SC 14D9

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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
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                                 SCHEDULE 14D-9
                    SOLICITATION / RECOMMENDATION STATEMENT
                      PURSUANT TO SECTION 14(D)(4) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
 
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                           SHERIDAN HEALTHCARE, INC.
                           (Name of Subject Company)
 
                           SHERIDAN HEALTHCARE, INC.
                       (Name of Person Filing Statement)
 
                    COMMON STOCK, PAR VALUE $0.01 PER SHARE,
                CLASS A COMMON STOCK, PAR VALUE $0.01 PER SHARE
                       (Titles of Classes of Securities)
 
                                   823781109,
                                   823781208
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                    (CUSIP Numbers of Classes of Securities)
 
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                              JAY A. MARTUS, ESQ.
                 VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
                           SHERIDAN HEALTHCARE, INC.
                        4651 SHERIDAN STREET, SUITE 400
                            HOLLYWOOD, FLORIDA 33021
                                 (954) 987-5822
                 (Name, address and telephone number of person
                authorized to receive notice and communications
                   on behalf of the person filing statement)
 
                                   Copies to:
 
                          STEPHEN K. RODDENBERRY, ESQ.
                       AKERMAN, SENTERFITT & EIDSON, P.A.
                             ONE S.E. THIRD AVENUE
                                   28TH FLOOR
                              MIAMI, FLORIDA 33131
                                 (305) 374-5600
 
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ITEM 1.  SECURITY AND SUBJECT COMPANY.
 
     The name of the subject company is Sheridan Healthcare, Inc., a Delaware
corporation (the "Company"), and the address of the principal executive offices
of the Company is 4651 Sheridan Street, Suite 400, Hollywood, Florida 33021. The
titles of the classes of equity securities to which this statement relates are
the Company's Common Stock, par value $0.01 per share ("Common Stock"), and the
Company's Class A Common Stock, par value $0.01 per share ("Class A Common
Stock" and, together with the Common Stock, the "Shares").
 
ITEM 2.  TENDER OFFER OF THE BIDDER.
 
     This statement relates to the tender offer (the "Offer") described in the
Tender Offer Statement on Schedule 14D-1 and Statement on Schedule 13D, dated
March 31, 1999 (as amended or supplemented, the "Schedule 14D-1"), filed by
Vestar/Sheridan, Inc., a Delaware corporation (formerly known as Vestar/Calvary,
Inc., "Purchaser"), Vestar/Sheridan Holdings, Inc. (formerly known as
Vestar/Calvary Holdings, Inc.) a Delaware corporation of which Purchaser is a
wholly owned subsidiary ("Parent"), and Vestar/Sheridan Investors, LLC, a
Delaware limited liability company (formerly known as Vestar/Calvary Investors,
LLC), of which Parent is a wholly owned subsidiary ("Holdings"), with the
Securities and Exchange Commission (the "Commission"), relating to an offer by
Purchaser to purchase all of the issued and outstanding Shares at a price of
$9.25 per Share, net to the seller in cash, without interest thereon (the "Offer
Price"), upon the terms and subject to the conditions set forth in Purchaser's
Offer to Purchase, dated March 31, 1999, and the related Letter of Transmittal
(together, as amended or supplemented, the "Offer Documents"), copies of which
are filed as Exhibits (a)(1) and (a)(2) to this Solicitation/Recommendation
Statement on Schedule 14D-9 (this "Schedule 14D-9"), respectively, and are
incorporated herein by reference in their entirety.
 
     The Schedule 14D-9 indicates that the principal executive offices of
Purchaser, Parent and Holdings are located at 245 Park Avenue, 41st Floor, New
York, New York 10167. The Offer is being made pursuant to the Agreement and Plan
of Merger, dated as of March 24, 1999 (the "Merger Agreement"), among the
Company, Purchaser and Parent. A copy of the Merger Agreement is filed as
Exhibit (c)(1) to this Schedule 14D-9, and is incorporated herein by reference
in its entirety. Pursuant to the Merger Agreement, as soon as practicable
following the consummation of the Offer and the satisfaction or waiver of
certain conditions, Purchaser will be merged into the Company (the "Merger"),
with the Company continuing as the surviving corporation (the "Surviving
Corporation"). Pursuant to the Merger Agreement, as of the effective time of the
Merger (the "Effective Time"), each Share outstanding immediately prior to the
Effective Time (other than Shares owned by Parent or Purchaser and any Shares
held by stockholders who properly exercise their dissenters' rights (the
"Dissenting Shares") under Delaware General Corporation Law ("DGCL")) shall be
cancelled, extinguished and converted into the right to receive $9.25 per Share,
net to the Seller in cash, without interest thereon (the "Merger
Consideration"), upon the surrender of the certificate formerly representing
such Share (the "Certificate") in the manner described in the Merger Agreement
less any withholding taxes required under applicable law. The Merger Agreement
is more fully described in Item 3 of this Schedule 14D-9.
 
ITEM 3.  IDENTITY AND BACKGROUND.
 
     (a) The name and address of the Company, which is the person filing this
Schedule 14D-9, are set forth in Item 1 above. Unless the context otherwise
requires, references to the Company in this Schedule 14D-9 are to the Company
and its subsidiaries, viewed as a single entity.
 
     (b) In addition to the agreements described below, certain contracts,
agreements, arrangements or understandings between the Company or its affiliates
and certain of its executive officers, directors or affiliates are described in
the Company's Information Statement attached hereto as Annex A under the
headings "Executive Compensation," "Security Ownership of Management and Certain
Beneficial Owners" and "Certain Relationships and Related Transactions." Except
as described therein or as otherwise disclosed in this Schedule 14D-9, to the
knowledge of the Company, as of the date hereof there are no other material
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contracts, agreements, arrangements or understandings, or any actual or
potential conflicts of interest with respect to the Offer or the Merger between
the Company or its affiliates and (i) the Company, its executive officers,
directors or affiliates or (ii) Purchaser, Parent and Holdings and their
executive officers, directors or affiliates. Capitalized terms used in the
description of agreements below and not otherwise defined herein shall have the
meanings ascribed to them in the particular agreement.
 
     SUBSCRIPTION AND TENDER AGREEMENTS.  Concurrently with the execution and
delivery of the Merger Agreement, Parent entered into the Subscription and
Tender Agreements with each of Dr. Mitchell Eisenberg, the Chairman, President
and Chief Executive Officer of the Company, Dr. Lewis D. Gold, the Executive
Vice President -- Business Development of the Company, Mr. Michael F. Schundler,
the Chief Operating Officer and Chief Financial Officer of the Company, Mr. Jay
A. Martus, the Vice President, Secretary and General Counsel of the Company and
Dr. Gilbert L. Drozdow, the Vice President -- Hospital Based Services of the
Company, and the Tender Agreement with Mr. Robert J. Coward, the Vice
President -- Finance of the Company (each of Drs. Eisenberg, Gold and Drozdow
and Messrs. Martus, Coward and Schundler, an "Executive"). The following is a
summary of the Subscription and Tender Agreements and the Tender Agreement,
which summary is qualified in its entirety by reference to the Subscription and
Tender Agreements and the Tender Agreement, copies of which are filed as
Exhibits (c)(2)-(c)(7) hereto, respectively, and are incorporated herein by
reference.
 
     The Subscription and Tender Agreements and the Tender Agreement provide
that each Executive will validly tender his Shares in the Offer and will not
withdraw any Shares so tendered; provided that the Merger Agreement has not been
terminated. Each Executive also agrees, so long as the Executive is required to
tender his Shares, to vote the Shares (a) in favor of the adoption of the Merger
Agreement and the approval of the transactions contemplated thereby and (b)
against any action or agreement that would result in a breach of any covenant,
representation or warranty contained in the Merger Agreement or would impede,
interfere with, delay or prevent the consummation of the Merger or the purchase
of Shares pursuant to the Offer. Each Executive has agreed not to, so long as
the Executive is required to tender his Shares, purport to vote (or execute a
consent with respect to) his Shares (other than in accordance with the
requirements of the Subscription and Tender Agreements or the Tender Agreement)
or grant any proxy or power of attorney with respect to any Shares, deposit any
Shares into a voting trust or enter into any agreement, arrangement or
understanding with any person (other than the Subscription and Tender Agreements
and the Tender Agreement), directly or indirectly, to vote, grant any proxy or
give instructions with respect to the voting of his Shares, or agree to do any
of the foregoing. The Subscription and Tender Agreements and the Tender
Agreement also provide that no Executive shall, so long as the Executive is
required to tender Shares pursuant to his Subscription and Tender Agreement or
Tender Agreement, sell, transfer or otherwise dispose of, pledge or otherwise
encumber any Shares after the date of the agreement (except to tender Shares to
Purchaser pursuant to the Offer), or agree to do any of the foregoing.
 
     Pursuant to the Subscription and Tender Agreements, each Executive party
thereto has agreed to subscribe for and purchase, and Parent has agreed to issue
and sell to the Executive, on the date Purchaser purchases Shares pursuant to
the Offer (the "Closing Date") a specific number of shares of common stock, par
value $0.01 per share ("Parent Common Stock"), at a price equal to the per Share
price paid pursuant to the Offer. The Executives have agreed to purchase an
aggregate number of shares of Parent Common Stock that are expected to
constitute approximately 4.8% of the shares of Parent Common Stock expected to
be outstanding upon the consummation of the Merger. Notwithstanding any other
provision of the Subscription and Tender Agreements, Parent shall have no
obligations to issue, sell or deliver any of its shares to any Executive (i) who
is not a full-time employee of, or consultant to, Parent or any of its
subsidiaries on the Closing Date, (ii) whose representations and warranties
contained in his Subscription and Tender Agreement are not true and correct as
of the Closing Date in all material respects or (iii) who has breached his
obligations under his Subscription and Tender Agreement.
 
     The Subscription and Tender Agreements and the Tender Agreement also
provide that upon the consummation of the Merger (a) Parent shall adopt the
Vestar/Sheridan Holdings, Inc. 1999 Stock Option Plan (the "Option Plan") in
substantially the form attached to the Subscription and Tender Agreements and
the Tender Agreement and (b) Parent shall enter into stock option agreements
with each Executive in
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substantially the forms attached to the Subscription and Tender Agreements and
the Tender Agreement pursuant to which the Executives will be granted options to
purchase an aggregate of 950,000 shares of Parent Common Stock at an exercise
price per share equal to the per Share price paid pursuant to the Offer, subject
to the satisfaction of certain time vesting requirements or targets relating to
the financial performance of the Company which are described in the option
agreements.
 
     STOCKHOLDERS AGREEMENT.  Concurrently with the execution and delivery of
the Merger Agreement, Parent, Holdings, the Company and the Executives party to
Subscription and Tender Agreements entered into the Stockholders Agreement (the
"Stockholders Agreement"). Mr. Coward will enter into the Stockholders Agreement
upon the consummation of the Merger. The following is a summary of the
Stockholders Agreement, which summary is qualified in its entirety by reference
to the Stockholders Agreement, a copy of which is filed as Exhibit (c)(8) hereto
and is incorporated herein by reference.
 
     Pursuant to the Stockholders Agreement, the shares of Parent Common Stock
beneficially owned by each Executive and any other employees of Parent and its
subsidiaries who become beneficial owners of Parent Common Stock (collectively,
the "Management Investors") are subject to restrictions on transfer, as well as
the other provisions described below.
 
     The Stockholders Agreement provides that Holdings and the Management
Investors will vote all of their shares of Parent Common Stock to elect and
continue in office a Board of Directors of Parent and each subsidiary of Parent
(other than subsidiaries of the Company) consisting solely of the following:
 
          (a) three designees of Holdings;
 
          (b) two designees of the Management Investors (who shall be Mitchell
     Eisenberg and Lewis D. Gold so long as each of them is an executive officer
     of the Company); and
 
          (c) two persons to be designated by Holdings in its sole discretion
     after consultation with the representatives of the Management Investors.
 
In addition, each Management Investor has agreed that until the Lapse Date (as
defined in the Stockholders Agreement) he will vote all of his shares of Parent
Common Stock (i) consistent with the vote of Holdings with respect to its shares
of Parent Common Stock and (ii) to ratify, approve and adopt any and all actions
adopted or approved by the Board of Directors of Parent.
 
     The Stockholders Agreement provides for customary "tag-along" and
"drag-along" rights with respect to shares of Parent Common Stock beneficially
owned by the Management Investors. In addition, Holdings has certain rights to
require Parent to register shares of Parent Common Stock held by it under the
Securities Act of 1933 (the "Securities Act"), and Holdings and the Management
Investors have certain rights to participate in publicly registered offerings of
Parent Common Stock initiated by Parent or other third parties.
 
     The Stockholders Agreement provides that upon termination of a Management
Investor's employment with Parent and its subsidiaries, (a) Parent, Holdings and
the Company will have call rights with respect to shares of Parent Common Stock
owned by such Management Investor and certain transferees and (b) such
Management Investor and certain transferees in certain limited circumstances
will have a right to put shares of Parent Common Stock to the Company. The
amount paid for shares of Parent Common Stock upon a put or a call will vary
depending on the reason for the termination of the Management Investor's
employment. The Stockholders Agreement also contains non-competition,
non-solicitation and confidentiality provisions agreed to by each Management
Investor who is not party to a written employment agreement with Parent or one
of its subsidiaries which contains such provisions.
 
     EMPLOYMENT AGREEMENTS.  Concurrently with the execution and delivery of the
Merger Agreement, the Company entered into Employment Agreements with each of
Dr. Eisenberg, Dr. Gold, Mr. Schundler and Mr. Martus. The following is a
summary of the Employment Agreements, which summary is qualified in its entirety
by reference to the Employment Agreements, copies of which are filed as Exhibits
(c)(10)-(c)(13) hereto, respectively, and are incorporated herein by reference.
 
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     The Employment Agreements shall become effective upon the purchase of
Shares pursuant to the Offer. Each Employment Agreement has a five year term
with automatic one year renewals thereafter, unless either party gives the other
six months' written notice prior to the end of the applicable term. The
Employment Agreements supersede all prior agreements and understandings between
each Executive and the Company and its affiliates; provided that it shall not
supersede the Executives' rights under the Company's employee benefit plans.
 
     The Employment Agreements provide for a one-time cash bonus at the
Effective Time in the amounts of $650,000, $600,000, $250,000, and $245,000 for
Dr. Eisenberg, Dr. Gold, Mr. Schundler and Mr. Martus, respectively. In
addition, the Employment Agreements provide for annual base salaries of
$375,000, $350,000, $275,000 and $275,000 for Dr. Eisenberg, Dr. Gold, Mr.
Schundler and Mr. Martus, respectively. The Company has also agreed to establish
an annual incentive compensation plan pursuant to which the Executives shall be
eligible to receive bonuses equal to 50%, in the case of Dr. Eisenberg and Dr.
Gold, or 25%, in the case of Mr. Schundler and Mr. Martus, of their annual
salaries based upon satisfaction of annual performance targets established by
the Company Board.
 
     If an Executive's employment pursuant to his Employment Agreement is
terminated (i) by the Company without cause (as defined in the Employment
Agreements), (ii) upon the death or permanent disability of the Executive or
(iii) by the Executive upon the occurrence of certain events, including the
failure of the Company to pay the Executive's salary or provide certain benefits
to which the Executive is entitled, certain relocations of the Company's offices
or a material breach of the Employment Agreement by the Company, the Company
shall make cash severance payments over a one-year period following any such
termination in an aggregate amount equal to the relevant Executive's base salary
(twice the base salary in the case of Dr. Eisenberg and Dr. Gold) plus the pro
rata portion of the annual bonus to which the Executive would otherwise have
been entitled for the fiscal year in which such termination occurs if such
Executive had remained employed by the Company for the entire fiscal year. In
addition, Dr. Eisenberg's and Dr. Gold's Employment Agreements provide that if
their employment is terminated due to any of the foregoing events within one
year following a Change of Control (as defined), such Executive shall receive in
addition to the severance amounts described above the excess of (A) the greater
of (i) $1 million and (ii) twice the sum of such Executive's current base salary
and the bonus he received in the prior year less (B) twice his current base
salary. Payment of all severance amounts is subject to the Executive's continued
compliance with his covenant not to compete with the Company.
 
     Each Employment Agreement also provides for termination upon mutual
consent, for cause, and by the Executive upon 90 days' written notice or upon
due notice not to renew at the end of his term of employment, in which event the
Company has no further obligation to the Executive other than the obligations to
pay accrued but unpaid salary, to provide certain continuing medical malpractice
insurance coverage and to pay the Executive his accrued and unpaid bonus in
respect of prior completed fiscal years. If an Executive's employment is
terminated because the Company decides not to renew at the end of his term of
employment, the Executive shall be entitled to his accrued and unpaid salary and
bonus and, provided he complies with his covenant not to compete with the
Company, an amount equal to his base salary (twice the base salary in the case
of Dr. Eisenberg and Dr. Gold).
 
     Each of the Executives is subject to certain non-competition,
non-solicitation and confidentiality provisions with respect to the Company and
its Controlled Entities (as defined in the Merger Agreement).
 
THE MERGER AGREEMENT, THE GUARANTY AGREEMENT AND THE MANAGEMENT AGREEMENT.
 
     THE MERGER AGREEMENT.  The following is a summary of the Merger Agreement,
which summary is qualified in its entirety by reference to the Merger Agreement,
which is attached as Exhibit (c)(1) hereto.
 
     The Offer.  The Merger Agreement provides for the commencement of the Offer
and for the acceptance for payment, purchase and payment for Shares validly
tendered on or prior to the expiration of the Offer and not withdrawn, subject
to the satisfaction or waiver of certain conditions described in Annex A to the
Merger Agreement, (the "Offer Conditions"). Purchaser has the right, in its sole
discretion, to waive any such condition and make any other changes in the terms
and conditions of the Offer; provided, however, without the written consent of
the Company, Purchaser may not amend or waive the Minimum Condition (as defined
in
 
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the Merger Agreement), decrease the price per Share payable in the Offer, change
the form of consideration payable in the Offer (other than by adding
consideration), reduce the maximum number of Shares to be purchased in the
Offer, or impose conditions to the Offer in addition to those set forth in the
Merger Agreement which are materially adverse to the holders of Shares.
Purchaser has the right in its sole discretion to extend the Offer for up to
five business days, notwithstanding the prior satisfaction of the Offer
Conditions, in order to attempt to satisfy the requirements of Section 253 of
the DGCL.
 
     The Merger.  The Merger Agreement provides that, at the Effective Time and
subject to the conditions set forth therein (including the Offer Conditions and
in accordance with the provisions of the DGCL), Purchaser shall merge into the
Company and the separate corporate existence of Purchaser shall cease, and the
Company shall continue as the Surviving Corporation of the Merger.
 
     Certificate of Incorporation, By-laws, Directors and Officers.  The Merger
Agreement provides that at the Effective Time the Certificate of Incorporation
of the Company as in effect immediately prior to the Effective Time shall be
amended so as to read in its entirety in the form set forth as Exhibit A to the
Merger Agreement and, as so amended, shall be the Certificate of Incorporation
of the Surviving Corporation until thereafter further amended as provided
therein and under the DGCL. At the Effective Time, the By-laws of Purchaser as
in effect immediately prior to the Effective Time in the form set forth as
Exhibit B to the Merger Agreement shall be the By-laws of the Surviving
Corporation following the Merger and thereafter may be amended or repealed in
accordance with their terms or the certificate of incorporation of the Surviving
Corporation following the Merger and as provided under the DGCL. The Merger
Agreement further provides that the directors of Purchaser immediately prior to
the Effective Time shall be the initial directors of the Surviving Corporation
following the Merger, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation following the Merger, and
the officers of the Company immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed (as the case may be) and
qualified.
 
     Conversion of Securities.  Pursuant to the Merger Agreement, as of the
Effective Time, each Share outstanding immediately prior to the Effective Time
(other than any Shares owned by Parent or Purchaser and any Dissenting Shares)
shall be cancelled, extinguished and converted into the right to receive the
Merger Consideration, without interest, upon surrender of the Certificate in the
manner described in the Merger Agreement, less any withholding taxes required
under applicable law.
 
     Each share of common stock of Purchaser outstanding immediately prior to
the Effective Time shall be converted into and become one validly issued, fully
paid and nonassessable share of identical common stock of the Surviving
Corporation.
 
     Stock Options.  Under the Merger Agreement, each option to purchase Shares
(a "Company Option") outstanding immediately prior to the Effective Time shall
become immediately vested. Each Company Option with an exercise price per Share
less than the Merger Consideration shall automatically be converted into the
right to receive cash in the amount of the product of (a) the Merger
Consideration minus such exercise price, multiplied by (b) the number of Shares
underlying each such Company Option. Based on Merger Consideration of $9.25, the
officers and directors of the Company will receive $556,058 in the aggregate in
respect of their Company Options, and Drs. Eisenberg, Gold and Drozdow and
Messrs. Schundler, Martus and Coward will receive $30,168, $20,618, $39,551,
$185,618, $179,779 and $86,250, respectively, in respect of their Company
Options. All other Company Options outstanding as of the Effective Time shall
automatically be terminated effective as of the Effective Time.
 
     Dissenters' Rights.  The Merger Agreement provides that any Shares
outstanding immediately prior to the Effective Time held by a holder who has
demanded and perfected the right, if any, for appraisal of those Shares in
accordance with the provisions of Section 262 of the DGCL and as of the
Effective Time has not withdrawn or lost such right to such appraisal shall not
be converted into or represent a right to receive Merger Consideration, but the
holder shall only be entitled to such rights as are granted by the DGCL. If a
holder of Shares who demands appraisal of those Shares under the DGCL shall
effectively withdraw or lose (through failure to perfect or otherwise) the right
to appraisal, then, as of the Effective Time or the occurrence of such event,
whichever last occurs, those Shares shall be converted into and represent only
the right to receive the Merger Consideration without interest, upon the
surrender of the Certificate or Certificates.
 
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     Interim Operations.  The Company has agreed that, from March 24, 1999 until
the earlier of the termination of the Merger Agreement and the time persons
nominated by Parent or Purchaser constitute a majority of the Company Board,
except as set forth in the Company Disclosure Statement (as defined in the
Merger Agreement) or unless Parent shall otherwise agree in writing, the
businesses and operations of the Company and its Controlled Entities (as defined
in the Merger Agreement) will be conducted only in the ordinary course of
business and in a manner consistent with past practice. The Company has also
agreed that the Company and its Controlled Entities shall use their commercially
reasonable efforts during such period to preserve intact the business
organization and goodwill of the Company and its Controlled Entities, to keep
available the services of their present officers and employees and to maintain
satisfactory relationships with those persons having business relationships with
them.
 
     The Company has also agreed that the Company and its Controlled Entities
shall refrain from directly or indirectly taking various actions without
Parent's consent until the time persons nominated by Parent or Purchaser
constitute a majority of the Company Board. These prohibitions cover, among
other things, limitations on making changes to their organizational documents,
selling their capital stock or their property or assets (other than in the
ordinary course of business), declaring or paying any dividend or other
distribution, entering into any material agreement or transaction, including
acquisitions and dispositions, incurring debt other than in the ordinary course
of business beyond specified limits, making capital expenditures beyond
specified limits, increasing the compensation payable to its directors, officers
and employees (except normal increases in the ordinary course of business for
employees who are not directors or officers of the Company), granting any
severance or termination pay (except to the extent required under existing
policies or agreements), changing accounting or tax policies, settling any
litigation beyond specified limits, changing the composition of the Company
Board, amending, modifying or terminating any rights to intellectual property,
and failing to maintain the existing insurance policies covering the Company and
its subsidiaries.
 
     Stockholders Meeting.  Pursuant to the Merger Agreement, the Company,
acting through the Company Board, shall, if required in accordance with
applicable law and the Company's Certificate of Incorporation and By-laws, (i)
duly call, give notice of, convene and hold a meeting of its stockholders as
soon as practicable following consummation of the Offer for the purpose of
adopting the Merger Agreement (the "Stockholders Meeting") and (ii) subject to
its fiduciary duties under applicable law (A) include in the proxy or
information statement relating to the Stockholders Meeting the unanimous
recommendation of the Company Board that the stockholders of the Company vote in
favor of the adoption of the Merger Agreement and the written opinions of
Salomon Smith Barney and Bowles Hollowell Conner (collectively, the "Financial
Advisors") that the consideration to be received by the stockholders of the
Company pursuant to the Offer and the Merger is fair to such stockholders from a
financial point of view and (B) use its reasonable best efforts to obtain the
necessary stockholder approval of the Merger Agreement. Parent and Purchaser
have agreed to cause all Shares then beneficially owned by them and their
subsidiaries to be voted in favor of adoption of the Merger Agreement at any
Stockholders Meeting.
 
     The Merger Agreement provides that, notwithstanding the foregoing, if
Purchaser acquires at least 90% of the outstanding Shares pursuant to the Offer,
the Company and Parent shall, subject to the provisions of the Merger Agreement,
take all necessary and appropriate action to cause the Merger to become
effective as soon as reasonably practicable after such acquisition, without a
meeting of the Company's stockholders, in accordance with Section 253 of the
DGCL.
 
     Proxy Statement.  The Merger Agreement provides that, if required by
applicable law, as soon as practicable following Parent's request, the Company
shall file with the Commission under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder, and shall use its reasonable good faith efforts to have cleared by
the Commission and mailed to the Company's stockholders, the proxy or
information statement relating to the Stockholders Meeting. Parent, Purchaser
and the Company have agreed to cooperate with each other in the preparation of
the proxy or information statement. Without limiting the generality of the
foregoing, each of Parent and Purchaser is obliged to furnish to the Company the
information relating to it required by the Exchange Act and the rules and
regulations promulgated thereunder to be set forth in the Proxy Statement. The
Company has agreed to use its best efforts, after consultation with the other
parties hereto, to respond promptly to any comments
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made by the Commission with respect to the proxy or information statement and
any preliminary version thereof filed by it and to cause such proxy or
information statement to be mailed to the Company's stockholders at the earliest
practicable time.
 
