EXHIBIT 10.71
Doc. No. 13
CASTLE DENTAL CENTERS, INC.
INCENTIVE STOCK OPTION AGREEMENT
This Incentive Stock Option Agreement ("Option Agreement") is between
Castle Dental Centers, Inc., a Delaware corporation (the "Company"), and Xxxxx
Xxxxx ("Optionee"), who agree as follows:
Section 1. INTRODUCTION. The Company has heretofore adopted the Castle
Dental Centers, Inc. Omnibus Stock and Incentive Plan (the "Plan") for the
purpose of providing eligible key employees and directors of the Company and its
Affiliates (as defined in the Plan) with increased incentive to render services,
to exert maximum effort for the business success of the Company and to
strengthen the identification of employees and directors with the shareholders.
The Company, acting through its Board of Directors (the "Board"), has determined
that its interests will be advanced by the issuance to Optionee of an incentive
stock option under the Plan.
Section 2. OPTION. Subject to the terms and conditions contained herein,
the Company hereby irrevocably grants to Optionee the right and option
("Option") to purchase from the Company 5,000 shares of the Company's common
stock, $.001 par value ("Common Stock"), at a price of $5.00 per share, which is
deemed to be not less than the fair market value of the Common Stock at the date
of grant of this Option.
Section 3. OPTION PERIOD. The Option herein granted may be exercised by
Optionee in whole or in part at any time during a five year period beginning on
May 31, 1997 (the "Option Period"), subject to the limitation that said Option
shall not be exercisable for more than a percentage of the aggregate number of
shares offered by this Option determined by the number of full years of
employment with the Company or its Affiliates from the effective date of
Optionee's grant, to the date of such exercise, in accordance with the following
schedule:
Number of Percentage of
FULL YEARS SHARES PURCHASABLE
1 20%
2 40%
3 60%
4 80%
5 100%
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Notwithstanding anything in this Option Agreement to the contrary, the Board, in
its sole discretion, may waive the foregoing schedule of vesting and upon
written notice to Optionee, accelerate the earliest date or dates on which any
of the Options granted hereunder are exercisable.
Section 4. PROCEDURE FOR EXERCISE. The Option herein granted may be
exercised by the delivery by Optionee of written notice to the Secretary of the
Company setting forth the number of shares of Common Stock with respect to which
the Option is being exercised. The notice shall be accompanied by, at the
election of the Optionee, (i) cash, cashier's check, bank draft, or postal or
express money order payable to the order of the Company, (ii) certificates
representing shares of Common Stock theretofore owned by Optionee duly endorsed
for transfer to the Company, (iii) an election by Optionee to have the Company
withhold shares of Common Stock issuable upon exercise of the Option, or (iv)
any combination of the preceding, equal in value to the aggregate exercise
price. Notice may also be delivered by telecopy provided that the exercise price
of such shares is received by the Company via wire transfer on the same day the
telecopy transmission is received by the Company. The notice shall specify the
name in which such shares are issued and the address to which the certificates
for such shares are to be mailed. An option to purchase shares of Common Stock
in accordance with this Plan, shall be deemed to have been exercised immediately
prior to the close of business on the date (i) written notice of such exercise
and (ii) payment in full of the exercise price for the number of shares for
which Options are being exercised, are both received by the Company and Optionee
shall be treated for all purposes as the record holder of such shares of Common
Stock as of such date.
As promptly as practicable after receipt of such written notice and
payment, the Company shall deliver to Optionee certificates for the number of
shares with respect to which such Option has been so exercised, issued in
Optionee's name or such other name as Optionee directs; provided, however, that
such delivery shall be deemed effected for all purposes when a stock transfer
agent of the Company shall have deposited such certificates in the United States
mail, addressed to Optionee at the address specified pursuant to this Section 4.
Section 5. TERMINATION OF EMPLOYMENT. If Optionee ceases to be employed
by the Company or its Affiliates for any reason other than death or disability,
any Option which is exercisable on the date of such termination of employment
shall expire upon such date of such termination of employment; provided,
however, the Board, in its sole discretion, may allow Optionee to exercise all
or a portion of the options granted but unexercised for a period of time after
Optionee's termination of employment.
