Exhibit 10.5
WELLCARE HEALTH PLANS, INC.
2004 EQUITY INCENTIVE PLAN
FORM OF
NON-QUALIFIED STOCK OPTION AGREEMENT
FOR
[ ]
AGREEMENT
1. Grant of Option. WellCare Health Plans, Inc. (the "Company") hereby grants,
as of [ ] ("Date of Grant"), to [ ] (the "Optionee") an option (the
"Option") to purchase up to [ ] shares of the Company's Common Stock, $0.01
par value per share (the "Shares"), at an exercise price per share equal to $[]
(the "Option Price"). The Option shall be subject to the terms and conditions
set forth herein. The Option was issued pursuant to the Company's 2004 Equity
Incentive Plan (the "Plan"), which is incorporated herein for all purposes. The
Option is a Non-Qualified Stock Option, and not an Incentive Stock Option. The
Optionee hereby acknowledges receipt of a copy of the Plan and agrees to be
bound by all of the terms and conditions hereof and thereof and all applicable
laws and regulations.
2. Definitions. Unless otherwise provided herein, terms used herein that are
defined in the Plan and not defined herein shall have the meanings attributed
thereto in the Plan.
3. Exercise Schedule. Except as otherwise provided in Sections 6 and 7 of this
Agreement, or in the Plan, the Option is exercisable in installments as provided
below, which shall be cumulative. To the extent that the Option has become
exercisable with respect to a percentage of Shares as provided below, the Option
may thereafter be exercised by the Optionee, in whole or in part, at any time or
from time to time prior to the expiration of the Option as provided herein. The
following table indicates each date (the "Vesting Date") upon which the Optionee
shall be entitled to exercise the Option with respect to the percentage of
Shares granted as indicated beside the date, provided that the Optionee's
employment or service with the Company and its Subsidiaries continues through
and on the applicable Vesting Date:
Percentage of Shares Vesting Date
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25% First anniversary of Date of Grant
2.08333333% The end of each full calendar month following the first
anniversary of the Date of Grant
Notwithstanding anything contained herein to the contrary, once the Option has
vested and become exercisable with respect to 100% of the Shares, then the
Option shall be fully vested and the provisions of the preceding sentence shall
cease to apply.
Except as otherwise specifically provided herein, there shall be no
proportionate or partial vesting in the periods prior to each Vesting Date, and
all vesting shall occur only on the
appropriate Vesting Date. Upon the termination of the Optionee's employment or
service with the Company and its Subsidiaries, any unvested portion of the
Option shall terminate and be null and void.
4. Method of Exercise. The vested portion of this Option shall be exercisable in
whole or in part in accordance with the exercise schedule set forth in Section 3
hereof by written notice which shall state the election to exercise the Option,
the number of Shares in respect of which the Option is being exercised (which
number must be a whole number), and such other representations and agreements as
to the holder's investment intent with respect to such Shares as may be required
by the Company pursuant to the provisions of the Plan. Such written notice shall
be signed by the Optionee and shall be delivered in person or by certified mail
to the Secretary of the Company. The written notice shall be accompanied by
payment of the Option Price. This Option shall be deemed to be exercised after
both (a) receipt by the Company of such written notice accompanied by the Option
Price and (b) arrangements that are satisfactory to the Committee in its sole
discretion have been made for Optionee's payment to the Company of the amount,
if any, that is necessary to be withheld in accordance with applicable Federal
or state withholding requirements. No Shares will be issued pursuant to the
Option unless and until such issuance and such exercise shall comply with all
relevant provisions of applicable law, including the requirements of any stock
exchange upon which the Shares then may be traded.
5. Method of Payment. Payment of the Option Price shall be by any of the
following, or a combination thereof, at the election of the Optionee: (a) in
cash (including check, bank draft, money order or wire transfer of immediately
available funds), (b) by delivery of outstanding shares of Common Stock with a
Fair Market Value on the date of exercise equal to the aggregate exercise price
payable with respect to the Options' exercise, (c) by simultaneous sale through
a broker reasonably acceptable to the Committee of Shares acquired on exercise,
as permitted under Regulation T of the Federal Reserve Board, (d) by authorizing
the Company to withhold from issuance a number of Shares issuable upon exercise
of the Option which, when multiplied by the Fair Market Value of a share of
Common Stock on the date of exercise, is equal to the Option Price payable with
respect to the portion of the Option being exercised or (e) by any combination
of the foregoing.
