EXHIBIT 10.8
EQUITY INCENTIVE PLAN
OF
MANOR CARE, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of ____________, is made by and between MANOR
CARE, INC., a Delaware corporation hereinafter referred to as "Company", and
_____________, an Outside Director 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, including
options granted to Outside Directors; and
WHEREAS, the Company wishes to carry out the terms of the Plan by granting
an option to the Outside Director named as Optionee herein.
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 - BOARD
"Board" shall mean the Board of Directors of the Company.
SECTION 1.2 - CHIEF FINANCIAL OFFICER
"Chief Financial Officer" shall mean the chief financial officer 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.
SECTION 1.8 - 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 1.9 - OUTSIDE DIRECTOR
"Outside Director" shall mean a member of the Board who is not an employee
of the Company or any subsidiary.
SECTION 1.10 - PLAN
"Plan" shall mean the Equity Incentive Plan of Manor Care, Inc., as
further amended from time to time.
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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 DIRECTORSHIP
"Termination of Directorship" shall mean the time when the Optionee ceases
to be a director of the Company, for any reason, with or without cause,
including, but not by way of limitation, a termination by resignation, removal,
death, disability, retirement or failure to be reelected by the Company's
stockholders.
ARTICLE II
GRANT OF OPTION
SECTION 2.1 - GRANT OF OPTION
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.
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SECTION 2.3 - 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 consideration")
the Chief Financial Officer 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 Chief Financial Officer 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
The Option shall be fully exercisable on the date hereof.
SECTION 3.2 - 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 expiration of three months from the date of the Optionee's
Termination of Directorship for any reason other than such Optionee's disability
or death unless the Optionee dies within said three-month period; or
(c) The expiration of one year from the date of the Optionee's
Termination of Directorship by reason of his total disability; or
(d) The expiration of one year from the date of the Optionee's
death; or
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(e) 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.
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
(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 Chief Financial Officer, (A)
shares of the Company's Common Stock owned by the Optionee duly
endorsed for transfer to the
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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 Chief Financial Officer, 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 Chief Financial Officer. 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 Chief Financial Officer, any
combination of the consideration provided in the foregoing
subparagraphs (i), (ii) and (iii); and
(c) Such representations and documents as the Chief Financial
Officer, in its absolute discretion, deems necessary or advisable to effect
compliance with all applicable provisions of federal or state securities laws or
regulations. The Chief Financial Officer, 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 Chief Financial
Officer, (i) shares of the Common Stock owned by the Optionee duly endorsed for
transfer, or, (ii) subject to any timing requirements imposed by the Chief
Financial Officer, 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 Chief Financial Officer 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 Chief Financial Officer 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 Chief Financial Officer 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 Board 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 Board in good faith shall be
final and binding upon the Optionee, the Company and all other interested
persons. No member of the Board 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 Board shall be fully protected by the Company
in respect to any such action, determination or interpretation.
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SECTION 5.2 - OPTION NOT TRANSFERABLE
Unless otherwise approved in writing by the Board, 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 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
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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.
SECTION 5.9 - NO RIGHT TO CONTINUED MEMBERSHIP ON THE BOARD
Nothing in this Agreement shall confer upon any Outside Director any right
to continue as a director of the Company or shall interfere with or restrict in
any way the rights of the Company and its stockholders, which are hereby
expressly reserved, to remove any Outside Director at any time for any reason
whatsoever with or without cause.
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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