shall be
elected by a plurality of the votes of the shares present in person or by proxy
at the Annual Meeting. The proposal for the increase in the number of authorized
shares of Common Stock
2
requires an amendment to the Certificate of Incorporation, which must be
approved by a majority of the shares outstanding. All other proposals, including
the approval of the 2001 Stock Option Plan and the ratification of the
reappointment of the auditors shall be approved by a majority of the shares
present in person or by proxy at the Annual Meeting. If less than a majority of
the outstanding shares entitled to vote are represented at the Annual Meeting, a
majority of the shares so represented may adjourn the Annual Meeting to another
date, time or place. Prior to the Annual Meeting, the Company will select one or
more inspectors of election for the meeting. Such inspector(s) shall determine
the number of shares of Common Stock represented at the meeting, the existence
of a quorum and the validity and effect of proxies, and shall receive, count and
tabulate ballots and votes and determine the results thereof.
Abstentions will be considered as shares present and entitled to vote
at the Annual Meeting and will be counted as votes cast at the Annual Meeting.
Shares represented by proxies reflecting abstentions will be considered as
shares present and entitled to vote for purposes of determining the presence of
a quorum and will be counted as votes cast for purposes of determining the
outcome of any matter submitted to the shareholders for a vote, but will not be
counted as votes "for" or "against" any matter subject to the abstention.
Directors are elected by plurality of votes cast, without regard to proxies as
to which authority to vote for one or more of the nominees being proposed is
withheld. Abstentions on any other proposal will have the same effect as
negative votes.
The inspectors of election will treat shares referred to as "broker or
nominee non-votes" (shares held by brokers or nominees as to which instructions
have not been received from the beneficial owners or persons entitled to vote
and the broker or nominee does not have discretionary voting power on a
particular matter) as shares that are present and entitled to vote for purposes
of determining the presence of a quorum. For purposes of determining the outcome
of any matter as to which the proxies reflect broker or nominee non-votes,
shares represented by such proxies will be treated as not present and not
entitled to vote on that subject matter and therefore will not be considered by
the inspectors of election when counting votes cast on the matter (even though
those shares are considered entitled to vote for quorum purposes and may be
entitled to vote on other matters). Accordingly, broker or nominee non-votes
will have the same effect as a vote against the proposal to increase the
authorized shares of common stock, but will not have the same effect as a vote
against the election of any director or any other proposal.
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BENEFICIAL SECURITY OWNERSHIP
The following table sets forth, as of March 16, 2001, information with
respect to the beneficial ownership of the Company's Common Stock by (i) the
Company's Chief Executive Officer and each of the other "Named Executive
Officers" (as defined below in "Executive Compensation--Summary Compensation
Table"), (ii) each director of the Company, (iii) all directors and executive
officers of the Company as a group and (iv) each holder of five percent (5%) or
more of the Company's outstanding shares of Common Stock. The Company is not
aware of any beneficial owner of more than five percent of the outstanding
shares of Common Stock other than as set forth in the following table.
Shares Percent of
Beneficially Outstanding
Name of Beneficial Owner (1) Owned (2) Shares
---------------------------- ------------ ------------
T. Rowe Price Associates, Inc. (3)........................................... 2,050,200 8.2%
Wasatch Advisors, Inc. (4)................................................... 1,851,423 7.4%
Dimensional Fund Advisors, Inc. (5).......................................... 1,633,882 6.6%
James C. New (6)............................................................. 317,218 1.3%
Alan Levin, M.D. (7) ........................................................ 24,200 *
Dennis M. Smith, Jr., M.D. (8) .............................................. 213,576 *
Robert P. Wynn (9) .......................................................... 143,600 *
Stephen V. Fuller (10) ...................................................... 7,000 *
Brian C. Carr (11)........................................................... 42,494 *
Martin Gibson (12) .......................................................... -- *
C. Arnold Renschler, M.D. (13)............................................... 7,000 *
Thomas S. Roberts (14) ...................................................... 2,000 *
E. Roe Stamps, IV (15) ...................................................... 2,000 *
All directors and executive officers as a group (12 persons) (16) ........... 638,769 2.5%
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* Less than one percent.
1. Unless otherwise indicated, the address of each of the beneficial
owners identified is 7289 Garden Road, Suite 200, Riviera Beach,
Florida 33404.
2. Based on 24,941,749 shares of Common Stock outstanding as of March
16, 2001. Pursuant to the rules of the Securities and Exchange
Commission, shares of Common Stock which a person had the right to
acquire within 60 days pursuant to the exercise of stock options or the
conversion of a convertible security are deemed to be outstanding for
the purpose of computing the percentage ownership of such person but
are not deemed outstanding for the purpose of computing the percentage
ownership of any other person.
3. Represents shares beneficially owned by T. Rowe Price Associates, Inc.
("Price"), as to which Price has sole voting power with respect to
316,000 of such shares and sole dispositive power with respect to
2,050,200 such shares. The address of Price is 100 E. Pratt Street,
Baltimore, Maryland 21202. This disclosure of Price's beneficial
ownership is based solely upon information set forth in Price's
Schedule 13G dated February 12, 2001.
4. Represents shares beneficially owned by Wasatch Advisors, Inc.
("Wasatch"), as to which Wasatch has sole voting power with respect to
1,851,423 of such shares and sole
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dispositive power with respect to all such shares. The address of
Wasatch is 150 Social Hall Avenue, Salt Lake City, Utah, 84111. This
disclosure of Wasatch's beneficial ownership is based solely upon
information set forth in Wasatch's Schedule 13G dated February 14,
2001.
5. Represents shares beneficially owned by Dimensional Fund Advisors, Inc.
("Dimensional"), as to which Dimensional has sole voting power with
respect to 1,633,882 of such shares and sole dispositive power with
respect to all such shares. The address of Dimensional is 1299 Ocean
Avenue, 11th Floor, Santa Monica, California, 90401. This disclosure of
Dimensional's beneficial ownership is based solely upon information set
forth in Price's Schedule 13G dated February 2, 2001.
6. Includes 308,211 shares subject to stock options which are exercisable
or become exercisable within 60 days. Does not include 102,800 shares
subject to presently unexercisable stock options.
7. Includes 17,700 shares subject to stock options which are exercisable
or become exercisable within 60 days. Does not include 54,000 shares
subject to presently unexercisable stock options.
8. Includes 20,800 shares subject to stock options which are exercisable
or become exercisable within 60 days. Does not include 48,200 shares
subject to presently unexercisable options.
9. Includes 143,600 shares subject to stock options which are exercisable
or become exercisable within 60 days. Does not include 40,000 shares
subject to presently unexercisable stock options. As of February 1,
2001, Mr. Wynn retired from the Company, therefore he is no longer an
executive officer.
10. Includes 7,000 shares subject to stock options which are exercisable
or become exercisable within 60 days. Does not include 38,000 shares
subject to presently unexercisable stock options.
11. Includes 2,329 shares subject to stock options which are exercisable or
become exercisable within 60 days.
12. There are no shares subject to stock options which are currently
exercisable or unexercisable within 60 days.
13. Includes 5,000 shares subject to stock options which are exercisable or
become exercisable within 60 days. Does not include 10,000 shares
subject to presently unexercisable stock options.
14. Includes 2,000 shares subject to stock options which are exercisable or
become exercisable within 60 days. Does not include 8,000 shares
subject to presently unexercisable stock options. Mr. Roberts resigned
as a director effective March 23, 2001.
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15. Includes 2,000 shares subject to stock options which are exercisable or
become exercisable within 60 days. Does not include 8,000 shares
subject to presently unexercisable stock options.
16. In addition to the shares beneficially owned by officers and directors
named in the table above (see footnotes 6, 7, 8, 10, 11, 12, 13, 15),
the shares indicated include 25,281 shares beneficially owned by
executive officers of AmeriPath who are not named in the table above,
of which 8,676 shares are outstanding and 16,605 shares are subject to
stock options which are exercisable or become exercisable within 60
days.
ELECTION OF DIRECTORS; NOMINEES
The Company's Certificate of Incorporation and Bylaws provide that the
number of directors constituting the Company's Board of Directors shall not be
less than three nor more than twelve, as determined from time to time by
resolution of the Board of Directors. The size of the Board of Directors is
currently fixed at six directors.
The Company's Certificate of Incorporation divides the Board of
Directors into three classes. Each class of directors serves staggered three
year terms or until their successors are elected and qualified.
The current classes of the Board of Directors and their terms of office
are as follows:
TERM
CLASS DIRECTORS EXPIRATION
----- --------- ----------
I James C. New 2001
I E. Roe Stamps, IV 2001
II Martin Gibson 2002
II Brian C. Carr 2002
III Alan Levin, M.D. 2003
III C. Arnold Renschler, M.D. 2003
The two directors in Class I, James C. New and E. Roe Stamps, IV, have
been nominated for re-election at the Annual Meeting. Each Class I director
elected at the Annual Meeting will hold office until the annual meeting of
shareholders to be held in 2004.
On December 21, 2000, Timothy M. Kilpatrick, M.D. resigned as a
Director of the Company. The Board of Directors of the Company approved Brian C.
Carr, President of the Company, to replace Mr. Kilpatrick as a Director. Mr.
Carr will serve the remainder of Dr. Kilpatrick's term until 2002.
On March 23, 2001, Thomas S. Roberts resigned as a Director of the
Company. The Board of Directors of the Company approved Martin Gibson to replace
Mr. Roberts as a Director. Mr. Gibson will serve the remainder of Mr. Robert's
term until 2002.
The Company is considering expanding the size of its Board of Directors
by adding one or more additional independent directors who can add unique value
and perspective to the Board. If added, any such director shall serve until the
annual meeting following his or her appointment to the Board.
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All proxies will be voted for Mr. New and Mr. Stamps, absent contrary
instructions. The Board of Directors has no reason to believe that the nominees
will refuse or be unable to accept election; however, in the event that any
nominee is unwilling or unable to accept election or if any other unforeseen
contingencies should arise, each proxy that does not specifically direct
otherwise will be voted for the remaining nominees, if any, and for such other
person(s) as may be designated by the Board of Directors.
MANAGEMENT
Executive Officers and Directors
The executive officers and directors of the Company are as follows:
Name Age Position with Company
---- --- ---------------------
James C. New (1)............................ 55 Chairman of the Board, Chief Executive Officer
and Director
Alan Levin, M.D. (1)........................ 49 Chief Operating Officer and Director
Brian C. Carr............................... 39 President and Director
Gregory A. Marsh............................ 40 Vice President, Chief Financial Officer and
Secretary
James E. Billington......................... 38 Senior Vice President, Operations
Dennis M. Smith, Jr., M.D. ................. 49 Senior Vice President and Medical Director
Stephen V. Fuller........................... 46 Senior Vice President, Human Resources
Michael J. Downs............................ 46 Chief Information Officer
Bruce C. Walton............................. 41 Vice President, Sales and Marketing
Martin Gibson (1) (2) (3)................... 62 Director
C. Arnold Renschler, M.D. (2)............... 59 Director
E. Roe Stamps, IV (3)....................... 54 Director
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(1) Member of Acquisition Committee.
(2) Member of Audit Committee.
(3) Member of Compensation Committee.
James C. New is Chairman of the Board of Directors and has been the
President, Chief Executive Officer and a director of AmeriPath since January
1996. Prior to joining AmeriPath, Mr. New served as President and Chief
Executive Officer, and as a director of RehabClinics, Inc., one of the largest
outpatient rehabilitation companies in the country, which he founded in 1991.
RehabClinics completed its initial public offering in June 1992 and merged with
NovaCare, Inc. in February 1994. Mr. New was President of NovaCare, Inc.'s
Outpatient Division from 1994 to 1995. Prior to founding RehabClinics, Inc., he
served as President of Greater Atlantic Health Service and Physicians Choice of
Southeastern Pennsylvania, both HMOs. From 1993 through 1996, Mr. New was the
Chairman of the Acquisition Committee and member of the Board of Directors of
Pet Practice, Inc. From 1978 to 1985, Mr. New served in various executive
positions at Textron, Inc. and Emerson Electric, Inc.
