EXHIBIT 10.6
EQUITY INCENTIVE PLAN
OF
MANOR CARE, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT (O)
THIS AGREEMENT, dated as of __________, is made by and between MANOR CARE,
INC., a Delaware corporation hereinafter referred to as "Company", and
_____________, an employee of the Company or a Subsidiary of the Company,
hereinafter referred to as "Optionee":
WHEREAS, the Company has established the Equity Incentive Plan of Manor
Care, Inc. (the "Plan") (the terms of which are hereby incorporated by reference
and made a part of this Agreement); and
WHEREAS, Article IV of the Plan provides for the grant of options to
purchase common stock of the Company, par value $.01 per share; and
WHEREAS, the Compensation Committee of the Company's Board of Directors
(hereinafter referred to as the "Committee"), has determined that it would be to
the advantage and best interest of the Company and its stockholders to grant the
non-qualified option provided for herein to the Optionee as an inducement to
remain in the service of the Company or any of its Subsidiaries (each as defined
hereunder) and as an incentive for increased efforts during such service, and
has advised the Company thereof and instructed the undersigned officer to issue
said Option.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall have
the meaning specified below unless the context clearly indicates to the
contrary. The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.
SECTION 1.1 - ADDITIONAL OPTION
"Additional Option" shall mean an Option granted to the Optionee to
purchase a number
of shares of Common Stock equal to the number of shares of Common Stock tendered
or relinquished by the Optionee in payment of the exercise price upon exercise
of an Option and/or the number of shares of Common Stock tendered or
relinquished in payment of the amount to be withheld under applicable federal,
state or local income tax laws in connection with the exercise of an Option as
described in Article VI hereof.
SECTION 1.2 - BOARD
"Board" shall mean the Board of Directors of the Company.
SECTION 1.3 - CODE
"Code" shall mean the Internal Revenue Code of 1986, as amended.
SECTION 1.4 - COMMON STOCK
"Common Stock" shall mean the Company's common stock, $.01 par value.
SECTION 1.5 - COMPANY
"Company" shall mean Manor Care, Inc. In addition, "Company" shall mean
any corporation assuming, or issuing new employee stock options in substitution
for, the Options and Incentive Stock Options (as defined in Sections 1.21 and
1.19 of the Plan, respectively) outstanding under the Plan, in a transaction to
which Section 424(a) of the Code applies.
SECTION 1.6 - EXCHANGE ACT
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
SECTION 1.7 - FAIR MARKET VALUE
"Fair Market Value" of a share of Common Stock as of a given date shall
be: (a) the closing price of a share of Common Stock on the principal exchange
on which shares of Common Stock are then trading, if any, on the trading day
previous to such date, or, if shares were not traded on the trading day previous
to such date, then on the next preceding date on which a trade occurred, or (b)
if Common Stock is not traded on an exchange but is quoted on NASDAQ or a
successor quotation system, the mean between the closing representative bid and
asked prices for the Common Stock on the trading day previous to such date as
reported by NASDAQ or such successor quotation system, or (c) if Common Stock is
not publicly traded on an exchange and not quoted on NASDAQ or a successor
quotation system, the fair market value established by the Committee acting in
good faith.
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SECTION 1.8 - OFFICER
"Officer" shall mean an officer of the Company, as defined in Rule
16a-1(f) under the Exchange Act, as such Rule may be amended in the future.
SECTION 1.9 - OPTION
"Option" shall mean the Non-Qualified Option (as defined in Section 1.20
of the Plan) to purchase Common Stock as granted under this Agreement.
SECTION 1.10 - PLAN
"Plan" shall mean the Equity Incentive Plan of Manor Care, Inc., as
further amended from time to time.
SECTION 1.11 - RULE 16B-3
"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange Act, as
such rule may be amended in the future.
SECTION 1.12 - SECRETARY
"Secretary" shall mean the Secretary of the Company.
SECTION 1.13 - SECURITIES ACT
"Securities Act" shall mean the Securities Act of 1933, as amended.
SECTION 1.14 - SUBSIDIARY
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. "Subsidiary" shall also mean any partnership
in which the Company and/or any Subsidiary owns more than 50% of the capital or
profits interests.
