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EXHIBIT 10.37
UNITED DENTAL CARE, INC.
STOCK OPTION AGREEMENT
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THIS STOCK OPTION AGREEMENT ("Agreement") made as of August 15, 1997
between United Dental Care, Inc. (the "Company"), a Delaware corporation, and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Optionee"), an employee of the Company.
WHEREAS, the Compensation Committee of the Board of Directors of the
Company (the "Committee") has authorized a stock option plan under its 1995
Stock Option Plan (the "Plan") to the Optionee on the terms and conditions set
forth below;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth and for other good and valuable consideration,
the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee a stock
option (the "Option") to purchase, subject to and upon the terms and conditions
hereinafter set forth 240,000 shares of the Common Stock, $.10 par value, of
the Company. The date of this Agreement is the date of the grant of this
Option.
2. Purchase Price. Subject to Section 10 hereof, the purchase price of
the Common Stock subject to the Option shall be $17.60 per share (the "Option
Price").
3. Time to Exercise. This Option shall be exercisable in whole or in
part at any time on or after August 15, 2006.
In addition, the exercisability of this Option shall be accelerated in
the manner and subject to the conditions set forth below:
Options for 40,000 shares shall be accelerated and become
immediately exercisable in whole or in part when earnings per share for
the Company (as reported on audited consolidated financial statements)
for a calendar year first equal or exceed $1.32;
Options for 40,000 shares shall be accelerated and become
immediately exercisable in whole or in part when earnings per share for
the Company (as reported on audited consolidated financial statements)
for a calendar year first equal or exceed $1.52;
Options for 40,000 shares shall be accelerated and become
immediately exercisable in whole or in part when earnings per share for
the Company (as reported on audited consolidated financial statements)
for a calendar year first equal or exceed $1.75;
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EXHIBIT 10.37
Options for 40,000 shares shall be accelerated and become
immediately exercisable in whole or in part when earnings per share for
the Company (as reported on audited consolidated financial statements)
for a calendar year first equal or exceed $2.00;
Options for 40,000 shares shall be accelerated and become
immediately exercisable in whole or in part when earnings per share for
the Company (as reported on audited consolidated financial statements)
for a calendar year first equal or exceed $2.30; and
Options for 40,000 shares shall be accelerated and become
immediately exercisable in whole or in part when earnings per share for
the Company (as reported on audited consolidated financial statements)
for a calendar year first equal or exceed $2.65.
Only one installment may be accelerated with respect to any one
calendar year. The foregoing installments shall vest sequentially and once
vested shall remain vested irrespective of the financial performance of the
Company in future years. The date of the acceleration of the exercisability of
any installment shall be the date that the audited financial statements for
such respective year are delivered to the Company. The calendar years with
respect to which such vesting acceleration provisions shall apply shall be the
calendar year ended December 31, 1997 and the following calendar years.
To the extent not exercised, accelerated installments shall accumulate
and be exercisable, in whole or in part, in any subsequent period. Anything in
this Agreement to the contrary notwithstanding, this Option shall terminate and
no part of the Option may be exercised after 5:00 p.m. on August 15, 2007.
Subject to Plan. This Option and the exercise hereof is subject to the
terms and conditions of the Plan, now or hereinafter in effect, which is
incorporated herein by reference and made a part hereof, but the terms of the
Plan shall not be considered an enlargement of any benefits under this
Agreement.
Term.
(a) If the Optionee voluntarily terminates his employment with
the Company or any of its subsidiaries at any time without the consent
of the Company (of which the Committee shall be the sole judge), or if
the Optionee shall have his employment involuntarily terminated by the
Company or its subsidiaries for any reason involving a breach of faith
or loyalty to such Company, this option shall terminate immediately as
to any unexercised portion on the effective date of termination.
(b) If (1) the Optionee voluntarily terminates his employment
with the Company and its subsidiaries with the consent of the Company
(of which the Committee shall be the sole judge), (2) the Optionee
shall have his employment involuntarily terminated by the Company and
its subsidiaries for any reason, including disability, not involving a
breach of faith or loyalty to such Company, or (3) the Optionee retires
from the Company and its
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EXHIBIT 10.37
subsidiaries, then the Optionee shall have the right for 30 days after
termination to exercise this option for the number of shares, or any
portion thereof, then exercisable pursuant to Section 3 above.
(c) In the event of the death of the Optionee during any period
in which he was entitled to exercise this option, this option may be
exercised to the extent that the Optionee was entitled to do so on the
date of his death, in whole or in part, at any time within twelve (12)
months from the date of death of the Optionee or within the unexpired
term of this option, whichever is shorter, by the person to whom the
Employee's rights under this option shall pass by the Employee's will
or by the laws of descent and distribution, whichever is applicable.
During the lifetime of the Optionee, the option may be exercised only
by the Optionee.
6. Restrictions on Exercise. The Option may not be exercised and no
certificates representing shares subject to such Option shall be delivered if
any requisite approval or consent of any governmental authority of any kind
having jurisdiction over the exercise of Options shall not have been secured.
The Option may only be exercised with respect to full shares and not for any
fractional shares.