     Company Board Representation.  The Merger Agreement provides that, promptly
upon the purchase by Purchaser of Shares pursuant to the Offer, and from time to
time thereafter, Purchaser shall be entitled to designate up to that number of
directors, rounded up to the next whole number, on the Company Board as shall
give Purchaser representation on the Company Board equal to the product of the
total number of directors on the Company Board (giving effect to the directors
elected pursuant to this sentence) multiplied by the percentage that the
aggregate number of Shares beneficially owned by Purchaser or any affiliate of
Purchaser bears to the total number of Shares then outstanding, and the Company
shall, at such time, promptly take all action necessary to cause Purchaser's
designees to be so elected, including either increasing the size of the Company
Board or securing the resignations of incumbent directors or both. The Company
has agreed to use its reasonable best efforts to cause persons designated by
Purchaser to constitute the same percentage as is on the Company Board of (i)
each committee of the Company Board, (ii) each board of directors of each
Controlled Entity of the Company and (iii) each committee of each such board, in
each case only to the extent permitted by law. Until Purchaser acquires a
majority of the outstanding Shares on a fully diluted basis, the Company shall
use its reasonable best efforts to ensure that all the members of the Company
Board and such boards and committees as of March 24, 1999 who are not employees
of the Company or its Controlled Entities shall remain members of the Company
Board and such boards and committees.
 
     Following the election or appointment of Purchaser's designees pursuant to
the Merger Agreement and prior to the Effective Time, any amendment of the
Merger Agreement or the Certificate of Incorporation or By-laws of the Company,
any termination of the Merger Agreement by the Company, any extension by the
Company of the time for the performance of any of the obligations or other acts
of Parent or Purchaser or waiver of any of the Company's rights thereunder, will
require the concurrence of a majority of the directors of the Company then in
office who are neither designated by Purchaser or Parent nor are employees of
the Company or any of its Controlled Entities (the "Disinterested Directors").
Notwithstanding the immediately preceding paragraph, the number of Disinterested
Directors shall be not less than two; provided, however, that, in such event, if
the number of Disinterested Directors is reduced below two for any reason, the
remaining Disinterested Director is entitled to designate a person to fill the
vacancy, and such person will be deemed to be a Disinterested Director. If no
Disinterested Director remains, the other directors who were directors prior to
March 24, 1999 will designate two persons to fill such vacancies who cannot be
employees of any of the Company and its Controlled Entities or employees,
stockholders or affiliates of Parent or Purchaser, and such persons will be
deemed to be Disinterested Directors.
 
     No Solicitations.  The Merger Agreement provides that neither the Company
nor any of its Controlled Entities will (whether directly or indirectly through
advisors, agents or other intermediaries), nor will the Company or any of its
Controlled Entities authorize or permit any of its or their officers, directors,
agents, representatives, advisors or subsidiaries to, (a) solicit, initiate,
encourage (including by way of furnishing information) or take any action
knowingly to facilitate the submission of any inquiries, proposals or offers
(whether or not in writing) from any person (other than Parent and its
affiliates) relating to, other than the transactions contemplated by the Merger
Agreement, (i) any acquisition or purchase of 5% or more of the consolidated
assets of the Company and its Controlled Entities or of any class of equity
securities of the Company or any of its Controlled Entities, (ii) any tender
offer (including a self tender offer) or exchange offer that if consummated
would result in any person beneficially owning any class of equity securities of
the Company or any of its Controlled Entities, (iii) any merger, consolidation,
business combination, sale of substantially all assets, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any of
its Controlled Entities whose assets, individually or in the aggregate,
constitute 5% or more of the consolidated assets of the Company, or (iv) any
other transaction the consummation of which would or would reasonably be
expected to impede, interfere with, prevent or materially delay the Merger or
which would or would reasonably be expected to materially dilute the benefits to
Parent or Purchaser of the transactions contemplated by the Merger Agreement
(collectively, "Transaction Proposals"), or agree to or endorse any Transaction
Proposal, or (b) enter into or participate in any discussions or negotiations
regarding any of the
 
                                        7
   9
 
foregoing, or furnish to any other person any information with respect to its
business, properties or assets in connection with the foregoing, or otherwise
cooperate in any way with, or knowingly assist or participate in, facilitate or
encourage, any effort or attempt by any other person (other than any of Parent
and its affiliates) to do or seek any of the foregoing; provided, however, that
the foregoing shall not prohibit the Company, prior to the receipt of
stockholder approval of the transactions contemplated hereby, (A) from complying
with Rule 14e-2 and Rule 14d-9 under the Exchange Act with regard to a bona fide
tender offer or exchange offer or (B) from participating in negotiations or
discussions with or furnishing information to any person in connection with a
Transaction Proposal not solicited after March 24, 1999 which is submitted in
writing by such person to the Company Board after March 24, 1999; provided,
however, that prior to participating in any such discussions or negotiations or
furnishing any information, the Company receives from such person an executed
confidentiality agreement on terms not less favorable to the Company than the
Confidentiality Agreement; and provided, further, that the Company Board shall
have concluded in good faith, after consultation with its outside financial
advisors, that such Transaction Proposal is reasonably likely to constitute a
Superior Proposal (as defined below) and, after consultation with its outside
legal counsel, that participating in such negotiations or discussions or
furnishing such information is required in order to comply with its fiduciary
duties to the stockholders of the Company under applicable law; and provided,
further, that the Company Board shall not (unless it is prohibited from doing so
by the terms of the Transaction Proposal), take any of the foregoing actions
prior to two business days after it provides Parent with prompt (but in no event
later than 24 hours after the occurrence or commencement of such action) written
notice thereof. If the Company Board receives a Transaction Proposal, then the
Company shall, to the extent not prohibited in good faith by the terms of such
Transaction Proposal, promptly inform Parent of the terms and conditions of such
proposal and the identity of the person making it.
 
     The Merger Agreement required the Company to cease and cause its advisors,
agents and other intermediaries to cease any and all activities, discussions or
negotiations with any parties conducted prior to March 24, 1999 with respect to
any of the foregoing and to use its reasonable best efforts to cause any such
parties in possession of confidential information about the Company that was
furnished by or on behalf of the Company to return or destroy all such
information in the possession of any such party or in the possession of any
agent or advisor of any such party. The Company has agreed not to release any
third party from, or waive any provisions of, any confidentiality or standstill
agreement to which the Company is a party. "Superior Proposal" is defined as any
of the transactions described in clause (i), (ii) or (iii) of the definition of
Transaction Proposal (with all of the percentages included in the definition of
such term raised to 51% for purposes of the definition) with respect to which
the Company Board shall have concluded in good faith, after consultation with
its outside legal counsel and financial advisors, is reasonably likely to be
completed, taking into account all legal, financial, regulatory and other
aspects of the Transaction Proposal, including the status of the financing
therefor, and the person making the proposal, and would, if consummated, result
in a transaction more favorable to the Company's stockholders from a financial
point of view than the transactions contemplated by the Merger Agreement,
including the Merger.
 
     Employee Benefits Plans.  The Merger Agreement provides that the Surviving
Corporation must maintain benefit plans substantially comparable in the
aggregate to the benefit plans in place on March 24, 1999 and disclosed to
Parent for a period of at least one year following the Effective Time. For
purposes of satisfying the terms and conditions of such plans, the Surviving
Corporation must give full credit for eligibility and vesting (but not benefit
accrual) for each participant's period of service with the Company prior to the
Effective Time. To the extent the Surviving Corporation's benefit plans provide
medical or dental welfare benefits after the Effective Time, the Surviving
Corporation must cause all pre-existing condition exclusions and actively at
work requirements to be waived to the extent such exclusions and work
requirements have been satisfied under medical and dental plans in place on
March 24, 1999 and the Surviving Corporation must provide that any expenses
incurred on or before the Effective Time will be taken into account under the
Surviving Corporation's benefit plans for purposes of satisfying the applicable
deductible, coinsurance and maximum out-of-pocket provisions for such employees
and their covered dependents.
 
     Indemnification of Directors and Officers.  The Merger Agreement provides
that for a period of six years after the Effective Time the Surviving
Corporation must indemnify and hold harmless, and to honor its
 
                                        8
   10
 
separate indemnification agreements with, each person who is an officer or
director of the Company or its Controlled Entities on March 24, 1999 (an
"Indemnified Person") from and against all damages, liabilities, judgments and
claims (and related expenses including, but not limited to, attorney's fees and
amounts paid in settlement) based upon or arising from his or her capacity as an
officer or director of the Company or its Controlled Entities prior to the
Effective Time, to the same extent he or she would have been indemnified under
the Certificate of Incorporation or By-laws of the Company or the applicable
Controlled Entity as such documents were in effect on March 24, 1999 and to the
extent permitted under applicable law.
 
     The Merger Agreement also provides that for a period of six years after the
Effective Time the Surviving Corporation must maintain in full force and effect
(i) the Company's directors' and officers' liability insurance policy in
existence on February 19, 1999 or (ii) a substantially similar policy maintained
by the Surviving Corporation providing for coverages of not less than $5,000,000
for acts and/or omissions alleged to have occurred prior to the Effective Time;
provided that (x) the Surviving Corporation is not required to spend an
aggregate amount for such coverage in excess of $380,000; and provided, further,
that if the aggregate premiums of such insurance coverage exceed such amount,
the Surviving Corporation is obligated to obtain a policy with the best coverage
available, in the reasonable judgment of the board of directors of the Surviving
Corporation, for an aggregate cost not exceeding such amount, and (y) such
policies may in the sole discretion of the Surviving Corporation be one or more
"tail" policies for all or any portion of the full six year period.
 
     Further Action; Reasonable Best Efforts.  The Merger Agreement provides
that, upon the terms and subject to the conditions thereof, each of the parties
thereto shall use its reasonable best efforts to take, or cause to be taken, all
action, and to do or cause to be done, and to assist and cooperate with the
parties in doing, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by the Merger Agreement and the
Stockholder Documents (as defined in the Merger Agreement) in the most
expeditious manner practicable. The Merger Agreement further provides that the
Company must use its commercially reasonable best efforts to obtain all
consents, approvals, agreements, extensions or other waivers of rights necessary
to ensure that all Leases (as defined in the Merger Agreement) and other
Material Contracts (as defined in the Merger Agreement) remain in full force and
effect for the benefit of the Company after the Effective Time on substantially
the same terms and conditions as in effect on the date of the Merger Agreement
(without any material increase in amounts payable by the Company thereunder).
The Company must file with the Internal Revenue Service a Form 3115 in form and
substance satisfactory to Parent and duly executed and acknowledged requesting
permission for the Company and each of the entities with which the Company files
a consolidated Federal income tax return to change the method of accounting for
taxable gross revenues to the non-accrual experience method as defined in
Internal Revenue Code Section 448(d)(5).
 
     Representations and Warranties.  The Merger Agreement contains various
customary representations and warranties of the parties thereto. Representations
and warranties of the Company include, without limitation, certain matters
concerning the Company's capitalization, the Company's authority to execute,
deliver and perform under, and the Company Board's approval of, the Offer, the
Merger, the Merger Agreement, the Stockholder Documents and the transactions
contemplated thereby, absence of any conflicts with charter documents and
contracts, required filings and consents, compliance with law, Commission
filings and financial statements, absence of certain changes or events, absence
of litigation, employee benefit plans, tax matters, environmental matters,
interim conduct of business, billing and coding, properties, 1998 financial
statements, brokers and year 2000 issues. Some of the representations are
qualified by a "Material Adverse Effect" clause. "Material Adverse Effect" means
(a) any change or effect that individually or in the aggregate would be
materially adverse to the business, operations, assets, liabilities, financial
condition or results of operations of such entity and its subsidiaries and
controlled entities taken as a whole or (b) a material impairment on the ability
of such entity or its subsidiaries and controlled entities taken as a whole to
perform any of their material obligations under the Merger Agreement or to
consummate the Merger.
 
     Representations and warranties of Parent and Purchaser include, without
limitation, certain matters relating to their organization and qualification to
do business, their authority to enter into the Merger Agreement and to
consummate the transactions contemplated thereby, their filings with the
Commission in connection with the Offer, consents and approvals required for the
execution and delivery of the Merger
                                        9
   11
 
Agreement and the consummation of the transactions contemplated thereby, brokers
and commitment letters. Some of the representations are qualified by a "Material
Adverse Effect" clause.
 
     Conditions of the Merger.  Under the Merger Agreement, the respective
obligations of Parent and Purchaser, on the one hand, and the Company, on the
other hand, to consummate the Merger are subject to the satisfaction at or prior
to the Effective Time of the following conditions: (a) if required by the DGCL,
the Merger Agreement shall have been adopted by the requisite vote of the
stockholders of the Company; (b) no preliminary or permanent injunction or other
order, decree, statute, rule or regulation by any federal or state court or
federal, state, local or other governmental authority which prevents the
consummation of the Merger shall have been issued and remain in effect; (c) any
waiting period applicable to the consummation of the Merger under the HSR Act
(as defined in the Merger Agreement) shall have terminated or expired; and (d)
Purchaser shall have purchased Shares pursuant to the Offer. In addition, the
obligations of Parent and Purchaser to effect the Merger are subject to the
additional condition that funding under the Permanent Facilities (as defined in
the NationsBank Commitment Letter) in the amounts and on the other terms and
conditions set forth in the NationsBank Commitment Letter (as defined in the
Merger Agreement) shall have been received.
 
     Termination.  The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, before or after the adoption
of the Merger Agreement by the stockholders of the Company:
 
          (a) By mutual written consent of Parent, Purchaser and the Company;
 
          (b) By Parent or the Company, if any court of competent jurisdiction
     or other governmental authority located or having jurisdiction within the
     United States shall have issued an order, injunction, decree, judgment or
     ruling or taken any other action restraining, enjoining or otherwise
     prohibiting the Offer or the Merger and such order, injunction, decree,
     judgment, ruling or other action is or shall have become final and
     nonappealable;
 
          (c) By Parent, if due to an occurrence or circumstance which resulted
     in a failure to satisfy any of the Offer Conditions (other than as a result
     of a material breach by Parent or Purchaser of any of its obligations under
     the Merger Agreement), Purchaser shall have (i) terminated the Offer or
     (ii) failed to pay for Shares pursuant to the Offer on or prior to May 31,
     1999 (the "Outside Date");
 
          (d) By the Company, prior to the purchase of Shares pursuant to the
     Offer, if (i) pursuant to and in compliance with the Merger Agreement, the
     Company Board withdraws, modifies or amends in a manner adverse to Parent
     or Purchaser any of its recommendations described in the Merger Agreement
     (or publicly announces its intention to do so), or (ii) the Company or the
     Company Board approves a Superior Proposal; provided, however, that (A) the
     Company shall have complied with the Merger Agreement, (B) the Company
     Board shall have concluded in good faith, after consultation with its
     outside legal counsel and financial advisors, that such proposal is a
     Superior Proposal and (C) the Company Board shall have concluded in good
     faith, after consultation with its outside legal counsel, that approving
     and entering into an agreement in connection with, and consummating, such
     Superior Proposal is required in order to comply with its fiduciary duties
     to the stockholders of the Company under applicable law; provided, that the
     Merger Agreement may not be terminated pursuant thereto unless (x)
     concurrently with such termination, the Company pays to Parent the
     Termination Fee (as hereinafter defined) and (y) the Company shall have
     provided Parent with at least two business days advance notice of such
     termination.
 
          (e) By Purchaser, prior to the purchase of Shares pursuant to the
     Offer, if the Company or the Company Board shall have (i) withdrawn,
     modified or amended in any respect adverse to Parent or Purchaser any of
     its recommendations described in the Merger Agreement (or publicly
     announced its intention to do so), (ii) failed as promptly as reasonably
     practicable to mail this Schedule 14D-9 to the Company's stockholders or
     failed to include in such Schedule 14D-9 such recommendations, (iii)
     approved, recommended or entered into an agreement with respect to, or
     consummated, any Transaction Proposal from a person other than Parent or
     any of its affiliates, (iv) resolved to do any of the
 
                                       10
   12
 
     foregoing, or (v) in response to the commencement of any tender offer or
     exchange offer (other than the Offer) for outstanding Shares, not
     recommended rejection of such tender offer or exchange offer.
 
          (f) By the Company, prior to the purchase of Shares pursuant to the
     Offer, if (i) Parent or Purchaser breaches any of its representations,
     warranties, covenants or agreements contained in the Merger Agreement and
     such breach is reasonably likely to have a Material Adverse Effect on
     Parent and, with respect to any such breach that it is reasonably capable
     of being remedied, the breach is not remedied prior to the earlier of (x)
     20 days after the Company has furnished Parent with written notice of such
     breach or (y) two business days prior to the date on which the Offer
     expires, or (ii) Purchaser shall have (A) terminated the Offer or (B)
     failed to pay for Shares pursuant to the Offer on or prior to the Outside
     Date (unless such failure is caused by or results from the breach by the
     Company of any of its representations, warranties, covenants or agreements
     contained in the Merger Agreement).
 
          (g) By Parent, if (i) the Company breaches any of its representations,
     warranties, covenants or agreements contained in the Merger Agreement and
     such breach is reasonably likely to have a Material Adverse Effect on the
     Company and, with respect to any such breach that is reasonably capable of
     being remedied, the breach is not remedied prior to the earlier of (x) 20
     days after Parent has furnished the Company with written notice of such
     breach or (y) two business days prior to the date on which the Offer
     expires, or (ii) the Minimum Condition shall not have been satisfied by the
     expiration date of the Offer as it may have been extended pursuant to the
     Merger Agreement and on or prior to such date (A) any person (including the
     Company but not including any of Parent and its other affiliates) shall
     have made a public announcement, public disclosure or other formal
     communication to the Company or its stockholders with respect to a
     Transaction Proposal or (B) any person (including the Company or any of its
     Controlled Entities), other than Parent or any of its affiliates, shall
     have become (and remain at the time of termination) the beneficial owner of
     19.9% or more of the Shares (provided that any person who on March 24, 1999
     beneficially owns 19.9% or more of the Shares shall not have become the
     beneficial owner of an additional 3% of the Shares) (unless such person
     shall have tendered and not withdrawn such person's Shares pursuant to the
     Offer).
 
     Termination Fee and Expenses.  (a) The Company shall (provided that neither
Parent nor Purchaser is then in material breach of its obligations under the
Merger Agreement) upon the termination of the Merger Agreement if such
termination shall have occurred, in whole or in part, by reason of the failure
of any of the Offer Conditions set forth in paragraphs (a), (b), (d), (e), (f)
and (i) of the Offer Conditions or the Financing Condition (as defined in
Purchaser's Offer to Purchase) (unless such financing is not received due to (i)
the occurrence of a material disruption of or material adverse change in
financial, banking or capital market conditions, (ii) a competing offering,
placement or arrangement of debt securities or bank financing by or on behalf of
the Company or any Controlled Entity thereof that was undertaken by, on behalf
of (with Parent's or Purchaser's consent), or at the direction of Parent or its
affiliates, or (iii) a material disruption or material adverse change in the
market for new issues of high yield securities or the financial or capital
markets in general), or paragraphs (d), (e) or (f) (ii) under "Termination"
above if Parent could have terminated the Merger Agreement and such termination
would have occurred, in whole or in part, for any of the reasons set forth
earlier in this sentence with respect to a termination pursuant to paragraphs
(c) or (g) under "Termination" above, promptly, but in no event later than two
business days following written notice thereof, together with reasonable
supporting documentation, reimburse Parent and Purchaser, in an aggregate amount
of up to $3,000,000, for all reasonable out-of-pocket expenses and fees
(including fees payable to all banks, investment banking firms and other
financial institutions, and their respective agents and counsel, and all fees of
counsel, accountants, financial printers, advisors, experts and consultants to
Parent and its affiliates), whether incurred prior to, concurrently with or
after the execution of the Merger Agreement in connection with the Offer or the
Merger or the consummation of any other transaction contemplated by the Merger
Agreement or the Stockholder Documents, the financing thereof or consents
related thereto (collectively, the "Expenses"). Such payment, together with any
Termination Fee (as defined below) which may be paid, shall serve as full
liquidated damages in respect of such breach, and Parent and Purchaser have
waived all claims against the Company and its Controlled Entities in respect of
breach or breaches occasioning the payment
 
                                       11
   13
 
pursuant hereto. It is understood that if Purchaser is paid a Termination Fee
(as defined below), to the extent not previously paid, no amounts shall be
payable as Expenses.
 
     (b) If the Merger Agreement is terminated by the Company pursuant to
paragraph (d) under "Termination" or by Purchaser pursuant to paragraph (e)
under "Termination" above, the Company shall pay to Parent by wire transfer of
immediately available funds to an account designated by Parent on the next
business day following such termination (or, in the case of a termination
pursuant to paragraph (d) under "Termination" above, prior to the effectiveness
of such termination) an amount equal to $6,400,000 (the "Termination Fee") less
any amount previously paid to Parent in respect of Expenses.
 
     (c) If all of the following events have occurred:
 
          (i) a Transaction Proposal is commenced, publicly disclosed, publicly
     proposed or otherwise formally communicated to the Company or its
     stockholders at any time on or after March 24, 1999 but prior to any
     termination of the Merger Agreement and either (A) Parent terminates the
     Merger Agreement pursuant to paragraph (c) under "Termination" above
     (unless such termination shall have occurred, in whole or in part, due to
     the failure of the condition set forth in paragraph (c) of the Offer
     Conditions or of the Financing Condition due to, in the case of the failure
     of the Financing Condition, (i) the occurrence of a material disruption of
     or material adverse change in financial, banking or capital market
     conditions, (ii) a competing offering, placement or arrangement of debt
     securities or bank financing by or on behalf of the Company or any
     Controlled Entity thereof that was undertaken by or on behalf of (with
     Parent's or Purchaser's consent), or at the direction of Parent or any of
     its affiliates, or (iii) a material disruption or material adverse change
     in the market for new issues of high yield securities or the financial or
     capital markets in general) or (B) the Company terminates the Merger
     Agreement pursuant to paragraph (f)(ii) under "Termination" above or (C)
     Parent terminates the Merger Agreement pursuant to paragraph (g) under
     "Termination" above; and
 
          (ii) thereafter, within 12 months of the date of such termination, the
     Company enters into a definitive agreement with respect to, or consummates,
     the Transaction Proposal referred to in clause (i) above or a Superior
     Proposal (whether or not such Superior Proposal was commenced, publicly
     disclosed, publicly proposed or otherwise communicated to the Company or
     its stockholders prior to such termination);
 
     then, the Company shall pay to Parent, concurrently with the earlier of the
     execution of such definitive agreement or the consummation of such
     Transaction Proposal, an amount equal to the Termination Fee (less any
     amount previously paid to Parent in respect of Expenses).
 
     (d) Purchaser shall (provided that the Company is not then in material
breach of any of its representations, warranties or obligations under the Merger
Agreement), following the termination of the Merger Agreement in accordance with
paragraph (f) under "Termination" above (if such termination shall have occurred
by reason of a material breach by Parent or Purchaser of any of its material
obligations under the Merger Agreement), promptly, but in no event later than
two business days following written notice thereof, together with reasonable
supporting documentation, reimburse the Company, in an aggregate amount of up to
$1,000,000, for all reasonable out-of-pocket expenses and fees (including those
payable to investment banking firms and other financial institutions, and their
respective agents and counsel and all fees of counsel, accountants, financial
printers, advisors, experts and consultants to the Company and its affiliates),
whether incurred prior to, concurrently with or after the execution of the
Merger Agreement, in connection with the Offer or the Merger or the consummation
of any other transaction contemplated thereby or by the Stockholder Documents,
the financing thereof or consents related thereto. Such payment shall serve as
full liquidated damages in respect of such breach and the Company has waived, on
behalf of itself and its Controlled Entities, all claims against Parent and its
affiliates in respect of the breach or breaches occasioning the payment pursuant
to such provisions.
 
     (e) Except as otherwise specifically provided in the Merger Agreement, each
party thereto shall bear its own expenses in connection with the Merger
Agreement and the transactions contemplated thereby; provided
 
                                       12
   14
 
that all expenses of Parent and Purchaser shall be paid by the Surviving
Corporation at or following the Effective Time.
 
     GUARANTY.  Concurrently with the execution and delivery of the Merger
Agreement, the Company entered into a Guaranty Agreement with Vestar Capital
Partners III, L.P., a Delaware limited partnership ("Vestar") which currently is
the sole member of Holdings, pursuant to which Vestar irrevocably guaranteed the
payment of Parent's obligations to the Company described in paragraph (d) under
"Termination Fee and Expenses." The foregoing summary of the Guaranty Agreement
is qualified in its entirety by reference to the Guaranty Agreement, a copy of
which is filed as an Exhibit (c)(14) hereto and is incorporated herein by
reference.
 
     MANAGEMENT AGREEMENT.  Concurrently with the execution and delivery of the
Merger Agreement, the Company, Vestar Capital Partners, a New York general
partnership affiliated with Vestar ("Vestar Capital"), and Parent entered into a
Management Agreement (the "Management Agreement"). The following is a summary of
the Management Agreement, which summary is qualified in its entirety by
reference to the Management Agreement, a copy of which is filed as an Exhibit
(c)(9) hereto and is incorporated herein by reference.
 
     Pursuant to the Management Agreement, Vestar Capital has agreed commencing
upon the Effective Time to render to each of Parent and the Company (and their
subsidiaries) certain advisory and consulting services. In consideration of
those services, Parent and the Company jointly and severally agreed to pay to
Vestar Capital an aggregate per annum management fee equal to the greater of (i)
$300,000 and (ii) an amount per annum equal to 1.5% of the consolidated earnings
before depreciation, interest, taxes and amortization of Parent and its
subsidiaries for such fiscal year, determined in accordance with generally
accepted accounting principles, commencing at the Effective Time. Parent and the
Company also jointly and severally agreed to pay Vestar Capital at the Effective
Time a transaction fee equal to $1.6 million plus all out-of-pocket expenses
incurred by Vestar Capital prior to the Effective Time for services rendered by
Vestar Capital in connection with the consummation of the Offer and the Merger.
Parent and the Company also jointly and severally agreed to indemnify Vestar
Capital and its affiliates from and against all losses, claims, damages and
liabilities arising out of the performance by Vestar Capital of its services
pursuant to the Management Agreement. The Management Agreement shall terminate
upon the earlier to occur of (i) the termination of the Merger Agreement or (ii)
such time after the Effective Time as Vestar Capital and its partners and their
respective affiliates thereof hold, in the aggregate, less than 20% of the
voting power of the Company's outstanding voting stock.
 