SECTION 1.15 - TERMINATION OF EMPLOYMENT
"Termination of Employment" shall mean the time when the employee-employer
relationship between the Optionee and the Company or any Subsidiary is
terminated for any reason, with or without cause, including, but not by way of
limitation, a termination by resignation, discharge, death, disability or
retirement; but excluding (a) a termination where there is a simultaneous
reemployment or continuing employment of the Optionee by the Company or any
Subsidiary, (b) at the discretion of the Committee, a termination which results
in a temporary
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severance of the employee-employer relationship, and (c) at the discretion of
the Committee, a termination which is followed by the simultaneous establishment
of a consulting relationship by the Company or a Subsidiary with the Optionee.
The Committee, in its absolute discretion, shall determine the effect of all
matters and questions relating to Termination of Employment, including, but not
by way of limitation, the question of whether a Termination of Employment
resulted from a discharge for good cause, and all questions of whether a
particular leave of absence constitutes a Termination of Employment.
ARTICLE II
GRANT OF OPTION
SECTION 2.1 - GRANT OF OPTION
In consideration of the Optionee's agreement to remain in the employ of
the Company or its Subsidiaries and for other good and valuable consideration,
on the date hereof the Company irrevocably grants to the Optionee the option to
purchase any part or all of an aggregate of ____ shares of Common Stock upon the
terms and conditions set forth in this Agreement.
SECTION 2.2 - PURCHASE PRICE
The purchase price of the shares of Common Stock covered by the Option
shall be $____ per share without commission or other charge.
SECTION 2.3 - CONSIDERATION TO COMPANY
In consideration of the granting of this Option by the Company, the
Optionee agrees to render faithful and efficient services to the Company or a
Subsidiary, with such duties and responsibilities as the Company shall from time
to time prescribe, for a period of at least one year from the date this Option
is granted. Nothing in this Agreement or in the Plan shall confer upon the
Optionee any right to continue in the employ of the Company or any Subsidiary or
shall interfere with or restrict in any way the rights of the Company or any
Subsidiary, which are hereby expressly reserved, to discharge the Optionee at
any time for any reason whatsoever, with or without cause.
SECTION 2.4 - ADJUSTMENTS IN OPTION
In the event that the outstanding shares of Common Stock subject to the
Option are changed into or exchanged for a different number or kind of shares of
the Company or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, or the number of shares is
increased or decreased by reason of a stock split up, stock dividend,
combination of shares or any other increase or decrease in the number of such
shares of Common Stock effected without receipt of consideration by the Company
(provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of
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consideration") the Committee shall make appropriate adjustments in the number
and kind of shares as to which the Option, or portions thereof then unexercised,
shall be exercisable, to the end that after such event the Optionee's
proportionate interest shall be maintained as before the occurrence of such
event. Such adjustment in the Option shall be made without change in the total
price applicable to the unexercised portion of the Option (except for any change
in the aggregate price resulting from rounding-off of share quantities or
prices) and with any necessary corresponding adjustment in the Option price per
share. Any such adjustment made by the Committee shall be final and binding upon
the Optionee, the Company and all other interested persons.
ARTICLE III
PERIOD OF EXERCISABILITY
SECTION 3.1 - COMMENCEMENT OF EXERCISABILITY
(a) Except as provided in Section 3.4, no Option may be exercised in
whole or in part during the three years after such Option is granted.
Thereafter, the Option shall be fully exercisable.
(b) Except as provided in Section 3.4, no portion of the Option
which is unexercisable at Termination of Employment shall thereafter become
exercisable.
SECTION 3.2 - DURATION OF EXERCISABILITY
Once the Option becomes exercisable pursuant to Section 3.1, the Option
shall remain exercisable until it becomes unexercisable under Section 3.3.