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Alan Levin, M.D. has been Chief Operating Officer since September 1996.
He became a director and a physician employed by a subsidiary of the Company (an
"Affiliated Physician") in June 1996 after the Company acquired Derrick and
Associates. Prior to that, he served on the Board of Directors of Derrick since
1987, as Treasurer from 1990 to 1994, and President from 1994 until the
Company's acquisition of Derrick. Dr. Levin has 19 years experience as a
pathologist and is board certified in anatomic and clinical pathology. He served
as the medical director of the inpatient pathology laboratory at Columbia
Medical Center, Port St. Lucie, Florida from 1983 until 1997, and presently is
the Chairman of that hospital's Board of Trustees. Dr. Levin received his B.A.
from Emory University and his M.D. from the University of Miami Medical School.
He performed his medical oncology internship at Jackson Memorial Hospital and
completed his anatomic and clinical pathology residency at Mount Sinai Medical
Center in Miami Beach, Florida.
Brian C. Carr became President of AmeriPath effective November 30, 2000
and a Director of the Company in December 2000. Most recently, he was the
co-founder, Chief Executive Officer and a Director of Pathology Consultants of
America, Inc., a Tennessee corporation doing business as Inform DX (PCA). Prior
to founding PCA in 1997, Mr. Carr spent two years at PhyCor, most recently
serving as Director, Corporate Services, where he was responsible for activities
related to the acquisition of multispecialty medical clinics. Previously, Mr.
Carr spent seven years with Allied Clinical Laboratories, serving in five
different positions, most recently as Vice President, General Manager of the
Southwest Division.
Gregory A. Marsh has served as the Vice President, Chief Financial
Officer and Secretary since February 2001. From August 1996 to February 2001, he
served as Vice President, Corporate Controller of AmeriPath. Prior to joining
AmeriPath, Mr. Marsh was the Director of Budgeting and Financial Analysis for
Sensormatic Electronics Corporation from November 1991 to July 1996. From 1983
to October 1991, Mr. Marsh worked for Coopers & Lybrand in Pittsburgh, PA and
South Florida. Mr. Marsh is a Certified Public Accountant in the State of
Florida and he received his B.S. in Accounting from Slippery Rock State College
in Pennsylvania.
James E. Billington has been the Senior Vice President of Operations of
AmeriPath since November 30, 2000. Prior to this position, he was the
co-founder, President, Chief Operating Officer and Chief Compliance Officer of
Pathology Consultants of America, Inc., a Tennessee corporation doing business
as Inform DX (PCA). Prior to founding PCA in 1997, Mr. Billington served as Vice
President, Administration/Finance for Laboratory Corporation of America
(LabCorp). In this capacity, he had operational and financial oversight for six
operating regions with combined annual revenues of $532 million. Previously, Mr.
Billington spent five years with Allied Clinical Laboratories, most recently
serving as Assistant Vice President, Controller for the Texas Division. From
1984 to 1989, Mr. Billington served in various audit roles in the public
accounting industry.
Dennis M. Smith, Jr., M.D., has been the Senior Vice President and
Medical Director of AmeriPath since March 1999. Dr. Smith heads AmeriPath's
genomic strategies. He also holds the position of Director of Laboratories at
Memorial Hospital in Jacksonville. Currently, Dr. Smith chairs the Board of
Trustees of the National Blood Foundation and sits on the Board of Directors,
the Florida-Georgia Blood Alliance, and Immucor, Inc. He is a member of
Vanderbilt University's School of Engineering's Committee of Visitors. Dr. Smith
was previously President of the American Association of Blood Banks and Director
and Executive Head of the American Red Cross Blood Services, Nashville Region.
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Stephen V. Fuller began his employment at AmeriPath as Vice President
of Human Resources in November 1996, and was promoted to Senior Vice President
of Human Resources in June 1999. Prior to joining AmeriPath, he held executive
human resources positions at Miami Heart Institute, Delray Medical Center,
Hialeah Hospital, South Miami Hospital, Highland Park General Hospital, and the
University of Miami/Jackson Memorial Medical Center. Mr. Fuller has 23 years of
experience in healthcare human resources, and is certified by the HR
Certification Institute as a Senior Professional in Human Resources (SPHR). He
received his Bachelor of Science in Personnel Management and Industrial
Relations from Auburn University, and his Masters of Business Administration
from Nova Southeastern University. As an active member in the Society for Human
Resources Management, Mr. Fuller has served in a variety of leadership
capacities including Area II Board Member, Board Member of the HR Florida State
Council, State Director for Florida, District Director for South Florida, and
President of the Greater Miami Society for Human Resources Management.
Michael Downs has been the Chief Information Officer of AmeriPath since
March 2000 and has 18 years of information technology experience in
laboratories, hospitals, and healthcare. Prior to joining AmeriPath, he held a
management consulting position with Interim Healthcare, senior management
positions with Corning Life Sciences/Quest Diagnostics, New York University
Medical Center, American Express International Bank, and American Home Products'
Wyeth-Ayerst Laboratory Division. Mr. Downs holds an A.A.S. in Computer
Technology from County College of Morris, and received both his B.A. in
Organizational Communications and his M.A. in Business Education from New York
University.
Bruce C. Walton has served as the Vice President of Sales, Marketing,
and Contracting since July 2000. He joined AmeriPath in July 1999 as National
Director of Sales. Prior to that, he spent 15 years with C.R. Bard in various
sales and management positions. Mr. Walton received his B.S. degree in Business
Administration from Indiana University of Pennsylvania.
E. Martin Gibson retired from Corning, Incorporated in 1994 after a
32-year career. His last position at Corning was Chairman and CEO of Corning Lab
Services, Inc., the company's largest subsidiary. He served as a Corning
Director for 11 years. Mr. Gibson serves as a Director of The IT Group Inc.
(formerly known as International Technology Corporation) (ITX - NYSE), an
environmental engineering and consulting firm, and Hardinge, Inc. (HDNG -
NASDAQ), a machine tool company. Mr. Gibson is a graduate of Yale University and
has an MBA from the University of Pennsylvania.
C. Arnold Renschler, M.D. has been a director of the Company since
April 1997. Recently retired in May 2000, he had been Executive Vice President
of Bergen Brunswig (BBC-NYSE) since April 1999. From December 1997 to April
1999, he was President and CEO of PharMerica, Inc. and a member of it Board of
Directors. From June 1996 to November 1997, Dr. Renschler was President and
Chief Executive Officer of Pharmacy Corporation of America, a division of
Beverly Enterprises, Inc. From January 1990 to June 1996, he held various
positions, including serving as a Director, President and Chief Operating
Officer and Chief Clinical Officer at NovaCare, Inc. He currently serves as a
Director of two privately-held healthcare companies, Cora Health, Inc. and
Elderport, Inc. Dr. Renschler is certified in pediatric medicine. He received
his B.A. from Walla Walla College and his M.D. from Loma Linda University School
of Medicine. He completed his internal medicine residency at Georgetown
University Hospital in Washington, D.C., and his pediatric residency at Stanford
University in Palo Alto, California.
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E. Roe Stamps, IV has been a Director of the company since February
1996, and was a Director of American Laboratory Associates from 1994 to 1996.
Mr. Stamps has over 25 years experience in private equity investing. Prior to
co-founding Summit Partners in 1984, Mr. Stamps was a General Partner at TA
Associates, a Senior Investment Manager at First Chicago Investment Corporation,
and an Associate with The Palmer Organization. He has served as a Director of
numerous private and public companies, including Boca Research, Inc. and
Pediatrix Medical Group, Inc. He is also a past Director of the National Venture
Capital Association. Mr. Stamps received B.S. and M.S. degrees in Industrial
Engineering from the Georgia Institute of Technology and an M.B.A. from Harvard
Business School.
Meetings and Committees of the Board of Directors
During the Company's year ended December 31, 2000, the Company's Board
of Directors held four formal meetings and took a number of other actions by
written consent. During 2000, no director attended fewer than 75% of the
aggregate of (i) the number of meetings of the Board of Directors held during
the period he served on the Board, and (ii) the number of meetings of committees
of the Board of Directors held during the period he served on such committees.
The only committees of the Board of Directors are the Audit Committee,
the Compensation Committee and the Acquisition Committee.
Mr. Roberts and Dr. Renschler were the members of the Audit Committee
during 2000, which held three meetings. The duties and responsibilities of the
Audit Committee include (i) recommending to the Board of Directors the
appointment of the Company's independent public accountants and any termination
of engagement, (ii) reviewing the plan and scope of independent audits, (iii)
reviewing the Company's significant accounting policies and internal controls,
(iv) having general responsibility for all related auditing matters, and (v)
reporting its recommendations and findings to the full Board of Directors. The
members of the Audit Committee for 2001 are Dr. Renschler and Mr. Gibson. All
members of the audit committee are independent (as such term is defined in Rule
4200(a)(15) of the NASD listing standards).
Messrs. Roberts and Stamps were the members of the Compensation
Committee during 2000, which held three meetings during 2000 and took a number
of other actions by written consent. The Compensation Committee reviews and
approves the compensation of the Company's chief executive officer and
administers the Company's stock option plans. The members of the Compensation
Committee for 2001 are Messrs. Stamps and Gibson.
Messrs. New and Roberts and Dr. Levin were the members of the
Acquisition Committee, which held three meetings during 2000 and took a number
of other actions by written consent. The Acquisition Committee is authorized to
review and approve acquisitions by the Company with a purchase price of less
than $15 million. The Acquisition Committee reviews and recommends acquisitions
of $15 million or more to the Board of Directors, for the Board's approval. The
members of the Acquisition Committee for 2001 are Messrs. New and Gibson and Dr.
Levin. The Small Acquisition Committee, of which Mr. New is the sole member, is
authorized to review and approve acquisitions by the Company with a purchase
price up to $3 million.
Director Compensation
The Company pays each director who is not an employee a retainer of
$10,000 per year plus a $1,500 fee for each meeting of the Board of Directors
and $500 for each meeting of a committee of the Board of Directors for those
meetings attended in person by such directors. In addition, each director who is
not an employee of the Company is eligible to receive options to purchase shares
of Common Stock under
10
the Company's 1996 Director's Stock Option Plan, in connection with his initial
election to the Board of Directors (5,000 options upon initial election) and
discretionary grants of options to purchase additional shares from time to time
thereafter. The Company also reimburses all Directors for out-of-pocket expenses
incurred in connection with the rendering of services as a director. For the
year ended December 31, 2000, Dr. Renschler also received a special $10,000
award from the Company.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the aggregate compensation paid or
earned during the prior three years to the Company's Chief Executive Officer and
each of the Company's four other most highly compensated executive officers
whose total annual salary and bonus was $100,000 or more for 2000 (the Chief
Executive Officer and such other executive officers are sometimes referred to
herein as the "Named Executive Officers").
Annual Long-Term
Compensation(1) Compensation
-------------------------- ------------
Number of
Name and Principal Position Fiscal Year Salary ($) Bonus ($) Options Granted
------------------------------------- ------------- ------------- ----------- -----------------
James C. New 2000 375,000 225,000 61,000
Chairman of the Board, President and 1999 350,000 190,000 50,000
Chief Executive Officer 1998 300,000 200,000 40,000
Alan Levin, M.D. 2000 279,394 96,900 28,500
Chief Operating Officer 1999 270,636 84,700 20,000
1998 263,756 96,250 20,000
Robert P. Wynn (2) 2000 196,967 43,904 20,000
Executive Vice President and 1999 170,291 72,000 20,000
Chief Financial Officer 1998 159,140 86,225 20,000
Dennis M. Smith, Jr., M.D. (3) 2000 252,308 -- 34,000
Senior Vice President and 1999 294,167 33,333 25,000
Medical Director
Stephen V. Fuller 2000 163,077 66,500 20,000
Senior Vice President, Human 1999 135,572 60,100 15,000
Resources 1998 114,318 50,163 15,000
---------------
(1) The column for "Other Annual Compensation" has been omitted because there
is no compensation required to be reported in such column. The aggregate
amount of perquisites and other personal benefits provided to each Named
Executive Officer is less than the lesser of 10% of the total annual salary
and bonus of such officer or $50,000.