ITEM 4. THE SOLICITATION OR RECOMMENDATION
 
  (A) RECOMMENDATION OF THE COMPANY BOARD.
 
     At a meeting held on March 24, 1999, the Company Board unanimously (with
the interested directors abstaining) (i) determined that the Offer and the
Merger, taken together, are fair to and in the best interests of the Company's
stockholders, (ii) approved the Offer, the Merger, the Merger Agreement and the
transactions contemplated thereby and (iii) decided to recommend to the
Company's stockholders that they accept the Offer and tender their Shares
pursuant to the Offer and adopt the Merger Agreement, and the Company Board
(with the interested directors abstaining) recommends that all stockholders of
the Company accept the Offer and tender all their Shares pursuant to the Offer.
 
     A letter to the Company's stockholders communicating the recommendation of
the Company Board and a copy of the press release issued jointly by the Company
and Parent on March 25, 1999 announcing the Merger and the Offer are filed as
Exhibits (a)(7) and (a)(3) hereto, respectively, and are incorporated herein by
reference in their entirety.
 
  (B)BACKGROUND; REASONS FOR THE COMPANY BOARD'S RECOMMENDATION.
 
     On August 5, 1998, the Company Board met to discuss various strategic
alternatives for the Company. At that time, because of the depressed market for
healthcare securities generally, and the current trading price of
 
                                       13
   15
 
the Common Stock in particular, the Company Board concluded that the Company
would no longer be able to pursue its acquisition growth strategy through the
issuance of Common Stock. The Company believed that to continue such a strategy
would have an undesired dilutive effect for the Company's stockholders.
Consequently, the Company Board instructed the Company's management to consider
various means of securing additional capital. On October 29, 1998 the Company
publicly announced that it had engaged Salomon Smith Barney Inc. ("Salomon Smith
Barney")_ and Bowles Hollowell Conner, a division of First Union Capital Markets
Corp. ("Bowles Hollowell Conner"), as its financial advisors (collectively, the
"Financial Advisors") to evaluate the strategic alternatives available to the
Company, including, among other things, a possible recapitalization, a secondary
offering of securities to the public, a private placement of debt or equity
securities, a stock repurchase and a sale of the Company. After exploring
various alternatives, the Financial Advisors determined that they would solicit
indications of interest in a possible sale transaction from a select group of
potential purchasers who the Financial Advisors believed might be interested in
acquiring the Company.
 
     On December 1, 1998, executives of the Company met James L. Elrod, Jr. of
Vestar, for the first time at a health care conference. Throughout the day, Mr.
Elrod and the executives discussed their respective businesses and the
executives indicated the Company's willingness to enter into a transaction that
would enable the Company to continue its growth strategy. Vestar and the
Company's management thereafter considered a possible merger, recapitalization
or similar transaction. As the discussions between Vestar and the Company
continued, the Company and Vestar executed a confidentiality agreement dated as
of December 1, 1998 (the "Confidentiality Agreement" filed as Exhibit (c)(15)
hereto and incorporated herein by reference) pursuant to which the Company
agreed to provide Vestar with non-public information and Vestar agreed to treat
such information as confidential. Thereafter, in December, 1998, the Company
directed the Financial Advisors to provide Vestar with a copy of the
Confidential Information Memorandum which the Financial Advisors had prepared on
behalf of the Company.
 
     Throughout December 1998, Vestar and the Company were in frequent contact
discussing the Company's business and the possible structure of a transaction.
On December 15, 1998, Mr. Elrod visited the Company's headquarters in Hollywood,
Florida and met with Dr. Mitchell Eisenberg, the Chairman, President and Chief
Executive Officer of the Company, to discuss a possible transaction.
 
     On January 7, 1999, Vestar submitted a preliminary, non-binding indication
of interest to Salomon Smith Barney that stated that Vestar would consider a
possible acquisition of the Company for a price of $11.00 to $13.00 per Share.
The Financial Advisors evaluated the price range which Vestar was considering
relative to the Company's then current trading price and determined that the
Company should continue negotiations with Vestar. Additionally, the Financial
Advisors considered Vestar's standing in the investment community, its track
record with respect to the companies in which it had made equity investments and
the capabilities of its partners and employees.
 
     On January 18, 1999, Dr. Eisenberg and Dr. Lewis D. Gold, Executive Vice
President of the Company, met with James Elrod, Arthur J. Nagle and Daniel S.
O'Connell of Vestar to further discuss the Company's business. On January 27,
1999, the executive officers of the Company made a formal presentation to
Vestar's representatives. Vestar continued its business due diligence
investigation of the Company.
 
     On February 12, 1999, Salomon Smith Barney requested by letter that Vestar
formally submit an offer to acquire the Company. On February 19, 1999, Vestar
submitted an offer to purchase for cash not less than 70% of the Company's
outstanding Shares in a recapitalization transaction structured as a one-step
merger at a price of $11.50 per Share, provided a sufficient number of Shares
were retained by the Company's existing stockholders to ensure that the
transaction would qualify for recapitalization accounting treatment. The offer
was subject to, among other things, Vestar's satisfactory completion of its due
diligence investigation of the Company. Along with the letter, Vestar provided
the Company with the written comments of Vestar's outside legal counsel to the
form of merger agreement previously provided to Vestar and other bidders.
 
     On February 19, 1999, the Company Board held a meeting to review various
proposals that had been obtained by the Financial Advisors. At this meeting, the
Company Board, after consultation with management, determined that, due to the
likelihood that management would continue with the Company following an
acquisition transaction, management might be presented with a potential conflict
of interest. Accordingly, it
 
                                       14
   16
 
was agreed that Drs. Eisenberg and Gold, the only members of management serving
on the Company Board, would abstain from voting on any proposal for the
acquisition of the Company that was considered by the Company Board. The
Company's outside directors determined that Drs. Eisenberg's and Gold's
abstinence from voting on potential transactions would facilitate the Company
Board's independent judgment but requested that the management directors
participate in certain future discussions and be available to advise the Company
Board as it considered the various proposals. Because the three outside
directors would be the only directors voting on an acquisition proposal, the
Company Board determined that an independent committee of the Company Board was
unnecessary.
 
     At its February 19, 1999 meeting, the Company Board determined that the
proposed recapitalization transaction from Vestar was the most attractive
proposal that it had received. Following discussions as to whether to pursue
negotiations with other potential acquirors, the Company Board determined that
pursuing an acquisition transaction exclusively with Vestar would be most likely
to benefit its stockholders' interests and achieve the Company's objectives.
 
     On February 26, 1999, at the request of Vestar, the Company entered into an
exclusivity agreement with Vestar. Vestar had stated to the Company's
representatives that such an agreement was necessary in order to justify
Vestar's continued investment of time and financial resources in connection with
the transaction. The exclusivity agreement was subsequently extended on March 9,
1999 and during this period Vestar's legal, accounting, tax, insurance and other
advisers commenced their due diligence review of the Company and its operations.
The exclusivity agreement expired on March 15, 1999.
 
     On February 27 and February 28, 1999, representatives of management, the
Financial Advisors and outside counsel to the Company commenced negotiations
with respect to a definitive acquisition agreement and related documentation
with representatives of Vestar and its outside legal counsel. In addition,
representatives of Vestar and its legal counsel began discussions with certain
members of management regarding employment with, and equity investments in,
Parent and the Company.
 
     As discussions and negotiations with respect to the proposed transaction
continued, the Company Board met on March 2, 1999 to assess, among other items,
the status of negotiations and the likelihood of the completion of the
transaction on terms favorable to the Company's stockholders. The Company Board
reviewed in detail the proposed terms of the transaction and Vestar's
requirement that senior management invest in and remain employed by the Company
following the consummation of the transaction. After discussions with respect to
potential conflicts of interest, it was determined that the senior managers who
would participate in the transaction should obtain counsel separate from the
Company's outside legal counsel. In light of Vestar's insistence that its
obligation to consummate the transaction be conditioned upon satisfactory
employment agreements and equity investment agreements with management being
agreed upon, the Company Board also directed management to negotiate fully the
scope and terms of all such arrangements prior to such time as the Company Board
was asked to consider a definitive transaction.
 
     During this time, Vestar continued to review the transaction and conduct
its due diligence review of the Company. Based on the results of Vestar's due
diligence review, Mr. Elrod telephoned Dr. Eisenberg on March 14, 1999 to tell
him that the results of Vestar's due diligence review did not support
consummating a transaction at a price of $11.50 per Share but that Vestar was
willing to consider a transaction at a price of approximately $9.00 per Share.
Robert L. Rosner of Vestar subsequently had discussions with the Financial
Advisors outlining the results of Vestar's due diligence review and Vestar's
rationale for proposing to reduce the per Share price that would be offered to
the Company's stockholders. After various discussions among Vestar, the
Company's management, the Financial Advisors and others, Vestar agreed to submit
in writing its revised proposal to consummate a merger transaction, at its
current price per Share of $9.25 and as it is currently structured, and the
Company's representatives agreed to present that proposal to the Company Board
for its consideration.
 
     The Company Board met on March 16, 1999 to review with the Company's
management and financial and legal advisors the terms and conditions of the
revised proposal. The Company Board queried the Company's management and the
Financial Advisors as to the likelihood that another suitor would pursue a
transaction with the Company on more favorable terms. The Financial Advisors
indicated that no other
                                       15
   17
 
potential acquiror had expressed interest in the Company to the extent that
Vestar had and that, in their opinion, beginning the sale process again or
pursuing additional leads was unlikely to result in a proposal that would be
more advantageous to the Company's stockholders than Vestar's revised proposal.
In light of the timing of Vestar's proposed transaction, Vestar's willingness to
purchase all outstanding Shares and Vestar's willingness to structure the
transaction as a tender offer followed by a merger (which the Company Board
believed would be more expeditious than the structure originally proposed), the
Company Board instructed management to continue negotiations with Vestar.
 
     Negotiations regarding the terms of the Merger Agreement and the other
agreements contemplated thereby continued through March 24, 1999. That night the
Company Board held a meeting at which management indicated that the parties had
reached definitive agreements with respect to the transaction. The Company's
outside legal counsel, outside counsel for the Executives, and the Financial
Advisors each gave presentations to the Company Board. The Company Board also
received fairness opinions from each of the Company's Financial Advisors, which
were delivered orally and subsequently confirmed in writing. See "Item 8(b)
Additional Information to be Furnished -- Opinions of the Financial Advisors."
 
     Following discussions, the Company Board unanimously (excluding directors
who would be considered "interested directors" under Section 144 of the DGCL,
who abstained) determined that the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, are fair to, and in
the best interests of, the Company and its stockholders, approved the Merger
Agreement and the Offer and the Merger and the other transactions contemplated
thereby, declared the Merger to be advisable, directed that the Merger be
submitted for consideration at a special meeting of the stockholders of the
Company, resolved to recommend that the stockholders of the Company accept the
Offer, tender their Shares to Purchaser thereunder and adopt the Merger
Agreement, and approved the Merger Agreement and the Stockholder Documents and
the transactions contemplated thereby for purposes of Section 203 of the DGCL.
 
     The Merger Agreement and the Stockholder Documents were executed and
delivered by the parties thereto following the meeting. A joint press release
was issued by the Company and Vestar the next morning announcing the
transaction, a copy of which is filed as Exhibit (a)(3) hereto and incorporated
herein by reference.
 
  Factors considered by the Company Board.
 
     In reaching its recommendations described above in paragraph (a) of this
Item 4, the Company Board considered a number of factors, including the
following:
 
          1. The fact that Vestar's proposal represented the best offer received
     by the Company Board after the Financial Advisors had contacted a select
     group of potential purchasers who had been given an opportunity to receive
     confidential information about the Company and either declined to submit a
     proposal or submitted a proposal that the Company Board considered to be
     less attractive to the Company's stockholders than the Vestar proposal.
 
          2. The fact that the cash consideration that the Company's
     stockholders would receive for each Share under the Vestar proposal was at
     a premium to the Company's then current market price.
 
          3. The fact that the Company Board had explored the possibility of
     pursuing various other possible transactions that would secure the
     necessary capital to finance future acquisitions in fulfillment of the
     Company's growth strategy and that no alternative transaction was as
     favorable to the Company's stockholders as the Vestar proposal.
 
          4. The Company's business, prospects, financial condition, current
     business strategy and competitive position in the healthcare industry.
 
          5. The presentations and fairness opinions (including financial
     analyses) of its Financial Advisors described below in Item 8.
 
          6. The terms and conditions of the Merger Agreement, including the
     fact that the Offer is subject to various conditions, including the
     Financial Condition, and that the Merger Agreement contemplates the
                                       16
   18
 
     payment or reimbursement to Parent and Purchaser of certain fees and
     expenses (including financing commitment fees and related expenses) and a
     Termination Fee under certain circumstances . In analyzing the conditions
     to this Offer, the Board of Directors considered, among other things, the
     risks of failing to consummate the Offer and the Merger. In assessing the
     expense payment and Termination Fee provision, the Company Board recognized
     that its effect would be to increase by the amount of such fees and
     expenses the cost of acquiring the Company by a third party other than
     Purchaser.
 
          7. The nature of the financing commitments received by Parent and
     Purchaser with respect to the Offer and the Merger, including the identity
     of the institutions providing such commitments and their proven experience
     in consummating transactions such as the Offer and the Merger and the
     conditions to the obligations of such institutions to fund such
     commitments, as well as the fact that consummation of the Offer and the
     Merger will not be dependent on the ability of Parent and the Purchaser to
     raise funds through the high yield debt or other securities market.
 
          8. The likelihood of soliciting a firm offer from a third party to
     acquire the Company at a price in excess of that to be paid in the Offer
     and the Merger, the timing of the receipt of any such offer, and the
     possible consequences of unsuccessfully seeking to solicit such an offer.
 
     In view of the wide variety of factors considered in connection with its
evaluation of the Offer and the Merger, the Company Board did not find it
practicable to, and did not, qualify or otherwise assign relative weights to the
individual factors considered in reaching its determinations. Because only the
disinterested directors of the Company voted on the Vestar proposal and because
of the engagement of the Financial Advisors and outside legal counsel by the
Company Board, the Company Board did not consider it necessary to retain an
unaffiliated representative to act solely on behalf of the unaffiliated
stockholders of the Company for the purpose of negotiating the terms of the
Merger Agreement. As discussed above, the Merger Agreement does not require the
transactions contemplated thereby to be approved by a majority of the
unaffiliated stockholders of the Company.
 
ITEM 5.  PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
 
     RETENTION OF BOWLES HOLLOWELL CONNER.  Pursuant to an engagement letter
dated November 5, 1998 (the "Bowles Hollowell Conner Engagement Letter"), the
Company engaged Bowles Hollowell Conner to render financial advisory and
investment banking services to the Company and to render an opinion as to
whether or not the consideration to be paid in a proposed transaction with a
prospective purchaser is fair, from a financial point of view, to the Company.
Pursuant to the Bowles Hollowell Conner Engagement Letter, the Company agreed to
pay Bowles Hollowell Conner (i) an opinion fee of $60,000 upon the delivery of
its opinion described above and (ii) a transaction fee payable upon consummation
of the Offer and the Merger (or another transaction) equal to 40% of (x) 1.0% of
up to $100 million of the total proceeds payable to holders of Shares and
Company Options pursuant to the Offer and the Merger and (y) 1.5% of any such
proceeds in excess of $100 million. The opinion fee will be credited against the
transaction fee payable to Bowles Hollowell Conner if the Merger is effected.
The Company will be obligated to pay the transaction fee only if the Offer and
the Merger (or another transaction) are consummated. Accordingly, the payment of
a substantial majority of Bowles Hollowell Conner's total fee is subject to the
consummation of the Offer and the Merger. The Bowles Hollowell Conner Engagement
Letter also calls for the Company to reimburse Bowles Hollowell Conner for its
reasonable out-of-pocket expenses and for the Company to indemnify Bowles
Hollowell Conner, its affiliates, and their respective directors, agents,
employees and controlling persons against certain liabilities, including
liabilities under the federal securities laws, relating to or arising out of
Bowles Hollowell Conner's engagement. Bowles Hollowell Conner and its affiliates
may maintain business relationships with the Company, Holdings, Parent, other
bidders for the Company and their respective affiliates.
 
     In the ordinary course of business, Bowles Hollowell Conner or its
affiliates may actively trade the debt and equity securities of the Company,
Holdings, Parent, other bidders for the Company or their respective affiliates
for its or any such affiliate's own account or for the account of customers and,
accordingly, may hold a long or short position in such securities. In addition,
Bowles Hollowell Conner and its affiliates in the past may have provided
investment and commercial banking products and services for the Company,
Holdings,
 
                                       17
   19
 
Parent, other bidders for the Company, their respective affiliates and other
related persons. Bowles Hollowell Conner is not affiliated with the Company,
Holdings or Parent.
 
     RETENTION OF SALOMON SMITH BARNEY.  In the past Salomon Smith Barney has
rendered certain investment banking services to the Company for which it has
been paid fees. Pursuant to an engagement letter dated October 9, 1998, the
Company agreed to pay Salomon Smith Barney (i) an opinion fee of $90,000 upon
the delivery of its opinion and (ii) a transaction fee payable upon consummation
of the merger equal to 60% of (x) 1.0% of up to $100 million of the total
proceeds payable to shareholders and option holders of Sheridan in the tender
offer and merger and (y) 1.5% of such proceeds in excess of $100 million. Any
opinion fee paid will be credited against the transaction fee. Additionally, the
Company has agreed to reimburse Salomon Smith Barney for reasonable out-of
pocket expenses, including, without limitation, fees and expenses of Salomon
Smith Barney's legal counsel and agreed to indemnify Salomon Smith Barney and
certain related persons against certain liabilities, including liabilities under
the federal securities laws, related to or arising out of its engagement. In the
ordinary course of business, Salomon Smith Barney or its affiliates may actively
trade the securities of the Company for its own account and for the accounts' of
its customers and, accordingly, at any time may hold a long or short position in
such securities. Salomon Smith Barney and its affiliates (including Citigroup
Inc. and its affiliates) may have other business and financial relationships
with the Company and Holdings and its affiliates.
 
ITEM 6.  RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
 
     (a) From February 3, 1999 through the date hereof, the Company has
purchased 1,123,832 shares of its Common Stock which have been retired. The
shares were issued as consideration to former stockholders of certain acquired
practices and were purchased at prices ranging from $11.50 to $13.89 per share.
The average price per share paid for these shares was $11.99. During the past
sixty (60) days, no other transactions in the Shares have been affected by the
Company or, to the best of the Company's knowledge, by any executive officer,
director, affiliate or subsidiary of the Company.
 
     (b) To the best of the Company's knowledge, all of the Executives and all
of the Company's other executive officers, directors, subsidiaries and
affiliates who own Shares, to the extent permitted by the applicable securities
laws, rules and regulations currently intend to tender all of their Shares
pursuant to the Offer.
 
ITEM 7.  CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
 
     (a) Except as set forth in this Schedule 14D-9 and Annex A hereto, no other
negotiation is being undertaken or is underway by the Company in response to the
Offer which relates to or would result in (i) an extraordinary transaction, such
as a merger or reorganization, involving the Company or any subsidiary thereof,
(ii) a purchase, sale or transfer of a material amount of assets by the Company
or any subsidiary thereof, (iii) a tender offer for or other acquisition of
securities by or of the Company; or (iv) any material change in the present
capitalization or dividend policy of the Company.
 
     (b) Except as set forth in this Schedule 14D-9 and Annex A hereto, there is
no other transaction, board resolution, agreement in principle or signed
contract in response to the Offer that relates to, or would result in, one or
more of the events referred to in Item 7(a) above.
 
ITEM 8.  ADDITIONAL INFORMATION TO BE FURNISHED
 
     (a) PENDING LITIGATION.  On March 29, 1999, March 31, 1999, and March 31,
1999 purported class action lawsuits entitled Henner v. Sheridan Healthcare,
Inc., et al, Betz v. Sheridan Healthcare, Inc., et al, and Schoenfield v.
Sheridan Healthcare, Inc., et al, respectively, were filed in Delaware Chancery
Court by holders of Shares. The complaints name as defendants the Company, the
directors of the Company and Vestar Capital Partners, Inc. Among other things,
the plaintiffs allege that:
 
     (1) the purchase price is inadequate relative to the market price of the
         Shares prior to the announcement of the transactions contemplated by
         the Merger Agreement;
 
                                       18
   20
 
     (2) the transactions contemplated by the Merger Agreement are timed to take
         advantage of the temporarily depressed price of the Shares to the
         disadvantage of the public stockholders;
 
     (3) the terms of the transactions contemplated by the Merger Agreement are
         the product of a conflict of interest on the part of Dr. Eisenberg and
         Dr. Gold and are not fair to the public holders of Shares; and
 
     (4) the defendants violated their fiduciary duties owed to the public
         stockholders of the Company by agreeing to the terms of the
         transactions contemplated by the Merger Agreement and the timing of
         such transactions.
 
     The lawsuits seek unspecified damages and costs and to enjoin or rescind
the transactions contemplated by the Merger Agreement, among other things. The
Company, Purchaser, Parent, Holdings and Vestar Capital Partners, Inc. believe
that these lawsuits are wholly without merit.
 
(b) OPINIONS OF THE FINANCIAL ADVISORS
 
     Opinion of Bowles Hollowell Conner.  Pursuant to the Bowles Hollowell
Conner Engagement Letter, the Company retained Bowles Hollowell Conner to act as
its financial advisor in considering the Company's strategic and financial
alternatives for maximizing stockholder value, including the possible sale of
all or a portion of the Company. The Company had previously retained Salomon
Smith Barney to also act as its financial advisor. See "Item 4. The Solicitation
or Recommendation." Bowles Hollowell Conner is a nationally recognized firm and,
as part of its investment banking activities, is regularly engaged in the
valuation of businesses and their securities in connection with merger
transactions and other types of acquisitions, negotiated underwritings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and other purposes. The Company selected Bowles
Hollowell Conner as its financial advisor on the basis of Bowles Hollowell
Conner's experience and expertise in transactions similar to the Offer and the
Merger and its reputation in the healthcare industry.
 
     In connection with the consideration by the Company Board of the merits of
the Offer and the Merger, Bowles Hollowell Conner was asked under the terms of
the Bowles Hollowell Conner Engagement Letter to perform various financial
analyses and deliver to the Company Board its opinion based on such analyses.
 
     THE OPINION OF BOWLES HOLLOWELL CONNER WAS DIRECTED TO THE COMPANY BOARD
FOR ITS CONSIDERATION IN CONNECTION WITH THE PROPOSED OFFER AND MERGER, AND IS
DIRECTED ONLY TO THE FAIRNESS OF THE CONSIDERATION TO BE RECEIVED BY THE HOLDERS
OF SHARES FROM A FINANCIAL POINT OF VIEW AND IT DOES NOT ADDRESS ANY OTHER
ASPECT OF THE MERGER AGREEMENT NOR DOES IT CONSTITUTE A RECOMMENDATION TO ANY
HOLDER OF SHARES AS TO WHETHER THE OFFER OR THE MERGER IS IN SUCH HOLDER'S BEST
INTERESTS OR AS TO WHETHER HOLDERS OF SHARES SHOULD TENDER THEIR SHARES OR VOTE
FOR OR AGAINST THE MERGER. THE FULL TEXT OF SUCH WRITTEN OPINION OF BOWLES
HOLLOWELL CONNER DATED MARCH 24, 1999, IS FILED AS EXHIBIT (a)(6) HERETO AND
INCORPORATED HEREIN BY REFERENCE AND SETS FORTH CERTAIN IMPORTANT
QUALIFICATIONS, ASSUMPTIONS MADE, MATTERS CONSIDERED, AREAS OF RELIANCE ON
OTHERS, AND LIMITATIONS ON THE REVIEW UNDERTAKEN IN CONNECTION WITH SUCH
OPINION. THE SUMMARY DESCRIPTION OF SUCH OPINION SET FORTH BELOW IS QUALIFIED IN
ITS ENTIRETY BY THE FULL TEXT OF THE OPINION FILED AS EXHIBIT (a)(6) HERETO AND
INCORPORATED HEREIN BY REFERENCE AND SHOULD BE READ CAREFULLY AND IN ITS
ENTIRETY IN CONNECTION WITH THE OFFER DOCUMENTS.
 
     In arriving at its opinion, Bowles Hollowell Conner, among other things,
(i) reviewed certain publicly available business and financial information
relating to the Company; (ii) reviewed certain other information, including
financial forecasts, provided to Bowles Hollowell Conner by the Company, and met
with the Company's management to discuss the business and prospects of the
Company; (iii) considered certain financial data of the Company and compared
that data with similar data for publicly held companies in
 
                                       19
   21
 
businesses similar to those of the Company; (iv) considered the financial terms
of certain other business combinations and other transactions which had recently
been effected; (v) reviewed the financial terms and conditions of the Merger
Agreement; and (vi) considered such other information, financial studies,
analyses and investigations and financial, economic and market criteria which
Bowles Hollowell Conner deemed relevant.
 
     Based upon and subject to its review of the foregoing, its work described
below, its experience as investment bankers and other factors it deemed
relevant, but subject to the limitations set forth below and in reliance upon
the assumptions set forth below, Bowles Hollowell Conner provided the Company
Board with its opinion as investment bankers that as of the date of its opinion
(which was the date that Bowles Hollowell Conner presented its financial
analyses to the Company Board), the aggregate consideration to be received by
the holders of Shares (other than the Executives, as to whom Bowles Hollowell
Conner expressed no opinion) pursuant to the Offer and the Merger was fair to
such holders from a financial point of view.
 