SECTION 3.3 - EXPIRATION OF OPTION
The Option may not be exercised to any extent by anyone after the first to
occur of the following events:
(a) The expiration of ten years and one day from the date the Option
was granted; or
(b) The time of the Optionee's Termination of Employment unless such
Termination of Employment results from his normal retirement or total disability
(each as determined by the Committee in accordance with Company policies), early
retirement with the consent of the Committee or death or his being discharged
not for good cause; or
(c) The expiration of three months from the date of the Optionee's
Termination of Employment by reason of his normal retirement (as determined by
the Committee in accordance
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with Company policies), early retirement with the consent of the Committee, or
his being discharged not for good cause, unless the Optionee dies within said
three-month period; or
(d) The expiration of one year from the date of the Optionee's
Termination of Employment by reason of his total disability; or
(e) The expiration of one year from the date of the Optionee's
death; or
(f) The effective date of either the merger or consolidation of the
Company with or into another corporation, or the acquisition by another
corporation or person (excluding any employee benefit plan of the Company or any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company) of all or substantially all of the Company's assets or more than
50% of the Company's then outstanding voting stock, or the liquidation or
dissolution of the Company, unless the Committee waives this provision in
connection with such transaction. At least ten days prior to the effective date
of such merger, consolidation, acquisition, liquidation or dissolution, the
Committee shall give the Optionee notice of such event if the Option has then
neither been fully exercised nor become unexercisable under this Section 3.3.
SECTION 3.4 - ACCELERATION OF EXERCISABILITY
(a) In the event of a Termination of Employment resulting from an
Optionee's normal retirement or total disability (each as determined by the
Committee in accordance with Company policies), death or early retirement with
the consent of Committee, the Option shall be exercisable as to all shares
covered hereby, notwithstanding that this Option may not have become fully
exercisable under Section 3.1; or
(b) In the event of the merger or consolidation of the Company with
or into another corporation, or the acquisition by another corporation or person
(excluding any employee benefit plan of the Company or any trustee or other
fiduciary holding securities under an employee benefit plan of the Company) of
all or substantially all of the Company's assets or more than 50% of the
Company's then outstanding voting stock, or the liquidation or dissolution of
the Company, the Committee shall then provide by resolution, adopted prior to
such event and incorporated in the notice referred to in Section 3.3(f), that at
some time prior to the effective date of such event this Option shall be
exercisable as to all the shares covered hereby, notwithstanding that this
Option may not yet have become fully exercisable under Section 3.1; provided,
however, that this acceleration of exercisability shall not take place if:
(i) This Option becomes unexercisable under Section 3.3 prior
to said effective date; or
(ii) In connection with such an event, provision is made for
an assumption of this Option or a substitution therefor of a new option by
an employer corporation or a parent or subsidiary of such corporation; and
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provided, further, that nothing in this Section 3.4 shall make this Option
exercisable if it is otherwise unexercisable by reason of Section 5.6.
The Committee may make such determinations and adopt such rules and
conditions as it, in its absolute discretion, deems appropriate in connection
with such acceleration of exercisability, including, but not by way of
limitation, provisions to ensure that any such acceleration and resulting
exercise shall be conditioned upon the consummation of the contemplated
corporate transaction.
ARTICLE IV
EXERCISE OF OPTION
SECTION 4.1 - PERSON ELIGIBLE TO EXERCISE
During the lifetime of the Optionee, only he may exercise the Option or
any portion thereof. After the death of the Optionee, any exercisable portion of
the Option may, prior to the time when the Option becomes unexercisable under
Section 3.3, be exercised by his representative or by any person empowered to do
so under the Optionee's will or under the then applicable laws of descent and
distribution.
SECTION 4.2 - PARTIAL EXERCISE
At any time and from time to time prior to the time when the Option or
exercisable portion thereof becomes unexercisable under this Agreement, such
Option or portion thereof may be exercised in whole or in part, provided,
however, that the Company shall not be required to issue fractional shares and
any partial exercise of the Option shall be with respect to no less than
twenty-five (25) shares (or such lesser remaining number of shares subject to
the Option).