Section 6. DISABILITY OR DEATH. In the event that Optionee dies or is
determined to be disabled while Optionee is employed by the Company, the options
previously granted to Optionee may be exercised (to the extent Optionee would
have been entitled to do so at the date of death or the determination of
disability) at any time and from time to time, within a one-year period after
such death or determination of disability, by the Optionee, the guardian of
Optionee's estate, the executor or administrator of Optionee's estate or by the
person or persons to whom Optionee's rights under
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this Option Agreement shall pass by will or the laws of descent and
distribution, but in no event may the Option be exercised after its expiration
under the terms of this Option Agreement. An Optionee shall be deemed to be
disabled if, in the opinion of a physician selected by the Board, Optionee is
incapable of performing services for the Company of the kind Optionee was
performing at the time the disability occurred by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or to be of long, continued and indefinite duration. The date of
determination of disability for purposes hereof shall be the date of such
determination by such physician.
Section 7. TRANSFERABILITY. This Option shall not be transferable by
Optionee otherwise than by Optionee's will or by the laws of descent and
distribution or pursuant to a transfer which is incident to a divorce, as
described in Code Section 1041(a). During the lifetime of Optionee, the Option
shall be exercisable only by Optionee or his authorized legal representative.
Any heir or legatee of Optionee shall take rights herein granted subject to the
terms and conditions hereof. No such transfer of this Option Agreement to heirs
or legatees of Optionee shall be effective to bind the Company unless the
Company shall have been furnished with written notice thereof and a copy of such
evidence as the Board may deem necessary to establish the validity of the
transfer and the acceptance by the transferee or transferees of the terms and
conditions hereof.
Section 8. NO RIGHTS AS SHAREHOLDER. Optionee shall have no rights as a
shareholder with respect to any shares of Common Stock covered by this Option
Agreement until the Option is exercised by written notice and accompanied by
payment as provided in Section 4 of this Option Agreement.
Section 9. EXTRAORDINARY CORPORATE TRANSACTIONS. The existence of
outstanding Options shall not affect in any way the right or power of the
Company or its shareholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or any
issuance of Common Stock or subscription rights thereto, or any issuance of
bonds, debentures, preferred or prior preference stock ahead of or affecting the
Common Stock or the rights thereof, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceedings, whether of a similar character or
otherwise. If the Company goes through a "Fundamental Change" or a "Corporate
Change" (as defined in subsection 8.4 of the Plan), the Options granted
hereunder shall be governed by subsection 8.4 of the Plan.
Section 10. CHANGES IN CAPITAL STRUCTURE. If the outstanding shares of
Common Stock or other securities of the Company, or both, for which the Option
is then exercisable shall at any time be changed or exchanged by declaration of
a stock dividend, stock split, combination of shares, or recapitalization, the
number and kind of shares of Common Stock or other securities subject to the
Plan or subject to the Option and the exercise price, shall be appropriately and
equitably adjusted
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so as to maintain the proportionate number of shares or other securities without
changing the aggre gate exercise price.
Section 11. SHAREHOLDER AGREEMENT. Optionee, or Optionee's
representative upon Optionee's death, prior to the exercise of an Option granted
hereunder, agrees to enter into the Company's Shareholders Agreement at the
request of the Company.
Section 12. COMPLIANCE WITH SECURITIES LAWS. Upon the acquisition of any
shares pursuant to the exercise of the Option herein granted, Optionee (or any
person acting under Section 7) will enter into such written representations,
warranties and agreements as the Company may reasonably request in order to
comply with applicable securities laws or with this Option Agreement.
Section 13. COMPLIANCE WITH LAWS. Notwithstanding any of the other
provisions hereof, Optionee agrees that he or she will not exercise the Option
granted hereby, and that the Company will not be obligated to issue any shares
pursuant to this Option Agreement, if the exercise of the Option or the issuance
of such shares of Common Stock would constitute a violation by Optionee or by
the Company of any provision of any law or regulation of any governmental
authority.