In the event the Optionee elects to pay the Option Price pursuant to
clause (b) above, (i) only a whole number of share(s) of Common Stock (and not
fractional shares of Common Stock) may be tendered in payment, (ii) the Optionee
must present evidence acceptable to the Company that the Optionee has owned any
such shares of Common Stock tendered in payment of the Option Price (and that
such tendered shares of Common Stock have not been subject to any substantial
risk of forfeiture) for at least six months prior to the date of exercise, and
(iii) Common Stock must be delivered to the Company. Delivery for this purpose
may, at the election of the Optionee, be made either by (A) physical delivery of
the certificate(s) for all such shares of Common Stock tendered in payment of
the Option Price, accompanied by duly executed instruments of transfer in a form
acceptable to the Company, or (B) direction to the Optionee's broker to
transfer, by book entry, such shares of Common Stock from a brokerage account of
the Optionee to a brokerage account specified by the Company. When payment of
the Option Price is made by delivery of Common Stock, the difference, if any,
between the Option Price payable with respect to the portion of the Option being
exercised and the Fair Market Value of the shares of Common Stock tendered in
payment (plus any applicable taxes)
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shall be paid in cash. The Optionee may not tender shares of Common Stock having
a Fair Market Value exceeding the Option Price payable with respect to the
portion of the Option being exercised (plus any applicable taxes).
In the event the Optionee elects to pay the Option Price pursuant to
clause (d) above, (i) only a whole number of Share(s) (and not fractional
Shares) may be withheld in payment and (ii) the Optionee must present evidence
acceptable to the Company that the Optionee has owned a number of shares of
Common Stock at least equal to the number of Shares to be withheld in payment of
the Option Price (and that such owned shares of Common Stock have not been
subject to any substantial risk of forfeiture) for at least six months prior to
the date of exercise. When payment of the Option Price is made by withholding of
Shares, the difference, if any, between the Option Price payable with respect to
the portion of the Option being exercised and the Fair Market Value of the
Shares withheld in payment (plus any applicable taxes) shall be paid in cash.
The Optionee may not authorize the withholding of Shares having a Fair Market
Value exceeding the Option Price payable with respect to the portion of the
Option being exercised (plus any applicable taxes). Any withheld Shares shall no
longer be issuable under the Option.
6. Termination of Optionee's Service.
(a) Death or Disability. If the Optionee ceases to be a director, officer
or employee of, or to perform other services for, the Company or any Subsidiary
due to the Optionee's death or Disability, the portion of the Option that was
exercisable on the date of such cessation shall remain so for a period of 180
days from the date of such death or Disability, but in no event after the
expiration date provided in Section 7(a) below; provided that the Option shall
immediately terminate and become null and void in the event that the Optionee
engages in Competition during such 180 day period, unless the Optionee has
received written consent to do so from the Company.
(b) Retirement. If the Optionee ceases to be a director, officer or
employee of, or to perform other services for, the Company or any Subsidiary due
to the Optionee's Retirement, the portion of the Option that was exercisable on
the date of such cessation shall remain so for a period of 90 days from the date
of such Retirement, but in no event after the expiration date provided in
Section 7(a) below; provided that the Option shall immediately terminate and
become null and void in the event that the Optionee engages in Competition
during such 90 day period, unless the Optionee has received written consent to
do so from the Company.
(c) Termination for Cause. If the Optionee's employment or service as a
director, officer or employee of, or other performance of services for, the
Company or any Subsidiary is terminated for Cause, the Option shall expire and
be forfeited immediately upon such termination, whether or not then exercisable.
(d) Other Termination of Service. If the Optionee ceases to be a director,
officer or employee of, or to perform other services for, the Company or any
Subsidiary for any reason other than death, Disability, Retirement or Cause, the
portion of the Option that was exercisable on the date of such cessation shall
remain so for a period of 90 days after the date of such cessation, but in no
event after the expiration date provided in Section 7(a) below; provided that
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the Option shall immediately terminate in the event that the Optionee engages
in Competition during such 90 day period, unless the Optionee has received
written consent to do so from the Company.
(e) Termination of Service Following a Change in Control. Notwithstanding
the foregoing, if the Optionee ceases to be a director, officer or employee of,
or to perform other services for, the Company or any Subsidiary, and the
Optionee's service was terminated (i) by the Company without Cause, (ii) by
reason of the Optionee's death, Disability, or Retirement, or (iii) by the
Optionee for Good Reason, within twelve months after there is a Change in
Control of the Company, as defined in Section 2(c) of the Plan, then the Option
shall be immediately fully exercisable and shall remain so [for the applicable
period following the Optionee's termination of service, as described in this
Section 6] [for a period of 180 days after the date of such termination, but in
no event after the expiration date provided in Section 7(a) below].
7. Other Termination of Option.
(a) Expiration of Option. Notwithstanding anything to the contrary, any
unexercised portion of the Option shall automatically and without notice
terminate and become null and void on the tenth anniversary of the date as of
which the Option is granted.
