Exhibit 10.8


 


US
ONCOLOGY HOLDINGS, INC.


2004
DIRECTOR STOCK OPTION PLAN


 


I.              Purposes


 


                The mission
of US Oncology Holdings, Inc., through its wholly-owned subsidiary US Oncology,
Inc., is to increase access to and advance the delivery of high-quality cancer
care in community-based settings throughout the United States. The Company
understands that it must have a highly motivated, focused and committed board
of directors to accomplish its mission and objectives.  The purposes of this 2004 Director Stock Option Plan
(the “Plan”) are (i) to provide additional incentive for securing and retaining
qualified non-employee persons to serve on the Board of Directors of the
Company and (ii) to enhance the future growth of the Company by furthering such
persons’ identification with the interests of the Company and its
stockholders.  It is intended that
Options granted under this Plan will be Non-Qualified Stock Options.


 


II.                                     Definitions.  The following definitions are applicable to
the Plan.


 


(a)           “1934 Act” means the Securities
Exchange Act of 1934, as amended, or any successor statute.


(b)           “Affiliate” means, with
respect to any specified Person, a Person that directly, or indirectly through
one or more intermediaries, Controls, is Controlled by or is under common Control
with, the specified Person; provided, that, for purposes of the
definition of Third Party contained in Section XIV(b)(i) of the Plan, no
portfolio company of WCAS IX (or of any other investment partnership under
common control with WCAS IX) shall be deemed to be an Affiliate of the Company
or WCAS IX unless a majority of the outstanding voting securities of such
portfolio company are owned by WCAS IX and/or such other investment
partnership.


(c)           “Board” means the Board of
Directors of the Company.


(d)           “Business Day” means a day
other than a day on which commercial banks in New York, New York or Houston,
Texas are authorized or required by law to close.


(e)           “Code” means the Internal
Revenue Code of 1986, as amended.


(f)            “Committee”
means the compensation committee of the Board (or, if there is no such
committee, the Board committee performing equivalent functions), which, from
and after the date the Company registers any class of its equity securities
pursuant to Section 12 of the 1934 Act, shall be comprised of at least two
members of the Board who are (i) “non-employee directors” as defined under
rules and regulations promulgated under Section 16(b) of the 1934 Act and (ii)
“outside directors” as defined in Section


 

















 


162(m) of the Code.  The Board shall have the power to fill
vacancies on the Committee arising by resignation, death, removal or
otherwise.  The Committee may delegate
ministerial tasks to such persons as it deems appropriate.


(g)           “Company” means US Oncology
Holdings, Inc., a Delaware corporation.


(h)           “Control” (including the terms
“Controlling”, “Controlled by” and “under common Control with”) means the
possession, direct or indirect, of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.


(i)            “Effective Date” means the
date this Plan is adopted by the Stockholders of the Company.


(j)              “Eligible Director”
means a person who as of any applicable date (i) is a member of the Board, (ii)
is not an officer of the Company or any subsidiary of the Company, (iii) is not
a full-time employee of the Company or any of its subsidiaries and (iv) is not
an employee, partner or Affiliate of Welsh, Carson, Anderson & Stowe.


(k)           “Fair Market Value” means,
with respect to a share of Stock on any date herein specified, (i) if the
shares of Stock are listed or admitted for trading on a national securities
exchange, the reported closing sales price regular way, or, in case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices regular way, in either case on the principal national
securities exchange on which the shares of Stock are listed or admitted for
trading, or (ii) if the shares of Stock are not listed or admitted for trading
on a national securities exchange, (A) the closing transaction price of the
shares of Stock on the National Association of Securities Dealers Automated
Quotation System (“NASDAQ”) or, in the case no such reported transaction
takes place on such day, the average of the reported closing bid and asked
prices thereof quoted on NASDAQ, or (B) if the shares of Stock are not quoted
on NASDAQ, the average of the closing bid and asked prices of the shares of
Stock in the over-the-­counter market, as reported by The National Quotation
Bureau, Inc., or an equivalent generally accepted reporting service, or (iii)
if on any such day the shares of Stock are not quoted by any such organization,
the fair market value per share of Stock on such day, as determined in good
faith by the Committee.  If the Fair
Market Value of Stock is to be determined as of a day other than a trading day,
the Fair Market Value of Stock for such day shall be determined as described
above on the last trading day ending prior to the date as of which the
determination is being made.  If, in the
discretion of the Committee, another means of determining Fair Market Value
shall be necessary or advisable in order to comply with the requirements of
Section 162(m) of the Code or any other applicable law, governmental
regulation, or ruling of any governmental entity, then the Committee may
provide for another means of such determination.