SECTION 4.3 - MANNER OF EXERCISE
The Option, or any exercisable portion thereof, may be exercised solely by
delivery to the Secretary or his office of all of the following prior to the
time when the Option or such portion becomes unexercisable under Section 3.3:
(a) Notice in writing signed by the Optionee or the other person
then entitled to exercise the Option or portion, stating that the Option or
portion is thereby exercised, such notice complying with all applicable rules
established by the Committee; and
(b) (i) Full payment (in cash or by check) for the shares with
respect to which such Option or portion is exercised; or
(ii) With the consent of the Committee, (A) shares of the
Company's
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Common Stock owned by the Optionee duly endorsed for transfer to the
Company, or (B) subject to any timing requirements imposed by the
Company, shares of the Company's Common Stock issuable to the
Optionee upon exercise of the Option, with a Fair Market Value on
the date of option exercise equal to the aggregate purchase price of
the shares with respect to which such Option or portion is
exercised; or
(iii) With the consent of the Committee, a full recourse
promissory note bearing interest (at least at such rate as shall
preclude the imputation of interest under the Code or successor
provision) and payable upon such terms as may be prescribed by the
Committee. The Committee may also prescribe the form of such note
and the security to be given for such note. The Option may not be
exercised, however, by delivery of a promissory note or by a loan
from the Company when or where such loan or other extension of
credit is prohibited by law; or
(iv) With the consent of the Committee, any combination of the
consideration provided in the foregoing subparagraphs (i), (ii) and
(iii); and
(c) Such representations and documents as the Committee, in its
absolute discretion, deems necessary or advisable to effect compliance with all
applicable provisions of federal or state securities laws or regulations. The
Committee, in its absolute discretion, may also take whatever additional actions
it deems appropriate to effect such compliance including, without limitations,
placing legends on share certificates and issuing stop-transfer notices to
agents and registrars.
(d) Full payment to the Company (or other employer corporation) of
all amounts which, under federal, state or local tax law, it is required to
withhold upon exercise of the Option; with the consent of the Committee, (i)
shares of the Common Stock owned by the Optionee duly endorsed for transfer, or,
(ii) subject to any timing requirements imposed by the Company, shares of the
Common Stock issuable to the Optionee upon exercise of the Option, valued at
Fair Market Value as of the date of Option exercise, may be used to make all or
part of such payment; and
(e) In the event the Option or portion shall be exercised pursuant
to Section 4.1 by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the Option.
SECTION 4.4 - CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES
The shares of stock deliverable upon the exercise of the Option, or any
portion thereof, may be either previously authorized but unissued shares or
issued shares which have been reacquired by the Company. Such shares shall be
fully paid and nonassessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon the
exercise of the Option or portion thereof prior to fulfillment of all of the
following conditions:
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(a) The admission of such shares to listing on all stock exchanges
on which such class of stock is then listed; and
(b) The completion of any registration or other qualification of
such shares under any state or federal law or under rulings or regulations of
the Securities and Exchange Commission or of any other governmental regulatory
body, which the Committee shall, in its absolute discretion, deem necessary or
advisable; and
(c) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(d) The payment to the Company (or other employer corporation) of
all amounts which, under federal, state or local tax law, it is required to
withhold upon exercise of the Option; and
(e) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may from time to time establish for
reasons of administrative convenience.
SECTION 4.6 - RIGHTS OF STOCKHOLDER
The holder of the Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect to any shares purchasable
upon the exercise of any part of the Option unless and until certificates
representing such shares shall have been issued by the Company to such holder.
ARTICLE V
OTHER PROVISIONS
SECTION 5.1 - ADMINISTRATION
The Committee shall have the power to interpret the Plan, this Agreement
and all other documents relating to the Option and to adopt such rules for the
administration, interpretation and application of the Plan as are consistent
therewith and to interpret or revoke any such rules. All actions taken and all
interpretations and determinations made by the Committee in good faith shall be
final and binding upon the Optionee, the Company and all other interested
persons. No member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan or
the Option and all members of the Committee shall be fully protected by the
Company in respect to any such action, determination or interpretation. The
Board shall have no right to exercise any of the rights or duties of the
Committee under the Plan and this Agreement.
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SECTION 5.2 - OPTION NOT TRANSFERABLE
Unless otherwise approved in writing by the Committee, no shares acquired
upon exercise of any Option by any Officer may be sold, assigned, pledged,
encumbered or otherwise transferred until at least six months have elapsed from
(but excluding) the date that such Option was granted. Neither the Option nor
any interest or right therein or part thereof shall be liable for the debts,
contracts or engagements of the Optionee or his successors in interest or shall
be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law or by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy),
and any attempted disposition thereof shall be null and void and of no effect;
provided, however, that this Section 5.2 shall not prevent transfers by will or
by the applicable laws of descent and distribution.