(b) Cancellation by the Committee. Notwithstanding anything to the
contrary, in connection with any transaction of the type specified by clause
(iii) of the definition of a Change in Control in Section 2(c) of the Plan, the
Committee may, in its discretion, (i) cancel the Option in consideration for
payment to the Optionee of an amount equal to the portion of the consideration
that would have been payable to the Optionee pursuant to such transaction if the
Option had been fully exercised immediately prior to such transaction, less the
aggregate Option Price that would have been payable therefor, or (ii) if the
amount that would have been payable to the Optionee pursuant to such transaction
if the Option had been fully exercised immediately prior thereto would be equal
to or less than the aggregate Option Price that would have been payable
therefor, cancel the Option for no consideration or payment of any kind. Payment
of any amount payable pursuant to the preceding sentence may be made in cash or,
in the event that the consideration to be received in such transaction includes
securities or other property, in cash and/or securities or other property in the
Committee's discretion.
(c) Corporate Transactions. Notwithstanding anything to the contrary, to
the extent not previously exercised, the Option shall terminate immediately in
the event of the liquidation or dissolution of the Company.
8. Transferability. Unless otherwise determined by the Committee, the Option
granted hereby is not transferable otherwise than by will or under the
applicable laws of descent and distribution, and during the lifetime of the
Optionee the Option shall be exercisable only by the Optionee, or the Optionee's
guardian or legal representative. In addition, the Option shall not be assigned,
negotiated, pledged or hypothecated in any way (whether by operation of law or
otherwise), and the Option shall not be subject to execution, attachment or
similar process. Upon any attempt to transfer, assign, negotiate, pledge or
hypothecate the Option, or in the event of any levy upon the Option by reason of
any execution, attachment or similar process contrary to the provisions hereof,
the Option shall immediately become null and void. The terms of this Option
shall be binding upon the executors, administrators, heirs, successors and
assigns of the Optionee. The terms of this
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Option shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.
9. No Rights of Stockholders. Neither the Optionee nor any personal
representative (or beneficiary) shall be, or shall have any of the rights and
privileges of, a stockholder of the Company with respect to any shares of Stock
purchasable or issuable upon the exercise of the Option, in whole or in part,
prior to the date of exercise of the Option.
10. No Right to Continued Employment or Service. Neither the Option nor this
Agreement shall confer upon the Optionee any right to continued employment or
service with the Company.
11. Law Governing. This Agreement shall be governed in accordance with and
governed by the internal laws of the State of Delaware.
12. Interpretation / Provisions of Plan Control. This Agreement is subject to
all the terms, conditions and provisions of the Plan, including, without
limitation, the amendment provisions thereof, and to such rules, regulations and
interpretations relating to the Plan adopted by the Committee as may be in
effect from time to time. If and to the extent that this Agreement conflicts or
is inconsistent with the terms, conditions and provisions of the Plan, the Plan
shall control, and this Agreement shall be deemed to be modified accordingly.
The Optionee accepts the Option subject to all the terms and provisions of the
Plan and this Agreement. The undersigned Optionee hereby accepts as binding,
conclusive and final all decisions or interpretations of the Committee upon any
questions arising under the Plan and this Agreement.
13. Notices. Any notice under this Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally or when deposited in
the United States mail, registered, postage prepaid, and addressed, in the case
of the Company, to the Company's Secretary at:
6800 N. Dale Mabry Highway
Suite 268
Tampa, FL 33614
or if the Company should move its principal office, to such principal office,
and, in the case of the Optionee, to the Optionee's last permanent address as
shown on the Company's records, subject to the right of either party to
designate some other address at any time hereafter in a notice satisfying the
requirements of this Section.
14. Tax Consequences. Set forth below is a brief summary as of the date of this
Option of some of the federal tax consequences of exercise of this Option and
disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX
LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX
ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) The Optionee will not recognize any income on receipt of the Option.
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(b) The Optionee will recognize ordinary income at the time he exercises
the Option equal to the amount by which the Fair Market Value of the Shares on
the date of exercise exceeds the Option Price paid for the Shares. The amount so
recognized is subject to federal withholding and employment taxes if the
Optionee is an employee.
(c) The Optionee's tax basis for the Shares received as a result of the
exercise of the Option will be equal to the Fair Market Value of those Shares on
the date of the exercise.
(d) Upon the sale of the Shares, the Optionee will recognize a capital
gain or loss on the difference between the amount realized from the sale of the
Shares and the Fair Market Value on the date of exercise. The gain or loss would
be short- or long-term depending upon whether the Shares were held for at least
one year after the date of exercise of the Option.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
______ day of ___________________, 20___.
COMPANY:
WELLCARE HEALTH PLANS, INC.
By:__________________________________
Name:
Title:
Optionee acknowledges receipt of a copy of the Plan and represents that he
or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option, and fully
understands all provisions of the Option.
Dated: ___________________________ OPTIONEE:
_______________________________________
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