 


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(l)            “Option Date” means, with
respect to any Stock Option, the date on which the Stock Option is awarded
under the Plan.


(m)          “Option Share” means any share
of Stock issued upon exercise of a Stock Option, regardless of whether the
Holder of such share is the Participant in respect of which such Stock Option
was originally issued under the Plan or a transferee thereof.


(n)           “Non-Qualified Stock Option”
means a Stock Option that does not qualify for treatment as an Incentive Stock
Option, as defined under the Code.


(o)           “Participant” means an
Eligible Director who is granted a Stock Option hereunder.


(p)           “Permitted Transferees” means
a member of a Participant’s immediate family, trusts for the benefit of the
Participant or such immediate family members, and partnerships in which the
Participant or such immediate family members are the only partners, provided
that no consideration is provided for the transfer.  Immediate family members shall include a Participant’s spouse and
descendants (children, grandchildren and more remote descendants), and shall include
step-children and relationships arising from legal adoption.


(q)           “Person” means any natural
person, corporation, limited liability company, partnership, trust, joint stock
company, business trust, unincorporated association, joint venture, governmental
authority or other legal entity of any nature whatsoever.


(r)            “Stock” means the Common
Stock of the Company, par value $0.001 per share.


(s)           “Stock Option” means the right
of a Participant to purchase Stock pursuant to a Stock Option awarded pursuant
to the provisions of the Plan.


(t)            “Subsidiary” means, during
any period, any corporation or other entity of which 50% or more of the total
combined voting power of all classes of stock (or other equity interests in the
case of an entity other than a corporation) entitled to vote is owned, directly
or indirectly, by the Company.


(u)           “Terminate” means cease to be a Director
of the Company.


(v)           “Termination of Directorship” means the
date upon which any Participant ceases to be a Director for any reason whatsoever.  The effective date of such Termination of
Directorship shall be the actual date of such termination (by death,
disability, retirement, resignation, non-election or otherwise).


 


 


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(w)          “Transfer” means a transfer,
sale, assignment, pledge, hypothecation or other disposition (including by
operation of law), whether directly or indirectly pursuant to the creation of a
derivative security, the grant of an option or other right or the imposition of
a restriction on disposition or voting.


(x)            “US Oncology” means US
Oncology, Inc., a Delaware corporation.


(y)           “WCAS IX” shall mean Welsh,
Carson, Anderson & Stowe IX, L.P., a Delaware limited partnership.


 


III.           Grants
of Stock Options; Option Price; Vesting Schedule


 


                Options will be
granted only to individuals who are Eligible Directors of the Company.


 


                (a)           Each Eligible Director on the
Effective Date shall receive on the Effective Date, without the exercise of the
discretion of any person or persons, an Option to purchase 5,000 Shares.  In addition, each Eligible Director on the
Effective Date who serves on a committee of the Board or on the Audit Committee
of US Oncology, Inc. as of the Effective Date shall receive on the Effective
Date, without the exercise of the discretion of any person or persons, an
Option to purchase 1,000 Shares. Each Eligible Director elected after the
Effective Date shall receive on the date of such election, without the exercise
of the discretion of any person or persons, an Option to purchase 5,000
Shares.  In addition, each Eligible
Director elected after the Effective Date who is appointed to a committee of
the Board or on the Audit Committee of US Oncology, Inc. at the time of his or
her election shall receive on the date of such election and appointment,
without the exercise of the discretion of any person or persons, an Option to
purchase 1,000 Shares.


 


                (b)           On the date of the 2005 annual
meeting of stockholders of the Company and each annual meeting of stockholders
thereafter, each Eligible Director who is in office after giving effect to the
election of directors at such meeting shall receive, without the exercise of
the discretion of any person or persons, an option to purchase 5,000 shares of
Common Stock.


 
                (c)                    At the first Board meeting following the 2005 annual meeting of stockholders and each annual meeting of stockholders thereafter, each Eligible Director appointed at such meeting to any committee of the Board, or who is a member of any committee of the Board or the Audit Committee of US Oncology, Inc after giving effect to all appointments at such meeting, shall receive, without the exercise of the discretion of any person or persons, an option to purchase 1,000 shares of Common Stock for each such committee to which such Eligible Director is appointed.