(2) As of February 1, 2001, Mr. Wynn retired as Executive Vice President and
Chief Financial Officer of the Company.
(3) Dr. Smith became the Senior Vice President and Medical Director on March 1,
1999.
11
Option Grants Table
The following table sets forth certain information regarding options
granted to the Named Executive Officers during 2000.
Potential Realizable Value at
Assumed Annual Rates of Stock
Number of Percent of Total Price Appreciation for Option Term
Securities Options Granted Exercise (2)
Underlying to Employees in Price Per Expiration ----------------------------------
Name Options Granted Year Share (1) Date 5% 10%
-------------------- ------------------ ------------------- ------------ ------------ ----------------------------------
James C. New 61,000 15.5% $7.63 5/04/10 $292,706 $741,776
Alan Levin, M.D. 28,500 7.3% $7.63 5/04/10 $136,756 $346,567
Robert P. Wynn 20,000 5.1% $7.63 5/04/10 $ 95,969 $243,205
Dennis M. Smith, Jr., 34,000 8.7% $7.63 5/04/10 $163,148 $413,449
M.D.
Stephen V. Fuller 20,000 5.1% $7.63 5/04/10 $ 95,969 $243,205
------------------
(1) All options were granted under the Company's Amended and Restated 1996
Stock Option Plan at exercise prices equal to or greater than the fair
market value of the Common Stock on the date of the grant, and vest over
five years with a ten year term.
(2) These assumed annual rates of appreciation were used in compliance with
the rules of the Securities and Exchange Commission and are not intended
to forecast future price appreciation of the Common Stock.
Option Exercises in Last Year and Year-End Option Value Table
The following table sets forth information regarding exercise of
options during 2000 and the options held at December 31, 2000 by each of the
Named Executive Officers.
Number of Value of Unexercised
Unexercised Options In-The-Money Options
Number of at Year End (#) at 2000 Year End (1)
Options Amount ------------------------- -------------------------
Name Exercised Realized Exercisable Unexercisable Exercisable Unexercisable
---------------- --------- -------- ----------- ------------- ----------- -------------
James C. New -- -- 386,011 125,000 $8,747,797 $2,016,930
Alan Levin, M.D. -- -- 33,600 63,700 $ 481,000 $1,012,245
Robert P. Wynn 70,000 $822,904 135,600 48,000 $3,109,804 $ 756,600
Dennis M. Smith, Jr., -- -- 9,000 60,000 $ 122,195 $ 970,130
M.D.
Stephen V. Fuller -- -- 16,800 45,000 $ 234,750 $ 714,300
----------------
(1) The indicated value of the options is a computation of the difference
between the applicable option exercise price and the closing market price
of the Common Stock as of December 31, 2000 ($25.00) multiplied by the
number of shares of Common Stock underlying such option.
12
Employment Agreements
The Company entered into an employment agreement with Mr. New effective
January 1, 1996, pursuant to which Mr. New is eligible to receive an annual
bonus up to 50% of his base salary upon attaining mutually agreed upon
objectives relating to the Company's performance, and a potential additional
amount of bonus for exceeding the objectives. For the year ended December 31,
2000, the Compensation Committee of the Board of Directors determined that Mr.
New exceeded his performance objectives for 2000 and awarded a bonus to Mr. New
that exceeded 50% of his base salary. Upon termination of his employment by the
Company for reasons other than disability, death or cause, Mr. New will receive
his base salary and benefits for a period of 12 months.
In addition, on November 1, 1999, the Company entered a Consulting and
Non-competition Agreement with Mr. New, providing for continuation of Mr. New's
current salary and benefits for an additional 12 month period in exchange for
Mr. New's agreement to provide certain consulting services, and to refrain from
competing with or soliciting personnel from the Company, during the agreement's
(24-month) term. This agreement becomes effective if either (a) Mr. New's
employment with the Company is terminated for a reason other than death,
disability or voluntary resignation prior to a change-in-control of the Company,
or by the Company for "cause", or (b) Mr. New voluntarily resigns following a
change-in-control of the Company. Upon effectiveness of this agreement, Mr.
New's consulting fee would be $100,000 and compensation for his restrictive
covenant would be $250,000.
On August 12, 1999, the Company entered into Executive Retention
Agreements with certain executive officers of the Company, following approval of
such agreements by the Company's Board of Directors. Each agreement generally
provides that in the event of a "change in control" of the Company (as defined
therein), the Company will continue to employ the Officer under the agreement
for a period of one year following the change in control, at a monthly salary
(the "Base Salary") equal to the highest monthly salary paid to the Officer
during the twelve months preceding the change in control. In addition, upon the
occurrence of a change in control, the Officer will receive a bonus equal to
twelve times the Base Salary, and at the end of the one-year employment period,
the Officer will receive another bonus in the same amount. The agreements
provide for various termination payments if employment is terminated prior to
the end of the one-year employment period.
In February 1996, the Company assumed Mr. Wynn's employment agreement
with American Laboratory Associates. The agreement, which was subsequently
amended, provided that Mr. Wynn may receive an annual bonus of up to 35% based
on his achievement of performance objectives determined by the Company. Upon
termination of his employment without cause, Mr. Wynn would receive his base
salary for a period of 12 months. Mr. Wynn also entered into the Executive
Retention Agreement as described above. Mr. Wynn retired from the Company as of
February 1, 2001. All the above agreements terminated on that day.
The Company entered into an employment agreement with Dr. Levin, in his
capacity as an Affiliated Physician, as of June 30, 1996 in connection with the
Company's acquisition of Derrick and Associates. Effective October 1, 1996, the
Company entered into an additional agreement with Dr. Levin pursuant to which
Dr. Levin became Chief Operating Officer of AmeriPath and amended his existing
employment agreement. These agreements provide for aggregate annual base salary
of $255,000. Upon termination by the Company other than for cause, Dr. Levin
would receive his annual salary for one year. Dr. Levin also entered into the
Executive Retention Agreement as described above.
The Company entered into an employment agreement with Dr. Smith, in his
capacity as an Affiliated Physician, as of December 1, 1997 in connection with
the Company's acquisition of
13
Laboratory Physicians in Jacksonville, Florida. Effective March 1, 1999, the
Company entered into an additional agreement with Dr. Smith pursuant to which
Dr. Smith became Vice President and Medical Director of AmeriPath and amended
his existing employment agreement. These agreements provide for an aggregate
annual salary of $310,000. Upon termination by the Company other than for cause,
Dr. Smith would receive his annual salary for one year.
The Company entered into an employment agreement with Mr. Fuller in his
capacity of Senior Vice President, Human Resources in October 1998. The
agreement provides that Mr. Fuller is eligible to receive a bonus up to 25% of
base compensation for 2000 based upon attaining mutually agreed upon goals. The
bonus granted Mr. Fuller in 2000 included an additional discretionary bonus in
excess of the bonus provided for under his agreement. Upon termination of his
employment without cause, Mr. Fuller would receive his base salary for a period
of 12 months.
In addition to their roles as executive officers and directors of the
Company, Drs. Levin and Smith are also employed by the Company as Affiliated
Physicians and have entered into separate employment agreements with the Company
that govern their relationship as Affiliated Physicians. Each such employment
agreement provides for a covenant not to compete during the Affiliated
Physician's employment and for a period of two years thereafter.
Each of the Named Executive Officers holds options to purchase Common
Stock granted under the Company's Amended and Restated 1996 Stock Option Plan.
Such options generally become fully exercisable upon: (i) a merger,
consolidation, reorganization, liquidation, or dissolution in which the Company
does not survive; (ii) a sale, lease, exchange or other disposition of all or
substantially all of the Company's property or other assets; (iii) certain
specified changes in control of the Company.
Long-Term Incentive and Pension Plans
The Company does not have any long-term incentive or pension plans.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
From 1996 through March 23, 2001, the Compensation Committee of the
Board of Directors has consisted of Messrs. Roberts and Stamps. Since March 23,
2001, the Compensation Committee of the Board of Directors has consisted of
Messrs. Stamps and Gibson. All compensation decisions affecting Mr. New were
approved by the Compensation Committee and by the Company's Board of Directors,
except for Mr. New.
Compensation Committee Report on Executive Compensation
Under rules established by the Securities and Exchange Commission, the
Company is required to provide a report explaining the rationale and
considerations that led to fundamental compensation decisions affecting the
Company's executive officers (including the Named Executive Officers) during the
past fiscal year. The report of the Company's Compensation Committee is set
forth below.
The Compensation Committee is responsible for determining and making
recommendations to the Board of Directors concerning executive compensation,
including base salaries, bonuses and the basis for their awards, stock options
and other benefits.
14
The three principal components of the Company's executive compensation
are salary, bonus and stock options. These components are designed to facilitate
fulfillment of the compensation objectives of the Company's Board of Directors
and the Compensation Committee, which objectives include (i) attracting,
retaining and motivating qualified management, (ii) recognizing individual
initiative and achievement, (iii) rewarding management for short and long term
accomplishments and (iv) aligning management compensation with the achievement
of the Company's goals and performance.
It is the Compensation Committee's view that senior executives'
interests should complement those of the stockholders. Accordingly, consistent
with prior practice, it is anticipated that a substantial portion of senior
executive compensation above a base salary will be provided through bonuses tied
to certain indicators of Company performance and through the grant of stock
options, thus creating incentives for executives to achieve long term Company
objectives and increase stockholder value. Base salaries for new management
employees are determined initially by evaluating the responsibilities of the
position in question and the experience of the individual, and by reference to
the competitive marketplace for managerial talent, including a comparison of
base salaries for similar positions at comparable companies. Annual bonuses are
determined by evaluating the competitive marketplace, the performance of the
Company, the performance of the executive and the responsibilities assumed by
the executive.
The Compensation Committee has reviewed the Company's existing
management compensation arrangements and has consulted with the Chief Executive
Officer to evaluate the Company's current compensation programs, and believes
that they are consistent with the philosophy of the Compensation Committee.
Additionally, the Compensation Committee has made certain recommendations for
the present year regarding evaluation criteria in connection with the incentive
compensation to be awarded to the Company's senior management.
Executive Officer Compensation. The determination of 2000 executive
officer compensation by the Compensation Committee was made after a review and
consideration of a number of factors, including each executive's level of
responsibility and commitment, level of performance (with respect to specific
areas of responsibility and on an overall basis), past and present contribution
to and achievement of Company goals and performance, compensation levels at
comparable companies and historical compensation levels, and following
consultation with and recommendations from the Company's Chief Executive
Officer. In addition, the executive officers who are physicians that sold their
practices to the Company had previously existing employment agreements which
were assumed by the Company and that designate a substantial portion of such
officers' compensation. See "--Employment Agreements" above for a description of
the Company's agreements with named executive officers related to compensation.
Chief Executive Officer Compensation. The principal factors considered
by the Compensation Committee and the Board of Directors in determining the 2000
salary and bonus for James C. New, the Chief Executive Officer of the Company,
included the factors described in the preceding paragraph and an analysis of the
compensation of chief executive officers of comparable public companies similar
in size and capitalization to the Company, and it was the view of the
Compensation Committee that Mr. New's 2000 compensation was reasonable in
comparison. Based on such factors, Mr. New's base salary was increased from
$350,000 to $375,000 for 2000, and his 2000 bonus was awarded based upon his
achievement of performance objectives during 2000 that the Compensation
Committee established early in the year, including the Company's attainment of
revenue, earnings-per-share, practice acquisition and other goals. Because Mr.
New exceeded the performance goals set by the Compensation Committee, Mr. New
was awarded a bonus in 2000 that exceeded 50% of his base salary. Based on Mr.
New's and the Company's performance in 2000, Mr. New's base salary for 2001 was
increased to $425,000.