Section 14. NO RIGHT TO EMPLOYMENT. Optionee who is an employee shall be
considered to be in the employment of the Company so long as he or she remains
an employee of the Company or its Affiliates. Any questions as to whether and
when there has been a termination of such employment and the cause of such
termination shall be determined by the Board, and its determination shall be
final. Nothing contained herein shall be construed as conferring upon Optionee
the right to continue in the employ of the Company, nor shall anything contained
herein be construed or interpreted to limit the "employment at will"
relationship between Optionee and the Company.
Section 15. RESOLUTION OF DISPUTES. As a condition of the granting of
the Option hereby, Optionee, and Optionee's heirs, personal representatives and
successors agree that any dispute or disagreement which may arise hereunder
shall be determined by the Board, in its sole discretion and judgment, and that
any such determination and any interpretation by the Board of the terms of this
Option Agreement shall be final and shall be binding and conclusive, for all
purposes, upon the Company, Optionee, and Optionee's heirs, personal
representatives and successors.
Section 16. LEGENDS ON CERTIFICATE. The certificates representing the
shares of Common Stock purchased by exercise of the Option will be stamped or
otherwise imprinted with legends in such form as the Company or its counsel may
require with respect to any applicable restrictions on sale or transfer and the
stock transfer records of the Company will reflect stop-transfer instructions
with respect to such shares.
Section 17. NOTICES. Every notice hereunder shall be in writing and
shall be given by registered or certified mail. All notices of the exercise of
any Option hereunder shall be directed to
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Castle Dental Centers, Inc., 0000 Xxxx Xxx Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx
00000, Attention: Secretary. Any notice given by the Company to Optionee
directed to Optionee at the address on file with the Company shall be effective
to bind Optionee and any other person who shall acquire rights hereunder. The
Company shall be under no obligation whatsoever to advise Optionee of the
existence, maturity or termination of any of Optionee's rights hereunder and
Optionee shall be deemed to have familiarized himself or herself with all
matters contained herein and in the Plan which may affect any of Optionee's
rights or privileges hereunder.
Section 18. CONSTRUCTION AND INTERPRETATION. Whenever the term
"Optionee" is used herein under circumstances applicable to any other person or
persons to whom this award, in accordance with the provisions of Section 7
hereof, may be transferred, the word "Optionee" shall be deemed to include such
person or persons.
Section 19. NOTICE OF DISPOSITION. If Optionee disposes of any shares of
Common Stock acquired pursuant to the exercise of an Option granted hereunder
prior to the earlier of (i) two years from the date of this Option Agreement or
(ii) one year from the date the shares of Common Stock were acquired, Optionee
shall notify the Company of such disposition within ten days of its occurrence
and deliver to the Company any amount of federal or state income tax withholding
required by law. Payment of the withholding shall be made in accordance with
Section 10 of the Plan. If the Optionee fails to pay the withholding tax, the
Company is authorized to withhold from any cash remuneration then or thereafter
payable to the Optionee any tax required to be withheld by reason of any
disposition named herein.
Section 20. AGREEMENT SUBJECT TO PLAN. This Option Agreement is subject
to the Plan. The terms and provisions of the Plan (including any subsequent
amendments thereto) are hereby incorporated herein by reference thereto. In the
event of a conflict between any term or provision contained herein and a term or
provision of the Plan, the applicable terms and provisions of the Plan will
govern and prevail. All definitions of words and terms contained in the Plan
shall be applicable to this Option Agreement.
Section 21. BINDING EFFECT. This Option Agreement shall be binding upon
and inure to the benefit of any successors to the Company and all persons
lawfully claiming under Optionee as provided herein.
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IN WITNESS WHEREOF, this Incentive Stock Option Agreement has been
executed as of the 31st day of May, 1996.
CASTLE DENTAL CENTERS, INC.
ATTEST: By: ___________________________
Xxxx X. Xxxxxx, Xx.
President
OPTIONEE
___________________________
Xxxxx Xxxxx
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