     In connection with its opinion, Bowles Hollowell Conner made a presentation
to the Company Board on March 24, 1999 (the "Bowles Hollowell Conner
Presentation") as to the fairness of the Offer and the Merger based on the
foregoing analyses. A copy of the Bowles Hollowell Conner Presentation is filed
as Exhibit (a)(8) hereto and incorporated herein by reference. The Bowles
Hollowell Conner Presentation is available for inspection and copying at the
principal executive offices of the Company during its regular business hours to
any stockholder or his representative who has been so designated in writing.
 
     No limitations were imposed by the Company on Bowles Hollowell Conner with
respect to the investigations made or procedures followed in rendering its
opinion.
 
     In connection with its review, Bowles Hollowell Conner did not assume any
obligation for independent verification of financial and other information
reviewed by it and relied on such information being accurate and complete in all
material respects. With respect to the financial forecasts for the Company
provided to Bowles Hollowell Conner by the Company's management, Bowles
Hollowell Conner assumed that the forecasts had been reasonably prepared on
bases reflecting the best available estimates and judgments of the Company's
management as to the future financial performance of the Company and that such
projections provided a reasonable basis upon which Bowles Hollowell Conner could
form its opinion. Bowles Hollowell Conner also assumed that there had been no
material changes in the Company's assets, financial condition, results of
operations, business or prospects since the dates of the last financial
statements made available to Bowles Hollowell Conner. Bowles Hollowell Conner
relied on advice of the counsel and the independent accountants to the Company
as to all legal and financial reporting matters with respect to the Company,
Purchaser's Offer to Purchase, the Offer, the Merger and the Merger Agreement.
Bowles Hollowell Conner assumes that the Offer and the Merger will be
consummated in a manner that complies in all respects with the applicable
provisions of the Securities Act of 1933, as amended (the "Securities Act"), the
Exchange Act and all other applicable federal and state statutes, rules and
regulations. In addition, Bowles Hollowell Conner did not assume responsibility
for making an independent evaluation, appraisal or physical inspection of any of
the assets or liabilities (contingent or otherwise) of the Company, nor was
Bowles Hollowell Conner furnished with any such appraisals. Finally, Bowles
Hollowell Conner's opinion was based on economic, monetary, market and other
conditions as in effect on, and the information made available to Bowles
Hollowell Conner as of, the date of the opinion (March 24, 1999). Accordingly,
although subsequent developments may affect its opinion, Bowles Hollowell Conner
did not assume and does not have any obligation to update, revise or reaffirm
its opinion.
 
     Bowles Hollowell Conner also assumed that the Offer and the Merger will be
consummated in accordance with the terms described in the Merger Agreement,
without any further amendments thereto, and without waiver by the Company of any
of the conditions to its obligations thereunder. The terms of the Merger
Agreement and the conditions to the Company's obligations thereunder should be
reviewed and understood by holders of Shares in connection with their
consideration of the Offer and the Merger.
 
     Set forth below is a brief summary of selected analyses presented by Bowles
Hollowell Conner in the Bowles Hollowell Conner Presentation in connection with
its March 24, 1999 opinion described above.
 
                                       20
   22
 
  Historical Stock Price Analysis
 
     Bowles Hollowell Conner reviewed the trading performance of the Common
Stock for the period from November 1, 1995 to March 23, 1999, relative to the
performance of the Standard & Poor's 500 Index, the Russell 2000 Index, a
Multi-Specialty PPM Index and a Single Specialty PPM Index. The Multi-Specialty
and Single Specialty PPM Indexes were comprised of publicly traded
multi-specialty and single specialty physician practice management companies
that Bowles Hollowell Conner deemed to be similar to the Company. While the
Company provides both specialist physician and practice management services in
the areas of women's and children's health, Bowles Hollowell Conner regards the
Company as more comparable to multi-specialty physician practice management
organizations due to the number of specialist physician services it provides
within women's and children's health. The multi-specialty comparable companies
were MedPartners, Inc., Phycor, Inc., PhyMatrix Corp. and Promedco Management
Co. (collectively, the "Multi-Specialty Comparable Companies"). The single
specialty comparable companies were American Oncology Resources, Inc., American
Physician Partners, Inc., AmeriPath, Inc., Pediatrix Medical Group, Inc. and
Physician Reliance Network, Inc. (collectively, the "Single Specialty Comparable
Companies"). Bowles Hollowell Conner noted that during this period the price of
the Company's Common Stock declined 35%, while the Standard & Poor's 500 Index
increased 116%, the Russell 2000 Index increased 29%, the Multi-Specialty
Comparable Companies declined 86% and the Single Specialty Comparable Companies
declined 52%. Additionally, Bowles Hollowell Conner noted that a significant
amount of the price declines in the Multi-Specialty and Single Specialty PPM
Indexes has occurred since January 1, 1998. Bowles Hollowell Conner noted that
during this period the price of the Common Stock declined 46%, while the
Standard & Poor's 500 Index increased 30%, the Russell 2000 Index declined 12%,
the Multi-Specialty Comparable Companies declined 83% and the Single Specialty
Comparable Companies declined 48%.
 
Comparable Company Analysis
 
     Using publicly available information and information provided by the
Company, Bowles Hollowell Conner compared the historical financial and operating
performance of the Company with the corresponding performance of the
Multi-Specialty Comparable Companies and the Single Specialty Comparable
Companies. In comparing the Company's financial performance to that of the
Comparable Companies, Bowles Hollowell Conner made the following observations,
among others: (i) the Company had a latest twelve months' ("LTM") earnings
(loss) before interest, taxes, depreciation and amortization ("EBITDA") margin
of 16.9%, compared to median LTM EBITDA margins of 10.4% and 30.1%,
respectively, for the Multi-Specialty and Single Specialty Comparable Companies;
(ii) the Company had a LTM earnings (loss) before interest and taxes ("EBIT")
margin of 13.1%, compared to median LTM EBIT margins of 9.7% and 22.7%,
respectively, for the Multi-Specialty and Single Specialty Comparable Companies;
and (iii) the Company had a LTM net income margin of 5.6%, compared to median
LTM net income margins of 5.0% and 10.3%, respectively, for the Multi-Specialty
and Single Specialty Comparable Companies.
 
     In order to arrive at an implied valuation for the Company, Bowles
Hollowell Conner calculated the adjusted market value, defined as aggregate
equity value plus debt and preferred stock less cash and cash equivalents
("Adjusted Market Value"), of the Comparable Companies as a multiple of (i) LTM
sales, (ii) LTM EBITDA and (iii) LTM EBIT. An analysis of the multiples of
Adjusted Market Value to LTM sales yielded a range of multiples from 0.3x to
0.7x for the Multi-Specialty Comparable Companies, with a median multiple of
0.5x, and a range of multiples from 1.1x to 2.3x for the Single Specialty
Comparable Companies, with a median multiple of 1.7x. An analysis of the
multiples of Adjusted Market Value to LTM EBITDA yielded a range of multiples
from 4.5x to 39.8x, with a median multiple of 5.0x (excluding the 39.8x high end
of the range) for the Multi-Specialty Comparable Companies and a range of
multiples from 5.6x to 7.4x, with a median multiple of 6.7x for the Single
Specialty Comparable Companies. An analysis of the multiples of Adjusted Market
Value to LTM EBIT yielded a range of multiples from 6.3x to 9.9x, with a median
multiple of 7.1x for the Multi-Specialty Comparable Companies and a range of
multiples from 7.3x to 10.1x, with a median multiple of 8.8x for the Single
Specialty Comparable Companies. Bowles Hollowell Conner noted that these
multiples could be compared to LTM sales, LTM EBITDA and LTM EBIT multiples
implied by the Merger Consideration of 1.3x, 7.7x and 10.0x, respectively, for
the Company. Bowles
 
                                       21
   23
 
Hollowell Conner applied the median LTM Sales, LTM EBITDA and LTM EBIT multiples
for the Multi-Specialty and Single Specialty Comparable Companies to the
corresponding historical results of the Company to calculate the implied
Adjusted Market Value range and the implied equity value range for the Shares
("Equity Value"). This analysis indicated an Adjusted Market Value range for the
Company of $94.9 million to $130.0 million and an implied Equity Value range of
$1.44 to $6.69 per Share. As noted above, Bowles Hollowell Conner regards the
Company as more comparable to multi-specialty physician practice management
organizations.
 
Comparable Acquisitions Analysis
 
     Using publicly available information and certain other information and
estimates derived in the ordinary course of Bowles Hollowell Conner's business,
Bowles Hollowell Conner reviewed selected recent merger and acquisition
transactions in the physician practice management industry. These transactions
included: Madison Dearborn/Cornerstone/Beecken Petty & Co.'s acquisition of
MedPartners Team Health Operations; American Oncology Resources, Inc.'s
acquisition of Physician Reliance Network, Inc.; an acquisition in which Bowles
Hollowell Conner acted as financial advisor and for which financial information
is not publicly available (the "Private Deal"); Phycor, Inc.'s acquisition of
First Physician Care; MedPartners, Inc.'s acquisition of Talbert Medical
Management; FPA Medical Management Inc.'s acquisition of Health Partners, Inc.;
CRA Managed Care's acquisition of Occusystems, Inc.; MedPartners, Inc.'s
acquisition of InPhynet Medical Management; FPA Medical Management's acquisition
of AHI Healthcare Systems, Inc.; and Physician Resource Group's acquisition of
American Opthalmic, Inc. (collectively, the "Comparable Transactions"). Bowles
Hollowell Conner compared the Adjusted Market Value of the acquired companies as
implied by the consideration paid in each such transaction to the corresponding
LTM Sales, LTM EBITDA and LTM EBIT for the acquired companies at the time of
transaction announcement. As physician practice management company stock prices
and forward earnings multiples have declined particularly since early 1998,
Adjusted Market Value to LTM Sales, LTM EBITDA and LTM EBIT multiples have
similarly declined. Thus, Bowles Hollowell Conner believes acquisition
transaction multiples since January 1, 1998 are more relevant to the Company's
proposed transaction. Multi-Specialty comparable transactions since that time
include Madison Dearborn/Cornerstone/Beecken Petty & Co.'s acquisition of
MedPartners' Team Health Operations and the Private Deal while the only Single
Specialty comparable transaction since that time was the American Oncology
Resources, Inc.'s acquisition of Physician Reliance Network, Inc. Based on these
comparable Multi-Specialty transactions, Adjusted Market Value as a multiple of:
(i) LTM Sales ranged from 0.4x to 0.6x with a median value of 0.5x; (ii) LTM
EBITDA ranged from 6.2x to 8.5x with a median value of 7.3x; and (iii) LTM EBIT
was 7.5x. Based on the comparable Single Specialty transaction, Adjusted Market
Value as a multiple of: (i) LTM Sales was 1.8x; (ii) LTM EBITDA was 9.3x; and
(iii) LTM EBIT was 14.0x. Bowles Hollowell Conner applied median LTM Sales, LTM
EBITDA and LTM EBIT multiples for the Comparable Transactions to the
corresponding historical results of the Company, yielding an implied Adjusted
Market Value range for the Company of $111.1 million to $199.0 million and an
implied Equity Value range of $3.87 to $16.99 per Share. As noted above, Bowles
Hollowell Conner regards the Company as more comparable to multi-specialty
physician practice management organizations.
 
     No other company or transaction used in the comparable company analysis or
the comparable acquisitions analysis as a comparison is identical to the Company
or the Offer and the Merger. Accordingly, an analysis of the results of the
foregoing is not mathematical; rather, it involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies and other factors that could affect the public trading value of
the companies to which the Company and the Offer and the Merger are being
compared.
 
Earnings Impact Analysis
 
     Based on the Company's results for fiscal year 1998, Bowles Hollowell
Conner analyzed the potential pro-forma earnings impact of an acquisition of the
Company by a potential acquiror assuming an all cash purchase. Bowles Hollowell
Conner calculated the maximum cash purchase price that an acquiror could pay
which would result in no earnings dilution for fiscal year 1998, assuming costs
of financing ranging from 7% to
 
                                       22
   24
 
8%. This analysis indicated an Adjusted Market Value range for the Company of
$127.3 million to $144.2 million and an Equity Value range of $6.27 to $7.60 per
Share at 8% and 7% cost of financing, respectively.
 
Discounted Cash Flow Analysis
 
     Bowles Hollowell Conner performed a discounted cash flow analysis to
estimate the present value of the projected unlevered free cash flows for the
Company based on the Company's projections (the "Base Case"). The Base Case
assumes that the Company grows through a combination of internal growth
initiatives and acquisitions. Internal growth initiatives include internal
hospital outsourcing contract growth, new hospital outsourcing contracts,
physician startups within existing multi-specialty physician group practices and
the addition of ancillary surgery centers. Acquisitions of hospital-based and
office-based physician practices are assumed to be completed within the
Company's integrated physician networks at multiples of 5.0x practice EBITDA in
aggregate amounts of $60.0 million, $35.0 million, $40.0 million, $50.0 million
and $65.0 million for the years 1999 through 2003, respectively. Based on the
Base Case assumptions, Bowles Hollowell Conner calculated the estimated future
free cash flows that the Company would produce for the fiscal years 1999 through
2003 and a terminal value of the Company at the end of the forecasting period.
The terminal value was computed by multiplying the Company's year 2003 estimated
EBITDA by a range of multiples between 5.5x and 6.5x, chosen to reflect current
acquisition multiples of comparable multi-specialty physician practice
management companies. The projected free cash flows and terminal values were
discounted using a range of discount rates of 9.3% to 13.3%, chosen to reflect
assumptions regarding the Company's cost of capital. This analysis indicated an
Adjusted Market Value range for the Company of $169.0 million to $215.0 million
and an implied Equity Value range of $12.45 to $19.35 per Share.
 
Sensitivity of Discounted Cash Flow Analyses
 
     Bowles Hollowell Conner relied on the Company's Base Case to perform the
Discounted Cash Flow Analysis. These projections reflect the best judgments of
the Company's management as to the future financial performance of the Company
and include assumptions regarding the impact of the integration of internal
growth initiatives and acquired physician practices. The Company has projected
it will realize certain revenue growth from increased local market density of
integrated networks and certain economies of scale. For purposes of comparison
and to test the sensitivity of the Discounted Cash Flow Analysis to changes in
the Base Case, Bowles Hollowell Conner reviewed scenarios that assumed the
Company: (i) completed no practice acquisitions going forward, and due to lower
projected revenue and earnings growth rates relative to the Base Case, applied
EBITDA terminal multiples of 4.0x to 5.0x; and (ii) completed the internal
growth initiatives and acquisitions contemplated in the Base Case, however, the
Company acquired physician practices at a multiple of 6.0x practice EBITDA,
resulting in acquisitions in aggregate amounts of $72.0 million, $42.0 million,
$48.0 million, $60.0 million and $78.0 million for the years 1999 through 2003,
respectively. Bowles Hollowell Conner performed these selected sensitivity
analyses on the Company's Base Case. The Discounted Cash Flow Analysis based on
the no acquisitions scenario resulted in an Adjusted Market Value range for the
Company of $100.0 million to $117.0 million and an implied Equity Value range of
$2.18 to $4.80 per Share. The Discounted Cash Flow Analysis based on the 6.0x
EBITDA acquisition multiple scenario resulted in an Adjusted Market Value range
for the Company of $135.0 million to $179.0 million and an implied Equity Value
range of $7.41 to $14.05 per Share.
 
Leveraged Buyout Analysis
 
     Bowles Hollowell Conner analyzed a series of scenarios involving
hypothetical recapitalizations of the Company. Each scenario provided for the
distribution of an amount of cash in respect of each Share. The analysis assumed
the Company's Base Case projections and a terminal value at the end of the
forecasting period. The terminal value was computed by multiplying the Company's
year 2003 estimated EBITDA by a range of multiples between 5.5x and 6.5x, chosen
to reflect current acquisition multiples of comparable multi-specialty physician
practice management companies. The analyses assumed leverage levels appropriate
for physician practice management companies. Based on these and other
assumptions, an offer of $9.25 per Share could produce an internal rate of
return in the range of 25% to 30% over a five year period. Bowles Hollowell
 
                                       23
   25
 
Conner analyzed these scenarios in light of various factors affecting the
feasibility of a leveraged buyout of the Company.
 
Healthcare LBO Premium Analysis
 
     Bowles Hollowell Conner reviewed the consideration paid in U.S. healthcare
leveraged buyouts announced since May 7, 1996. Bowles Hollowell Conner
calculated the premiums paid in those transactions over: (i) the acquired
entity's applicable stock price one day prior to either the announcement of the
acquisition offer or the announcement by the acquired entity of information
relating to a possible corporate transaction, including its intention to
evaluate its strategic alternatives ("unaffected price"), (ii) the acquired
entity's 52-week high trading value as of the announcement date; (iii) the
acquired entity's 52-week low trading value as of the announcement date; and
(iv) the acquired entity's applicable stock price one day prior to announcement
of the acquisition offer ("affected price"). Seven transactions were reviewed
and the following premium ranges were observed: premium of offer price to
unaffected price, 15.2% to 88.2%; premium of offer price to 52-week high,
(52.9)% to 4.2%; premium of offer price to 52-week low, 53.5% to 170.9%; and
premium of offer price to affected price, 11.0% to 88.2%. The Bowles Hollowell
Conner analysis indicated that the consideration to be paid pursuant to the
Offer was 41.0% above the unaffected price, 47.1% below the 52-week high, 42.3%
above the 52-week low and 12.1% above the price of the Company's stock as of the
close of business on March 22, 1998.
 
     While the foregoing summary describes all analyses and examinations that
Bowles Hollowell Conner deemed material to the preparation of its opinion to the
Company Board, it does not purport to be a comprehensive description of all
analyses and examinations actually conducted by Bowles Hollowell Conner. The
preparation of a fairness opinion necessarily is not susceptible to partial
analysis or summary description; and selecting portions of the analyses and of
the factors considered by Bowles Hollowell Conner, without considering all
analyses and factors, would create an incomplete view of the process underlying
the analyses set forth in the Bowles Hollowell Conner Presentation. In addition,
Bowles Hollowell Conner may have given some analyses more or less weight than
other analyses, and may have deemed various assumptions more or less probable
than other assumptions. Accordingly, the ranges of valuations resulting from any
particular analysis described above should not be taken to be Bowles Hollowell
Conner's view of the actual value of the Company or the Shares. To the contrary,
Bowles Hollowell Conner expressed no opinion on the actual value of the Company
or the Shares, and its opinion that is addressed and limited to the Company
Board extends only to the belief expressed by Bowles Hollowell Conner that the
immediate value to holders of Shares (other than the Executives, as to whom
Bowles Hollowell Conner expressed no opinion), from a financial point of view
under the Offer and the Merger, is within the range of values that might fairly
be ascribed to the Shares as of the date of the opinion of Bowles Hollowell
Conner (March 24, 1999), and as of the date of the Company Board's consideration
of the Offer and the Merger (March 24, 1999). At the time of the delivery of its
oral opinion, Bowles Hollowell Conner provided a draft form of opinion that was
the same in all material respects as the executed opinion later provided to the
Company Board.
 
     In performing its analyses, Bowles Hollowell Conner made numerous
assumptions with respect to industry performance, general business and economic
conditions and other matters, many of which are beyond the control of the
Company. The analyses performed by Bowles Hollowell Conner are not necessarily
indicative of actual values or actual future results, which may be significantly
more or less favorable than those suggested by such analyses. Such analyses were
prepared solely as part of Bowles Hollowell Conner's analysis for the Company
Board of the fairness of the Offer and the Merger to the holders of Shares from
a financial point of view, and were provided solely to the Company Board in
connection with the Company Board's consideration of the Offer and the Merger.
The analyses do not purport to be appraisals or to reflect the prices at which a
company might actually be sold or the prices at which any securities may trade
at any time in the future. Bowles Hollowell Conner used in its analyses various
projections of future performance prepared by the management of the Company. The
projections are based on numerous variables and assumptions which are inherently
unpredictable and must be considered not certain or accurate as projected.
Accordingly, actual results could vary significantly from those set forth in
such projections.
 
                                       24
   26
 
     As described above, the opinion of Bowles Hollowell Conner and the Bowles
Hollowell Conner Presentation summarized above were presented to the Company
Board. Bowles Hollowell Conner, however, does not make any recommendation to
holders of Shares (or to any other person or entity) as to whether such
stockholders should tender their shares pursuant to the Offer or vote for or
against the Merger.
 
     In the ordinary course of business, Bowles Hollowell Conner or its
affiliates may actively trade the debt and equity securities of the Company,
Holdings, Parent, other bidders for the Company or their respective affiliates
for its or any such affiliate's own account or for the account of customers and,
accordingly, may hold a long or short position in such securities. In addition,
Bowles Hollowell Conner and its affiliates in the past may have provided
investment and commercial banking products and services for the Company,
Holdings, Parent, other bidders for the Company, their respective affiliates and
other related persons. Bowles Hollowell Conner is not affiliated with the
Company, Holdings or Parent.
 
     Opinion of Salomon Smith Barney  Salomon Smith Barney has acted as a
financial advisor to the Company in connection with the Offer and the Merger. On
March 24, 1999, Salomon Smith Barney stated to the Company Board its oral
opinion as investment bankers that, as of such date and based upon and subject
to the factors and assumptions set forth in its presentation, the consideration
to be received by the holders of Shares (other than Parent and its affiliates
and the Executives) (the "Public Stockholders") was fair, from a financial point
of view, to the Public Stockholders. Such opinion was subsequently confirmed in
a written opinion dated March 24, 1999.
 
     The opinion and presentation of Salomon Smith Barney to the Company Board,
in connection with which Salomon Smith Barney was requested to evaluate the
fairness from a financial point of view of the consideration to the Public
Stockholders, was only one of many factors taken into consideration by the
Company Board in making its determination to approve the Merger Agreement. The
terms of the Merger were determined through negotiations between the Company and
Vestar and were approved by the Company Board.
 
     THE FULL TEXT OF SALOMON SMITH BARNEY'S OPINION, WHICH SETS FORTH THE
ASSUMPTIONS MADE, GENERAL PROCEDURES FOLLOWED, MATTERS CONSIDERED AND
LIMITATIONS ON THE REVIEW UNDERTAKEN BY SALOMON SMITH BARNEY, IS ATTACHED TO
THIS DOCUMENT AS EXHIBIT (a)(5) HERETO AND INCORPORATED HEREIN BY REFERENCE.
SALOMON SMITH BARNEY'S OPINION SHOULD BE READ CAREFULLY AND IN ITS ENTIRETY. IT
IS DIRECTED ONLY TO THE COMPANY BOARD AND RELATES ONLY TO THE FAIRNESS, FROM A
FINANCIAL POINT OF VIEW, OF THE CONSIDERATION TO BE RECEIVED BY THE PUBLIC
STOCKHOLDERS AND DOES NOT ADDRESS THE COMPANY'S UNDERLYING BUSINESS DECISION TO
EFFECT THE OFFER AND THE MERGER OR CONSTITUTE A RECOMMENDATION TO ANY HOLDER OF
SHARES AS TO WHETHER SUCH STOCKHOLDER SHOULD TENDER SHARES INTO THE OFFER OR AS
TO HOW SUCH HOLDER SHOULD VOTE WITH RESPECT TO THE MERGER. THE SUMMARY OF
SALOMON SMITH BARNEY'S OPINION SET FORTH IN THIS DOCUMENT IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE OPINION ATTACHED AS EXHIBIT (a)(5)
HERETO AND INCORPORATED HEREIN BY REFERENCE.
 
     In connection with rendering its opinion, Salomon Smith Barney, among other
things:
 
     - reviewed the March 23, 1999 draft of the Merger Agreement, in the form
       provided to Salomon Smith Barney, and assumed that the final form of such
       agreement would not vary in any respect that is material to Salomon Smith
       Barney's analysis;
 
     - reviewed certain publicly available business and financial information
       relating to the Company that Salomon Smith Barney deemed relevant;
 
     - reviewed certain other information, primarily financial in nature,
       provided to Salomon Smith Barney by the Company relating to the Company's
       business, including certain financial forecasts;
 
                                       25
   27
 
     - reviewed certain publicly available information with respect to certain
       other companies that Salomon Smith Barney believed to be comparable to
       the Company and the trading markets for such other companies' securities;
 
     - reviewed and analyzed certain publicly available information concerning
       the trading of, and the trading market for, the Common Stock;
 
     - reviewed certain publicly available information concerning the nature and
       terms of certain other transactions that Salomon Smith Barney deemed to
       be relevant to Salomon Smith Barney's inquiry;
 
     - considered and took into account the Company's lack of, and likely
       difficulty in raising, adequate capital to fund its growth and
       acquisition plans if the Offer and the Merger were not effected;
 
     - discussed with certain officers and employees of the Company and Vestar
       the foregoing, as well as other matters Salomon Smith Barney believed
       relevant to its inquiry, and
 
     - considered such other information, financial studies, analyses,
       investigations and financial, economic and market criteria as Salomon
       Smith Barney deemed relevant to its inquiry.
 
     In its review and analysis and in arriving at its opinion, Salomon Smith
Barney assumed and relied upon, without assuming any responsibility for
verification, the accuracy and completeness of all of the financial and other
information provided to, discussed with, or reviewed by or for Salomon Smith
Barney, or publicly available. With respect to the Company's financial
forecasts, Salomon Smith Barney was advised by management of the Company and
assumed that they had been reasonably prepared on bases reflecting the best
currently available estimates and judgments on the part of the management of the
Company, as to the future financial performance of the Company. Salomon Smith
Barney expressed no view as to such forecasts or the assumptions on which they
are based. Salomon Smith Barney did not assume any responsibility for making or
obtaining any independent evaluations or appraisals of the Company, nor for
conducting a physical inspection of, the properties and facilities of the
Company. The Salomon Smith Barney opinion was necessarily based upon market,
economic and other conditions as they existed and could be evaluated on March
24, 1999, and Salomon Smith Barney assumed no responsibility to update or revise
their opinion based upon circumstances or events occurring after March 24, 1999.
 