15
Thomas S. Roberts
E. Roe Stamps, IV
As Members of the
Compensation Committee
16
Performance Graph
The following graph compares the cumulative total stockholder return on
the Company's Common Stock with the cumulative total stockholder return on the
Nasdaq Stock Market Index and the Nasdaq Health Services Index commencing on
October 22, 1997 (the first day the Common Stock began trading on the Nasdaq
Stock Market) through December 31, 2000. The closing price of the Company's
Common Stock used in the graph for October 22, 1997 was $19.75, the initial
public offering closing price. The graph assumes a $100 investment on October
22, 1997 in each of AmeriPath Common Stock, the Nasdaq Stock Market Index and
the Nasdaq Health Services Index.
AMERIPATH, INC.
10/97 12/97 3/98 6/98 9/98 12/98 3/99 6/99 9/99 12/99
-----------------------------------------------------------------------------
AMERIPATH, INC. 100.00 86.08 93.35 59.81 75.32 45.25 45.57 43.67 42.41 41.46
NASDAQ STOCK MARKET (U.S.) 100.00 92.23 107.94 110.92 100.09 130.07 145.87 159.57 163.55 241.73
NASDAQ HEALTH SERVICES 100.00 86.88 95.31 86.55 65.01 73.64 65.93 81.45 60.19 59.25
3/00 6/00 9/00 12/00
------------------------------
AMERIPATH, INC. 41.14 44.94 73.42 126.58
NASDAQ STOCK MARKET (U.S.) 271.33 235.91 217.10 145.47
NASDAQ HEALTH SERVICES 61.59 62.85 69.78 81.24
17
CERTAIN TRANSACTIONS
Pursuant to the Company's acquisition of Derrick and Associates in
1996, Dr. Levin received in exchange for his interest in Derrick a Subordinated
Contingent Note in the maximum principal amount of $584,615. The Company paid
$163,052, including interest, to Dr. Levin in 2000 with respect to the
Contingent Note based upon operating earnings achieved in 1999.
Pursuant to the Company's acquisition of Laboratory Physicians,
Jacksonville ("LPJ") in 1997, Dr. Smith received in exchange for his interest in
LPJ a Subordinated Contingent Note in the maximum principal amount of
$1,420,000. The Company paid $171,052, including interest, to Dr. Smith in 2000
with respect to the Contingent Note based upon operating earnings achieved in
1999.
Section 16(a) Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's outstanding shares of Common Stock, to file with the
Securities and Exchange Commission (the "SEC") initial reports of ownership and
reports of changes in ownership of Common Stock. Such persons are required by
SEC regulation to furnish the Company with copies of all such reports that they
file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required to be filed, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with during 2000, except that Mr. Walton, Mr. Downs, Dr.
Levin and Dr. Smith each made one filing after the due date.
REPORT OF THE AUDIT COMMITTEE
The primary responsibility of the Audit Committee is to oversee the
Company's financial reporting process on behalf of the Board and to report the
results of the Audit Committee's activities to the Board. Management has the
primary responsibility for the financial statements and reporting process,
including the systems of internal control, and Deloitte & Touche LLP (the
independent auditors) is responsible for auditing those financial statements in
accordance with generally accepted accounting principles and issuing a report
thereon. In this context, we have reviewed and discussed with management and the
independent auditors the Company's audited financial statements as of and for
the year ended December 31, 2000. We have discussed with the independent
auditors the matters required to be discussed by Statement on Auditing Standards
No. 61, Communication with Audit Committees, as amended, by the Auditing
Standards Board of the American Institute of Certified Public Accountants. We
have received and reviewed the written disclosures and the letter from the
independent auditors required by Independence Standard No. 1, Independence
Discussions with Audit Committees, as amended, by the Independence Standards
Board, and have discussed with the auditors their independence. In addition, we
have considered the compatibility of nonaudit services with the auditors'
independence. In reliance on the reviews and discussions referred to above, we
recommended to the Board of Directors that the audited financial statements,
referred to above, be included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2000, filed with the Securities and Exchange
Commission. The Board of Directors has adopted a written Audit Committee Charter
which is attached hereto as Exhibit B.
18
Thomas S. Roberts
C. Arnold Renschler
As Members of the
Audit Committee
PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION
For the reasons set forth below, the Board of Directors believes that
it is in the best interest of the Company and its shareholders to amend the
Company's Certificate of Incorporation as discussed below. The purpose of the
amendment is to increase the number of authorized shares of Common Stock from
30,000,000 shares to 60,000,000 shares.
Purpose of the Amendment to the Certificate of Incorporation
The primary purpose of the proposed amendment to Article IV of the Certificate
of Incorporation is to increase the number of authorized shares of the Company's
Common Stock in order to make additional shares of authorized Common Stock
available for use by the Board of Directors as it deems necessary or
appropriate. The additional shares of Common Stock for which authorization is
sought would be identical to the shares of Common Stock now authorized. The
amendment would provide additional authorized shares of Common Stock that may be
used from time to time for corporate purposes that the Board of Directors may
deem desirable, including, without limitation, financings, acquisitions, stock
splits, stock dividends or other distributions, stock grants, stock options and
employee benefit plans. The Board of Directors believes the availability of
additional shares of Common Stock for such purposes without unnecessary delay
will be beneficial to the Company by providing it with the flexibility required
to consider and respond to future corporate opportunities and needs as they
arise. The Company has no current plans with respect to the additional
authorized but unissued shares of Common Stock that will result from the
amendment that it considers probable.
Possible Effects of the Amendment to the Certificate of Incorporation
If the stockholders approve the proposed amendment to the Certificate
of Incorporation, the Company will have additional authorized but unissued
shares of Common Stock that may be issued without further action or
authorization of the stockholders (except as required by law or the rules of the
Nasdaq Stock Market or other stock exchange on which the Company's securities
may then be listed). The proposed increase in the number of authorized shares of
Common Stock could also have an anti-takeover effect, in that additional shares
could be issued (within the limits of the law) in one or more transactions that
could make a change of control more difficult. For example, additional shares
could be issued by the Company so as to dilute the stock ownership or voting
rights of persons seeking to obtain control of the Company. The issuance of
additional shares of Common Stock may have a dilutive effect on earnings per
share. In addition, the issuance of additional shares of Common Stock could have
a dilutive effect on the voting power of the current stockholders because they
do not have preemptive rights. Substantial additional issuances of Common Stock
could also effect the market price of the Common Stock.
Required Vote and Recommendation
Affirmative votes of the holders of at least a majority of the
outstanding shares of Common Stock are required to approve the proposed
amendments to the Company's Certificate of Incorporation. Under the applicable
provisions of the Delaware General Corporation Law, the Company's stockholders
19
have no appraisal rights with respect to the proposed amendments. If the
amendments are adopted, they will become effective upon the filing of the
Certificate of Incorporation, as amended, with the Delaware Secretary of State.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT TO THE
CERTIFICATE OF INCORPORATION.
PROPOSAL TO APPROVE
THE COMPANY'S 2001 STOCK OPTION PLAN
General
The Company currently maintains the AmeriPath, Inc. Amended and
Restated 1996 Stock Option Plan (the "1996 Plan"), which provides for the grant
of options to purchase shares of the Company's Common Stock to key employees and
consultants of the Company and its subsidiaries. As of March 16,, 2001, there
were 102,000 shares of Common Stock remaining available for the grant of options
under the 1996 Plan.
On March 23, 2001 the Board of Directors adopted the AmeriPath, Inc.
2001 Stock Option Plan (the "Plan"), subject to approval of the Plan by the
shareholders at the Annual Meeting. Whether or not the shareholders approve the
Plan, the Company may continue to grant options under the 1996 Plan until the
shares authorized thereunder are depleted or until such plan otherwise expires.
Certain material features of the Plan are discussed below; however, such
description is subject to, and is qualified in its entirety by, the full text of
the Plan attached hereto as Exhibit A.
The purpose of the Plan is to provide an additional incentive to retain
and motivate key employees and consultants or advisors who have an opportunity
to contribute to the success of the Company, through the encouragement of stock
ownership in the Company by such persons. In furtherance of this purpose, the
Plan authorizes, among other things, (a) the granting of incentive or
nonqualified stock options to purchase Common Stock to persons selected by the
administrators of the Plan from the class of all employees of the Company or any
subsidiary, including directors and officers who are employees, which class
presently consists of approximately 2,000 persons, (b) the provision of loans
for the purpose of financing the exercise price of options and the amount of
taxes payable in connection therewith, and (c) the use of already owned shares
of Common Stock as payment of the exercise price for options granted under the
Plan. Consultants and advisors to the Company are also eligible to receive
options under the Plan, whether or not they are employees of the Company.The
Company's reason for submitting the Plan for shareholder approval at the Annual
Meeting is so that incentive stock options may be awarded and so that future
awards made under the plan may be fully deductible without regard for the
deduction limits of Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"). Section 162(m) of the Code denies a federal income tax
deduction for all compensation received by the chief executive officer and any
of the four other most highly compensated executives in excess of $1,000,000 for
a taxable year. The Treasury Regulations promulgated under Section 162(m) of the
Code provide that, subject to certain restrictions, the $1,000,000 limit will
not apply to any compensation, including stock based compensation, paid pursuant
to a plan that is approved by shareholders. Accordingly, Section 162(m) of the
Code can limit the deductibility of annual compensation expense over $1,000,000
per person with respect to compensation of certain top executives
20
in certain circumstances. The Company believes that the Plan (if approved by
shareholders at the Annual Meeting) satisfies the requirements of Section 162(m)
of the Code regarding the applicability of such expense deduction limitation.
Options granted under the Plan, when exercised, may result in compensation
expense to the Company for federal income tax purposes (see "Federal Income Tax
Consequences" below).
The Plan provides that it is to be administered by the Compensation
Committee of the Board, and the Company believes that the Compensation Committee
members satisfy the Committee eligibility requirements under the Plan. Among
other things, to qualify as a "non-employee director" or an "outside director,"
a director must not be an employee of the Company and must not receive
compensation from the Company in any capacity other than as a director (other
than certain limited amounts within specified limitations). The Board has
authority to also administer the Plan in its discretion, under certain
circumstances.
Subject to the terms of the Plan, the Compensation Committee in its
sole discretion determines the persons to be awarded options, the number of
shares subject thereto and the exercise price and other terms thereof. In
addition, the Compensation Committee has full power and authority to construe
and interpret the Plan, and the acts of the Compensation Committee are final,
conclusive and binding upon all interested parties, including the Company, its
shareholders, its officers and employees, recipients of grants under the Plan,
and all persons or entities claiming by or through such persons.
An aggregate of 2,000,000 shares of Common Stock (subject to adjustment
as described below) are reserved for issuance upon exercise of options granted
under the Plan. The shares acquired upon exercise of options granted under the
Plan will be authorized and issued shares of Common Stock. The Company's
shareholders will not have any preemptive rights to purchase or subscribe for
any Common Stock by reason of the reservation and issuance of Common Stock under
the Plan. If any option granted under the Plan should expire or terminate for
any reason other than having been exercised in full, the unpurchased shares
subject to that option will again be available for purposes of the Plan. The
maximum number of shares with respect to which options may be granted to any one
optionee in any calendar year may not exceed 2,000,000.
Certain Terms and Conditions
All grants of options under the Plan must be evidenced by a written
agreement between the Company and the grantee. Such agreement shall contain such
terms and conditions as the Compensation Committee shall prescribe, consistent
with the Plan, including, without limitation, the exercise price, term and any
restrictions on the exercisability of the options granted. Options may be
nonqualified stock options or incentive stock options, as determined by the
Compensation Committee under the Plan (see "Federal Income Tax Consequences"
below).