 


                (d)           All Options granted under the Plan
shall be at the Option price set forth in the following subsection (e), shall
be subject to adjustment as provided in Section VII and to the terms


 


 


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and conditions set forth in Section VIII and shall vest in the manner
set forth in the subsection (f) below. 
All Options granted under the Plan shall be evidenced by a written
option agreement.


 


                (e)           The purchase price of Shares issued
under each Option shall be $1.00 per share for Options granted on the Effective
Date and shall be the Fair Market Value of Shares subject to the Option on the
date the Option is granted for all other Options.


 


                (f)            Except to the extent otherwise provided
herein, each Option granted under this Article III above shall vest and be
exercisable as to all of the Shares covered thereby six months after the
effective date of the grant of such Option.


 


IV.           Administration


 


                (a)           The Plan shall be administered
by the Committee.  If for any reason
there is no Committee, the duties of the Committee shall be performed by the
Board.  The Committee is authorized to
interpret the Plan, to establish, amend, and rescind any rules and regulations
relating to the Plan, to determine the terms and provisions of any agreements
made pursuant to the Plan, to modify such agreements, and to make all other
determinations that may be necessary or advisable for the administration of the
Plan; provided, that, except as expressly provided in the Plan, the
Committee may not, without the Participant’s consent, alter the terms of any
award so as to affect adversely the Participant’s rights under the award; and provided
further, that, if any such interpretation, rule, regulation, agreement, modification
or other determination would adversely affect the rights of WCAS IX under Article
XIV of the Plan, the Committee shall not take such action without the prior
written consent of WCAS IX.  Decisions
of the Committee (including decisions regarding the interpretation and
application of the Plan) shall be binding on the Company and on all
Participants and other interested parties. From and after the date the Company
registers any class of its equity securities pursuant to Section 12 of the 1934
Act, with respect to persons subject to Section 16 of the 1934 Act,
transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successor rule or statute under the 1934
Act.  To the extent any provision of the
Plan or action by the Committee fails to so comply, it shall be deemed null and
void, to the extent permitted by law.


 


                (b)           The Board may, in its discretion,
delegate duties to an officer or employee or a committee composed of officers
or employees of the Company, but it may not delegate its authority to apply and
interpret this Plan.


 


V.            Term


 


                The term of this
Plan commences on the Effective Date and terminates on the tenth anniversary of
the Effective Date.  This Plan shall
remain in effect for the purposes of administration of any Option granted
pursuant to its provisions and no such Option granted during the term of this
Plan shall be adversely affected by the termination of the Plan.


 


VI.           Shares
Reserved; Options Grantable and Exercisable


 


(a)           Subject
to adjustments as provided in Section VII hereof, a total of 500,000 Shares


 


 


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shall be subject to the Plan. 
The Shares subject to the Plan shall be and are hereby reserved for sale
for such purposes.  Any of the Shares
which remain unsold and which are not subject to outstanding Options at the
termination of the Plan shall cease to be reserved for the purposes of the
Plan.  If any award under the Plan or any portion of the award, shall
expire, terminate or be forfeited or cancelled, or be settled in cash pursuant
to the terms of the Plan and, therefore, any such shares are no longer
distributable under the award, such shares of Stock shall again be available
for award under the Plan, subject to the foregoing limits.  Notwithstanding the foregoing, in order to
comply with Section 162(m) of the Code, the Committee shall take into account
that (1) if a Stock Option is canceled, the canceled Stock Option continues to
be counted against the maximum number of shares for which Stock Options may be
granted to the Participant under the Plan and (2) for purposes of Section
162(m) of the Code, if after the grant of a Stock Option, the Committee reduces
the purchase price of the Stock Option, the transaction is treated as a
cancellation of the Stock Option and a grant of a new Stock Option, and in such
case, both the Stock Option that is deemed to be canceled and the Stock Option
that is deemed to be granted reduce the maximum number of shares for which
Stock Options may be granted to the Participant under the Plan.


 


                (b)           As to a Participant, an Option ceases
to be exercisable, as to any Share, when the Participant purchases the Share or
when the Option lapses.


 


VII.          Adjustments


 


                (a)           The
existence of outstanding Stock Options shall not affect in any way the right or
power of the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorgani­zations or other changes in the
Company’s capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of, or affecting, the Common Stock or the rights thereof, or the
dissolution or liquidation of the Company, or any sale or transfer of all or
any part of its assets or business, or any other corporate act or proceeding,
whether of a similar char­acter or otherwise.