     For purposes of rendering its opinion, Salomon Smith Barney assumed, in all
respects material to its analysis, that the representations and warranties of
each party contained in the Merger Agreement were true and correct, that each
party would perform all of the covenants and agreements required to be performed
by it under the Merger Agreement, and that all conditions to the consummation of
the Merger would be satisfied without waiver thereof. Salomon Smith Barney also
assumed that all material governmental, regulatory or other consents and
approvals would be obtained and that in the course of obtaining any necessary
governmental, regulatory or other consents and approvals, or any amendments,
modifications or waivers to any documents to which either the Company or
Holdings is a party, as contemplated by the Merger Agreement, no restrictions
would be imposed, or amendments, modifications or waivers made that would have
any material adverse effect on the contemplated benefits of the Merger.
 
     The preparation of financial analyses and fairness opinions is a complex
process involving subjective judgments with respect to, among other things,
appropriate comparable companies and transactions, appropriate multiples of
various selected financial data, appropriate discount rates and other financial
and other factors and is not necessarily susceptible to partial analysis or
summary description. Salomon Smith Barney made no attempt to assign specific
weights to particular analyses or factors considered, but rather made
qualitative judgments as to the significance and relevance of the analyses and
factors considered. Accordingly, Salomon Smith Barney believes that its analyses
(and the summary set forth above) must be considered as a whole, and that
selecting portions of such analyses and of the factors considered by Salomon
Smith Barney, without considering all of such analyses and factors, could create
a misleading or incomplete view of the processes underlying the analyses
conducted by Salomon Smith Barney and its opinion.
 
     With regard to the comparable company analysis summarized below, Salomon
Smith Barney selected comparable companies on the basis of various factors,
including the size of the company and similarity of the
 
                                       26
   28
 
line of business; however, no company utilized as a comparison in such analysis
is identical to the Company, any business segment of the Company or the Merger.
As a result, these analyses are not purely mathematical, but also take into
account differences in financial and operating characteristics of the comparable
companies and other factors that could affect the value of the comparable
companies and transactions to which the Company and the Merger are being
compared.
 
     In its analyses, Salomon Smith Barney made numerous assumptions with
respect to the Company, industry performance, general business, economic, market
and financial conditions and other matters, many of which are beyond the control
of the Company. Any estimates contained in Salomon Smith Barney's analyses are
not necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than those suggested
by such analyses. Estimates of values of companies do not purport to be
appraisals or necessarily to reflect the prices at which companies may actually
be sold. Salomon Smith Barney's analyses were prepared solely as part of Salomon
Smith Barney's analysis of the fairness of the consideration to the Public
Stockholders and were provided to the Company Board in that connection.
 
     The projections furnished to Salomon Smith Barney and used in formulating
Salomon Smith Barney's opinion were provided to Salomon Smith Barney, in
connection with the review of the Merger, by the management of the Company. The
projections were based on numerous variables and assumptions which are
inherently uncertain, including, without limitation, factors related to general
economic and competitive conditions. Accordingly, actual results could vary
significantly from those set forth in such projection.
 
     THE FOLLOWING IS A SUMMARY OF THE MATERIAL FINANCIAL ANALYSES USED BY
SALOMON SMITH BARNEY IN CONNECTION WITH PROVIDING ITS OPINION TO THE COMPANY
BOARD. IT DOES NOT PURPORT TO BE A COMPLETE DESCRIPTION OF THE ANALYSES
PERFORMED BY SALOMON SMITH BARNEY OR OF ITS PRESENTATION TO THE COMPANY BOARD
WHICH IS FILED AS EXHIBIT (a)(4) HERETO AND INCORPORATED HEREIN BY REFERENCE.
THE SALOMON SMITH BARNEY PRESENTATION IS AVAILABLE FOR INSPECTION AND COPYING AT
THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY DURING ITS REGULAR BUSINESS HOURS
TO ANY STOCKHOLDER OR HIS REPRESENTATIVE WHO HAS BEEN DESIGNATED IN WRITING. THE
SUMMARIES OF FINANCIAL ANALYSES INCLUDE INFORMATION PRESENTED IN TABULAR FORMAT.
IN ORDER TO FULLY UNDERSTAND THE FINANCIAL ANALYSES USED BY SALOMON SMITH
BARNEY, THE TABLES MUST BE READ WITH THE TEXT OF EACH SUMMARY. THE TABLES ALONE
DO NOT CONSTITUTE A COMPLETE DESCRIPTION OF THE FINANCIAL ANALYSES. IN
CONDUCTING ITS ANALYSES, SALOMON SMITH BARNEY ASSUMED THAT TOTAL DEBT AND SHARES
OUTSTANDING WERE AS AT MARCH 19, 1999, THAT EXCESS CASH WAS NOT AVAILABLE AND
THAT NO ACQUISITION EXPENDITURES WERE INCURRED IN THE FIRST QUARTER OF 1999.
 
                                       27
   29
 
     Comparable Company Analysis.  Using publicly available information, Salomon
Smith Barney compared the Company to the following five multispecialty physician
practice management companies: Advanced Health Corporation, MedPartners, Inc.,
PhyCor, Inc., PhyMatrix Corporation and ProMedCo Management based on various
measures of performance. Salomon Smith Barney noted that the Company's market
value as a multiple of 1998 net income was 10.6x, compared with a median of 7.1x
for the selected group. Salomon Smith Barney also noted that the Company's
market value as a multiple of estimated 1999 net income and estimated 2000 net
income was 8.6x and 7.4x, respectively, compared with a median of 7.3x and 5.5x,
respectively, for the selected group.
 


                                                                 MARKET VALUE AS MULTIPLE OF:
                                                              ----------------------------------
                                                               1998        1999          2000
                                                               NET      ESTIMATED     ESTIMATED
                                                              INCOME    NET INCOME    NET INCOME
                                                              ------    ----------    ----------
                                                                             
Company.....................................................  10.6x        8.6x          7.4x
Median for Multispecialty Group.............................   7.1x        7.3x          5.5x
Premium (Discount) to Multispecialty Median.................   49.1%       18.1%         33.6%

 
     Salomon Smith Barney also calculated multiples of adjusted market value to
last twelve months net revenues, to last twelve months earnings before interest,
taxes, depreciation and amortization and to last twelve months earnings before
interest and taxes. The multiple of adjusted market value to last twelve months
net revenues for the Company was 1.2x compared with a median of 0.4x for the
selected group. The multiple of adjusted market value to last twelve months
earnings before interest, taxes, depreciation and amortization for the Company
was 7.3x compared with a median of 4.8x for the selected group. The multiple of
adjusted market value to last twelve months earnings before interest and taxes
for the Company was 9.5x compared with a median of 7.1x for the selected group.
 


                                                    ADJUSTED MARKET VALUE(1) AS MULTIPLE OF:
                                                    -----------------------------------------
                                                    LTM NET REVENUE    LTM EBITDA    LTM EBIT
                                                    ---------------    ----------    --------
                                                                            
Company...........................................         1.2x            7.3x         9.5x
Median for Multispecialty Group(2)................         0.4x            4.8x         7.1x
Premium (Discount) to Multispecialty Median.......       198.7%           52.2%        33.9%

 
- ---------------
(1) Adjusted market value equals fully diluted market value plus outstanding
    debt minus cash.
 
(2) MedPartners, Inc. was excluded from the EBITDA and EBIT median calculation
    because of its announced plan to exit the physician practice management
    business.
 
     Salomon Smith Barney also compared the Company to the following five single
specialty physician practice management companies: American Oncology Resources,
American Physician Partners, AmeriPath, Inc., Pediatrix Medical Group and
Response Oncology, Inc. based on various measures of performance. Salomon Smith
Barney noted that the Company's market value as a multiple of 1998 net income
was 10.6x, compared with a median of 8.6x for the selected group. Salomon Smith
Barney also noted that the Company's market value as a multiple of estimated
1999 net income and estimated 2000 net income was 8.6x and 7.4x, respectively,
compared with a median of 7.4x and 6.2x, respectively, for the selected group.
 


                                                            MARKET VALUE AS MULTIPLE OF:
                                             ----------------------------------------------------------
                                                1998               1999                    2000
                                             NET INCOME    ESTIMATED NET INCOME    ESTIMATED NET INCOME
                                             ----------    --------------------    --------------------
                                                                          
Company....................................     10.6x               8.6x                    7.4x
Median for Single Specialty Group..........      8.6x               7.4x                    6.2x
Premium (Discount) to Single Specialty
  Median...................................     23.4%              16.9%                   18.8%

 
     Salomon Smith Barney also calculated multiples of adjusted market value to
last twelve months net revenues, to last twelve months earnings before interest,
taxes, depreciation and amortization and to last twelve months earnings before
interest and taxes. The multiple of adjusted market value to last twelve months
net revenues for the Company was 1.2x compared with a median of 1.5x for the
selected group. The multiple
 
                                       28
   30
 
of adjusted market value to last twelve months earnings before interest, taxes,
depreciation and amortization for the Company was 7.3x compared with a median of
6.4x for the selected group. The multiple of adjusted market value to last
twelve months earnings before interest and taxes for the Company was 9.5x
compared with a median of 8.5x for the selected group.
 


                                                    ADJUSTED MARKET VALUE(1) AS MULTIPLE OF:
                                                    -----------------------------------------
                                                    LTM NET REVENUE    LTM EBITDA    LTM EBIT
                                                    ---------------    ----------    --------
                                                                            
Company...........................................         1.2x            7.3x         9.5x
Median for Single Specialty Group.................         1.5x            6.4x         8.5x
Premium (Discount) to Single Specialty Median.....       (18.7%)          14.3%        11.7%

 
- ---------------
(1) Adjusted market value equals fully diluted market value plus outstanding
    debt minus cash.
 
     Discounted Cash Flow Valuation of the Company.  Using a discounted cash
flow methodology, Salomon Smith Barney calculated a range of firm values of the
Company as of March 22, 1999 based on the estimated unlevered free cash flows
that the Company could produce on a stand-alone basis, which includes
management's projected acquisitions at a 5.0x EBITDA purchase price, at a 6.0x
EBITDA purchase price and at a 7.0x EBITDA purchase price, in each case over the
five-year period from fiscal year 1999 through fiscal year 2003. Salomon Smith
Barney also calculated a range of firm values based on the estimated unlevered
free cash flows that the Company could produce on a stand-alone basis, excluding
management's projected acquisitions, over the five-year period from fiscal year
1999 through fiscal year 2003.
 
     Salomon Smith Barney discounted these cash flows by a range of discount
rates representing the weighted average cost of capital from 10% to 11%. Salomon
Smith Barney calculated firm values as of March 22, 1999 based on discount rates
from 10.3% to 10.8%. These calculations resulted in firm values ranging (i) from
$187 million to $218 million using projections provided by the Company's
management which included projected acquisitions at a 5.0x purchase price; (ii)
from $149 million to $180 million using projections provided by the Company's
management which included projected acquisitions at a 6.0x purchase price; (iii)
from $111 million to $142 million using projections provided by the Company's
management which included projected acquisitions at a 7.0x purchase price; and
(iv) from $110 million to $121 million using projections provided by the
Company's management which excluded projected acquisitions. These correspond to
a range of implied per share equity values (i) from approximately $15.00 to
$19.50; (ii) from approximately $9.50 to $14.00; (iii) from approximately $4.00
to $8.50; and (iv) from approximately $3.75 to $5.50, respectively.
 


                                                                                   IMPLIED PER SHARE
                                                          IMPLIED FIRM VALUE(1)      EQUITY VALUE
                                                          ---------------------    -----------------
                                                              (IN MILLIONS)
                                                                             
Based on Management Projections (including management's
  projected acquisitions at 5.0x EBITDA)................       $187 - $218         $14.99 to $19.56
Based on Management Projections (including management's
  projected acquisitions at 6.0x EBITDA)................       $149 - $180         $ 9.50 to $14.02
Based on Management Projections (including management's
  projected acquisitions at 7.0x EBITDA)................       $111 - $142         $ 4.02 to $ 8.48
Based on Management Projections (excluding projected
  acquisitions).........................................       $110 - $121         $ 3.83 to $ 5.47

 
- ---------------
(1) Firm value equals equity value plus debt and contingencies of $85.2 million
    less option proceeds of $2.0 million.
 
     Implied Private Market Valuation of the Company.  Salomon Smith Barney
derived an implied private market valuation for the Company based on the
Company's 1998 revenues and earnings before interest, taxes, depreciation and
amortization according to management data. Salomon Smith Barney reviewed
publicly available information regarding 9 selected merger transactions in the
physician practice management industry. The median transaction values as
multiples of last twelve month revenues and last twelve months earnings
 
                                       29
   31
 
before interest, taxes, depreciation and amortization in the three transactions
occurring since October, 1997 were 1.5x and 6.0x, respectively.
 
     Salomon Smith Barney applied a range of multiples of 1.2x to 1.5x to 1998
revenues, resulting in a range of implied equity value per Share of $7.58 to
$12.48. Salomon Smith Barney applied a range of multiples of 6.0x to 9.0x to
1998 earnings before interest, taxes, depreciation and amortization, resulting
in a range of implied equity value per Share prices of $4.58 to $12.89.
 


                                                                IMPLIED EQUITY
                                                              VALUE PER SHARE(1)
                                                              ------------------
                                                           
Based on 1998 Revenues....................................      $7.58 - $12.48
Based on 1998 EBITDA......................................      $4.58 - $12.89

 
- ---------------
(1) Equity value per Share reflects 6.916 million diluted Shares.
 
     (c) Other Information.  The information contained in Exhibits (a)(1)-(a)(8)
and (c)(1)-(c)(15), and in Annex A, referred to in Item 9 below, is incorporated
herein by reference.
 
                                       30
   32
 
ITEM 9.  MATERIAL TO BE FILED AS EXHIBITS
 


  EXHIBIT
   NUMBER                                   DESCRIPTION
  -------                                   -----------
              
(a)(1)         --   Offer to Purchase, dated March 31, 1999 (incorporated by
                    reference to Exhibit (d)(1) of the Schedule 13E-3).
(a)(2)         --   Letter of Transmittal (incorporated by reference to Exhibit
                    (d)(2) of the Schedule 13E-3).
(a)(3)         --   Joint Press Release, dated March 25, 1999 (incorporated by
                    reference to Exhibit (d)(6) of the Schedule 13E-3).
(a)(4)         --   Presentation to the Company Board by Salomon Smith Barney,
                    Inc., dated March 24, 1999 (incorporated by reference to
                    Exhibit (b)(3) of the Schedule 13E-3).
(a)(5)         --   Fairness Opinion of Salomon Smith Barney, Inc., dated March
                    24, 1999 (incorporated by reference to Annex A to Exhibit
                    (d)(1) of the Schedule 13E-3).*
(a)(6)         --   Fairness Opinion of Bowles Hollowell Conner, dated March 24,
                    1999 (incorporated by reference to Annex B to Exhibit (d)(1)
                    of the Schedule 13E-3.*
(a)(7)         --   Letter to Stockholders, dated April 8, 1999, from Mitchell
                    Eisenberg, M.D., Chairman, President and Chief Executive
                    Officer of the Company.*
(a)(8)         --   Presentation to the Company Board by Bowles Hollowell
                    Conner, dated March 24, 1999 (incorporated by reference to
                    Exhibit (b)(4) of the Schedule 13E-3).
(a)(9)         --   Summary Advertisement dated March 31, 1999 (incorporated by
                    reference to Exhibit (d)(7) of the Schedule 13E-3).
(c)(1)         --   Agreement and Plan of Merger, dated as of March 24, 1999,
                    among Parent, Purchaser and the Issuer (incorporated by
                    reference to Exhibit (c)(1) of the Schedule 13E-3).
(c)(2)         --   Subscription and Tender Agreement, dated as of March 24,
                    1999, between Parent and Mitchell Eisenberg (incorporated by
                    reference to Exhibit (c)(7) of the Schedule 13E-3).
(c)(3)         --   Subscription and Tender Agreement, dated as of March 24,
                    1999, between Parent and Lewis D. Gold (incorporated by
                    reference to Exhibit (c)(8) of the Schedule 13E-3).
(c)(4)         --   Subscription and Tender Agreement, dated as of March 24,
                    1999, between Parent and Jay A. Martus (incorporated by
                    reference to Exhibit (c)(9) of the Schedule 13E-3).
(c)(5)         --   Subscription and Tender Agreement, dated as of March 24,
                    1999, between Parent and Michael F. Schundler (incorporated
                    by reference to Exhibit (c)(10) of the Schedule 13E-3).
(c)(6)         --   Subscription and Tender Agreement, dated as of March 24,
                    1999, between Parent and Gilbert L. Drozdow (incorporated by
                    reference to Exhibit (c)(11) of the Schedule 13E-3).
(c)(7)         --   Tender Agreement, dated as of March 24, 1999, between Parent
                    and Robert J. Coward (incorporated by reference to Exhibit
                    (c)(12) of the Schedule 13E-3).
(c)(8)         --   Stockholders Agreement, dated as of March 24, 1999, among
                    Parent, the Issuer, Holdings, Mitchell Eisenberg, Lewis D.
                    Gold, Gilbert L. Drozdow, Michael F. Schundler and Jay A.
                    Martus (incorporated by reference to Exhibit (c)(6) of the
                    Schedule 13E-3).

 
                                       31
   33
 


  EXHIBIT
   NUMBER                                   DESCRIPTION
  -------                                   -----------
              
(c)(9)         --   Management Agreement, dated as of March 24, 1999, by and
                    among the Company, Parent and Vestar Capital Partners
                    (incorporated by reference to Exhibit (c)(14) of the
                    Schedule 14D-1, dated March 31, 1999, as amended by
                    Amendment No. 1 thereto).
(c)(10)        --   Employment Agreement, dated as of March 24, 1999, between
                    the Company and Mitchell Eisenberg (incorporated by
                    reference to Exhibit (c)(2) of the Schedule 13E-3).
(c)(11)        --   Employment Agreement, dated as of March 24, 1999, between
                    the Company and Lewis Gold (incorporated by reference to
                    Exhibit (c)(3) of the Schedule 13E-3).
(c)(12)        --   Employment Agreement, dated as of March 24, 1999, between
                    the Company and Michael F. Schundler (incorporated by
                    reference to Exhibit (c)(4) of the Schedule 13E-3).
(c)(13)        --   Employment Agreement, dated as of March 24, 1999, between
                    the Company and Jay A. Martus (incorporated by reference to
                    Exhibit (c)(5) of the Schedule 13E-3).
(c)(14)        --   Guaranty Agreement, dated as of March 24, 1999, between
                    Vestar Capital Partners III, L.P. and the Company
                    (incorporated by reference to Exhibit (c)(13) of the
                    Schedule 13E-3).
(c)(15)        --   Confidentiality Agreement, dated as of December 1, 1998, by
                    and between Vestar Capital Partners III, L.P. and the
                    Company (incorporated by reference to Exhibit (c)(3) of the
                    Schedule 14D-1, dated March 31, 1999, as amended by
                    Amendment No. 1 thereto).
Annex A        --   Information Statement Pursuant to Section 14(f) of the
                    Securities Exchange Act of 1934, as amended, and Rule 14f-1
                    thereunder.*

 
- ---------------
 
* Included with Schedule 14D-9 mailed to stockholders of the Company.
 
                                       32
   34
 
                                   SIGNATURE
 
     After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
 
                                          SHERIDAN HEALTHCARE, INC.
 
                                          By: /s/ MITCHELL EISENBERG, M.D.
                                            ------------------------------------
                                               Chairman, President and Chief
                                                      Executive Officer
 
April 8, 1999
 
                                       33
   35
 
                                 EXHIBIT INDEX
 


  EXHIBIT
   NUMBER                                   DESCRIPTION
  -------                                   -----------
              
(a)(1)         --   Offer to Purchase, dated March 31, 1999 (incorporated by
                    reference to Exhibit (d)(1) of the Schedule 13E-3).
(a)(2)         --   Letter of Transmittal (incorporated by reference to Exhibit
                    (d)(2) of the Schedule 13E-3).
(a)(3)         --   Joint Press Release, dated March 25, 1999 (incorporated by
                    reference to Exhibit (d)(6) of the Schedule 13E-3).
(a)(4)         --   Presentation to the Company Board by Salomon Smith Barney,
                    Inc., dated March 24, 1999 (incorporated by reference to
                    Exhibit (b)(3) of the Schedule 13E-3).
(a)(5)         --   Fairness Opinion of Salomon Smith Barney, Inc., dated March
                    24, 1999 (incorporated by reference to Annex A to Exhibit
                    (d)(1) of the Schedule 13E-3).*
(a)(6)         --   Fairness Opinion of Bowles Hollowell Conner, dated March 24,
                    1999 (incorporated by reference to Annex B to Exhibit (d)(1)
                    of the Schedule 13E-3).*
(a)(7)         --   Letter to Stockholders, dated April 8, 1999, from Mitchell
                    Eisenberg, M.D., Chairman, President and Chief Executive
                    Officer of the Company.*
(a)(8)         --   Presentation to the Company Board by Bowles Hollowell
                    Conner, dated March 24, 1999 (incorporated by reference to
                    Exhibit (b)(4) of the Schedule 13E-3).
(a)(9)         --   Summary Advertisement dated March 31, 1999 (incorporated by
                    reference to Exhibit (d)(7) of the Schedule 13E-3).
(c)(1)         --   Agreement and Plan of Merger, dated as of March 24, 1999,
                    among Parent, Purchaser and the Issuer (incorporated by
                    reference to Exhibit (c)(1) of the Schedule 13E-3).
(c)(2)         --   Subscription and Tender Agreement, dated as of March 24,
                    1999, between Parent and Mitchell Eisenberg (incorporated by
                    reference to Exhibit (c)(7) of the Schedule 13E-3).
(c)(3)         --   Subscription and Tender Agreement, dated as of March 24,
                    1999, between Parent and Lewis D. Gold (incorporated by
                    reference to Exhibit (c)(8) of the Schedule 13E-3).
(c)(4)         --   Subscription and Tender Agreement, dated as of March 24,
                    1999, between Parent and Jay A. Martus (incorporated by
                    reference to Exhibit (c)(9) of the Schedule 13E-3).
(c)(5)         --   Subscription and Tender Agreement, dated as of March 24,
                    1999, between Parent and Michael F. Schundler (incorporated
                    by reference to Exhibit (c)(10) of the Schedule 13E-3).
(c)(6)         --   Subscription and Tender Agreement, dated as of March 24,
                    1999, between Parent and Gilbert L. Drozdow (incorporated by
                    reference to Exhibit (c)(11) of the Schedule 13E-3).
(c)(7)         --   Tender Agreement, dated as of March 24, 1999, between Parent
                    and Robert J. Coward (incorporated by reference to Exhibit
                    (c)(12) of the Schedule 13E-3).
(c)(8)         --   Stockholders Agreement, dated as of March 24, 1999, among
                    Parent, the Issuer, Holdings, Mitchell Eisenberg, Lewis D.
                    Gold, Gilbert L. Drozdow, Michael F. Schundler and Jay A.
                    Martus (incorporated by reference to Exhibit (c)(6) of the
                    Schedule 13E-3).
(c)(9)         --   Management Agreement, dated as of March 24, 1999, by and
                    among the Company, Parent and Vestar Capital Partners
                    (incorporated by reference to Exhibit (c)(14) of the
                    Schedule 14D-1, dated March 31, 1999, as amended by
                    Amendment No. 1 thereto).
(c)(10)        --   Employment Agreement, dated as of March 24, 1999, between
                    the Company and Mitchell Eisenberg (incorporated by
                    reference to Exhibit (c)(2) of the Schedule 13E-3).
(c)(11)        --   Employment Agreement, dated as of March 24, 1999, between
                    the Company and Lewis Gold (incorporated by reference to
                    Exhibit (c)(3) of the Schedule 13E-3).
(c)(12)        --   Employment Agreement, dated as of March 24, 1999, between
                    the Company and Michael F. Schundler (incorporated by
                    reference to Exhibit (c)(4) of the Schedule 13E-3).
(c)(13)        --   Employment Agreement, dated as of March 24, 1999, between
                    the Company and Jay A. Martus (incorporated by reference to
                    Exhibit (c)(5) of the Schedule 13E-3).

 
                                       34
   36
 


  EXHIBIT
   NUMBER                                   DESCRIPTION
  -------                                   -----------
              
(c)(14)        --   Guaranty Agreement, dated as of March 24, 1999, between
                    Vestar Capital Partners III, L.P. and the Company
                    (incorporated by reference to Exhibit (c)(13) of the
                    Schedule 13E-3).
(c)(15)        --   Confidentiality Agreement, dated as of December 1, 1998, by
                    and between Vestar Capital Partners III, L.P. and the
                    Company (incorporated by reference to Exhibit (c)(3) of the
                    Schedule 14D-1, dated March 31, 1999, as amended by
                    Amendment No. 1 thereto).
Annex A        --   Information Statement Pursuant to Section 14(f) of the
                    Securities Exchange Act of 1934, as amended, and Rule 14f-1
                    thereunder.*

 
- ---------------
 
* Included with Schedule 14D-9 mailed to stockholders of the Company.
 
                                       35

EX-99.A5

   1
 
[SALOMON SMITH BARNEY LOGO]                                       EXHIBIT (a)(5)
 
March 24, 1999
 
Board of Directors
Sheridan Healthcare, Inc.
4651 Sheridan Street, Suite 200
Hollywood, FL 33021
 
Ladies and Gentlemen:
 
     You have requested our opinion as investment bankers as to the fairness,
from a financial point of view, to the holders of shares of common stock, $.01
par value per share and Class A common stock, $.01 par value per share
(collectively, the "Company Common Stock"), of Sheridan Healthcare, Inc. (the
"Company"), other than Vestar/Calvary Holdings, Inc. ("Holdings") and its
affiliates and certain members of management of the Company who have agreed to
become stockholders of Holdings (the "Management Stockholders"), of the
consideration to be received by such stockholders (the "Public Stockholders") in
the proposed acquisition of the Company by Holdings, pursuant to the Agreement
and Plan of Merger (the "Merger Agreement") to be entered into by and among
Holdings, Vestar/Calvary, Inc. ("Acquisition Sub") and the Company. We
understand that Holdings and Acquisition Sub are newly formed corporations
organized at the direction of an affiliate of Vestar Capital Partners III, L.P.
("Vestar").
 