Under the Plan, the option price per share of Common Stock may be any
price determined by the Compensation Committee; provided, however, that in no
event shall the option price of any option be less than the fair market value
per share of Common Stock on the date of grant (or less than 110% of fair market
value if an incentive stock option is granted to a holder of 10% or more of the
Company's voting securities). For purposes of the Plan, and for so long as the
Company's Common Stock is listed on the Nasdaq National Market, the term "fair
market value" means the closing price of the Common Stock as reported on the
Nasdaq National Market on the business day immediately preceding the date of
grant, unless the Compensation Committee shall determine otherwise in a fair and
uniform manner. The exercise price of an option may be paid in cash, by
certified or official bank check, by money order, by delivery of already owned
shares of Common Stock having a fair market value equal to the exercise
21
price, through a broker in connection with a "cashless exercise program"
approved by the Company, or by a combination of the foregoing. The Plan also
authorizes the Company to make loans to optionees to enable them to exercise
their options. If the exercise price is paid with the optionee's promissory
note, the note must (i) provide for recourse to the optionee, (ii) bear interest
at a rate no less than the prime rate of interest of the Company's principal
lender, and (iii) be secured by the shares of Common Stock purchased. Cash
payments will be used by the Company for general corporate purposes.
Options otherwise qualifying as incentive stock options will not be
treated as incentive stock options to the extent that the aggregate fair market
value (determined at the time the option is granted) of the Common Stock, with
respect to which options meeting the requirements of Code Section 422(b) are
exercisable for the first time by any individual during any calendar year (under
all stock option or similar plans of the Company or any subsidiary), exceeds
$100,000.
Options granted under the Plan are generally not assignable or
transferable other than by will or by the laws of descent and distribution,
except that the Compensation Committee has discretion to permit transfers of
nonqualified options under certain conditions provided in the Plan. During the
lifetime of an optionee, an option is exercisable only by the optionee. The
expiration date of an option will be determined by the Compensation Committee at
the time of the grant, but in no event will an option be exercisable after the
expiration of 10 years from the date of grant. An option may be exercised at any
time or from time to time or only after a period of time or in installments, as
the Compensation Committee determines. The Compensation Committee may in its
sole discretion accelerate the date on which any option may be exercised. Upon
an optionee's death or disability, all of his or her outstanding options will
become fully exercisable. After such acceleration of vesting, any of his or her
options will continue or lapse in accordance with the other provisions of the
plan and his or her option agreement.
Unless otherwise provided in an option, the unexercised portion of any
option granted under the Plan shall automatically be terminated (a) one year
after the date on which the optionee's employment or other service to the
Company is terminated for any reason, including disability, other than (i) cause
(as defined in the Plan), or (ii) death; (b) immediately upon the termination of
the optionee's employment (or other service) for cause; (c) ninety days after
the optionee's voluntary termination of service; or (d) twelve months after the
date of the optionee's death, if death occurs during employment or during the
one year or ninety day periods described above.
To prevent dilution of the rights of a holder of an option, the Plan
provides for appropriate adjustment of the number of shares for which options
may be granted, the number of shares subject to outstanding options and the
exercise price of outstanding options, in the event of any increase or decrease
in the number of issued and outstanding shares of the Company's capital stock
resulting from a stock dividend, recapitalization, reorganization,
reclassification, merger, consolidation, split-up, spin-off, stock split, or
combination or Company exchange of shares
The Plan will continue in effect until all options granted thereunder
have expired or been exercised, except that no stock options can be granted
after May 3, 2011. The Compensation Committee or the Board may amend the Plan or
any option at any time, provided that such amendment may not adversely affect
the rights of an optionee under an outstanding option without the optionee's
consent. In addition, no such amendment may, without approval of the Company's
shareholders, materially increase the number of shares of Common Stock reserved
for issuance under the Plan, or materially modify the requirements for
eligibility to receive options under the Plan.
22
Federal Income Tax Consequences
The Plan is not qualified under the provisions of Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), nor is it subject to any
of the provisions of the Employee Retirement Income Security Act of 1974, as
amended.
Nonqualified Stock Options. An optionee granted a nonqualified stock
option under the Plan will generally recognize, at the date of exercise of such
option, ordinary income equal to the difference between the exercise price and
the fair market value of the shares purchased pursuant to the exercise of the
option. This taxable ordinary income will be subject to Federal income tax
withholding, and the Company will be entitled to a deduction for Federal income
tax purposes equal to the amount of ordinary income recognized by the optionee.
If an optionee exercises a nonqualified stock option by delivering
shares of the Company's Common Stock, the optionee will not recognize gain or
loss with respect to the exchange of such shares, even if their then fair market
value is different from the optionee's tax basis. The optionee, however, will be
taxed as described above with respect to the exercise of the nonqualified stock
option as if he had paid the exercise price in cash, and the Company likewise
generally will be entitled to an equivalent tax deduction. Provided a separate
identifiable stock certificate is issued therefor, the optionee's tax basis in
that number of shares received on such exercise which is equal to the number of
shares surrendered on such exercise will be equal to his tax basis in the shares
surrendered, and his holding period for such number of shares received will
include his holding period for the shares surrendered. The optionee's tax basis
and holding period for the additional shares received on exercise of a
nonqualified stock option paid for, in whole or in part, with shares will be the
same as if the optionee had exercised the nonqualified stock option solely for
cash.
Incentive Stock Options. The Plan provides for the grant of stock
options that qualify as "incentive stock options" as defined in Section 422 of
the Code. Under the Code, an optionee generally is not subject to ordinary
income tax upon the grant or exercise of an incentive stock option. However, an
employee who exercises an incentive stock option by delivering shares of common
stock previously acquired pursuant to the exercise of an incentive stock option
is treated as making a "Disqualifying Disposition" (as defined below) of such
shares if the employee delivers such shares before the expiration of the holding
period applicable to such shares. The applicable holding period is the longer of
two years from the date of grant or one year from the date of exercise. The
effect of this provision is to prevent "pyramiding," the exercise of an
incentive stock option (i.e., the exercise of the incentive stock option for one
share and the use of that share to make successive exercises of the incentive
stock option until it is completely exercised) without the imposition of current
income tax.
If, subsequent to the exercise of an incentive stock option (whether
paid for in cash or in shares), the optionee holds the shares received upon
exercise for a period that exceeds (a) two years from the date such incentive
stock option was granted or, if later, (b) one year from the date of exercise
(the "Required Holding Period"), the difference (if any) between the amount
realized from the sale of such shares and their tax basis to the holder will be
taxed as long-term capital gain or loss.
In general, if, after exercising an incentive stock option, an employee
disposes of the shares so acquired before the end of the Required Holding Period
(a "Disqualifying Disposition"), such optionee would be deemed in receipt of
ordinary income in the year of the Disqualifying Disposition in an amount equal
to the excess of the fair market value of the shares at the date the incentive
stock option was exercised over the exercise price. If the Disqualifying
Disposition is a sale or exchange that would permit a loss to be recognized
under the Code (were a loss in fact to be sustained), and the sales proceeds are
less than the fair market value of the shares on the date of exercise, the
optionee's ordinary income
23
would be limited to the gain (if any) from the sale. If the amount realized upon
disposition exceeds the fair market value of the shares on the date of exercise,
the excess would be treated as short-term or long-term capital gain, depending
on whether the holding period for such shares exceeded one year.
The amount by which the fair market value of the shares of Common Stock
acquired pursuant to the exercise of an incentive stock option exceeds the
exercise price of such shares under such option generally will be treated as an
item of adjustment included in the optionee's alternative minimum taxable income
for purposes of the alternative minimum tax for the year in which the option is
exercised. If, however, there is a Disqualifying Disposition of the shares in
the year in which the option is exercised, there will be no item of adjustment
for purposes of the alternative minimum tax as a result of the exercise of the
option with respect to those shares. If there is a Disqualifying Disposition in
a year after the year of exercise, the income on the Disqualifying Disposition
will not be considered income for purposes of the alternative minimum tax in
that subsequent year. The optionee's tax basis for shares acquired pursuant to
the exercise of an incentive stock option will be increased for purposes of
determining his alternative minimum tax by the amount of the item of adjustment
recognized with respect to such shares in the year the option was exercised.
Only employees of the Company or its subsidiaries qualify for the tax
treatment applicable to incentive stock options. Thus, optionees who are
non-employee advisors or consultants to the Company will be taxed solely under
the rules applicable to nonqualified stock options.
An income tax deduction is not allowed to the Company with respect to
the grant or exercise of an incentive stock option or the disposition, after the
Required Holding Period, of shares acquired upon exercise. In the event of a
Disqualifying Disposition, a Federal income tax deduction will be allowed to the
Company in an amount equal to the ordinary income to be recognized by the
optionee.
The Compensation Committee may, but is not required to, permit the
transfer of nonqualified stock options and other awards granted under the Plan.
Based on current tax and securities regulations, such transfers, if permitted,
are likely to be limited to gifts to members of the optionee's immediate family
or certain entities controlled by the optionee or such family members. The
following paragraphs summarize the likely income, estate, and gift tax
consequences to the optionee, the Company, and the transferee, under present
federal tax regulations, upon the transfer and exercise of such options. The tax
effect of transferring nonqualified stock options may vary depending upon the
particular circumstances, and the federal tax laws and regulations change
frequently. Optionees should rely upon their own tax advisors for advice
concerning the specific tax consequences applicable to them, including the
applicability and effect of state, local, and foreign tax laws. Under the Code,
incentive stock options cannot be transferred other than by will or the laws of
descent and distribution.
Federal Income Tax. There will be no federal income tax consequences to
the optionee, the Company or the transferee upon the transfer of a nonqualified
stock option. However, the optionee will recognize ordinary income when the
transferee exercises the option, in an amount equal to the excess of (a) the
fair market value of the option shares upon the exercise of such option over (b)
the exercise price, and the Company will be allowed a corresponding deduction.
The gain, if any, realized upon the transferee's subsequent sale or disposition
of the option shares will constitute short-term or long-term capital gain to the
transferee, depending on the transferee's holding period. The transferee's basis
in the stock will be the fair market value of such stock at the time of exercise
of the option.
Federal Estate and Gift Tax. If an optionee transfers a nonqualified
stock option to a transferee during the optionee's life but before the option
has become exercisable, the optionee will not be treated as having made a
completed gift for federal gift tax purposes until the option becomes
exercisable.
24
However, if the optionee transfers a fully exercisable option during life, the
optionee will be treated as having made a completed gift for federal gift tax
purposes at the time of the transfer. If an optionee transfers an option to a
transferee by reason of the optionee's death, the option will be included in the
optionee's gross estate for federal estate tax purposes. The value of such
option for federal estate or gift tax purposes may be determined using a
"Black-Scholes" or other appropriate option pricing methodology, in accordance
with IRS requirements.
Importance of Consulting Tax Adviser. The information set forth above
is a summary only and does not purport to be complete. In addition, the
information is based upon current federal income tax rules and therefore is
subject to change when those rules change. Moreover, because the tax
consequences to any optionee may depend on his or her particular situation, each
optionee should consult his or her tax adviser as to the Federal, state, local
and other tax consequences of the grant or exercise of an option or the
disposition of Common Stock acquired on exercise of an option.
Benefits to Named Executive Officers and Others
As of the date of this proxy statement, no awards had been granted or
approved for grant under the Plan. Any awards under the Plan will be made at the
discretion of the Compensation Committee or the Board, as the case may be.
Consequently, it is not presently possible to determine either the benefits or
amounts that will be received by any particular person or group pursuant to the
Plan.
Vote Required and Recommendation
The affirmative vote of the holders of a majority of the shares of
Common Stock represented in person or by proxy at the Annual Meeting will be
required for approval of the Plan at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE
COMPANY'S 2001 STOCK OPTION PLAN.
APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee recommends, and the Board of Directors selects,
independent public accountants for The Company. The Audit Committee has
recommended that Deloitte & Touche LLP, who served during 2000, be selected for
2001, and the Board has approved the selection. Unless a stockholder directs
otherwise, proxies will be voted for the approval of the selection of Deloitte &
Touche LLP as independent public accountants for 2001. If the appointment of
Deloitte & Touche LLP is not approved by the stockholders, the Board will
consider the selection of other independent public accountants for 2001.
