HEALTHSPRING, INC. INCENTIVE STOCK OPTION AGREEMENT
Exhibit 10.2
THIS INCENTIVE STOCK OPTION AGREEMENT (this “Agreement”) is made and entered into as of this
___ day of ___, 2007 (the “Grant Date”), by and between HealthSpring, Inc., a
Delaware corporation (together with its Subsidiaries and Affiliates, the “Company”), and
___ (the “Optionee”). Capitalized terms not otherwise defined herein shall have the
meaning ascribed to such terms in the HealthSpring, Inc. 2006 Equity Incentive Plan (the “Plan”).
WHEREAS, the Company has adopted the Plan, which permits the issuance of stock options for the
purchase of shares of the common stock, par value $0.01 per share, of the Company (the “Shares”);
and
WHEREAS, the Company desires to afford the Optionee an opportunity to purchase Shares as
hereinafter provided in accordance with the provisions of the Plan;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, agree as follows:
1. Grant of Option.
(a) The Company grants as of the date of this Agreement the right and option (the “Option”) to
purchase ___ Shares, in whole or in part (the “Option Stock”), at an exercise price of
___ and No/100 Dollars ($___) per Share, on the terms and conditions set forth in this
Agreement and subject to all provisions of the Plan. The Optionee, holder or beneficiary of the
Option shall not have any of the rights of a shareholder with respect to the Option Stock until
such person has become a holder of such Shares by the due exercise of the Option and payment of the
Option Payment (as defined in Section 3 below) in accordance with this Agreement.
(b) The Option shall be an incentive stock option within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the “Code”), and this Agreement shall be interpreted in
a manner consistent therewith. In order to provide the Company with the opportunity to claim the
benefit of any income tax deduction which may be available to it upon the exercise of the Option
and in order to comply with all applicable federal or state tax laws or regulations, the Company
may take such action as it deems appropriate to ensure that, if necessary, all applicable federal,
state or other taxes are withheld or collected from the Optionee.
2. Exercise of Option. Except as otherwise provided herein, your Option shall become
vested and exercisable as follows: ___, if and only if you have been continuously employed
by the Company or any of its Subsidiaries from the date of this Agreement through and including
such dates. Notwithstanding the above, each outstanding unvested Option shall vest and become
exercisable in full in the event (a) of Optionee’s death, Disability or Normal Retirement (as
defined below) or (b) that, within one (1) year following a Change in Control, Optionee’s
employment with the Company (or its successor) is terminated by
(i) Optionee for Good Reason (as defined below), or (ii) the Company for any reason other than
for Cause. If Optionee elects Early Retirement (as defined below), this Option shall vest as
though Optionee had elected Normal Retirement, provided that the Optionee’s Early Retirement is
with the consent of the Committee. “Early Retirement” means retirement, for purposes of the Plan
with the express consent of the Company at or before the time of such retirement, from active
employment with the Company prior to age sixty-five (65), in accordance with any applicable early
retirement policy of the Company then in effect. “Normal Retirement” means retirement from active
employment with the Company on or after age sixty-five (65). For purposes of this Agreement,
“Disabled” means that the Optionee is permanently unable to perform the essential duties of the
Optionee’s occupation. For purposes of this Agreement, “Good Reason” means (i) a material
reduction in Optionee’s responsibilities, which is not cured within 20 days after written notice
thereof to the Company (or its successor); (ii) any reduction in Optionee’s annual base salary as
in effect immediately prior to a Change in Control; or (iii) the relocation by the Company of the
office at which the Optionee is to perform the majority of his or her duties following a Change in
Control to a location more than 45 miles from the office at which the Optionee worked immediately
prior to the Change in Control.
3. Manner of Exercise. The Option may be exercised in whole or in part at any time
within the period permitted hereunder for the exercise of the Option, with respect to whole Shares
only, by serving written notice of intent to exercise the Option delivered to the Company at its
principal office (or to the Company’s designated agent), stating the number of Shares to be
purchased, the person or persons in whose name the Shares are to be registered and each such
person’s address and social security number. Such notice shall not be effective unless accompanied
by payment in full of the Option Price for the number of Shares with respect to which the Option is
then being exercised (the “Option Payment”) and cash equal to the required withholding taxes as set
forth by Internal Revenue Service and applicable State tax guidelines for the employer’s minimum
statutory withholding. The Option Payment shall be made in cash or cash equivalents or in whole
Shares that have been held by the Optionee for at least six (6) months prior to the date of
exercise valued at the Shares’ Fair Market Value on the date of exercise (or next succeeding
trading date if the date of exercise is not a trading date) or the actual sales price of such
Shares, together with any applicable withholding taxes, or by a combination of such cash (or cash
equivalents) and Shares. The Optionee shall not be entitled to tender Shares pursuant to
successive, substantially simultaneous exercises of the Option or any other stock option of the
Company. Subject to applicable securities laws, the Optionee may also exercise the Option by
delivering a notice of exercise of the Option and by simultaneously selling the Shares of Option
Stock thereby acquired pursuant to a brokerage or similar agreement approved in advance by proper
officers of the Company, using the proceeds of such sale as payment of the Option Payment, together
with any applicable withholding taxes. The Optionee shall notify the Company of any disposition of
shares acquired under this Agreement if such disposition occurs
within two (2) years after the date of
grant or one (1) year after the date of exercise of the Option. For purposes of this Agreement,
“Fair Market Value” means the closing sales price of the Shares on the New York Stock Exchange or
the actual sales price of such Shares.