 


(b)       Adjustments to Number of Shares
Subject to the Plan.  In the event
of any change in the outstanding shares of Stock of the Company by reason of
any stock dividend, split, spinoff, recapitalization, merger, consolidation,
combination, extraordinary dividend, exchange of shares or other similar
change, the aggregate number and class of shares of Company capital stock with
respect to which awards may be made under the Plan, and the terms (including
exercise price) and the number and class of shares subject to any outstanding
Stock Options shall be equitably adjusted by the Committee.


(c)           Change
in Stock and Adjustments.  If, while
unexercised Stock Options remain outstanding under the Plan, the Company is
merged into or consolidated with another corporation under circumstances where
the Company is not the surviving corporation or the Company is liquidated or
sells or otherwise disposes of substantially all its assets to another
corporation, the Committee may provide for the assumption of some or all
outstanding Stock Options, or for the grant of new awards in substitution
therefor, by the acquiror or survivor or Affiliate of the acquiror or survivor,
in each case on such terms and subject to such conditions as the Committee
determines.  In the absence of such an
assumption or if there is no substitution, (i) subject to the provisions of
clause (ii) below, after the effective date of such merger,


 


 


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consolidation, liquidation or sale, as the case may
be, each holder of an outstanding Stock Option shall be entitled, upon exercise
of such Stock Option, to receive, in lieu of each share of Stock for which such
Stock Option is exercised, shares of such stock (or other securities or
consideration) as the holder of one share of Stock received pursuant to the
terms of the merger, consolidation, liquidation or sale, and (ii) in the case
of any such merger, consolidation, liquidation, sale or other transaction, all
outstanding Stock Options may be canceled by the Committee as of a date not
earlier than the effective date of any such merger, consolidation, liquidation,
sale or other transaction, provided that (A) at least ten (10) days’
notice of such cancellation shall be given to each holder of a Stock Option,
and (B) following receipt of any such notice each holder of a Stock Option
shall have the right to exercise such Stock Option in full (without regard to
any vesting or other limitations on exercise set forth in or imposed pursuant
to the Plan or the award documentation relating to the Stock Option)
conditioned on the consummation of such merger, consolidation, liquidation or
other transaction and may defer delivery of the purchase price of any shares of
Stock to be purchased upon exercise of the Stock Option until not later than
five (5) business days after receipt from the Committee of written notice of
such consummation or occurrence.  In the
event that any acceleration of vesting pursuant to clause (ii) above would
result in imposition of the excise tax imposed by Section 4999 of the Code, a
Participant may elect to waive such acceleration with respect to such number of
shares subject to unvested Stock Options as the Participant may designate, and
the Participant shall be entitled to designate from among his unvested Stock
Options the Stock Options which shall not be subject to accelerated vesting, in
which case such Stock Options shall be terminated without payment of any
consideration to the Participant upon the consummation of such merger, consolidation,
liquidation, sale or other transaction. 
In the event that the merger, consolidation, liquidation, sale or other
transaction does not occur, then on notice from the Committee of such failure
to occur any exercise of a Stock Option conditioned on such occurrence shall be
null and void and all limitations on exercise of a Stock Option shall remain in
effect as if the Committee had never sent any notice of cancellation.


 


VIII.        Terms and
Conditions of Stock Options


 


                (a)           During the Participant’s life, the Stock Option is
exercisable only by the Participant, 
his or her guardian or legal representative or a permitted transferee
under Section VIII(b) below.


 


                (b)           A Stock Option under this Plan is not
assignable or transferable, except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order (as defined in
the Code), and is not subject, in whole or in part, to attachment, execution or
levy of any kind.


 


                (c)           Any Stock Option or portion thereof
that is exercisable shall be exercisable for the full amount or for any part
thereof.


 


                (d)           Stock Options shall be exercised by
the delivery of written notice to the Company setting forth the number of
shares of Common Stock with respect to which the Stock Option is to be exercised
and, subject to the subsequent provisions hereof, the address to which the
certificates representing shares of the Common Stock issuable upon the exercise
of such Stock Option shall be mailed. 
In order to be effective, such written notice shall be accompanied at
the time of its delivery to the Company by payment of the exercise price of
such shares of Common Stock, which payment


 


 


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shall be made in cash or by check, bank draft, or postal or express
money order payable to the order of the Company in an amount (in United States
dollars) equal to the exercise price of such shares of Common Stock.  Such notice shall be delivered in person to
the Secretary of the Company, or shall be sent by registered mail, return
receipt requested, to the Secretary of the Company, in which case, delivery
shall be deemed made on the date such notice is deposited in the mail.  Whenever shares of Common Stock are to be
issued or delivered pursuant to the Plan, the Company shall require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state, and local withholding tax requirements prior to the delivery of any
certificate or certificates for such shares, which payment may be made in the
manner set forth above or in the manner permitted by clause (e) below.