A representative of Deloitte & Touche LLP is expected to be present at
the 2001 Annual Meeting of Stockholders. The representative will be given the
opportunity to make a statement, if they desire to do so and will be available
to respond to appropriate questions from stockholders.
Audit Fees
The aggregate fees billed by Deloitte & Touche LLP for professional
services rendered for the audit of the Company's annual financial statements for
the fiscal year ended December 31, 2000, and the reviews of the financial
statements included in the Company's Quarterly Reports on Form 10-Q for that
fiscal year were $230,000.
25
Financial Information Systems Design and Implementation Fees
There were no fees billed by Deloitte & Touche LLP for professional
services rendered to the Company during the fiscal year ended December 31, 2000
in connection with operating, or supervising the operation of, the Company's
financial information systems or managing the Company's local area network and
designing and implementing a hardware or software system that aggregates source
data underlying the Company's financial statements or generates information that
is significant to the Company's financial statements.
All Other Fees
The aggregate fees billed by Deloitte & Touche LLP for professional
services rendered during the fiscal year ended December 31, 2000, other than as
stated above under the captions Audit Fees and Financial Information Systems
Design and Implementation Fees, were $172,570.
Audit Committee Review
The Company's Audit Committee has reviewed the services rendered and
the fees billed by Deloitte & Touche LLP for the fiscal year ending December 31,
2000. The Audit Committee has determined that the services rendered and the fees
billed last year that were not related to the audit of the Company's financial
statements are compatible with the independence of Deloitte & Touche LLP as the
Company's independent accountants.
The Board of Directors recommends a vote FOR the approval of the
selection of Deloitte & Touche LLP as the Company's independent accountants for
2001.
OTHER BUSINESS
The Board knows of no other business to be brought before the Annual
Meeting. If, however, any other business should properly come before the Annual
Meeting, the persons named in the accompanying proxy will vote proxies as in
their discretion they may deem appropriate, unless they are directed by a proxy
to do otherwise.
INFORMATION CONCERNING STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 promulgated by the Securities and Exchange
Commission, a stockholder intending to present a proposal to be included in the
Company's proxy statement for the Company's Annual Meeting of Stockholders to be
held in 2002 must deliver a proposal in writing to the Company's principal
executive offices no later December 6, 2001. Such proposals also will need to
comply with Securities and Exchange Commission regulations regarding the
inclusion of stockholder proposals in company sponsored proxy materials.
26
In addition, in order for a stockholder's proposal or director
nomination to be raised from the floor during next year's annual meeting,
written notice must be received by the Company after November 6, 2001 but no
later than December 6, 2001 and must contain all such information as required
under the Company's Bylaws. A copy of such Bylaw requirements for stockholder
proposals and nominations is available upon request from the Company's Investor
Relations Department, 7289 Garden Road, Suite 200, Riviera Beach, Florida,
33404.
By Order of the Board of Directors,
JAMES C. NEW
Chairman of the Board and
Chief Executive Officer
Riviera Beach, Florida
April 5, 2001
27
EXHIBIT A
AMERIPATH, INC.
2001 STOCK OPTION PLAN
1. Purpose. The purpose of this Plan is to advance the interests
of AmeriPath, Inc., a Delaware corporation (the "Company"), and its Subsidiaries
by providing an additional incentive to attract and retain qualified and
competent persons who are key to the Company or its Subsidiaries, including key
employees of and consultants or advisors to the Company or its Subsidiaries,
whose efforts and judgment the success of the Company and its Subsidiaries is
largely dependent, through the encouragement of stock ownership in the Company
by such persons.
2. Definitions. As used herein, the following terms shall have
the meaning indicated:
(a) "Board" shall mean the Board of Directors of the
Company.
(b) "Cause" shall mean any of the following:
(i) a determination by the Company that there has
been a willful or grossly negligent failure by the Optionee to perform
his duties as an employee or Non-Employee Eligible Individual of the
Company;
(ii) any conduct by the Optionee that either
results in the conviction of a felony under the laws of the United
States of America or any state thereof, or of an equivalent crime under
the laws of any other jurisdiction;
(iii) any act by the Optionee that the Company
determines to be in willful or wanton disregard of the Company's best
interest, or which results, or is intended to result, directly or
indirectly, in improper gain or personal enrichment of the Optionee at
the expense of the Company;
(iv) a determination by the Company that the
Optionee has willfully or materially failed to comply with any rules,
regulations, policies or procedures of the Company, or that the
Optionee has engaged in any act, behavior or conduct showing such
willful or wanton disregard of the interests of the Company or
occasioned by a deliberate violation or disregard of standards of
behavior that the Company has a right to expect of its employees or of
Non-Employee Eligible Individuals; or
(v) if the Optionee, while employed by the
Company and for two years thereafter, fails to safeguard, and divulges,
communicates, uses to the detriment of the Company or for the benefit
of any person or persons, or misuses in any way, any Confidential
Information.
(c) "Change in Control" means and includes the occurrence
of any one of the following events:
(i) individuals who, at the Effective Date,
constitute the Board (the "Incumbent Directors") cease for any reason
to constitute at least a majority of the Board, provided that any
person becoming a director after the Effective Date and whose election
or nomination for election was approved by a vote of at least a
majority of the Incumbent Directors
EXHIBIT A
then on the Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named as a
nominee for director, without written objection to such nomination)
shall be an Incumbent Director; provided, however, that no individual
initially elected or nominated as a director of the Company as a result
of an actual or threatened election contest (as described in Rule
14a-11 under the Securities Exchange Act ("Election Contest") or other
actual or threatened solicitation of proxies or consents by or on
behalf of any "person" (as such term is defined in Section 3(a)(9) of
the Securities Exchange Act and as used in Section 13(d)(3) and
14(d)(2) of the Securities Exchange Act) other than the Board ("Proxy
Contest"), including by reason of any agreement intended to avoid or
settle any Election Contest or Proxy Contest, shall be deemed an
Incumbent Director;
(ii) any person becomes a "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act), directly or
indirectly, of securities of the Company representing more than 50% of
the combined voting power of the Company's then outstanding securities
eligible to vote for the election of the Board (the "Company Voting
Securities"); provided, however, that the event described in this
paragraph (ii) shall not be deemed to be a Change in Control of the
Company by virtue of any of the following acquisitions: (A) any
acquisition by a person who is on the Effective Date the beneficial
owner of more than 50% or more of the outstanding Company Voting
Securities, (B) an acquisition by the Company which reduces the number
of Company Voting Securities outstanding and thereby results in any
person acquiring beneficial ownership of more than 50% of the
outstanding Company Voting Securities; provided, that if after such
acquisition by the Company such person becomes the beneficial owner of
additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such
person, a Change in Control of the Company shall then occur, (C) an
acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any parent company or Subsidiary, (D)
an acquisition by an underwriter temporarily holding securities
pursuant to an offering of such securities, or (E) an acquisition
pursuant to a Non-Qualifying Transaction (as defined in paragraph
(iii)); or
(iii) the consummation of a reorganization,
merger, consolidation, statutory share exchange or similar form of
corporate transaction involving the Company that requires the approval
of the Company's stockholders, whether for such transaction or the
issuance of securities in the transaction (a "Reorganization"), or the
sale or other disposition of all or substantially all of the Company's
assets to an entity that is not an affiliate of the Company (a "Sale"),
unless immediately following such Reorganization or Sale: (A) more than
50% of the total voting power of (x) the corporation resulting from
such Reorganization or the corporation which has acquired all or
substantially all of the assets of the Company (in either case, the
"Surviving Company"), or (y) if applicable, the ultimate parent
corporation that directly or indirectly has beneficial ownership of
100% of the voting securities eligible to elect directors of the
Surviving Company (the "Parent Company"), is represented by the Company
Voting Securities that were outstanding immediately prior to such
Reorganization or Sale (or, if applicable, is represented by shares
into which such Company Voting Securities were converted pursuant to
such Reorganization or Sale), and such voting power among the holders
thereof is in substantially the same proportion as the voting power of
such Company Voting Securities among the holders thereof immediately
prior to the Reorganization or Sale, (B) no person (other than (x) the
Company, (y) any employee benefit plan (or related trust) sponsored or
maintained by the Surviving Company or the Parent Company, or (z) a
person who immediately prior to the Reorganization or Sale was the
beneficial owner of more than 50% of the outstanding Company Voting
Securities) is the beneficial owner, directly or indirectly, of more
than 50% of the total
EXHIBIT A
voting power of the outstanding voting securities eligible to elect
directors of the Parent Company (or, if there is no Parent Company, the
Surviving Company), and (C) at least a majority of the members of the
board of directors of the Parent Company (or, if there is no Parent
Company, the Surviving Company) following the consummation of the
Reorganization or Sale were Incumbent Directors at the time of the
Board's approval of the execution of the initial agreement providing
for such Reorganization or Sale (any Reorganization or Sale which
satisfies all of the criteria specified in (A), (B) and (C) above shall
be deemed to be a "Non-Qualifying Transaction"); or
(iv) approval by the stockholders of the Company
of a complete liquidation or dissolution of the Company.
(d) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(e) "Committee" shall mean the committee appointed
pursuant to Section 13 hereof to administer the Plan.
(f) "Common Stock" shall mean the Company's Common Stock,
par value $.01 per share.
(g) "Confidential Information" shall mean any and all
information pertaining to the Company (including information relating to its
services, marketing practices, management agreements, clients, customers,
prospects, sources of prospects, suppliers, financial condition, results of
operations, costs and methods of doing business, owners and ownership structure)
that is not generally available to the public.
(h) "Covered Employee" shall mean any individual who, at
the time of the grant of an Option, is (i) the Chief Executive Officer of the
Company or is acting in such capacity ("CEO"), (ii) among the four highest
compensated officers of the Company (other than the CEO), or (iii) otherwise
considered to be a "Covered Employee" within the meaning of Section 162(m) of
the Code.
(i) "Disability" shall mean any illness or other physical
or mental condition of an Optionee that renders the Optionee incapable of
performing his customary and usual duties for the Company, or any medically
determinable illness or other physical or mental condition resulting from a
bodily injury, disease or mental disorder which, in either case, has lasted or
can reasonably be expected to last for at least 180 days out of a period 365
consecutive days. The Committee may require such medical or other evidence as it
deems necessary to judge the nature and permanency of the Optionee's condition.
Notwithstanding the above, with respect to an Incentive Stock Option, Disability
shall mean Permanent and Total Disability as defined in Section 22(e)(3) of the
Code.
(j) "Effective Date" shall mean May 3, 2001.
(k) "Fair Market Value" of a Share on any date of
reference shall be the "Closing Price" (as defined below) of the Common Stock on
the business day immediately preceding such date, unless the Committee in its
sole discretion shall determine otherwise in a fair and uniform manner. For this
purpose, the "Closing Price" of the Common Stock on any business day shall be
(i) if the Common Stock is listed or admitted for trading on any United States
national securities exchange, or if actual transactions are otherwise reported
on a consolidated transaction reporting system, the last reported sale price of
the Common Stock on such exchange or reporting system, as reported in any
EXHIBIT A
newspaper of general circulation, (ii) if the Common Stock is quoted on the
National Association of Securities Dealers Automated Quotations System
("NASDAQ"), or any similar system of automated dissemination of quotations of
securities prices in common use, the mean between the closing high bid and low
asked quotations for such day of the Common Stock on such system, or (iii) if
neither clause (i) or (ii) is applicable, the mean between the high bid and low
asked quotations for the Common Stock as reported by the National Quotation
Bureau, Incorporated if at least two securities dealers have inserted both bid
and asked quotations for the Common Stock on at least 5 of the 10 preceding
days. If the information set forth in clauses (i) through (iii) above is
unavailable or inapplicable to the Company (e.g., if the Company's Common Stock
is not then publicly traded), then the "Fair Market Value" of a Share shall be
the fair market value (i.e., the price at which a willing seller would sell a
Share to a willing buyer when neither is acting under compulsion and when both
have reasonable knowledge of all relevant facts) of a share of the Common Stock
on the business day immediately preceding such date as the Committee in its sole
and absolute discretion shall determine in a fair and uniform manner.
