WELLCARE HEALTH PLANS, INC. NON-QUALIFIED STOCK OPTION AGREEMENT FOR THOMAS TRAN Agreement
Exhibit 10.4
2004
EQUITY INCENTIVE PLAN
FOR
XXXXXX
XXXX
Agreement
1.
Grant of
Option. WellCare Health Plans, Inc. (the “Company”)
hereby grants, as of __________ ___, 2008, to Xxxxxx Xxxx (the “Optionee”)
an option (the “Option”)
to purchase up to 100,000 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.
Percentage of
Shares Vesting
Date
25% First
anniversary of the VestingCommencement Date
50% Second
anniversary of the VestingCommencement Date
75% Third
anniversary of the VestingCommencement Date
100% Fourth
anniversary of the VestingCommencement Date
1
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. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE OPTION
CANNOT BE EXERCISED UNTIL THE COMPANY IS AGAIN CURRENT IN ITS PERIODIC REPORT
FILINGS WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) AND
HAS FILED ALL PERIODIC REPORTS REQUIRED TO BE FILED BY THE COMPANY WITH THE SEC
WITHIN THE PRECEDING TWELVE MONTHS.
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. Except
as otherwise specifically provided herein, 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) receipt by the Company of the Optionee’s cash payment 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 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, (c) 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 (d) by any combination of the
foregoing.
In the event the Optionee elects to pay the
Option Price pursuant to clause (c) 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.
2
(a) Death or
Disability. If the Optionee ceases to be an officer or
employee of, or to perform other services for, the Company, Comprehensive Health
Management, Inc. (“CHMI”) or any other Subsidiary
due to the Optionee’s death or Disability, as defined in the Employment
Agreement dated as of July 21, 2008 among the Optionee, the Company and CHMI
(the “Employment
Agreement”), the Option shall become fully vested on the date of such
cessation and shall remain exercisable for a period of one year from the date of
such cessation, 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 any
such post-termination exercise period, unless the Optionee has received written
consent to do so from the Company.
(b)
Termination for
Cause. If the Optionee’s employment by, or other performance
of services for, the Company, CHMI or any other Subsidiary is terminated for
Cause, as defined in the Employment Agreement, the Option shall expire and be
forfeited immediately upon such termination, whether or not then
exercisable.
(c) Other Termination of
Service. If the Optionee ceases to be an officer or employee
of, or to perform other services for, the Company, CHMI and any other Subsidiary
for any reason other than death, Disability, as defined in the Employment
Agreement, or Cause, as defined in the Employment Agreement, 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 the Option shall
immediately terminate in the event that the Optionee engages in Competition
during any such post-termination exercise period, unless the Optionee has
received written consent to do so from the Company.
(d) Termination of Service
Following a Change in Control. Notwithstanding the foregoing,
if the Optionee ceases to be an officer or employee of, or to perform other
services for, the Company, CHMI or any other Subsidiary,
and the Optionee’s service was terminated (i) by the Company, CHMI or any other
Subsidiary without Cause, as defined in the Employment Agreement, or (ii) by the
Optionee for Good Reason, as defined in the Employment Agreement, in either
case, 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.
(e) Extension of
Post-Termination of Service Exercise Period. Notwithstanding the foregoing, the period during which
the Option can be exercised after a
termination of service subject to Sections 6(a), (c), or (d)
above will be extended for any period during which the Optionee cannot exercise
the Option because such an exercise would violate an applicable Federal, state,
local, or foreign law, until 30 days after the
exercise of the Option first would no
longer violate an applicable Federal, state, local, and foreign laws,
but in no event after the expiration date
of the Option provided in Section 7(a) below.
3
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 seventh 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.
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.
4
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:
0000
Xxxxxxxxx Xxxx
Renaissance
Two
Tampa, FL
33634
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.
Requirements of
Law.