     As more specifically set forth in the Merger Agreement, Acquisition Sub
will commence a tender offer (the "Proposed Tender Offer") to purchase all
outstanding shares of Company Common Stock at an offer price of $9.25 per share
in cash. Following consummation of the Proposed Tender Offer, Acquisition Sub
will be merged into the Company (the "Proposed Merger" and, together with the
Proposed Tender Offer, the "Proposed Acquisition") and each then-outstanding
share of Company Common Stock (other than shares held by Holdings, Acquisition
Sub or any other direct or indirect subsidiary of Holdings or held in the
treasury of the Company and shares as to which appraisal rights have been
properly exercised under applicable law) will be converted into the right to
receive, in cash, the amount paid for a share of Company Common Stock pursuant
to the Proposed Tender Offer. We understand that the Management Stockholders
have agreed, among other things, to tender their shares of Company Common Stock
in the Proposed Tender Offer and to subscribe for and purchase shares of common
stock of Holdings.
 
     In connection with rendering our opinion, we have reviewed and analyzed,
among other things, the following: (i) a draft dated March 23, 1999 of the
Merger Agreement; (ii) certain publicly available business and financial
information concerning the Company; (iii) certain other information, primarily
financial in nature, including financial forecasts, concerning the business and
operations of the Company furnished to us by the Company for purposes of our
analysis; (iv) certain publicly available information concerning the trading of,
and the trading market for, the Company Common Stock; (v) certain publicly
available information with respect to certain other companies that we believe to
be comparable to the Company and the trading market for certain of such other
companies' securities; and (vi) certain publicly available information
concerning the nature and terms of certain other transactions that we consider
relevant to our inquiry. We have considered and taken into account in our
analysis the Company's lack of, and likely difficulty raising, adequate capital
to fund its growth and acquisition plans if the Company were not to effect the
Proposed Acquisition. We have also considered such other information, financial
studies, analyses, investigations and financial, economic and market criteria
that we deemed relevant. We have also discussed the foregoing, as well as other
matters we believe relevant to our inquiry, with certain officers and employees
of the Company and officers of Vestar.
 
                       [SALOMON SMITH BARNEY LETTERHEAD]
   2
The Board of Directors
Sheridan Healthcare, Inc.
March 24, 1999
Page  2
 
     In our review and analysis and in arriving at our opinion, we have assumed
and relied upon the accuracy and completeness of all information provided to us
or publicly available and have neither attempted independently to verify nor
assumed responsibility for verifying any of such information. We have further
relied upon the assurances of management of the Company that they are not aware
of any facts that would make any of such information inaccurate or misleading.
We have not conducted a physical inspection of any of the properties or
facilities of the Company, nor have we made or obtained or assumed any
responsibility for making or obtaining any independent evaluations or appraisals
of any of such properties or facilities, nor have we been furnished with any
such evaluations or appraisals. With respect to financial forecasts, we have
been advised by the management of the Company and have assumed that such
forecasts were reasonably prepared on bases reflecting the best currently
available estimates and judgments of the management of the Company as to the
future financial performance of the Company. We express no view with respect to
such financial forecasts or the assumptions on which they were based. We have
also assumed that the definitive Merger Agreement will not, when executed,
contain any terms or conditions that differ materially from the terms and
conditions contained in the draft of such agreement we have reviewed and that
the Proposed Acquisition will be consummated in a timely manner and in
accordance with the terms of the Merger Agreement.
 
     In conducting our analysis and arriving at our opinion as expressed herein,
we have considered such financial and other factors as we have deemed
appropriate under the circumstances including, among others, the following: (i)
the historical and current financial position and results of operations of the
Company; (ii) the business prospects of the Company, including the likelihood
that, in the absence of additional capital support, the Company would be unable
to pursue its growth and acquisition strategy; (iii) the historical and current
market for the equity securities of certain other companies that we believe to
be comparable to the Company; and (iv) the nature and terms of certain other
merger and acquisition transactions that we believe to be relevant. We have also
taken into account our assessment of general economic, market and financial
conditions as well as our experience in connection with similar transactions and
securities valuation generally. We have also considered the process that
resulted in the negotiation of the Merger Agreement, including our extensive
solicitation of offers to acquire the Company and the responses received to such
solicitation and discussions we had with other potential acquirors.
 
     We have not been asked to consider, and our opinion does not address, the
relative merits of the Proposed Acquisition as compared to any alternative
business strategy that might exist for the Company. Our opinion necessarily is
based upon conditions as they exist and can be evaluated on the date hereof, and
we assume no responsibility to update or revise our opinion based upon
circumstances or events occurring after the date hereof. Our opinion is, in any
event, limited to the fairness, from a financial point of view, of the
consideration to be received by the Public Stockholders in the Proposed
Acquisition and does not address the Company's underlying business decision to
effect the Proposed Acquisition or constitute a recommendation of the Proposed
Acquisition to the Company or a recommendation to any holder of Company Common
Stock as to whether such holder should tender such stock in the Proposed Tender
Offer or as to how such holder should vote with respect to the Proposed Merger,
if such a vote is taken.
 
     As you are aware, Salomon Smith Barney Inc. ("Salomon Smith Barney") is
acting as financial advisor to the Company in connection with the Proposed
Acquisition and will receive a fee for such services, a substantial portion of
which is contingent upon consummation of the Proposed Acquisition. Additionally,
we or our predecessors or affiliates have previously rendered certain investment
banking and financial advisory services to the Company and Vestar for which we
or our predecessors or affiliates received customary compensation. In addition,
in the ordinary course of business, Salomon Smith Barney may hold or actively
trade the securities of the Company for its own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities. Salomon Smith Barney and its affiliates (including Citigroup
Inc. and its affiliates) may have other business and financial relationships
with the Company and Vestar.
 
     This opinion is intended solely for the benefit and use of the members of
Board of Directors of the
   3
The Board of Directors
Sheridan Healthcare, Inc.
March 24, 1999
Page  3
 
Company in considering the transaction to which it relates and may not be used
for any other purpose or published, reproduced, disseminated, quoted or referred
to at any time, in any manner or for any purpose, without the prior written
consent of Salomon Smith Barney, except that this opinion may be reproduced in
full in, and references to the opinion and to Salomon Smith Barney (in each case
in such form as Salomon Smith Barney shall approve) may be included in, the
solicitation/recommendation statement the Company distributes to holders of
Company Common Stock in connection with the Proposed Tender Offer and any
proxy/information statement and rule 13-3 transaction statement filed with the
Securities and Exchange Commission in connection with the Proposed Acquisition.
 
     Based upon and subject to the foregoing, we are of the opinion as
investment bankers that, as of the date hereof, the consideration to be received
by the Public Stockholders in the Proposed Acquisition is fair, from a financial
point of view, to such Public Stockholders.
 
Very truly yours,
 
SALOMON SMITH BARNEY INC.

EX-99.A6

   1
 
                                                                  EXHIBIT (a)(6)
 
The Board of Directors
Sheridan Healthcare, Inc.
March 24, 1999
Page 1
                      [Bowles Hollowell Connor Letterhead]
CONFIDENTIAL
 
March 24, 1999
 
Board of Directors
Sheridan Healthcare, Inc.
4651 Sheridan Street
Suite 400
Hollywood, Florida 33021
 
Members of the Board:
 
     You have asked us to advise you with respect to the fairness, from a
financial point of view, to the stockholders of Sheridan Healthcare, Inc.
("Sheridan"), excluding certain management stockholders (the "Participating
Management") who have agreed to become stockholders of Vestar/Calvary Holdings,
Inc. ("Holdings"), of the consideration to be received by such stockholders
pursuant to the terms of the Agreement and Plan of Merger, dated as of March 24,
1999 (the "Merger Agreement"), among Holdings, Vestar/Calvary, Inc.
("Purchaser") (Holdings and Purchaser are entities formed at the direction of an
affiliate of Vestar Capital Partners III, L.P. ("Vestar")), and Sheridan. The
Merger Agreement provides, among other things, for (A) Purchaser to make a
tender offer (the "Offer") to purchase for cash all outstanding shares of
Sheridan's common stock, par value $.01 per share, and Class A common stock, par
value $.01 per share (collectively, the "Common Stock"), at a price of $9.25 per
share and (B) the merger (the "Merger") of Purchaser into Sheridan, as soon as
practicable following the expiration or termination of the Offer, with (i) each
share of Common Stock being converted in the Merger into the right to receive
the amount paid per share in the Offer (the amount to be paid per share in the
Offer or the Merger, the "Consideration"), and (ii) each outstanding option to
purchase Sheridan Common Stock exercisable at a price less than $9.25 per share
being converted in the Merger into the right to receive cash in an amount equal
to the Consideration minus such exercise price, and all other options to
purchase Sheridan Common Stock being terminated.
 
     In arriving at our opinion, we have, among other things:
 
          (i) reviewed certain publicly available business and financial
     information relating to Sheridan;
 
          (ii) reviewed certain other information, including financial
     forecasts, provided to us by Sheridan, and have met with Sheridan's
     management to discuss the business and prospects of Sheridan;
 
          (iii) considered certain financial data of Sheridan and compared that
     data with similar data for publicly held companies in businesses similar to
     those of Sheridan;
 
          (iv) considered the financial terms of certain other business
     combinations and other transactions which have recently been effected;
 
          (v) reviewed the financial terms and conditions of the Merger
     Agreement; and
 
          (vi) considered such other information, financial studies, analyses
     and investigations and financial, economic and market criteria which we
     deemed relevant.
 
                         [Riverfront Plaza Letterhead]
   2
Board of Directors
March 24, 1999
Page  2
 
     In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
its being complete and accurate in all material respects. With respect to the
financial forecasts, we have assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of
Sheridan's management as to the future financial performance of Sheridan. In
addition, we have not made an independent evaluation or appraisal of the assets
or liabilities (contingent or otherwise) of Sheridan, nor have we been furnished
with any such evaluations or appraisals. Our opinion is necessarily based upon
financial, economic, market and other conditions as they exist and can be
evaluated on the date hereof. In connection with our engagement, we and the
Company's co-financial advisor, Salomon Smith Barney, approached third parties
to solicit indications of interest in a possible acquisition of Sheridan.
 
     We have acted as financial advisor to Sheridan in connection with the Offer
and the Merger and will receive a fee for our services, including for rendering
this opinion, a significant portion of which is contingent upon the consummation
of the Offer and the Merger. As part of our investment banking business, we are
regularly engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes.
 
     In the ordinary course of business, we or our affiliates may actively trade
the debt and equity securities of Sheridan for our or any such affiliate's own
account or for the account of customers and, accordingly, may hold a long or
short position in such securities. In addition, we and our affiliates in the
past may have provided investment and commercial banking products and services
for Sheridan, Vestar and their respective affiliates and other related persons.
 
     It is understood that this letter is for the information of the Board of
Directors of Sheridan in connection with its consideration of the Offer and the
Merger and does not constitute a recommendation to any stockholder as to how
such stockholders should vote on the proposed Merger or act with respect to the
Offer. Our opinion does not address the relative merits of the transaction
contemplated by the Merger Agreement as compared to any alternative business
strategies that might exist for Sheridan, nor does it address the effect of any
other business combination in which Sheridan might engage. This letter is not to
be quoted or referred to, in whole or in part, in any registration statement,
prospectus or proxy statement, or in any other document used in connection with
the offering or sale of securities, nor shall this letter be used for any other
purposes, without First Union Capital Markets Corp.'s prior written consent.
 
     Based upon and subject to the foregoing, our experience as investment
bankers, our work as described above and other factors we deem relevant, we are
of the opinion that, as of the date hereof, the Consideration is fair from a
financial point of view to holders of Common Stock (other than the Participating
Management, with respect to whom we express no opinion).
 
Very truly yours,
 
BOWLES HOLLOWELL CONNER
- ---------------------------------------------------
BOWLES HOLLOWELL CONNER
A division of First Union Capital Markets Corp.

EX-99.A7

   1
 
                                                                  EXHIBIT (a)(7)
 
                                                                   April 8, 1999
 
                           SHERIDAN HEALTHCARE, INC.
                        4651 SHERIDAN STREET, SUITE 400
                            HOLLYWOOD, FLORIDA 33021
 
Dear Sheridan Healthcare Stockholder:
 
     We are pleased to inform you that on March 24, 1999, Sheridan Healthcare,
Inc. ("Sheridan") entered into a merger agreement (the "Merger Agreement") with
Vestar/Sheridan, Inc. a Delaware corporation ("Purchaser") and Vestar/Sheridan
Holdings, Inc. a Delaware corporation of which Purchaser is a wholly owned
subsidiary ("Parent"), which provides for the acquisition of Sheridan by means
of a tender offer and a subsequent merger.
 
     As the first step of this acquisition, Purchaser is making a tender offer
for all outstanding shares of Sheridan's Common Stock and its Class A Common
Stock ( together, the "Shares") at a price of $9.25 per Share, net to the seller
in cash, without interest thereon (the "Offer Price"). Subject to certain
conditions, Purchaser and Sheridan will be merged subsequent to the completion
of the tender offer, and the remaining outstanding Shares will be converted into
the right to receive $9.25 per Share.
 
     Your Board of Directors has unanimously determined (with the interested
directors abstaining) that the tender offer and the merger are fair to and in
the best interests of Sheridan's stockholders and recommends that every
stockholder of the Company accept the tender offer and tender his or her Shares.
 
     In arriving at its recommendation, the Board of Directors gave careful
consideration to the factors described in the attached
Recommendation / Solicitation Statement on Schedule 14D-9 that is being filed
today with the Securities and Exchange Commission. Those factors considered
(including the fairness opinions of Salomon Smith Barney, Inc. and Bowles
Hollowell Conner, a division of First Union Capital Markets Corp., the Company's
financial advisors, copies of which opinions are filed as exhibits to the
Schedule 14D-9 attached hereto), should be carefully reviewed and understood in
their entirety. The terms and conditions of the Merger Agreement should also be
carefully reviewed and understood in their entirety.
 
     In addition to the attached Schedule 14D-9 that we are providing you, the
Purchaser has already provided you with its Offer to Purchase, dated March 31,
1999, together with related materials, including a Letter of Transmittal to be
used for tendering your Shares. The Offer to Purchase and the Letter of
Transmittal set forth in detail the terms and conditions of the tender offer and
provide instructions as to how to tender your Shares. I urge you to read those
materials carefully.
 
     If you desire assistance in completing the Letter of Transmittal or
tendering your Shares, please call Innisfeee M&A Incorporated, the Information
Agent, collect at (212) 750-5833 (banks and brokers only) or toll-free at (888)
750-5834 (all others).
 
                                            Very truly yours,

                                            (/s/ Mitchell Eisenberg, M.D.)

                                            Mitchell Eisenberg, M.D.
                                            Chairman, President and Chief
                                            Executive Officer

EX-99.ANNEXA

   1
 
                                                                         ANNEX A
 
                           SHERIDAN HEALTHCARE, INC.
                        4651 SHERIDAN STREET, SUITE 400
                            HOLLYWOOD, FLORIDA 33021
 
                       INFORMATION STATEMENT PURSUANT TO
                        SECTION 14(f) OF THE SECURITIES
          EXCHANGE ACT OF 1934, AS AMENDED, AND RULE 14F-1 THEREUNDER
 
     This Information Statement is being mailed on or about April 9, 1999 as
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of Sheridan Healthcare, Inc., a Delaware corporation (the
"Company"), to the holders of record of shares of Common Stock, par value $0.01
per share (the "Common Stock"), and Class A Common Stock, par value $0.01 per
share (the "Class A Common Stock", and, together with the Common Stock, the
"Shares"), of the Company on March 24, 1999. You are receiving this Information
Statement in connection with the designation by Vestar/Sheridan, Inc., a
Delaware corporation (formerly known as Vestar/Calvary, Inc.) (the "Purchaser"),
of certain individuals to the Company's Board of Directors (the "Company
Board"), in connection with the Merger Agreement (defined below).
 
     This Information Statement is being mailed to you in accordance with
Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and Rule l4f-1 promulgated thereunder. The information set forth herein
supplements certain information set forth in the Schedule 14D-9. You are urged
to read this Information Statement carefully. You are not, however, required to
take any action hereunder. Capitalized terms used herein and not otherwise
defined herein shall have the meaning set forth in the Schedule 14D-9.
 
     On March 24, 1999, the Company, Vestar/Sheridan Holdings, Inc., a Delaware
corporation ("Parent") and the sole stockholder of Purchaser, and Purchaser
entered into an Agreement and Plan of Merger (the "Merger Agreement") in
accordance with the terms and subject to the conditions of which (i) Purchaser
will commence a tender offer (the "Offer") for all outstanding Shares at a price
of $9.25 per Share, net to the seller in cash, without interest thereon, and
(ii) Purchaser will be merged into the Company (the "Merger"). Six officers of
the Company (the "Executives") who own, as of the date hereof, approximately
7.2% (11.4% after giving effect to the exercise of their options to purchase
Common Stock at prices less than $9.25 per share) of the outstanding shares of
Common Stock of the Company have agreed with Parent in Subscription and Tender
Agreements and a Tender Agreement (the "Subscription and Tender Agreements" and
the "Tender Agreement", respectively), among other things, to tender their
Shares into the Offer and vote their Shares in favor of the adoption of the
Merger Agreement and against any action or agreement that would impede,
interfere with, delay or prevent the purchase of Shares pursuant to the Offer or
the consummation of the Merger or would result in a breach of any covenant,
representation or warranty contained in the Merger Agreement and five of the
Executives also have agreed to purchase shares of common stock of Parent
("Parent Common Stock") following the purchase of Shares pursuant to the Offer
and have executed a Stockholders Agreement with Parent (the "Stockholders
Agreement"). Four of the Executives also have entered into new employment
agreements with the Company which shall become effective upon the purchase of
Shares pursuant to the Offer (the "Employment Agreements" and, together with the
Tender Agreement, the Subscription and Tender Agreements and the Stockholders
Agreement, the "Stockholder Documents"). Parent has agreed in the Tender
Agreement and in the Subscription and Tender Agreements to grant each of the
Executives time and performance options upon the consummation of the Merger.
 
     Pursuant to the Merger Agreement, Purchaser commenced the Offer on March
31, 1999. The Offer is scheduled to expire at 12:00 midnight, New York City
time, on April 27, 1999 unless the Offer is extended.
 
     The information contained in this Information Statement concerning
Purchaser has been furnished to the Company by Purchaser, and the Company
assumes no responsibility for the accuracy or completeness of such information.
 
     The Offer, the Merger, the Merger Agreement and the Stockholder Documents
referred to herein are more fully described in the Schedule 14D-9 to which this
Information Statement is attached as Annex A.
   2
 
                   GENERAL INFORMATION REGARDING THE COMPANY
 
GENERAL
 
     The total authorized capital stock of the Company consists of: (i)
5,000,000 shares of Convertible Preferred Stock, par value $.01 per share, no
shares of which are issued and outstanding as of the date hereof; and (ii)
21,000,000 shares of common stock, of which 296,638 shares of Class A Common
Stock and 6,290,178 shares of Common Stock are issued and outstanding as of the
date hereof.
 
     Each holder of Common Stock is entitled to one vote per share on all
matters to be voted on by stockholders. Holders of Class A Common Stock are not
entitled to vote, except as required by law, and then are entitled to one vote
per share.
 
                                   MANAGEMENT
 
PURCHASER DIRECTORS
 
     The Merger Agreement provides that, promptly upon the purchase by Purchaser
of Shares pursuant to the Offer, and from time to time thereafter, Purchaser
shall be entitled to designate up to such number of directors (the "Purchaser
Directors"), rounded up to the next whole number, to serve on the Company Board
as shall give Purchaser representation on the Company Board equal to the product
of the total number of directors on the Company Board (giving effect to the
directors elected pursuant to this sentence) multiplied by the percentage that
the aggregate number of Shares beneficially owned by Purchaser or any affiliate
of Purchaser bears to the total number of Shares then outstanding, and the
Company shall, at such time, promptly take all action necessary to cause
Purchaser's designees to be so elected, including either increasing the size of
the Company Board or securing the resignations of incumbent directors or both.
The Merger Agreement further provides that (i) the directors serving on the
board of directors of Purchaser immediately prior to the consummation of the
Merger will be the initial directors of the Company following the Merger, each
to hold office in accordance with the Certificate of Incorporation and By-laws
of the Company following the Merger, and (ii) the officers of the Company
immediately prior to the consummation of the Merger shall be the officers of the
Company following the Merger. In addition, until Purchaser acquires a majority
of the outstanding Shares on a fully diluted basis, the Company shall use its
reasonable best efforts to ensure that all members of the Company Board and its
committees who are not employees of the Company or its Controlled Entities (as
defined in the Merger Agreement) shall remain members of the Company Board and
such committees.
 
     Pursuant to the Merger Agreement, James L. Elrod, Jr., David M. Hooper and
Robert L. Rosner have been designated by Purchaser as the Purchaser Directors of
the Company Board. Purchaser has informed the Company that each of the Purchaser
Directors has consented to act as a director of the Company. Except as disclosed
herein or in the Schedule 14D-9, none of such persons (i) is currently a
director of, or holds any position with, the Company, (ii) has a familial
relationship with any of the directors or executive officers of the Company or
(iii) to the best knowledge of Purchaser, beneficially owns any equity
securities (or rights to acquire any such securities) of the Company. The
Company has been advised by Purchaser that, to the best of Purchaser's
knowledge, none of such persons has been involved in any transaction with the
Company or any of its directors, executive officers or affiliates which are
required to be disclosed pursuant to the rules and regulations of the Securities
and Exchange Commission (the "Commission"), except as disclosed herein or in the
Schedule 14D-9 or in Purchaser's Schedule 14D-1.
 
     The name, age, present principal occupation or employment and five year
employment history of each of the Purchaser Directors are set forth below.
Unless otherwise indicated, each such individual has held his present position
as set forth below for the last five years. Except for David M. Hooper, who is a
citizen of the Republic of Ireland, each such person is a citizen of the United
States. The business address of each person listed below is c/o Vestar/Sheridan
Investors, LLC, 245 Park Avenue, 41st Floor, New York, New York 10167.
 
                                        2
   3
 
     James L. Elrod, Jr. (43)  Mr. Elrod is currently Vice President of Vestar
Associates Corporation III ("VAC III"). Mr. Elrod is a director and President of
both Parent and Purchaser and President of Vestar/Sheridan Investors, LLC, a
Delaware Limited Liability Company ("Holdings"). Mr. Elrod joined an affiliate
of VAC III in 1998. From 1994 through 1997, he served as the Chief Financial
Officer and Chief Operating Officer of Physicians Health Services. From 1980 to
1994, he served as Managing Director of Dillon, Read & Co. Mr. Elrod is a
director of Pinnacle Automation, Inc. and Alvey Systems, Inc., both companies in
which an affiliate of VAC III has a significant equity interest, and D.D.S.
Partners, a dental practice management company.
 
     Robert L. Rosner. (39)  Mr. Rosner is currently Vice President of VAC III
and was a founding partner of an affiliate of VAC III at its inception in 1988.
Mr. Rosner is a director and Vice President, Treasurer and Assistant Secretary
of both Parent and Purchaser and Vice President, Treasurer and Assistant
Secretary of Holdings. Mr. Rosner is Chairman of Russell-Stanley Holdings, Inc.
and a director of Remington Products Company, L.L.C., both companies in which an
affiliate of VAC III has a significant equity interest.
 
     David M. Hooper. (31)  Mr. Hooper is currently Vice President of Vestar
Capital Partners, which he joined in 1994. Mr. Hooper is a director and Vice
President, Secretary and Assistant Treasurer of both Parent and Purchaser and
Vice President, Secretary and Assistant Treasurer of Holdings. Mr. Hooper is a
director of Advanced Organics Holdings, Inc., a company in which an affiliate of
VAC III has a significant equity interest.
 
THE COMPANY'S CURRENT DIRECTORS AND OFFICERS
 
     The name, age, present principal occupation or employment and five year
employment history of the current directors and executive officers of the
Company are set forth below. Unless otherwise noted, each person is a citizen of
the United States and the business address of such person is c/o Sheridan
Healthcare, Inc., 4651 Sheridan Street, Suite 400, Hollywood, Florida 33021.
Some of the current directors will resign effective immediately following the
consummation of the Offer by Purchaser.
 
     Mitchell Eisenberg, M.D. (48)  Dr. Eisenberg joined the Company in 1982,
has been a director of the Company since 1985, has been President since 1989,
and has been Chairman of the Board and Chief Executive Officer since 1994. Prior
to joining the Company, Dr. Eisenberg was in private practice.
 
     Lewis D. Gold, M.D. (43)  Dr. Gold joined the Company in 1985 as an
anesthesiologist and has been a director of the Company since 1988. He has
served as Executive Vice President -- Business Development since 1994. Dr. Gold
was also Chief of the Department of Anesthesia of Parkway Regional Medical
Center from 1990 to 1994.
 
     Neil A. Natkow, D.O. (52)  Dr. Natkow was appointed to the Company Board in
July 1996. Dr. Natkow served as Senior Vice President -- Health Care for
Precision Response Corporation, a publicly traded company, from February 1997
until October 1997, and is currently a member of Precision Response
Corporation's Board of Directors. Upon leaving Precision Response Corporation,
Dr. Natkow became President of NAN II, Inc., a Florida Corporation which is the
general partner of PhyTrust, Ltd., a Florida management services organization.
From December 1993 until October 1995, Dr. Natkow served as an executive officer
of PCA Health Plans of Florida, a health maintenance organization, most recently
as its Chief Executive Officer. From July 1992 to December 1993, Dr. Natkow was
the President and Chief Executive Officer of Family Health Plan, a health
maintenance organization, and from June 1987 to July 1992, Dr. Natkow was the
Vice President for Professional Affairs at Southeastern University for Health
Sciences.
 