(l) "Incentive Stock Option" shall mean an incentive
stock option as defined in Section 422 of the Code.
(m) "Non-Employee Eligible Individual" shall refer to an
advisor or consultant to the Company who contributes or has an opportunity to
contribute to the success of the Company or any Subsidiary.
(n) "Non-Statutory Stock Option" shall mean an Option
which is not an Incentive Stock Option.
(o) "Option" (when capitalized) shall mean any option
granted under this Plan.
(p) "Optionee" shall mean a person to whom a stock option
is granted under this Plan or any person who succeeds to the rights of such
person under this Plan by reason of the death of such person or otherwise.
(q) "Outside Director" shall mean a member of the Board
who (i) is not a current employee of the Company or any Affiliate, (ii) is not a
former employee of the Company or any Affiliate who receives compensation for
prior services (other than benefits under a tax-qualified retirement plan)
during the taxable year; (iii) has not been an officer of the Company or any
Affiliate; (iv) does not receive remuneration either directly or indirectly, in
any capacity other than as a director; and (v) satisfies any other conditions
that shall from time to time be required to qualify as an "outside director"
under Section 162(m) of the Code and the regulations thereunder and as a
"Non-Employee Director" under Rule 16b-3 promulgated under the Securities
Exchange Act. For this purpose, "Remuneration" shall have the meaning afforded
that term pursuant to Treasury Regulations issued under Section 162(m) of the
Code, and shall exclude any de minimis remuneration excluded under those
Treasury Regulations.
(r) "Plan" shall mean this Stock Option Plan of the
Company.
(s) "Securities Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
(t) "Share" shall mean a share of the Common Stock.
EXHIBIT A
(u) "Subsidiary" shall mean any corporation, limited
liability company, partnership or other entity of which a majority of the
outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Company. Notwithstanding the above, with respect to an
Incentive Stock Option, Subsidiary shall have the meaning set forth in Section
424(f) of the Code.
3. Shares and Options. Subject to adjustment as provided in
Section 10, the aggregate number of Shares reserved and available for Options
under the Plan shall be 2,000,000, which may consist, in whole or in part, of
authorized and unissued Shares, treasury Shares, or Shares purchased on the open
market. If any Option granted under the Plan shall terminate, expire, or be
canceled or surrendered as to any Shares, new Options may thereafter be granted
covering such Shares. An Option granted hereunder shall be either an Incentive
Stock Option or a Non-Statutory Stock Option as determined by the Committee at
the time of grant of such Option and shall clearly state whether it is an
Incentive Stock Option or Non-Statutory Stock Option. All Options shall be
granted within 10 years from the Effective Date.
4. Dollar Limitation. Options otherwise qualifying as Incentive
Stock Options hereunder will not be treated as Incentive Stock Options to the
extent that the aggregate Fair Market Value (determined at the time the Option
is granted) of the Shares, with respect to which Options meeting the
requirements of Code Section 422(b) are exercisable for the first time by any
individual during any calendar year (under all stock option or similar plans of
the Company and any Subsidiary), exceeds $100,000.
5. Conditions for Grant of Options.
(a) Each Option shall be evidenced by an option agreement
that may contain any term deemed necessary or desirable by the Committee,
provided such terms are not inconsistent with this Plan or any applicable law.
Optionees shall be those persons selected by the Committee who are employees of
the Company or any Subsidiary (including employees who are directors or officers
of the Company or any Subsidiary) or who are Non-Employee Eligible Individuals.
(b) In granting Options, the Committee shall take into
consideration the contribution the person has made or has the opportunity to
make with respect to the success of the Company or its Subsidiaries and such
other factors as the Committee shall determine. The Committee shall also have
the authority to consult with and receive recommendations from officers and
other personnel of the Company and its Subsidiaries with regard to these
matters. The Committee may from time to time in granting Options under the Plan
prescribe such other terms and conditions concerning such Options as it deems
appropriate, including, without limitation, (i) prescribing the date or dates on
which the Option becomes exercisable, (ii) providing that the Option rights
accrue or become exercisable in installments over a period of time, or upon the
attainment of stated goals, or both, or (iii) relating an Option to the
continued employment of the Optionee for a specified period of time, provided
that such terms and conditions are not more favorable to an Optionee than those
expressly permitted herein.
(c) The Options granted to employees or Non-Employee
Eligible Individuals under this Plan shall be in addition to regular salaries,
pension, life insurance or other benefits related to their employment with or
service as a Non-Employee Eligible Individual to the Company or its
Subsidiaries. Neither the Plan nor any Option granted under the Plan shall
confer upon any person any right to employment or continuance of employment by
or service as a Non-Employee Eligible Individual the Company or its
Subsidiaries.
EXHIBIT A
(d) Notwithstanding any other provisions of the Plan to
the contrary, an Incentive Stock Option shall not be granted to any person
owning directly or indirectly (through attribution under Section 424(d) of the
Code) at the date of grant, stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company (or of its parent or
subsidiary, as those terms are defined in Section 424 of the Code, at the date
of grant) unless the option price of such Option is at least 110% of the Fair
Market Value of the Shares subject to such Option on the date the Option is
granted, and such Option by its terms is not exercisable after the expiration of
five years from the date such Option is granted.
(e) Notwithstanding any other provision of this Plan, and
in addition to any other requirements of this Plan, the maximum number of Shares
with respect to which Options may be granted to any one Optionee in any calendar
year may not exceed 2,000,000, subject to adjustment as provided in Section
10(a) hereof. Incentive Stock Options may not be granted to any Non-Employee
Eligible Individual.
6. Exercise Price. The exercise price per Share of any Option
shall be any price determined by the Committee; provided, however, that the
exercise price of any Option shall not be less than the Fair Market Value of the
Shares underlying the Option (as determined in the sole and absolute discretion
of the Committee in a fair and uniform manner) on the date such Option is
granted.
7. Exercise of Options. An Option shall be deemed exercised when
(i) the Company has received written notice of such exercise in accordance with
the terms of the Option, (ii) full payment of the aggregate option price of the
Shares as to which the Option is exercised has been made or, in the case of
exercise through a broker in a so-called "cashless exercise," as described
below, arrangements that are satisfactory to the Committee in its sole
discretion have been made for such payment, and (iii) arrangements that are
satisfactory to the Committee in its sole discretion have been made for the
Optionee's payment to the Company of the amount that is necessary for the
Company or Subsidiary employing the Optionee to withhold in accordance with
applicable Federal or state tax withholding requirements. Unless further limited
by the Committee in any Option, the option price of any Shares purchased
pursuant to the exercise of such Option shall be paid in cash, by certified or
official bank check, by money order, with Shares owned by the Optionee that have
been owned by the Optionee for more than 6 months on the date of surrender or
such other period as may be required to avoid a charge to the Company's earnings
for financial accounting purposes, by arrangement with a broker that is
acceptable to the Committee where payment of the Option price is made pursuant
to an irrevocable direction to the broker to deliver all or a part of the
proceeds from the sale of the Option Shares to the Company in payment of the
Option price, or by a combination of the above. The Committee in its sole
discretion may accept a personal check in full or partial payment for any Shares
so purchased. If the exercise price is paid in whole or in part with Shares, the
value of the Shares surrendered shall be their Fair Market Value on the date the
Option is exercised, and the delivery of such Shares may be by attestation of
ownership or actual delivery of one or more certificates. The Company in its
sole discretion may, on an individual basis or pursuant to a general program
established in connection with this Plan, lend money to an Optionee, guarantee a
loan to an Optionee, or otherwise assist an Optionee to obtain the cash
necessary to exercise all or a portion of an Option granted hereunder or to pay
any tax liability of the Optionee attributable to such exercise. If the exercise
price is paid in whole or part with the Optionee's promissory note, such note
shall (i) provide for full recourse to the maker, (ii) be collateralized by the
pledge of the Shares that the Optionee purchases upon exercise of such Option,
(iii) bear interest at the prime rate of the Company's principal lender, and
(iv) contain such other terms as the Board or Committee in its sole discretion
shall reasonably require. No Optionee shall be deemed to be a
EXHIBIT A
holder of any Shares subject to an Option unless and until a stock certificate
or certificates for such Shares are issued to such person(s) under the terms of
this Plan.
8. Exercisability of Options. Any Option shall become exercisable
in such amounts, at such intervals, upon such events or occurrences and upon
such other terms and conditions as shall be provided in the individual option
agreement evidencing such Option (sometimes referred to herein as the "Option"),
except as otherwise provided in this Section 8:
(a) The expiration date of an Option shall be determined
by the Committee at the time of grant, but in no event shall an Option be
exercisable after the expiration of 10 years from the date of grant of the
Option.
(b) Unless otherwise provided in any Option, upon an
Optionee's death or Disability during his or her employment or service as a
Non-Employee Eligible Individual, all of his or her outstanding Options shall
become fully exercisable. To the extent that this provision causes incentive
Stock Options to exceed the dollar limitation set forth in Section 4, the excess
Options shall be deemed to be Non-Statutory Stock Options.
(c) The Committee may in its sole discretion accelerate
the date on which any Option may be exercised and may accelerate the vesting of
any Shares subject to any Option or previously acquired by the exercise of any
Option.
9. Termination of Option Period.
(a) Unless otherwise expressly provided in any Option,
the unexercised portion of any Option shall automatically and without notice
terminate and become null and void at the time of the earliest to occur of the
following:
(i) one year after the date on which the Optionee's
employment or service as a Non-Employee Eligible Individual is
terminated by the Company for any reason, including, but not limited
to, Disability, other than by reason of (A) Cause, or (B) the
Optionee's death;
(ii) immediately upon the termination by the
Company of the Optionee's employment or service as a Non-Employee
Eligible Individual for Cause;
(iii) ninety days after the voluntary termination
of employment or service as a Non-Employee Eligible Individual by the
Optionee;
(iv) one year after the date of the Optionee's
death if the Optionee dies while employed, while providing service as a
Non-Eligible Individual, or during the one-year or ninety day periods
described in Subsections 9(a)(i) or 9(a)(iv) hereof.
(v) the Option expiration date set forth in the
Option agreement.
(b) The Committee in its sole discretion may (i) provide
that an Option will be settled in cash rather than Shares upon consummation of a
Change in Control, (ii) provide that an Option will be assumed by another party
to the transaction giving rise to a Change in Control or otherwise be equitably
converted in connected with such Change in Control, or (iii) by giving written
notice
EXHIBIT A
("cancellation notice") to the Optionee, cancel, effective upon the date
of the consummation of any Change in Control, any Option that remains
unexercised on such date. Such cancellation notice shall be given a reasonable
period of time prior to the proposed date of such cancellation.
(c) Upon termination of an Option pursuant to the
foregoing provisions of this Section 9, any Option not exercisable pursuant to
Section 8 of this Plan shall be canceled.
10. Adjustment of Shares.
(a) If, at any time while the Plan is in effect or
unexercised Options are outstanding, there shall be any increase or decrease in
the number or nature of issued and outstanding Shares through the declaration of
a stock dividend, or through any recapitalization, reorganization,
reclassification, merger, consolidation, split-up, spin-off, stock split, or
combination or Company exchange of Shares, then and in such event:
(i) appropriate adjustment shall be made by the
Committee in the maximum number of Shares and kind of shares available
for grant under the Plan, so that the same percentage of the Company's
issued and outstanding Shares shall continue to be subject to being so
optioned; and
(ii) appropriate adjustment shall be made by the
Committee in the number of Shares and the exercise price per Share
thereof and the kind of shares then subject to any outstanding Option,
so that the same percentage of the Company's issued and outstanding
Shares shall remain subject to purchase at the same aggregate exercise
price; and
(iii) without limiting the foregoing, in the event
a stock dividend or stock split is declared upon the Common Stock, the
maximum number of Shares available for grant under the Plan shall be
increased proportionately, and the Shares then subject to each Option
shall be increased proportionately without any change in the aggregate
purchase price therefor, automatically and without any required action
by the Committee.