SECTION 5.3 - SHARES TO BE RESERVED
The Company shall at all times during the term of the Option reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of this Agreement.
SECTION 5.4 - NOTICES
Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Secretary, and any notice to
Optionee shall be given to him at the address given beneath his signature
hereto. By a notice given pursuant to this Section 5.4, either party may
hereafter designate a different address for notices to be given to it or him.
Any notice which is required to be given to the Optionee shall, if the Optionee
is then deceased, be given to the Optionee's personal representative if such
representative has previously informed the Company of his status and address by
written notice under this Section 5.4. Any notice shall be deemed duly given
when enclosed in a properly sealed envelope or wrapper addressed as aforesaid,
deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.
SECTION 5.5 - TITLES
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of this Agreement.
SECTION 5.6 - CONFORMITY TO SECURITIES LAWS
This Agreement is intended to conform to the extent necessary with all
provisions of the Securities Act and the Exchange Act and any and all
regulations and rules promulgated by the Securities and Exchange Commission
thereunder, including without limitation, Rule 16b-3. Notwithstanding anything
herein to the contrary, this Agreement shall be administered, and the
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Option shall be granted and may be exercised, only in such a manner as to
conform to such laws, rules and regulations. To the extent permitted by
applicable law, this Agreement and the Option granted hereunder shall be deemed
amended to the extent necessary to conform to such laws, rules and regulations.
SECTION 5.7 - AMENDMENT
This Agreement may be amended only by a writing executed by the parties
hereto which specifically states that it is amending this Agreement.
SECTION 5.8 - GOVERNING LAW
The laws of the State of Delaware shall govern the interpretation,
validity, administration, enforcement and performance of the terms of this
Agreement regardless of the law that might be applied under principles of
conflicts of laws.
ARTICLE VI
ADDITIONAL OPTIONS
SECTION 6.1 - ADDITIONAL OPTIONS
(a) If the Optionee exercises the Option or any portion thereof,
pursuant to Section 4.3(b)(ii)(A), by tendering or relinquishing shares of
Common Stock and/or when shares of Common Stock are tendered or relinquished
pursuant to Section 4.3 (d)(i) in payment for the amount to be withheld under
applicable federal, state and local income tax regulations (at withholding rates
not to exceed the Optionee's applicable marginal tax rates) in connection with
the exercise of the Option, the Optionee shall automatically be granted an
Additional Option. The Additional Option shall be subject to the following
provisions:
(i) The shares of Common Stock tendered or relinquished in
satisfaction of the exercise price and, if applicable, in
satisfaction of the Optionee's tax withholding obligations in
connection with the exercise, shall be shares of Common Stock
acquired by the Optionee other than through the exercise of an
option or through the grant of restricted stock unless such shares
have been held by the Optionee for more than six months following
the exercise of the stock option or the lapse of restrictions on the
restricted stock whatever the case may be;
(ii) The Additional Option will not have an Additional Option
feature;
(iii) The Additional Option shall grant the right to purchase
the number of shares of Common Stock which is equal to the sum of
(A) the number of shares
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of Common Stock tendered or relinquished as consideration upon the
exercise of the Option and (B) the number of shares of Common Stock
tendered or relinquished in payment of the applicable withholding
taxes;
(iv) The Additional Option shall be granted on the date
following the date on which the Optionee tenders or relinquishes
shares of Common Stock pursuant to this Article VI; the exercise
price of the Additional Option shall be 100% of the Fair Market
Value on the date of grant.
(v) The Additional Option shall have the same expiration date
as this Option; and
(vi) The Additional Option shall be immediately exercisable.
IN WITNESS HEREOF, this Agreement has been executed and delivered by the
parties hereto.
MANOR CARE, INC.
By: __________________________
Its: _________________________
_________________________________
Optionee
_________________________________
_________________________________
Address
_________________________________
Optionee's Social Security Number
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