 


                (e)           Alternatively, payment of the
exercise price may be made, in whole or in part, by delivery of shares of
Common Stock previously issued to the Participant.  Unless otherwise permitted by the Board, payment of the exercise
price with shares of Common Stock shall be made only with shares owned by the
Participant for at least six (6) months. 
If payment is made in whole or in part in shares of Common Stock owned
by the Participant, then the Participant shall deliver to the Company, in payment
of the option price of the shares of Common Stock with respect to which such
Stock Option is exercised, (i) certificates registered in the name of such
Participant representing a number of shares of Common Stock legally and
beneficially owned by such Participant, free of all liens, claims and
encumbrances of every kind and having a Fair Market Value as of the date of
delivery of such notice that is not greater than the exercise price of the
shares of Common Stock with respect to which such Stock Option is to be
exercised, such certificates to be accompanied by stock powers duly endorsed in
blank by the record holder of the shares represented by such certificates; and
(ii), if the exercise price of the shares of Common Stock with respect to which
such Stock Option is to be exercised exceeds such Fair Market Value, cash or a
check, bank draft, or postal or express money order payable to the order of the
Company in an amount (in United States dollars) equal to the amount of such
excess.


 


                (f)            Stock Options granted to any
Participant under this Plan shall be subject to the following conditions:


 


                                (1)           The price per share shall be as set
forth in Section III.


 


                                                                (2)           Each
Stock Option shall have a term of ten (10) years from the date such Stock
Option is granted and shall vest and become exercisable as set forth in Section
III.


 


                                                                (3)           A
Stock Option shall lapse in the following situations:


 


                                                                                (i)            If
a Termination of Directorship shall occur with respect to any Participant, for
any reason other than death, no further vesting shall occur and the Participant
shall be entitled to exercise his or her rights with respect to the portion of
the Option vested as of the date of such event until a date that is three (3)
months after the date of such Termination of Directorship, unless any of such
Options shall have terminated earlier under their terms or under other
provisions of this Plan.


 


                                                                                (ii)           If
a Termination of Directorship shall occur with respect to any


 


 


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                                                                Participant by reason of the death of such
Participant, and if any Stock Option granted to such Participant was in effect
at the time of the Participant’s death, all unexercised Stock Options, if any,
shall vest and become immediately exercisable and may be exercised until the
expiration of one (1) year from the date of death of the Participant or until
the expiration of the term of the Stock Option, whichever is earlier.  Such Stock Option may be exercised by the
Designated Beneficiary of the deceased Participant, subject to all other
provisions of the Plan.


 


IX.           Power
to Amend


 


                The Board of
Directors may modify, revise or terminate this Plan at any time and from time
to time; provided, however, that the Plan shall not be amended more than once
every six (6) months, other than to comport with changes in the Code, or the
regulations thereunder, or the Employee Retirement Income Security Act of 1974,
as amended, or the regulations hereunder; and provided, further, that without
the approval of the holders of at least a majority of the securities of the
Company present or represented, and entitled to vote at a meeting duly held in
accordance with the laws of the State of Delaware, the Board of Directors may
not (i) materially increase the benefits accruing to participants under the
Plan; (ii) change the aggregate number of Shares which may be issued under
Options pursuant to the provisions of the Plan; (iii) reduce the Option price
at which Options have been granted; or (iv) change the class of persons
eligible to receive Options.  However,
no termination or amendment of the Plan may, without the consent of the holder
of any Option then outstanding adversely affect the rights of such holder under
the Option.