(b) Subject to the specific terms of any Option, the Committee may
change the terms of Options outstanding under this Plan, with respect to the
option price or the number of Shares subject to the Options, or both, when, in
the Committee's sole judgement and discretion, such adjustments become
appropriate by reason of a corporate transaction described in Subsection
8(b)(ii) or (iii) hereof.
(c) Except as otherwise expressly provided herein or determined by
the Committee, the issuance by the Company of shares of its capital stock of any
class, or securities convertible into or exchangeable for shares of capital
stock of any class, either in connection with a direct or underwritten sale or
upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall
EXHIBIT A
not affect, and no adjustment by reason thereof shall be made with respect to,
the number of or exercise price of Shares then subject to outstanding Options
granted under the Plan.
(d) Without limiting the generality of the foregoing, the
existence of outstanding Options granted under the Plan shall not affect in any
manner the right or power of the Company to make, authorize or consummate (i)
any or all adjustments, recapitalizations, reclassifications, reorganizations or
other changes in the Company's capital structure or its business; (ii) any
merger or consolidation of the Company or to which the Company is a party; (iii)
any issuance by the Company of debt securities, or preferred or preference
stock, that would rank senior to or above the Shares subject to outstanding
Options; (iv) the dissolution or liquidation of the Company; (v) any sale,
transfer, encumbrance, pledge or assignment of all or any part of the assets or
business of the Company; or (vi) any other corporate act or proceeding, whether
of a similar character or otherwise.
11. Transferability of Options. No Incentive Stock Option, and
unless the Committee's prior written consent is obtained (which consent may be
obtained at the time an Option is granted) no Non-Qualified Stock Option, shall
be subject to alienation, assignment, pledge, charge or other transfer other
than by the Optionee by will or the laws of descent and distribution, and any
attempt to make any such prohibited transfer shall be void. Each Option shall be
exercisable during the Optionee's lifetime only by the Optionee, or in the case
of a Non-Qualified Stock Option that has been assigned or otherwise transferred
with the Committee's prior written consent, only by the assignee consented to by
the Committee.
12. Issuance of Shares.
(a) Notwithstanding any other provision of this Plan, the
Company shall not be obligated to issue any Shares unless it is advised by
counsel of its selection that it may do so without violation of the applicable
Federal and State laws pertaining to the issuance of securities, and may require
any stock so issued to bear a legend, may give its transfer agent instructions,
and may take such other steps, as in its judgment are reasonably required to
prevent any such violation.
(b) As a condition of any sale or issuance of Shares upon
exercise of any Option, the Committee may require such agreements or
undertakings, if any, as the Committee may deem necessary or advisable to assure
compliance with any such law or regulation including, but not limited to, the
following:
(i) a representation and warranty by the Optionee to
the Company, at the time any Option is exercised, that he is acquiring
the Shares to be issued to him for investment and not with a view to,
or for sale in connection with, the distribution of any such Shares;
and
(ii) a representation, warranty and/or agreement
to be bound by any legends that are, in the opinion of the Committee,
necessary or appropriate to comply with the provisions of any
securities law deemed by the Committee to be applicable to the issuance
of the Shares and are endorsed upon the Share certificates.
13. Administration of the Plan.
(a) The Plan shall be administered by the Compensation
Committee of the Board of Directors, which shall consist of not less than two
Directors, each of whom shall be Outside
EXHIBIT A
Directors. However, the mere fact that a Committee member shall fail to qualify
as an Outside Director shall not invalidate any Option granted by the Committee
which Option is otherwise validly granted under the Plan. The Committee shall
have all of the powers of the Board with respect to the Plan. Any member of the
Committee may be removed at any time, with or without cause, by resolution of
the Board and any vacancy occurring in the membership of the Committee may be
filled by appointment by the Board.
(b) The Committee, from time to time, may adopt rules and
regulations for carrying out the purposes of the Plan. The Committee's
determinations and its interpretation and construction of any provision of the
Plan shall be final and conclusive.
(c) Any and all decisions or determinations of the
Committee shall be made either (i) by a majority vote of the members of the
Committee at a meeting or (ii) without a meeting by the unanimous written
approval of the members of the Committee.
(d) The Board may reserve to itself the power to grant
Options to employees of the Company or any Subsidiary who are not Covered
Employees. If and to the extent that the Board reserves such powers, then all
references herein to the Committee shall refer to the Board with respect to the
Options granted by the Board.
(e) The Committee shall certify in writing prior to the
delivery of Shares upon exercise of an Option in which its rights accrue or
become exercisable upon the attainment of stated goals that such goals and any
other material terms of such Option are satisfied pursuant to the criteria
established by the Committee as well as the requirements of Section 162(m) of
the Code, if applicable.
14. Withholding or Deduction for Taxes. If at any time specified
herein for the making of any issuance or delivery of any Option or Common Stock
to any Optionee, any law or regulation of any governmental authority having
jurisdiction in the premises shall require the Company to withhold, or to make
any deduction for, any taxes or take any other action in connection with the
issuance or delivery then to be made, such issuance or delivery shall be
deferred until such withholding or deduction shall have been provided for by the
Optionee or beneficiary, or other appropriate action shall have been taken.
15. Interpretation.
(a) This Plan shall be governed by the internal laws of
the State of Delaware.
(b) Headings contained in this Plan are for convenience
only and shall in no manner be construed as part of this Plan or affect the
meaning or interpretation of any part of the Plan.
(c) Any reference to the masculine, feminine, or neuter
gender shall be a reference to such other gender as is appropriate.
16. Amendment and Discontinuation of the Plan. Either the Board or
the Committee may from time to time amend the Plan or any Option; provided,
however, that, except to the extent provided in Section 10, no such amendment
may, without approval by the stockholders of the Company, (a) materially
increase the number of securities which may be issued under the Plan, or (b)
materially modify the requirements as to eligibility for participation in the
Plan; and provided further, that, except to the extent provided in Section 9, no
amendment or suspension of the Plan or any Option issued hereunder
shall substantially impair any Option previously granted to any Optionee without
the consent of such Optionee. Shareholder approval also shall be required for
any amendment to the Plan if and to the extent such approval is required by any
federal or state law or regulation or the rules of any stock exchange or
automated quotation system on which the Common Stock may then be listed or
quoted.
EXHIBIT B
AmeriPath, Inc. and Subsidiaries
Audit Committee Charter
May 4, 2000
Role and Independence
The Audit Committee of the Board of Directors (the "Committee") assists the
Company's Board of Directors (the "Board") in fulfilling its responsibilities
for the oversight of the quality and integrity of the accounting, auditing and
financial reporting practices of the Company and other duties as directed by the
Board. The membership of the Committee shall consist of at least three directors
who are generally knowledgeable in accounting and audit matters, including at
least one member with accounting or related financial management expertise,
which members shall be persons that satisfy such requirements as provided in
Rule 4460(d) if the Nasdaq Stock Market (the "Nasdaq Rules"), as determined by
the Board. Each member shall be free of any relationship, that, in the opinion
of the Board, would interfere with his or her individual exercise of independent
judgment, and shall meet the independence rules for serving on audit committees
as set forth by the Nasdaq Rules (including the absence of current or prior
employment relationships, business relationships and family relationships that
are prohibited by the Nasdaq Rules). The Committee is directed and expected to
carry out and administer the "Committee Responsibilities" listed below, and to
maintain free and open communication (including private executive sessions at
least annually) with the independent accountants, internal auditors (if
applicable) and management of the Company. In discharging this oversight role,
the Committee is empowered to investigate any matter brought to its attention,
with full power to retain outside counsel or other experts for the purpose.
The Board shall appoint one member of the Committee as Chairperson. He or she
shall be responsible for the leadership of the Committee, including preparing
the agenda, presiding over meetings, making Committee assignments and reporting
to the Board. The Chairperson will also maintain regular communication with the
CEO, CFO, independent audit partner and the director of internal audit (if
applicable).
Committee Responsibilities
The Committee's primary responsibilities include:
1. Recommending to the Board the independent accountant to be selected or
retained to audit the financial statements of the Company; it being
recognized that the Audit Committee and the Board have the ultimate
authority and responsibility to select, evaluate and replace the
outside auditor.
2. Requesting the independent auditor provide written affirmation that
the auditor is in fact independent (within the requirements of
applicable Independence Standards), discuss with the auditor any
relationships that may impact the auditor's objectivity and
independence and recommend to the Board any actions necessary to
oversee the auditor's independence.
3. Overseeing the independent auditor relationship by discussing the
nature and rigor of the audit process, receiving and reviewing audit
reports and providing the auditor full access to the Committee (and
the Board) to report on any and all appropriate matters; it being
recognized that the outside auditor is accountable to the Board and
the Audit Committee.
4. Providing guidance and oversight of the internal audit activities of
the Company, if appropriate.
EXHIBIT B
5. Reviewing the Company's annual audited financial statements and
discussing them with management and the independent auditors. These
discussions shall include the quality of the Company's accounting
principles, internal accounting control, judgments and estimates, and
audit adjustments whether recorded or not and any other appropriate
inquiries.
6. Reviewing with management and the independent auditor the annual and
quarterly financial information and related discussions contained in
the Company's Annual Reports on Form 10-K and Quarterly Reports on
Form 10-Q prior to filing with the Securities and Exchange Commission,
including the disclosures contained in "Management's Discussion and
Analysis of Financial Condition and Results of Operations".
7. Discussing with management the status of pending litigation, taxation
matters and other legal and compliance matters as appropriate.
8. Reporting Committee activities to the full Board and issuing annually
a report to be included in the proxy statement (including appropriate
oversight conclusions) for submission to the shareholder's of the
Company.
This charter shall be reviewed, updated and approved annually by the Company's
Board and by the Audit Committee.
AMERIPATH, INC.
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned, a stockholder of AMERIPATH, INC., a Delaware
corporation (the "Company"), hereby appoints Brian C. Carr and Gregory A. Marsh,
and each of them, as proxies for the undersigned, each with full power of
substitution, and hereby authorizes them to represent and to vote, as designated
on the reverse side, all of the shares of common stock of the Company that the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held on May 3, 2001 at 11:00 a.m., local time, and at any
adjournments or past postponements thereof.
(complete and sign on reverse side)
A [X] Please mark your votes as in this example.
The Board of Directors unanimously recommends a vote FOR each proposal
below.
1. ELECTION OF DIRECTORS
[ ] VOTE FOR all nominees listed, except [ ] WITHHOLD AUTHORITY TO VOTE
as marked to the contrary below (if any) for all nominees
Nominees: James C. New
E. Roe Stamps IV
INSTRUCTION: To withhold authority to vote for any nominee(s), write that
nominee's name in the space provided below:
----------------------------------------------------------------------
2. Proposal to Approve Amendment to the Amended and Restated Certificate of
Incorporation
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to Approve the Company's 2001 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Ratify the reappointment of Deloitte & Touche LLP as the Company's
independent public accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Upon such other matters as may properly come before the Annual Meeting or
any adjournments or postponements thereof. In their direction, the proxies
are authorized to vote in their discretion upon such other business as may
properly come before the Annual Meeting and any adjournments or
postponements thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE ELECTION OF ALL DIRECTOR NOMINEES IN PROPOSAL 1 AND "FOR"
APPROVAL OF PROPOSALS 2, 3 AND 4.
The undersigned hereby acknowledges receipt of (1) the Notice of Annual Meeting
and Proxy Statement for the 2001 Annual Meeting and (2) the Company's 2000
Annual Report to Stockholders.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY USING THE ENVELOPE PROVIDED. NO
POSTAGE NECESSARY IF MAILED IN THE UNITED STATES.
(Signature) (Signature if held jointly) Dated: 2001
--------------- ---------- -------
IMPORTANT: Please sign exactly as your name appears hereon and mail it
promptly even though you now plan to attend the meeting. When signing as
attorney, executor, administrator, trustee or guardian, please give full
title as such. When shares are held by joint tenants, both should sign. If
a corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.