(a) The Company shall not
be required to sell or issue any securities under the Option if the sale or
issuance of such securities would constitute a violation by the Optionee or the
Company of any provisions of any law or regulation of any governmental
authority, including without limitation any federal or state securities laws or
regulations. If at any time the Company shall determine, in its
discretion, that the listing, registration or qualification of any securities
subject to the Option upon any securities exchange or under
any governmental regulatory body is necessary or desirable as a condition
of, or in connection with, the issuance or purchase of securities hereunder, the
Option may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company, and any delay
caused thereby shall in no way affect the date of termination of the
Option. Specifically in connection with the Securities Act of
1933, as amended (the “1933
Act”), upon the exercise of the Option, unless a Form S-8 registration
statement under the 1933 Act is in effect with respect to the securities covered
by the Option, the Company shall not be required to sell or issue such
securities. As to any jurisdiction that expressly imposes the
requirement that the Option shall not be exercisable until the securities
covered by such Option are registered or are exempt from registration, the
exercise of such Option (under circumstances in which the laws of such
jurisdiction apply) shall be deemed conditioned upon the effectiveness of such
registration or the availability of such an exemption.
5
(b) Optionee
Representations. The Optionee hereby represents and warrants
to the Company that: (i) the Optionee understands and accepts that
the grant of the Option by the Company to the Optionee is intended to be exempt
from registration under the 1933 Act by virtue of Section 4(2) of the 1933 Act;
(ii) the Optionee understands and accepts that the grant of the Option by the
Company to the Optionee is intended to be exempt from registration under the
securities laws of the state or states in which the grant of such Option is
deemed to be made, by virtue of transactional exemptions set forth therein;
(iii) the Option acquired by the Optionee hereunder is being acquired solely for
his own account, for investment purposes only and not with a view to, or for
sale in connection with, any distribution (as such term is used in Section 2(11)
of the 1933 Act) of such Option nor with the present intention of distributing
or selling such Option; (iv) the Optionee has made a detailed inquiry concerning
the Company and its business and services, officers and personnel, including the
ongoing governmental investigations and the investigation by special committee
of the Board (“Special
Committee”); (v) the Company has made available to the Optionee, or such
Optionee has had access to, any and all information, financial or otherwise,
concerning the Company and its businesses and services, officers and personnel
which the Optionee has requested or deems relevant (including information
regarding the ongoing investigations of the Company by certain federal and state
agencies and other regulatory bodies, as well as related private party
proceedings, the Special Committee investigation and the Company’s ongoing
response thereto); (vi) the Optionee has such knowledge and experience in
financial and business matters in order to evaluate the merits and risks of
investment in the Option and to make an informed investment decision with
respect to the Option; (vii) the Optionee is an “accredited investor” as defined
in Regulation D promulgated under the 1933 Act; and (viii) the Optionee can bear
a complete loss of the value of the Option and is able to bear the economic
risks of holding the Option for an indefinite period. The Optionee
also understands that neither the Option nor the Shares to be received as a
result of the exercise of the Option have been registered under the 1933 Act or
any applicable state securities laws and regulations and that the Option cannot
be exercised until the Company is again current in its periodic report filings
with the SEC and has filed all periodic reports required to be filed by the
Company within the preceding twelve months.
15. 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.
(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.
16. Company Right to Recover
Option Stock or Option Gains. If it
is ever determined by the Board of Directors, in its sole and absolute
discretion, that actions by the Optionee have constituted: (i) wrongdoing that
contributed to (A) any material misstatement or omission from any report or
statement filed by the Company with the SEC or (B) any statement, certification,
cost report, claim for payment, or other filing made under Medicare or
Medicaid that was false, fraudulent, or for an item or service not provided as
claimed; (ii) gross misconduct; (iii) breach of fiduciary duty to the Company or
any Subsidiary; or (iv) fraud, then the
Option shall be immediately forfeited and thereupon the Option shall be cancelled; provided,
further, that if the Option has been exercised prior to the Board of
Director’s determination, the Optionee shall be required to pay
to the Company an amount equal to the difference between the aggregate
value
of the Shares acquired upon such exercise of the Option at the date of the Board
determination and the aggregate exercise price paid by Optionee. In
addition, the Option and gains resulting from the exercise of the Option, shall
be subject to forfeiture in accordance with the Company’s standard
policies relating to such forfeitures and clawbacks, as such policies are in
effect at the time of grant of the Option.
* * * * *
6
IN
WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
executed this Agreement as of the date first written above.
COMPANY:
By: ______________________________
Name:
Xxxxx X. Xxxxxxxxx
Title:
President and Chief Executive Officer
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.
OPTIONEE:
_________________
Xxxxxx
Xxxx
7