     Jamie E. Hopping (45)  Mrs. Hopping has been a director of the Company
since February 1998. Mrs. Hopping is currently President and Chief Executive
Officer of Benchark Oncology, Inc. Prior to that, she served as an independent
health care consultant from September 1997 to December 1998. From January 1996
to August 1997, Mrs. Hopping served as a Group President of Columbia/HCA
Healthcare Corporation and from February 1994 to January 1996 served as its
Division President. Prior to that, Mrs. Hopping served as the Chief Executive
Officer of Deering Hospital and Grant Center, an acute care hospital and
psychiatric facility, from September 1990 to January 1993.


                                        3
   4
 
     Henry E. Golembesky, M.D. (53)  Dr. Golembesky has been a director of the
Company since November 1995. Dr. Golembesky is currently a health care
consultant to Cejka & Company. Prior to that, Dr. Golembesky served as a health
care consultant to CSC Healthcare, Inc. from January 1993 to October 1998. From
1990 to 1992, Dr. Golembesky served as President and Chief Executive Officer of
UniMed America, a physician services division of Unihealth.
 
     Michael F. Schundler (43)  Mr. Schundler joined the Company in July 1996 as
Chief Operating Officer and currently serves as both Chief Operating Officer and
Chief Financial Officer. Previously, Mr. Schundler served as Vice
President -- Operations at American Health Network from 1994 to 1996 and as
Chief Financial Officer of AdminiStar, Inc. from 1991 to 1994. Prior to that,
Mr. Schundler was Senior Vice President -- Finance of Merrill Lynch Life
Insurance Co. and Family Life Insurance Co.
 
     Gilbert L. Drozdow, M.D., M.B.A. (41)  Dr. Drozdow joined the Company in
1987 as an anesthesiologist and was a director of the Company from 1990 to 1994.
He served the Company as Vice President -- Medical Affairs from 1994 to February
1996 and has served as Vice President Hospital-Based Services since February
1996. He was also Chairman of the Department of Anesthesia at Westside Regional
Medical Center in 1994.
 
     Jay A. Martus, Esq. (43)  Mr. Martus joined the Company in 1994 as Vice
President, Secretary and General Counsel. Prior to joining the Company, he was a
partner with the law firm of Levey & Martus, P.A. Mr. Martus represented the
Company as outside general counsel from 1989 to 1994.
 
     Robert J. Coward (34)  Mr. Coward joined the Company in March of 1994 as
Controller and served in such capacity through June of 1997. From July 1997 to
the present, he has served the Company as Vice President of Finance.
 
BOARD OF DIRECTORS AND COMMITTEES
 
     The Company Board currently consists of five members and is divided into
three classes. The members of each class of directors serve for staggered
three-year terms. The Company Board is comprised of one Class I Director (Mrs.
Hopping), two Class II directors (Drs. Gold and Golembesky), and two Class III
directors (Drs. Eisenberg and Natkow). At each annual meeting of stockholders,
directors will be reelected or elected for a full term of three years to succeed
those directors whose terms are expiring.
 
     During 1998, the Company Board met five times. The Company Board also
signed eleven unanimous written consents in lieu of meetings. Each director
attended at least 75% of the aggregate of (i) the total number of meetings of
the Company Board (held during the period for which such director served on the
Company Board) and (ii) the total number of meetings of all committees of the
Company Board on which the director served (during the periods for which the
director served on such committee or committees).
 
     There are four standing committees of the Company Board: Audit,
Compensation, Option and Indemnification, as more fully described below:
 
     AUDIT COMMITTEE.  The Company Board has established an audit committee
consisting of Mrs. Hopping and Dr. Golembesky (the "Audit Committee"). The Audit
Committee is responsible for making recommendations concerning the engagement of
independent public accountants, reviewing with the independent public
accountants the plans and results of the audit engagement, approving
professional services provided by the independent public accountants, reviewing
the independence of the independent public accountants, considering the range of
audit and non-audit fees and reviewing the adequacy of the Company's internal
accounting controls. The Audit Committee met once during 1998.
 
     COMPENSATION COMMITTEE.  The Company Board has also established a
compensation committee consisting of Drs. Eisenberg and Natkow and Mrs. Hopping
(the "Compensation Committee"). The Compensation Committee, described in greater
detail below, reviews and recommends the compensation arrangements for all
directors and officers and approves such arrangements for other senior level
employees. The Compensation Committee also administers and takes such other
action as may be required in connection with the Company's Executive Incentive
Plan (described below). The Compensation Committee met four times during 1998.
 
                                        4
   5
 
     OPTION COMMITTEE.  The Company Board has also established an option
committee consisting of Drs. Golembesky and Natkow and Mrs. Hopping (the "Option
Committee"). The Option Committee administers and takes such other action as may
be required in connection with the Company's 1995 Stock Option Plan, as amended
(the "Option Plan"). The Option Committee met once during 1998 and signed one
unanimous written consent in lieu of a meeting.
 
     INDEMNIFICATION COMMITTEE.  The Company Board has also established an
indemnification committee consisting of Drs. Golembesky and Natkow and Mrs.
Hopping (the "Indemnification Committee"). The Indemnification Committee reviews
and recommends actions as may be required in connection with indemnification
issues arising out of litigation filed against the Company and certain of its
executive officers and directors by former stockholders of the Company's
predecessor. The Indemnification Committee did not meet during 1998.
 
     The Company Board does not have a standing nominating committee. The full
Company Board performs the function of such a committee.
 
COMPENSATION OF DIRECTORS
 
     Directors of the Company who are also employees receive no additional
compensation for their services as a director. Non-employee directors receive an
annual director's fee of $5,000 for their service as directors. Each
non-employee director also receives $1,000 for personal attendance at any
meeting of the Company Board and $500 for each committee meeting attended and
each meeting of the full Company Board attended by telephone conference. All
directors of the Company are reimbursed for travel related expenses incurred in
attending meetings of the Company Board and its committees.
 
     The Option Plan provides that each new non-employee director of the Company
will receive, on the date he or she first becomes a director, an option not
intended to qualify as an incentive stock option under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") (a "Non-Qualified
Option"), to purchase up to 7,500 Shares. In addition, the Option Plan provides
that each non-employee director serving in such capacity on the fifth business
day after each annual meeting of stockholders will also receive, on such date, a
Non-Qualified Option to purchase up to 2,500 Shares. Pursuant to this provision,
Drs. Golembesky and Natkow and Mrs. Hopping received grants of such
Non-Qualified Options on July 1, 1998. All options granted to directors under
the Option Plan vest in three equal installments, with one-third vesting on the
date of grant and an additional one-third vesting on each of the two successive
anniversaries thereof. All such options are granted with an exercise price per
Share equal to the fair market value per Share of Common Stock on the date of
grant and expire on the tenth anniversary of such date of grant.
 
EXECUTIVE COMPENSATION
 
     COMPENSATION COMMITTEE REPORT.  In connection with the Company's initial
public offering in November 1995, the Company Board established a Compensation
Committee, which currently consists of Drs. Eisenberg and Natkow and Mrs.
Hopping. Prior to the establishment of the Compensation Committee, decisions
with respect to compensation of executive officers were made by the full Company
Board. The Compensation Committee is responsible for setting base salaries for
executive officers and awarding bonuses under the Company's Executive Incentive
Plan. In addition to administering executive compensation, the Compensation
Committee also reviews from time to time succession planning for senior
management. The overall objectives of the Company's executive compensation
program, as established by the Company Board and confirmed by the Compensation
Committee, are to:
 
          - attract, retain and reward experienced, highly motivated executives
        who
         contribute to the Company's growth;
 
          - reward executives based on individual and corporate performance; and
            to
 
          - align executives' goals with those of the stockholders through
            grants of stock options.
 
                                        5
   6
 
     In order to implement this philosophy for fiscal year ended December 31,
1998, the Compensation Committee reviewed the individual elements of executive
compensation, including salaries, incentive compensation awards and the terms of
employment agreements with a view towards enhancing the profitability of the
Company and closely aligning the financial interests of the Company's officers
with those of its stockholders.
 
     BASE SALARY.  To date, the Compensation Committee has not established a
formal policy for determining base salary ranges for executive positions, as the
vast majority of the Company's executive officers are now compensated in
accordance with the terms of employment agreements approved by the Company Board
and entered into prior to the establishment of the Compensation Committee.
 
     COMPENSATION OF CHIEF EXECUTIVE OFFICER.  In determining the compensation
of the Chief Executive Officer, the Compensation Committee applies the same
philosophy and procedures as are applied to other executive officers. As with
the other executive officers, the Chief Executive Officer is currently
compensated in accordance with the terms of an employment agreement approved by
the Company Board and entered into prior to the establishment of the
Compensation Committee.
 
     The Company's Chairman, President and Chief Executive Officer, Mitchell
Eisenberg, M.D., received a base salary for fiscal 1998 of $304,808 and a bonus
of $6,375, to be awarded pursuant to the Company's Executive Incentive Plan
described below. In addition, in fiscal 1998 Dr. Eisenberg received stock option
grants of 37,500 shares and 62,500 Shares under the Company's Option Plan
described below.
 
     The Compensation Committee believes that Dr. Eisenberg's total compensation
is appropriate in light of the Company's performance in fiscal 1998 and the
other factors described above.
 
     EXECUTIVE INCENTIVE PLAN.  The Company has established an Executive
Incentive Plan (the "Incentive Plan") pursuant to which the Compensation
Committee has the discretion to determine those officers and key employees of
the Company who will be eligible for bonuses if certain financial and business
objectives are achieved. The formula for determining bonuses under the Incentive
Plan is established annually by the Compensation Committee. The Compensation
Committee bases these formulas upon the achievement of financial goals (such as
earnings per share, specified revenue levels, maintenance of positive cash flow
or addition of economic value) and business objectives. The Compensation
Committee may change formulas during a particular year and may, from time to
time, designate additional employees as participants in the Incentive Plan. The
terms of the Incentive Plan may be amended by the Company Board at any time.
 
     For the fiscal year ending December 31, 1998, the Compensation Committee
declared Drs. Eisenberg, Gold and Drozdow and Messrs. Martus and Schundler and
Dennis L. Gates and Robert Coward eligible for bonuses under the Incentive Plan.
In order to provide incentives for these individuals to focus their efforts on
the Company's financial performance, the Compensation Committee established a
bonus formula for 1998 (the "1998 Formula") based on the Company's 1998 earnings
per share, as reported in the Company's 1998 audited financial statements ("1998
EPS"). The 1998 Formula provides that in the event 1998 EPS is equal to or
exceeds $0.76, the eligible employees will receive, in the aggregate, bonuses in
an amount equal to 20% of the product of the excess of 1998 EPS over $0.76
multiplied by the number of Shares used in determining 1998 EPS. Of the
aggregate amount of bonuses determined by the 1998 Formula, 25% will be awarded
to Dr. Eisenberg, 5% will be be awarded to each of Drs. Gold and Drozdow and
Messrs. Martus and Schundler, 2.5% will be awarded to each of Messrs. Coward and
Gates and the remaining 50% will be distributed to officers and key employees at
the discretion of Dr. Eisenberg. The 1998 Formula provides that no bonuses will
be awarded pursuant to the Incentive Plan for the 1998 fiscal year if 1998 EPS
is less than $0.76. The 1998 Formula has, based on 1998 results, yielded an
aggregate amount of $25,500, of which Dr. Eisenberg is eligible to receive
$6,375, Drs. Gold and Drozdow and Messrs. Martus and Schundler are eligible to
receive $1,275, Mr. Coward is eligible to receive $637.50, and $13,387.50 may be
distributed at the discretion of Dr. Eisenberg. Mr. Gates is no longer employed
by the Company and will not receive a bonus.
 
                                          Mitchell Eisenberg, M.D.
                                          Jamie E. Hopping
                                          Neil A. Natkow, D.O.
 
                                        6
   7
 
                         EXECUTIVE OFFICER COMPENSATION
 
SUMMARY COMPENSATION TABLE
 
     The following table sets forth the compensation awarded to the Company's
Chief Executive Officer and the four other most highly compensated executive
officers of the Company for the last three fiscal years, who were serving as
executive officers at the end of 1998, each of whose total salary and bonus
exceeded $100,000 during 1998 (collectively, the "Named Executive Officers").
 


                                                                    LONG TERM
                                                                   COMPENSATION
                                                                      AWARDS
                                                   ANNUAL          ------------
                                                COMPENSATION        SECURITIES
                                             -------------------    UNDERLYING
                                              SALARY     BONUS       OPTIONS          ALL OTHER
    NAME AND PRINCIPAL POSITION       YEAR     ($)       ($)(1)        (#)        COMPENSATION($)(3)
    ---------------------------       ----   --------   --------   ------------   ------------------
                                                                   
Mitchell Eisenberg, M.D.............  1998   $304,808   $  6,375      100,000(2)       $      0
  Chairman of the Board of            1997    274,999          0      170,000               950
  Directors, President and            1996    275,712          0       30,000                 0
  Chief Executive Officer
 
Lewis D. Gold, M.D..................  1998    278,846      1,275       70,000(2)              0
  Executive Vice President-Business   1997    249,999          0      122,500               950
  Development and Director            1996    251,712          0       20,000                 0

Gilbert L. Drozdow, M.D., M.B.A.....  1998    259,615      1,275       30,000(2)              0
  Vice President-Hospital Based       1997    249,999          0       55,000               950
  Services                            1996    250,512          0       20,000                 0
                                      
Jay A. Martus, Esq..................  1998    221,152      1,275       30,000(2)              0
  Vice President, Secretary and       1997    200,000          0       55,000                 0
  General Counsel                     1996    199,677          0       20,000                 0
 
Michael F. Schundler................  1998    226,923      1,275       70,000(2)              0
  Chief Financial Officer and         1997    199,999          0      122,500                 0
  Chief Operating Officer             1996     84,615(4)       0       50,000                 0

 
- ---------------
 
(1) Bonus amounts for the fiscal year ended 1998 were awarded pursuant to the
    Company's Incentive Plan.
(2) Includes 75,000 options that were granted in February 1998 in lieu of 1997
    executive bonuses under the Company's 1997 Executive Incentive Plan as
    follows: Dr. Eisenberg -- 20,000; Dr. Gold -- 17,500; Mr.
    Schundler -- 17,500; Dr. Drozdow -- 10,000; and Mr. Martus -- 10,000. These
    options were reflected in the Company's 1998 proxy statement as 1997 option
    grants.
(3) Represents contributions by the Company under its 401(k) Plan on behalf of
    each of Drs. Eisenberg, Gold and Drozdow during 1997.
(4) Represents salary paid to Mr. Schundler from July 1996, when he began
    employment with the Company, to December 31, 1996.
 
                                        7
   8
 
OPTION GRANTS IN FISCAL YEAR 1998
 
     The following table sets forth certain information containing grants of
stock options made during fiscal year ended December 31, 1998.
 


                                                                                             POTENTIAL REALIZABLE
                                                      INDIVIDUAL GRANTS                        VALUE AT ASSUMED
                                                 ---------------------------                    ANNUAL RATE OF
                                  NUMBER OF                                                      STOCK PRICE
                                  SECURITIES     PERCENT OF TOTAL   EXERCISE                     APPRECIATION
                                  UNDERLYING     OPTIONS GRANTED    OR BASE                  FOR OPTION TERM (2)
                                   OPTIONS       TO EMPLOYEES IN     PRICE     EXPIRATION   ----------------------
             NAME               GRANTED (#)(1)     FISCAL YEAR       ($/SH)       DATE       5%($)        10%($)
             ----               --------------   ----------------   --------   ----------   --------    ----------
                                                                                      
Mitchell Eisenberg, M.D.......      37,500(3)           8.4%        $ 14.25       2/4/08    $336,066    $  861,656
  Chairman of the Board of          62,500(4)          14.0%          11.75      6/24/08     461,844     1,170,405
  Directors, President and
  Chief Executive Officer

Lewis D. Gold, M.D............      26,250(3)           5.9%          14.25       2/4/08     235,246       596,159
  Executive Vice President-         43,750(4)           9.8%          11.75      6/24/08     323,291       819,283
  Business Development
  and Director

Gilbert L. Drozdow, M.D.,.....      11,250(3)           2.5%          14.25       2/4/08     100,820       255,497
   M.B.A Vice President-Hospital    18,750(4)           4.2%          11.75      6/24/08     138,553       351,121
   Based Services                   

Jay A. Martus, Esq............      11,250(3)           2.5%          14.25       2/4/08     100,820       255,497
  Vice President, Secretary         18,750(4)           4.2%          11.75      6/24/08     138,553       351,121
  and General Counsel               

Michael F. Schundler..........      26,250(3)           5.9%          14.25       2/4/08     235,246       596,159
  Chief Financial Officer and       43,750(4)           9.8%          11.75      6/24/08     323,291       819,283
  Chief Operating Officer

 
- ---------------
 
(1) Excludes 75,000 options that were granted in February 1998 in lieu of 1997
    executive bonuses. These options were reflected in the Company's 1998 proxy
    statement as 1997 option grants.
(2) Amounts represent hypothetical gains that could be achieved for the
    respective options if exercised at the end of the option term. These gains
    are based upon assumed rates of stock price appreciation set by the
    Commission of five percent and ten percent compounded annually from the date
    the respective options were granted. Actual gains, if any, are dependent on
    the performance of the Common Stock. There can be no assurance that the
    amounts reflected will be achieved.
(3) These options vest in full on February 4, 2008, provided the applicable
    option holder is employed by the Company or one of its subsidiaries as of
    that date. The vesting of such options will be accelerated upon a change in
    control of the Company (as defined in the Option Plan) or in accordance with
    the following schedule in the event that the last reported sale price of the
    Common Stock on the Nasdaq National Market (the "Closing Price") reaches the
    following thresholds and remains at or above the thresholds each day for a
    period of one calendar month: (i) 25% of the options will vest at a Closing
    Price of $33.00 per share; (ii) 50% of the options will vest at a Closing
    Price of $36.00 per share; (iii) 75% of the options will vest at a Closing
    Price of $39.00 per share; and (iv) 100% of the options will vest at a
    Closing Price of $42.00 per share.
(4) These options will vest in full on June 24, 2008 provided the applicable
    option holder is employed by the Company or one of its subsidiaries as of
    that respective date. The vesting of such options will be accelerated in the
    same manner as the options which are described in footnote (3) above.
 
                                        8
   9
 
    AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998 AND
    FISCAL YEAR-END 1998 OPTION VALUES
 
     The following table sets forth the aggregate number of options exercised in
1998 and the value of options held at December 31, 1998 by the Named Executive
Officers.
 


                                                                           NUMBER OF SECURITIES        VALUE OF UNEXERCISED IN-
                                                                          UNDERLYING UNEXERCISED                 THE-
                                                                                OPTIONS AT                 MONEY OPTIONS AT
                                              SHARES                        FISCAL YEAR END(#)            FISCAL YEAR-END(1)
                                            ACQUIRED ON      VALUE      ---------------------------   ---------------------------
                   NAME                     EXERCISE(#)   REALIZED($)   EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
                   ----                     -----------   -----------   -----------   -------------   -----------   -------------
                                                                                                  
Mitchell Eisenberg, M.D...................         0         $   0         40,000        260,000       $      0       $      0
  Chairman of the Board of
  Directors, President and
  Chief Executive Officer
Lewis D. Gold, M.D........................         0             0         30,833        181,667              0              0
  Executive Vice President-Business
  Development and Director
Gilbert L. Drozdow, M.D., M.B.A...........     1,078         7,864(2)      30,000         75,000         17,500              0
  Vice President-Hospital Based Services
Jay A. Martus, Esq........................         0             0         46,174         75,000        143,576              0
  Vice President, Secretary and
  General Counsel
Michael F. Schundler......................         0             0         37,500        205,000         52,500         78,750
  Chief Financial Officer and
  Chief Operating Officer

 
- ---------------
 
(1) Based on $8.375 per share, the price of the last reported trade of the
    Common Stock on the Nasdaq National Market on December 31, 1998.
(2) Based on $7.875 per share, the price of the last reported trade of the
    Common Stock on the Nasdaq National Market on December 14, 1998 and an
    exercise price of $0.58 per share.
 
DESCRIPTION OF STOCK OPTION PLAN
 
     The Option Plan, administered by the Compensation Committee, is intended as
a performance incentive for officers, employees, consultants, directors and
other key persons of the Company, its subsidiaries or their affiliates to enable
the persons to whom options are granted (the "Optionees") to acquire or increase
a proprietary interest in the success of the Company. The Company intends that
this purpose will be effected by the granting of "incentive stock options"
("Incentive Options") as defined in Section 422 of the Code and Non-Qualified
Options.
 
     Pursuant to the Option Plan, options to acquire a maximum of 1,750,000
shares of Common Stock may be granted to employees, directors (including
employee and non-employee directors) and certain independent contractors and
consultants of the Company. As of December 31, 1998, there were outstanding
options to purchase 1,402,179 Shares at exercise prices ranging from $0.58 per
share to $14.25 per Share granted under the Option Plan, 397,223 of which were
immediately exercisable at that time. Options granted under the Option Plan
become immediately exercisable upon the "Change of Control" of the Company, as
defined in the Option Plan.
 
401(K) PROFIT SHARING PLANS
 
     The Company maintains 401(k) Profit Sharing Plans (the "401(k) Plans"),
which are defined contribution plans covering substantially all employees who
meet certain age and service requirements. The 401(k) Plans are intended to be
tax-qualified plans under Section 401(k) of the Code.
 
                                        9
   10
 
EMPLOYMENT ARRANGEMENTS WITH EXECUTIVE OFFICERS
 
     EMPLOYMENT AGREEMENTS.  The Company has entered into employment agreements
with each of Drs. Eisenberg, Gold, and Drozdow and Messrs. Martus and Schundler
(the "Employment Agreements"), certain of which, in August 1998, were amended as
described below. See "-- 1998 Amendments to Employment Agreements." The term of
each of the Employment Agreements with Drs. Eisenberg, Gold and Drozdow and Mr.
Martus ends on December 31, 1999. The term of the Employment Agreement with Mr.
Schundler ends on June 30, 2001. Thereafter each Employment Agreement is
renewable for a one-year term.
 
     The Employment Agreements with Drs. Eisenberg and Gold may be terminated
(i) by the Company without cause (as defined in the agreements) upon 30 days
written notice, (ii) upon the death or permanent disability of the executive,
and (iii) by the executive upon the occurrence of certain events, including the
failure of the Company to pay the executive's salary or provide certain benefits
to which the executive is entitled, certain relocations of the Company's
offices, and a material breach of the Employment Agreement by the Company. The
Employment Agreements provide for a continuation of base salary and certain
benefits for a period of one year following any such termination or in the event
of a change in control of the Company, as well as the pro rata portion of any
bonus to which the executive would otherwise have been entitled if such
executive had remained employed by the Company for the remainder of the calendar
year of his termination. Each Employment Agreement also provides for termination
upon mutual consent, for cause, and by the executive upon 90 days' written
notice (60 days' notice following certain reductions in medical malpractice
liability insurance), in which event the Company has no further obligation to
the executive other than the obligations to pay accrued but unpaid salary,
provide certain continuing medical malpractice insurance coverage and make
salary payments pursuant to a non-competition provision in the Employment
Agreement, as described below. Each Employment Agreement also requires the
Company to continue to provide each of Drs. Eisenberg and Gold with medical
malpractice insurance coverage for claims arising during the term of the
Employment Agreement, to the extent the executive was covered prior to his
termination, for a period of two years from the date of termination for any
reason other than by the executive following specified reductions in insurance
coverage by the Company. Each of Drs. Eisenberg and Gold are subject to certain
restrictions on competition with the Company for a period of three years
following termination of such executive's employment for any reason, provided
that the Company continues to pay such executives their salaries during such
three-year period.
 
     The Employment Agreements with Dr. Drozdow and Messrs. Schundler and Martus
may be terminated (i) by the Company without cause (as defined in the
agreements) upon 30 days written notice, (ii) upon the death or permanent
disability of the executive, and (iii) by the executive upon the occurrence of
certain events, including the failure of the Company to pay the executive's
salary or to provide certain benefits to which the executive is entitled,
certain relocations of the Company's offices, and material breach of the
Employment Agreement by the Company. The Employment Agreements provide for a
continuation of base salary and certain benefits for a period of six months
following any such termination or in the event of a change in control of the
Company. Each Employment Agreement also provides for termination upon mutual
consent, for cause and by the executive upon 90 days' written notice (60 days'
notice following certain reductions in medical malpractice liability insurance
in the case of Dr. Drozdow), in which event the Company has no further
obligation to the executive other than the payment of accrued but unpaid salary.
The Employment Agreement with Dr. Drozdow also requires the Company to continue
to provide Dr. Drozdow with medical malpractice insurance coverage for claims
arising during the term of the Employment Agreement, to the extent Dr. Drozdow
was covered prior to his termination, for a period of two years from the date of
termination for any reason other than by Dr. Drozdow following specified
reductions in insurance coverage by the Company. Each of Dr. Drozdow and Messrs.
Martus and Schundler are subject to certain restrictions on competition with the
Company for a period of one year following termination of such Executive's
employment for any reason.
 
     1998 AMENDMENTS TO EMPLOYMENT AGREEMENTS.  In August 1998, the Company
amended the Employment Agreements (the "1998 Amendments") with Drs. Eisenberg
and Gold and Messrs. Schundler and Martus (the "Applicable Executives"). The
1998 Amendments generally continue the provisions described
                                       10
   11
 
above, but instituted the following modifications, several of which have been
subsequently modified by the New Employment Agreements (as defined below) which
will become effective upon the purchase of Shares pursuant to the Offer. The
modifications effected by the 1998 Amendments are summarized below:
 
          - The term of each applicable Employment Agreement was extended until
            July 31, 2003.
 