 


X.            Exercise
of Options; Registration


 


                The Company shall
not be required to sell or issue any shares of Common Stock under any Stock
Option if the issuance of such shares shall constitute a violation by the
Participant or the Company of any provision of any law, statute, or regulation
of any governmental authority whether it be Federal or State.  Specifically, in connection with the
Securities Act, upon exercise of any Stock Option, unless a registration
statement under the Securities Act is in effect with respect to the shares of
Common Stock covered by such Stock Option, the Company shall not be required to
issue such shares unless the Board has received evidence satisfactory to it to
the effect that the holder of such Stock Option is acquiring such shares of
Common Stock for investment and not with a view to the dis­tribution thereof,
and that such shares of Common Stock may otherwise be issued without
registration under the Securities Act or State securities laws. Any deter­mination
in this connection by the Board shall be final, binding and conclusive. The
Company may, but shall in no event be obligated to, register any securities
covered hereby pursuant to the Secu­rities Act. The Company shall not be
obligated to take any affirmative action in order to cause the exercise of a
Stock Option, or the issuance of shares pursuant thereto, to comply with any
law or regulation of any governmental authority.


 


XI.           Shareholder
Approval


 


                Notwithstanding
any other provisions of the Plan, in order for the Plan to continue as
effective, on or before the date which occurs twelve (12) months after the date
the Plan is adopted by the Board, the Plan must be approved by the holders of
at least a majority of the outstanding


 


 


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stock (unless applicable state law or the Company’s charter or by-laws
require a greater number) of the Company entitled to vote thereon voting in
person, or by proxy, at a duly held stockholders’ meeting, and no shares of
Common Stock shall be issued under the Plan until such approval has been
secured.


 


XII.         Interpretations


 


                The provisions of
the Plan shall be construed, administered, and governed by the laws of the
State of Delaware, without giving effect to principles of conflicts of laws,
and, to the extent applicable, the laws of the United States.


 


XIII.        Government
Regulations


 


                The Plan, the
granting and exercise of Stock Options thereunder, and the obligation of the
Company to sell and deliver Shares under such Stock Options, shall be subject
to all applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.


 


XIV.        Provisions
For The Benefit Of WCAS IX


(a)                                  Transfer


(i)            Notwithstanding anything to the
contrary contained in this Plan or in any stock option agreement relating to
any Stock Option, no holder (each a “Holder”) of Option Shares may
Transfer all or any portion of the Option Shares held by such Holder without
the prior written consent of WCAS IX other than (i) Transfers to Permitted
Transferees that are made in accordance with Section (a)(ii) of this
Aricle XIV below and (ii) Transfers made in connection with a Drag-Along Sale
pursuant to Section (b) of this Aricle XIV below.   Any attempted Transfer of Option Shares in
violation of the provisions of this Article XIV shall be null and void ab initio
and of no effect, and the Company shall not record any such Transfer on its
books.  Each certificate representing
Option Shares shall bear a legend substantially to the following effect with
such additions thereto or changes therein as the Company (with the approval of
WCAS IX) may be advised by counsel are required by law or necessary to give
full effect to the provisions of this Article XIV (the “Legend”):


“THE SHARES REPRESENTED
BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN TRANSFER RESTRICTIONS AND CERTAIN
PROVISIONS REQUIRING THE SALE OF SUCH SHARES BY THE HOLDER THEREOF UNDER
CERTAIN CIRCUMSTANCES, IN EACH CASE UNDER ARTICLE XIV OF THE US ONCOLOGY
HOLDINGS, INC. 2004 DIRECTOR STOCK OPTION PLAN, AS AMENDED FROM TIME TO TIME, A
COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY. NO TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SHARES
REPRESENTED BY THIS


 


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CERTIFICATE MAY BE MADE
EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF ARTICLE XIV OF SUCH PLAN.  THE HOLDER OF THIS CERTIFICATE, BY
ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF ARTICLE
XIV OF SUCH PLAN.”


After the termination of
this Article XIV in accordance with its terms, and upon the written
request of any Holder of Option Shares, the Legend placed on the certificate(s)
evidencing such Option Shares will be removed by the Company by means of the
delivery of substitute certificates without such Legend.