7. Manner of Exercise. Subject to such administrative regulations as
the Committee administering the Plan may from time to time adopt, the Optionee
shall exercise the option by giving written notice to the Company of the number
of shares being purchased and the Option Price to be paid therefor accompanied
by the following:
(a) full payment in cash of the Option Price; provided,
however, that in lieu of cash an Optionee may, upon approval by the
Committee, exercise this Option by tendering to the Company shares of
the Common Stock of the Company owned by him having a fair market value
equal to the cash Option Price, or, by a combination of both cash and
stock;
(b) an undertaking to furnish or execute such documents as the
Company in its discretion shall deem necessary (1) to evidence the
exercise, in whole or in part, of the Option evidenced by this
Agreement, (2) to determine whether registration is then required under
the Securities Act of 1933, as then in effect, under (3) to comply with
or satisfy the requirements of the Securities Act of 1933, or any other
law, as then in effect and (4) to notify the Company in writing of any
disposition made of any shares issued pursuant to the exercise of the
Option evidenced by this Agreement within a period of thirty (30) days
after the day of the transfer of any such shares by the Optionee.
8. Non-Assignability. This Option is not assignable or transferable by
Optionee except by will or by the laws of descent and distribution.
9. Rights as Shareholder. The Optionee shall have no rights as a
shareholder with respect to any shares covered by the Option evidenced by this
Agreement until the issuance of one or more certificates to him/her for such
shares upon due exercise of the Option. Except as provided in Section 10, no
adjustment shall be made for dividends or other rights for which the record
date is prior to the issuance of certificates.
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EXHIBIT 10.37
10. Capital Adjustments. The number of shares of Common Stock covered
by the unexercised portion of the Option evidenced by this Agreement, and in
the Option Price thereof, shall be subject to such adjustment as appropriate or
necessary to reflect any stock dividend, stock split, reverse stock split,
share combination, exchange of shares, recapitalization, reclassification,
merger, consolidation, separation, reorganization, liquidation or the like of
or by the Company, so that the rights of the holder hereof shall remain
proportionate to the rights held hereunder immediately prior to such event.
11. Acceleration Upon Change In Control. In the event of a Change In
Control (as defined below) of the Company, then the holder of the options
evidenced by this Agreement shall have the right, immediately prior to the
consummation of such transaction constituting the Change In Control, to
exercise such options, to the extent not theretofore exercised, without regard
to any of the requirements as to the time periods and installments of
exercisability set forth in this Agreement if (and only if) such options have
not expired or otherwise been terminated prior to such vesting and the date of
such transaction. Notwithstanding the foregoing, such acceleration of
exercisability shall not apply if at least one-half of the board of directors
of the acquiring or surviving corporation (or a parent corporation thereof)
immediately after such Change in Control transaction consists of individuals
who were members of the board of directors of the Company immediately prior to
such transaction and such surviving or acquiring corporation agrees to assume
such options in connection with such transaction.
For the purposes of this section, a "Change In Control" shall mean: (i)
a change of stock ownership of UDC of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A promulgated under the
Securities Exchange Act of 1934, as amended, (the "Exchange Act") and any
successor Item of a similar nature; or (ii) the acquisition of beneficial
ownership, directly or indirectly, by any person (as such term is used in
Sections 13(d) and 14(d)(2) of the Exchange Act) of securities of UDC
representing 25% or more of the combined voting power of UDC's then outstanding
securities; or (iii) a change during any period of two consecutive years of a
majority of the members of the board of directors of UDC for any reason, unless
the election or the nomination for election by UDC's shareholders of each
director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period.
Notwithstanding the foregoing, no Change of Control shall be deemed to have
occurred in connection with any merger or similar transaction to which UDC is a
party if at least one-half of the members of the board of directors of the
ultimate parent corporation of the surviving corporate group consists of
persons who were members of UDC's board on the date hereof or persons who were
elected or nominated for election by such persons.
In addition to the foregoing, in the event a Change In Control
transaction occurs and the options evidenced by this Agreement become subject
to such acceleration of exercisability but the holder of such options elects
not to exercise such options, all such options shall terminate upon
consummation of such Change In Control transaction.
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EXHIBIT 10.37
Notwithstanding the above, the terms of the Employment Agreement
between the Optionee and the Company dated May 13, 1996 (the "Employment
Agreement") shall take precedence over the terms hereof and, specifically, the
vesting of this Option shall be further subject to the provisions of Section 9
of the Employment Agreement which are incorporated herein by reference.
Investment Purpose. This Option is granted on the condition that the
purchases of Common Stock thereunder shall be for investment purposes, and not
with a view to resale or distribution except that in the event the Common Stock
subject to such Option is registered under the Securities Act of 1933, as
amended, or in the event a resale of such stock without such registration would
otherwise be permissible such condition shall be inoperative if in the opinion
of counsel for the Company such condition is not required under the Securities
Act of 1933 or regulation, or rule of any governmental agency.
13. Law Governing. This Agreement is intended to be performed in the
State of Texas and shall be construed and enforced in accordance with and
governed by the laws of the State of Texas.
14. Binding Effect. This Agreement shall insure to the benefit of and
be binding upon the parties hereto and their personal representatives,
successors, heirs, and assigns.
IN WITNESS WHERE OF, the Company has caused this Agreement to be signed
by its duly authorized officers and the Optionee has duly signed this Agreement
on the day and year first above written.
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Optionee
UNITED DENTAL CARE, INC.
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Chairman of the Board