          - A provision was added to each applicable Employment Agreement such
            that it could be terminated by the Applicable Executive in the event
            the Company's executive offices were relocated from Broward County,
            Florida or to a location more than 15 miles from their current
            executive offices.
 
          - The Applicable Executives' compensation was increased to $325,000,
            in the case of Dr. Eisenberg; $300,000, in the case of Dr. Gold;
            $250,000, in the case of Mr. Schundler; and $245,000 in the case of
            Mr. Martus.
 
          - A bonus pool was established for the benefit of the Applicable
            Executives and others equal to 30% of the Company's annual earnings
            in excess of targeted earnings established by the Company Board.
            Under this bonus arrangement Drs. Eisenberg and Gold and Mr.
            Schundler are entitled to receive up to 30% of their annual base
            salary and Mr. Martus is entitled to receive up to 15% of his annual
            base salary. At the discretion of Dr. Eisenberg, Dr. Drozdow and Mr.
            Coward and Ms. Mary Kittle, the Company's Vice President of
            Operations of a subsidiary, are entitled to receive up to 15% of
            their respective annual base salary through the bonus pool.
 
          - Severance payments due to the Applicable Executive upon the
            occurence of certain conditions, including a change of control of
            the Company, were increased from one year's salary (plus a pro rata
            portion of any bonus) to two years' salary (plus a pro rata portion
            of any bonus) in the case of Drs. Eisenberg and Gold and from six
            months' salary (plus a pro rata portion of any bonus) to one year's
            salary (plus pro rata portion of any bonus) in the case of Messrs.
            Schundler and Martus.
 
          - Annual salary increases for the Applicable Executives of not less
            than a cost of living adjustment.
 
          - A reduction in the period required for the termination of the
            Employment Agreement by the Applicable Executive from 90 to 30 days.
 
          - Reimbursement by the Company of the amount of any excise tax owed by
            the Applicable Executive, pursuant to Section 4999 of the Code in
            connection with a change of control of the Company, as well as any
            interest and penalties thereon.
 
          - In the event that the Company were to fail to renew the Applicable
            Executive's compensation, the Applicable Executive would be entitled
            to a severance payment in the amount described above, and his
            unvested options would vest immediately.
 
          - In the event of a change of control of the Company, the Applicable
            Executive could terminate his Employment Agreement upon 90 days'
            notice to the Company.
 
          - In the event of a change of control of the Company, the Applicable
            Executive's noncompete agreement would prohibit the Applicable
            Executive only from employment with those competing enterprises that
            were doing business with the Company immediately prior to the change
            of control.
 
          - The noncompete agreements of Drs. Eisenberg and Gold were
            eliminated.
 
     NEW EMPLOYMENT AGREEMENTS.  Concurrently with the execution and delivery of
the Merger Agreement, the Company entered into new employment agreements (the
"New Employment Agreements") with each of the Applicable Executives. The
following is a summary of the New Employment Agreements, which summary is
qualified in its entirety by reference to the New Employment Agreements, which
are filed as exhibits to Schedule 14D-9 and are incorporated herein by
reference.
 
     The New Employment Agreements become effective upon the purchase of Shares
pursuant to the Offer. Each New Employment Agreement has a five-year term with
automatic one year renewals thereafter, unless either party gives the other six
months' written notice prior to the end of the applicable term. The New

                                       11
   12
 
Employment Agreements supersede all prior agreements and understandings between
each Applicable Executive and the Company and its affiliates; provided that they
do not supersede the Applicable Executives' rights under the Company's employee
benefit plans.
 
     The New Employment Agreements provide for a one-time cash bonus at the
Effective Time (as defined in the Merger Agreement) in the amounts of $650,000,
$600,000, $250,000, and $245,000 for Dr. Eisenberg, Dr. Gold, Mr. Schundler and
Mr. Martus, respectively. In addition, the New Employment Agreements provide for
annual base salaries of $375,000, $350,000, $275,000 and $275,000 for Dr.
Eisenberg, Dr. Gold, Mr. Schundler and Mr. Martus, respectively. The Company has
also agreed to establish an annual incentive compensation plan pursuant to which
the Applicable Executives shall be eligible to receive bonuses equal to 50%, in
the case of Dr. Eisenberg and Dr. Gold, or 25%, in the case of Mr. Schundler and
Mr. Martus, of their annual salaries based upon satisfaction of performance
targets established by the Company Board.
 
     If an Applicable Executive's employment pursuant to his New Employment
Agreement is terminated (i) by the Company without cause (as defined in the New
Employment Agreements), (ii) upon the death or permanent disability of the
Applicable Executive or (iii) by the Applicable Executive upon the occurrence of
certain events, including the failure of the Company to pay the Applicable
Executive's salary or provide certain benefits to which the Applicable Executive
is entitled, certain relocations of the Company's offices or a material breach
of the New Employment Agreement by the Company, the Company shall make cash
severance payments over a one-year period following any such termination in an
aggregate amount equal to the relevant Applicable Executive's base salary (twice
the base salary in the case of Dr. Eisenberg and Dr. Gold) plus the pro rata
portion of the annual bonus to which the Applicable Executive would otherwise
have been entitled for the fiscal year in which such termination occurs as if
such Applicable Executive had remained employed by the Company for the entire
fiscal year. In addition, Dr. Eisenberg's and Dr. Gold's New Employment
Agreements provide that if their employment terminates due to any of the
foregoing events within one year following a Change of Control (as defined),
such Applicable Executive shall receive in addition to the severance amounts
described above the excess of (A) the greater of (i) $1 million and (ii) twice
the amount of such Applicable Executive's current base salary and bonus he
received the prior year less (B) twice his base salary. Payment of all severance
amounts is subject to the Applicable Executive's continued compliance with his
covenant not to compete with the Company.
 
     Each New Employment Agreement also provides for termination upon mutual
consent, for cause, and by the Applicable Executive upon 90 days' written notice
or upon due notice not to renew at the end of his term of employment, in which
event the Company has no further obligation to the Applicable Executive other
than the obligations to pay accrued but unpaid salary, to provide certain
continuing medical malpractice insurance coverage and to pay the Applicable
Executive his accrued and unpaid bonus in respect of prior completed fiscal
years. If an Applicable Executive's employment is terminated because the Company
decides not to renew at the end of his term of employment, such Applicable
Executive shall be entitled to his accrued and unpaid salary and bonus and,
provided he complies with his covenant not to compete with the Company, an
amount equal to his base salary (twice the base salary in the case of Dr.
Eisenberg and Dr. Gold).
 
     Each of the Applicable Executives is subject to certain non-competition,
non-solicitation and confidentiality provisions with respect to the Company and
its Controlled Entities (as defined in the Merger Agreement).
 
          COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
     The Company's executive compensation is determined by the Compensation
Committee of the Company Board, which consists of Drs. Eisenberg and Natkow and
Mrs. Hopping. Other than Dr. Eisenberg, who serves as Chief Executive Officer of
the Company, the Compensation Committee is comprised of directors who are not
and have never been Company employees. No Company executive officer serves on
the compensation committee of another company for which any member of the
Company's Compensation Committee serves as an executive officer. There were no
Compensation Committee interlocks during fiscal year ended December 31, 1998.
 
                                       12
   13
 
                            STOCK PERFORMANCE GRAPH
 
     The following graph provides a comparison of cumulative total stockholder
return on the Common Stock for the period from October 31, 1995 (the date on
which the Common Stock was first publicly traded) through December 31, 1998
among the Company, the Nasdaq Stock Market-US Companies Index (the "Nasdaq-US
Index") and the Center for Research in Security Prices ("CRSP") Nasdaq Stock
Market-Health Services Index (the "CRSP-Health Services Index"). The Stock
Performance Graph assumes an investment of $100 in each of the Company and the
two indices, and the reinvestment of any dividends. The historical information
set forth below is not necessarily indicative of future performance. Data for
the Nasdaq-US Index and the CRSP-Health Services Index was provided to the
Company by CRSP.
 
                     COMPARISON OF CUMULATIVE TOTAL RETURNS
 
                             PERFORMANCE REPORT FOR
                           SHERIDAN HEALTHCARE, INC. [GRAPH]
 


MEASUREMENT PERIOD                     SHERIDAN           NASDAQ            NASDAQ
(FISCAL YEAR COVERED)                  HLTHCARE INC         US              HEALTH
- --------------------                   ------------       ------            ------
                                                                    
10/31/95                                   100               100               100
DEC 95                                   95.10            101.80            117.73
DEC 96                                   46.08            125.19            117.54
DEC 97                                  117.65            153.59            119.79
DEC 98                                   65.69            215.90            102.72

 
                                       13
   14
 
                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
SHERIDAN MEDICAL HEALTHCORP, P.C.
 
     As a result of certain prohibitions on the practice of medicine by business
corporations in New York, Sheridan Medical Healthcorp, P.C. ("Sheridan-NY") was
organized under the laws of the State of New York on October 28, 1993. Dr.
Drozdow is the only stockholder of Sheridan-NY. The Company has maintained an
affiliation with Sheridan-NY through a management services agreement pursuant to
which the Company provides all physician management services to the physicians
affiliated with Sheridan-NY in exchange for a management fee. During 1998, the
Company received approximately $1.87 million in fees from Sheridan-NY under this
agreement.
 
SHERIDAN HEALTHCARE OF TEXAS, P.A.
 
     As a result of certain prohibitions on the practice of medicine by business
corporations in Texas, Sheridan Healthcare of Texas, P.A. ("Sheridan-Texas") was
organized under the laws of the State of Texas on August 18, 1995. Dr. Drozdow
is the only stockholder of Sheridan-Texas. The Company has entered into a
management services agreement with Sheridan-Texas pursuant to which the Company
provides all physician management services to the physicians affiliated with
Sheridan-Texas in exchange for a management fee. During 1998, the Company
received approximately $85,000 in fees from Sheridan-Texas under this agreement.
 
SHERIDAN HEALTHCARE OF CALIFORNIA MEDICAL GROUP, INC.
 
     As a result of certain prohibitions on the practice of medicine by business
corporations in California, Sheridan Healthcare of California Medical Group,
Inc. ("Sheridan-California") was organized under the laws of the state of
California on August 18, 1995. Dr. Drozdow is the only stockholder of
Sheridan-California. No management fees were paid by Sheridan-California to the
Company during 1998.
 
SHERIDAN CHILDREN'S HEALTHCARE SERVICES OF PENNSYLVANIA, P.C.
 
     The Company also maintains an affiliation with Sheridan Children's
Healthcare Services of Pennsylvania, P.C. ("Sheridan Children's"), under which
Sheridan Children's provides certain physician management services to the
Company. Sheridan Children's is also wholly-owned by Dr. Drozdow. The Company
provided management services to Sheridan Children's in exchange for management
fees. During 1998, the Company received approximately $80,000 in such fees.
 
     The Company believes that, with respect to the transactions discussed above
in this Section, the terms of each such transaction were on terms at least as
favorable as the Company could have obtained from an unaffiliated third party.
 
CERTAIN ARRANGEMENTS WITH MANAGEMENT
 
     In addition to the Employment Agreements described above, concurrently with
the execution and delivery of the Merger Agreement, Parent entered into
Subscription and Tender Agreements and a Stockholders Agreement with each of
Drs. Mitchell Eisenberg, Lewis D. Gold, and Gilbert L. Drozdow and Messrs.
Michael F. Schundler and Jay A. Martus, and a Tender Agreement with Mr. Robert
J. Coward. Such Agreements are described in, and filed as exhibits to the
Schedule 14D-9 and are incorporated herein by reference.
 
     The Subscription and Tender Agreements and the Tender Agreement provide
that each Executive will validly tender the Shares of Common Stock he owns in
the Offer and will not withdraw any Shares so tendered; provided that the Merger
Agreement has not been terminated. Each Executive also agrees, so long as such
Executive is required to tender his Shares, to vote his Shares (a) in favor of
the adoption of the Merger Agreement and the approval of the transactions
contemplated thereby and (b) against any action or agreement that would result
in a breach of any covenant, representation or warranty in the Merger Agreement
 
                                       14
   15
 
or would impede, interfere with, delay or prevent the consummation of the Merger
or the purchase of Shares of Common Stock or Class A Common Stock pursuant to
the Offer. Each Executive has agreed not to, so long as he is required to tender
his Shares, purport to vote (or execute a consent with respect to) such Shares
(other than in accordance with the requirements of the Subscription and Tender
Agreement or the Tender Agreement) or grant any proxy or power of attorney with
respect to any Shares of Common Stock, deposit any such Shares into a voting
trust or enter into any agreement, arrangement or understanding with any person
(other than the Subscription and Tender Agreements and the Tender Agreement),
directly or indirectly, to vote, grant any proxy or give instructions with
respect to the voting of such Shares, or agree to do any of the foregoing. The
Subscription and Tender Agreements and the Tender Agreement also provide that no
Executive shall, so long as he is required to tender Shares pursuant to the
Subscription and Tender Agreement or the Tender Agreement, sell, transfer or
otherwise dispose of, pledge or otherwise encumber any Shares after the date of
such agreement (except to tender Shares to Purchaser pursuant to the Offer), or
agree to do any of the foregoing.
 
     Pursuant to the Subscription and Tender Agreements, each Executive party
thereto has agreed to subscribe for and purchase, and Parent has agreed to issue
and sell to such Executive, on the date Purchaser purchases Shares pursuant to
the Offer (the "Closing Date") a specific number of shares of Parent Common
Stock at a price equal to the price per Share paid pursuant to the Offer. The
Executives (other than Mr. Coward) have agreed to purchase an aggregate number
of shares of Parent Common Stock that are expected to constitute approximately
4.8% of the shares of Parent Common Stock expected to be outstanding upon
consummation of the Merger. Notwithstanding any other provision of the
Subscription and Tender Agreements, Parent shall have no obligation to issue,
sell or deliver any of its shares to any Executive (i) who is not a full-time
employee of, or consultant to, Parent or any of its subsidiaries on the Closing
Date, (ii) whose representations and warranties contained in the Subscription
and Tender Agreement are not true and correct as of the Closing Date in all
material respects or (iii) who has breached his obligations under his
Subscription and Tender Agreement.
 
     The Subscription and Tender Agreements and the Tender Agreement also
provide that upon the consummation of the Merger (a) Parent shall adopt the
Vestar/Sheridan Holdings, Inc. 1999 Stock Option Plan (the "Parent Option Plan")
in substantially the form attached to the Subscription and Tender Agreements and
the Tender Agreement and (b) Parent shall enter into stock option agreements
with each Executive in substantially the forms attached to the Subscription and
Tender Agreements and the Tender Agreement pursuant to which the Executives will
be granted options to purchase an aggregate of 950,000 shares of Parent Common
Stock, at an exercise price per share equal to the price per share of Common
Stock and Class A Common Stock paid pursuant to the Offer, subject to the
satisfaction of certain time vesting requirements or targets relating to the
financial performance of the Company which are described in the option
agreements.
 
     Concurrently with the execution and delivery of the Merger Agreement,
Parent, Holdings, the Company and the Executives party to Subscription and
Tender Agreements entered into a Stockholders Agreement (the "Stockholders
Agreement"). Mr. Coward will enter into the Stockholders Agreement upon the
consummation of the Merger. The following is a summary of the Stockholders
Agreement, which summary is qualified in its entirety by reference to the
Stockholders Agreement, a copy of which is filed as an exhibit to the 14D-9 and
is incorporated herein by reference.
 
     Pursuant to the Stockholders Agreement, the shares of Parent Common Stock
beneficially owned by the Executives and any other employees of Parent and its
subsidiaries who become beneficial owners of Parent Common Stock (collectively,
the "Management Investors") are subject to restrictions on transfer, as well as
the other provisions described below.
 
     The Stockholders Agreement provides that Holdings and the Management
Investors will vote all of their shares of Parent Common Stock to elect and
continue in office a Board of Directors of Parent and each subsidiary of Parent
(other than subsidiaries of the the Company) consisting solely of the following:
 
          (a) three designees of Holdings;
 
                                       15
   16
 
          (b) two designees of the Management Investors (who shall be Dr.
     Eisenberg and Dr. Gold so long as each of them is an executive officer of
     the Issuer); and
 
          (c) two persons to be designated by Holdings in its sole discretion
     after consultation with the representative of the Management Investors.
 
In addition, each Management Investor has agreed that until the Lapse Date (as
defined in the Stockholders Agreement), he will vote all of his shares of Parent
Common Stock (i) consistent with the vote of Holdings with respect to its shares
of Parent Common Stock and (ii) to ratify, approve and adopt any and all actions
adopted or approved by the Board of Directors of Parent.
 
     The Stockholders Agreement provides for customary "tag-along" and
"drag-along" rights with respect to shares of Parent Common Stock beneficially
owned by the Management Investors. In addition, Holdings has certain rights to
require Parent to register shares of Parent Common Stock held by it under the
Securities Act of 1933, and Holdings and the Management Investors have certain
rights to participate in publicly registered offerings of Parent Common Stock
initiated by Parent or other third parties.
 
     The Stockholders Agreement provides that upon termination of a Management
Investor's employment with Parent and its subsidiaries, (a) Parent, Holdings and
the Issuer will have call rights with respect to shares of Parent Common Stock
owned by such Management Investor and certain transferees and (b) such
Management Investor and certain transferees in certain limited circumstances
will have a right to put shares of Parent Common Stock to the Company. The
amount paid for shares of Parent Common Stock upon a put or a call will vary
depending on the reason for the termination of such Management Investor's
employment. The Stockholders Agreement also contains non-competition,
non-solicitation and confidentiality provisions agreed to by each Management
Investor who is not party to a written employment agreement with Parent or one
of its subsidiaries which contains such provisions.
 
         SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
 
     The following table sets forth as of March 24, 1999 (except as noted below)
certain information regarding the beneficial ownership of Common Stock by (i)
each person or "group" (as that term is defined in Section 13(d)(3) of the
Exchange Act) known by the Company to be the beneficial owner of more than 5% of
the Company's Common Stock, (ii) the named executive officers, (iii) each
director and director designee of the Company and (iv) all directors, designated
directors and executive officers of the Company as a group (twelve (12)
persons). Except as otherwise indicated, each person listed below has sole
voting and investment power over the shares of Common Stock shown as
beneficially owned.
 


                                                               NUMBER OF SHARES       PERCENT OF
                            NAME                              BENEFICIALLY OWNED    COMMON STOCK(1)
                            ----                              ------------------    ---------------
                                                                              
Vestar/Sheridan Holdings, Inc...............................        698,759(2)          10.7%
  245 Park Avenue, 41st Floor
  New York, NY 10167
TA Associates, Inc..........................................      1,890,882(3)          28.7%
  125 High Street
  Boston, MA 02110
Chestnut Investors..........................................        213,439(4)            3.2
  c/o MVP Ventures
  45 Milk Street
  Boston, MA 02109
NationsBank Investment Corporation..........................        438,695(5)           6.7%
  c/o NationsBank Leveraged Capital
  NationsBank Corporate Center, 10th Floor
  100 North Tryon Street
  Charlotte, North Carolina 28202-4006

 
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                                                               NUMBER OF SHARES       PERCENT OF
                            NAME                              BENEFICIALLY OWNED    COMMON STOCK(1)
                            ----                              ------------------    ---------------
                                                                              
Kaufmann Fund, Inc..........................................        900,000(6)          13.7%
  140 E. 45th Street, 43rd Floor
  New York, New York 10017
Mitchell Eisenberg..........................................        258,041(7)(8)         3.9
Lewis D. Gold...............................................        206,325(7)(9)         3.1
Gilbert L. Drozdow..........................................         78,537(7)(10)        1.2
Jay A. Martus...............................................         56,956(7)(11)          *
Michael F. Schundler........................................         73,700(7)(12)        1.1
Robert J. Coward............................................         25,200(7)(16)          *
Henry E. Golembesky.........................................         13,333(13)             *
Neil A. Natkow..............................................         33,833(14)             *
Jamie Hopping...............................................          5,833(15)             *
James L. Elrod, Jr..........................................              0(17)             *
Robert L. Rosner............................................              0(17)             *
David M. Hooper.............................................              0(17)             *
All directors, director designees and executive officers as
  a group (12 persons)......................................        751,758              11.4

 
- ---------------
 
* Less than one percent
 (1) The number of Shares outstanding used in calculating the percentage for
     each listed person includes the Shares underlying the options held by such
     person or entity that are exercisable within 60 days of March 24, 1999, but
     excludes Shares underlying options held by any other person.
 (2) Beneficial ownership is based solely on the provisions of the Tender
     Agreement described in "Certain Relationships and Related
     Transactions -- Certain Arrangements with Management" pursuant to which
     among, other things, these officers have agreed with Parent to (1) vote the
     Shares shown here as beneficially owned in favor of the adoption of the
     Merger Agreement and against any action or agreement that would impede,
     interfere with, delay or prevent the purchase of Shares pursuant to the
     Offer or the consummation of the Merger or would result in a breach of any
     covenant, representation or warranty contained in the Merger Agreement and
     (2) tender such Shares into the Offer.
 (3) Includes 1,031,130 Shares owned by Advent VII L.P., 526,099 Shares owned by
     Advent Atlantic and Pacific II L.P., 103,105 Shares owned by Advent New
     York L.P., 210,456 Shares owned by Advent Industrial II Limited
     Partnership, and 20,092 Shares owned by TA Venture Investors Limited
     Partnership.
 (4) Includes 105,189 Shares owned by Chestnut III Limited Partnership and
     108,250 Shares owned by Chestnut Capital International III Limited
     Partnership.
 (5) Includes 296,638 Shares of Class A Common Stock which are convertible into
     Common Stock at the option of NationsBank Investment Corporation upon the
     occurrence of certain events. As a result, NationsBank Investment
     Corporation may be deemed to beneficially own the number of Shares of
     Common Stock into which the Shares of Class A Common Stock so held are
     convertible.
 (6) The indicated ownership is as of February 18, 1998 and is based solely on a
     Schedule 13G provided by this entity to the Company.
 (7) On March 24, 1999, Mitchell Eisenberg, Lewis D. Gold, Michael F. Schundler,
     Gilbert L. Drozdow and Jay A. Martus each entered into Subscription and
     Tender Agreements with Parent and Robert J. Coward entered into a Tender
     Agreement with Parent in which they agreed, among other things, to (1) vote
     all of their Shares in favor of the adoption of the Merger Agreement and
     against any action or agreement that would impede, interfere with, delay or
     prevent the purchase of Shares pursuant to the Offer or the consummation of
     the Merger or would result in a breach of any covenant, representation or
     warranty contained in the Merger Agreement and (2) tender such Shares in
     the Offer. Pursuant to the Subscription and Tender Agreements and the
     Tender Agreement, each of the aforementioned individuals may be deemed to
     beneficially own approximately 10.7% of the outstanding Shares.
 
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 (8) Includes 151,015 Shares owned by the Eisenberg Family Limited Partnership,
     a Florida limited partnership. Dr. Eisenberg acts as the sole general
     partner of this limited partnership and exercises sole voting and
     investment power with respect to such Shares. Also includes 26,956 Shares
     owned by Dr. Eisenberg's wife and 570 Shares owned by his wife's retirement
     plan, of which Shares, in each case, Dr. Eisenberg disclaims beneficial
     ownership. Also includes 40,000 currently vested options and 10,000 options
     which vest within 60 days of March 31, 1999.
 (9) Includes 107,870 Shares owned by the Gold Family Limited Partnership, Ltd.,
     a Florida limited partnership. Dr. Gold acts as the sole general partner of
     this limited partnership and exercises sole voting and investment power
     with respect to such Shares. Also includes 58,956 Shares owned by Dr.
     Gold's wife, of which Shares Dr. Gold disclaims beneficial ownership. Also
     includes 30,833 currently vested options and 6,666 options which vest
     within 60 days of March 31, 1999.
(10) Includes 43,145 Shares owned by the Drozdow Family Limited Partnership, a
     Florida limited partnership. Drozdow Family GP Corp., a Florida corporation
     owned by Dr. Drozdow and his wife as tenants by the entireties, is the
     general partner of this limited partnership. Dr. Drozdow, in his capacity
     as the sole director and officer of the general partner of the limited
     partnership, exercises sole voting and investment power with respect to
     such Shares. Includes 30,000 currently vested options.
(11) Includes 46,174 currently vested options.
(12) Includes 37,500 currently vested options.
(13) Includes 12,500 currently vested options and 833 options which vest within
     60 days of March 24, 1999.
(14) Includes 10,000 currently vested options and 833 options which vest within
     60 days of March 24, 1999.
(15) Represents 5,833 currently vested options.
(16) Represents 25,200 currently vested options.
(17) Messrs. Elrod, Rosner and Hooper are each directors and officers of Parent
     and Purchaser. Based solely on the provisions of the Tender Agreement and
     the Subscription and Tender Agreements, Parent is deemed to beneficially
     own 698,759 Shares.
 
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            SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
     Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership and changes of
ownership with the Commission and each exchange on which the Company's
securities are registered. Officers, directors and greater than ten percent
stockholders are required by Commission regulations to furnish the Company with
copies of all ownership forms they file.
 
     Based solely upon a review of (1) Forms 3 and 4 and amendments to each form
furnished to the Company pursuant to Rule 16a-3(e) under the Exchange Act during
the Company's fiscal year ended December 31, 1998, (2) any Forms 5 and
amendments to the form furnished to the Company with respect to the Company's
fiscal year ended December 31, 1998, and (3) any written representations
referred to the Company in subparagraph (b)(2)(i) of Item 405 of Regulation S-K
under the Exchange Act, no person who at any time during the fiscal year ended
December 31, 1998 was a director, officer or, to our knowledge, a beneficial
owner of more than 10% of the Company's Common Stock failed to file on a timely
basis reports required by Section 16(a) of the Exchange Act during the fiscal
year ended December 31, 1998 or prior fiscal years.
 
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