(ii)           A Participant may, at any time,
Transfer any or all of the Option Shares of such Participant to a Permitted
Transferee thereof if such Permitted Transferee duly executes and delivers to
the Company and WCAS IX an instrument (in a form reasonably acceptable to the
Committee and WCAS IX) acknowledging that such Permitted Transferee is bound by
the provisions of this Article XIV as a Holder of Option Shares
hereunder (such Transfer to be effective only upon delivery of such instrument
to the Company and WCAS IX); provided, that (A) if the Company so
requests promptly following (and, in any event, within five (5) Business Days
after) its receipt of such instrument, such Transfer shall not be effective
unless and until the Company has been furnished with an opinion in form and
substance reasonably satisfactory to the Company of counsel reasonably satisfactory
to the Company that such Transfer is exempt from or not subject to the
provisions of Section 5 of the Securities Act of 1933, as amended (the “1933
Act”), and any other applicable securities laws and (B) no Transfer under
this Section (a)(ii) shall be permitted if such Transfer would require
the Company to register a class of equity securities under Section 12 of the
1934 Act under circumstances where the Company does not then have securities of
any class registered under Section 12 of the 1934 Act.  Notwithstanding the foregoing, no
Participant shall avoid the provisions of this Article XIV by making one
or more Transfers to one or more Permitted Transferees and then disposing of
all or any portion of such Participant’s interest in any such Permitted
Transferee(s).


(iii)          The provisions of this Section (a)
of Article XIV shall terminate and be of no further force or effect from and
after the 180th day following the consummation of the initial
underwritten sale by the Company of shares of Stock to the public pursuant to
an effective registration statement (other than a registration statement on
Form S-8 or Form S-4) filed under the 1933 Act (the “Initial Public Offering”).


(b)                                 Drag-Along
Rights of WCAS IX.


i.      Drag-Along
Sale.  If WCAS IX, the Company or US
Oncology receives an offer from a person who is not an Affiliate of the Company
or WCAS IX (a “Third Party”) to purchase or exchange (by merger,
consolidation or otherwise) (x) at least a majority of the shares of Stock then
outstanding or (y) all or substantially all of the assets of the Company and
its subsidiaries taken as a whole, and WCAS IX wishes


 


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            to
accept such offer (or WCAS IX wishes that the Company or US Oncology accept
such offer), then each Holder of Option Shares (the “Drag-Along Stockholders”)
shall, if requested by WCAS IX, (A) waive any appraisal rights that it would
otherwise have in respect of such transaction, and/or (B) Transfer to such
Third Party, subject to the other provisions of this Plan, on the terms of the
offer so accepted by WCAS IX, including time of payment, form and choice of
consideration and adjustments to purchase price, the number of Option Shares
equal to the number of Option Shares owned by the Holder multiplied by the
percentage of the then outstanding shares of Stock to which the Third Party
offer is applicable.


ii. Exercise of Drag-Along
Rights; Notices; Certain Conditions of Drag-Along Sales.


1.               WCAS
IX will give notice (the “Drag-Along Notice”) to the Drag-Along
Stockholders of any proposed Transfer giving rise to the rights of WCAS IX set
forth in Section (b)(i) of this Article XIV (a “Drag-Along Sale”)
within five (5) Business Days after WCAS IX’s acceptance of the offer referred
to in such Section (b)(i) and, in any event, not less than ten (10)
Business Days prior to the proposed closing date for such Drag-Along Sale.  The Drag-Along Notice will set forth the
number of shares of Stock proposed to be so Transferred, the name of the
proposed transferee or acquiring Person, the proposed amount and form of
consideration and the other terms and conditions of the offer.


2.               If
any holders of Stock are given an option as to the form and amount of
consideration to be received, all Holders of Option Shares shall be given the
same option.  Each Drag-Along Stockholder
(x) shall agree to the same covenants as WCAS IX agrees to in connection with
the Drag-Along Sale, (y) shall be obligated to join on a pro  rata
basis (based on the proceeds received by each such Drag-Along Stockholder in
connection with the Drag-Along Sale) in any indemnification that WCAS IX agrees
to provide in connection with the Drag-Along Sale (other than in connection
with obligations that relate to a particular Holder such as representations and
warranties concerning itself for which each Holder shall agree to be solely
responsible) and (z) shall make such representations and warranties concerning
itself and the Option Shares to be sold by it in connection with such
Drag-Along Sale as WCAS IX makes with respect to itself and its Option Shares.


3.               Each
Drag-Along Stockholder will be responsible for funding its proportionate share
of any adjustment in purchase price or


 


12

















 


                        escrow arrangements in
connection with the Drag-Along Sale and for its proportionate share of any
withdrawals from any such escrow, including any such withdrawals that are made
with respect to claims arising out of agreements, covenants, representations,
warranties or other provisions relating to the Drag-Along Sale.


4.               Each
Drag-Along Stockholder will be responsible for its proportionate share of the
fees, commissions and other out-of-pocket expenses (collectively, “Costs”)
of the Drag-Along Sale to the extent not paid or reimbursed by the Company, the
Third Party or another Person (other than WCAS IX); provided, that the
liability for such Costs shall not exceed the total consideration received by
such Drag-Along Stockholder for its Option Shares in respect of such Drag-Along
Sale.  WCAS IX shall be entitled to
estimate each Drag-Along Stockholder’s proportionate share of such Costs and to
withhold such amounts from payments to be made to each Drag-Along Stockholder
at the time of closing of the Drag-Along Sale; provided that (i) such
estimate shall not preclude WCAS IX from recovering additional amounts from the
Drag-Along Stockholders in respect of each Drag-Along Stockholder’s
proportionate share of such Costs and (ii) WCAS IX shall reimburse each
Drag-Along Stockholder to the extent actual amounts are ultimately less than
the estimated amounts or any such amounts are paid by the Company, the Third
Party or another Person (other than WCAS IX).


iii.                        Closing
of Drag-Along Sale.


1.               At
the closing of such Drag-Along Sale, each of the Drag-Along Stockholders shall
deliver certificates evidencing the Option Shares then held by it and to be
sold in connection with such sale, duly endorsed for transfer or accompanied by
stock powers executed in blank, against payment of the purchase price therefor
by wire transfer to the account or accounts specified by such Drag-Along
Stockholder or by check.


2.               If
the Drag-Along Sale is not consummated within 180 days from the date of the
Drag-Along Notice, WCAS IX must deliver another Drag-Along Notice in order to
exercise its rights under this Plan with respect to such Drag-Along Sale.


iv.                       Custody
Agreement and Power of Attorney. 
Upon receiving a Drag-Along Notice, each Drag-Along Stockholder will, if
requested by WCAS IX, execute and deliver a custody agreement and power of
attorney in form and substance reasonably satisfactory to WCAS IX


 


13

















 


            with
respect to the Option Shares that are to be sold by such Drag-Along Stockholder
pursuant hereto in respect of such Drag-Along Sale (a “Drag-Along Custody
Agreement and Power of Attorney”). 
The Drag-Along Custody Agreement and Power of Attorney will provide,
among other things, that each such Drag-Along Stockholder will deliver to and
deposit in custody with the custodian and attorney-in-fact named therein a
certificate or certificates representing such Option Shares (each duly endorsed
in blank by the registered owner or owners thereof) and irrevocably appoint
said custodian and attorney-in-fact as its agent and attorney-in-fact with full
power and authority to act under the Drag-Along Custody Agreement and Power of
Attorney on its behalf with respect to (and subject to the terms and conditions
of) the matters specified in this Plan.


v.  The provisions of
this Section (b) of Article XIV shall terminate and be of no further
force or effect from and after the consummation of the Company’s Initial Public
Offering.


c.     Required Provisions of
Stock Option Agreements.  Each stock
option agreement relating to Stock Options awarded under this Plan shall
contain the following provisions (and shall not contain any provisions in
conflict with the following provisions):


“The
Participant hereby acknowledges receipt of a copy of the Plan and accepts and
agrees to be bound by all of the terms and conditions of the Plan as if set out
verbatim in this Agreement, including, without limitation, the provisions of
Article XIV of the Plan which restrict transfers of shares of Stock issued upon
exercise of the Stock Options without the prior written consent of Welsh,
Carson, Anderson & Stowe IX, L.P. (“WCAS IX”) and require the holder
of such shares to sell such shares at the request of WCAS IX under certain
circumstances.  The Participant hereby
further acknowledges and agrees that WCAS IX is an express third party
beneficiary of the provisions of Article XIV of the Plan and this Agreement and
is entitled to enforce such provisions against the Participant.  In the event of a conflict between the terms
of the Plan and the terms of this Agreement, the terms of the Plan shall
control.”


“This Agreement may be amended only by written
agreement of the Participant and the Company (and WCAS IX, if such change would
affect WCAS IX’s rights or obligations under Article XIV of the Plan or this
Agreement), and may be amended without the consent of any other person.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto (and WCAS IX as
third party beneficiary) and their respective successors, representatives,
heirs, descendants, distributees and permitted assigns.”


                d.             WCAS IX Consent to Certain
Amendments; WCAS IX As Third Party Beneficiary.  Notwithstanding anything else to the contrary contained in this
Plan, none of the provisions of this Article XIV shall be amended,
modified, terminated or supplemented without


 


14

















 


the prior written approval of WCAS
IX, which is intended to be a beneficiary of such provisions entitled to
enforce such provisions.


 


 


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