4. Termination of Option. The Option will expire ten (10) years from the date of
grant of the Option (the “Term”) with respect to any then unexercised portion thereof, unless
terminated earlier as set forth below:
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(a) Termination by Death. If the Optionee’s employment by the Company terminates by
reason of death, or if the Optionee dies within three (3) months after termination of such
employment for any reason other than Cause, this Option may thereafter be exercised, to the extent
the Option was exercisable at the time of such termination, by the legal representative of the
estate or by the legatee of the Optionee under the will of the Optionee, for a period of one (1)
year from the date of death or until the expiration of the Term of the Option, whichever period is
the shorter.
(b) Termination by Reason of Disability. If the Optionee’s employment by the Company
terminates by reason of Disability, this Option may thereafter be exercised, to the extent the
Option was exercisable at the time of such termination, by the Optionee or personal representative
or guardian of the Optionee, as applicable, for a period of one (1) year from the date of such
termination of employment or until the expiration of the Term of the Option, whichever period is
the shorter; provided, however, that if the Option is exercised following the one (1) year
anniversary of the date of termination, the Option shall thereafter be treated as a Non-Qualified
Stock Option.
(c) Termination by Normal Retirement or Early Retirement. If Optionee’s employment by
the Company terminates by reason of Normal Retirement or Early Retirement, this Option may
thereafter be exercised by the Optionee, to the extent the Option was exercisable at the time of
such termination, for a period of three (3) years from the date of such termination of employment
or until the expiration of the Term of the Option, whichever period is the shorter; provided,
however, that if the Option is exercised following the three (3) month anniversary of the date of
termination, the Option shall thereafter be treated as a Non-Qualified Stock Option.
(d) Termination for Cause. If the Optionee’s employment by the Company is terminated
for Cause, this Option shall terminate immediately and become void and of no effect.
(e) Other Termination. If the Optionee’s employment by the Company is terminated for
any reason other than for Cause, death, Disability or Normal Retirement or Early Retirement, this
Option may be exercised, to the extent the Option was exercisable at the time of such termination
(after giving effect to any acceleration of vesting provided for in Section 2 above), by the
Optionee for a period of three (3) months from the date of such termination of employment or the
expiration of the Term of the Option, whichever period is the shorter.
5. No Right to Continued Employment. The grant of the Option shall not be construed
as giving Optionee the right to be retained in the employ of the Company, and the Company may at
any time dismiss Optionee from employment, free from any liability or any claim under the Plan.
6. Adjustment to Option Stock. The Committee shall make equitable and proportionate
adjustments in the terms and conditions of, and the criteria included in, this Option in
recognition of unusual or nonrecurring events (including, without limitation, the events described
in Section 4.2 of the Plan) affecting the Company or the financial statements of the Company or of
changes in applicable laws, regulations, or accounting principles in accordance with the Plan.
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7. Amendments to Option. Subject to the restrictions contained in the Plan, the
Committee may waive any conditions or rights under, amend any terms of, or alter, suspend,
discontinue, cancel or terminate, the Option, prospectively or retroactively; provided that any
such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that
would adversely affect the rights of the Optionee or any holder or beneficiary of the Option shall
not to that extent be effective without the consent of the Optionee, holder or beneficiary
affected.
8. Limited Transferability. During the Optionee’s lifetime, this Option can be
exercised only by the Optionee. This Option may not be assigned, alienated, pledged, attached,
sold or otherwise transferred or encumbered by Optionee other than by will or the laws of descent
and distribution. Any attempt to otherwise transfer this Option shall be void. No transfer of
this Option by the Optionee by will or by laws of descent and distribution shall be effective to
bind the Company unless the Company shall have been furnished with written notice thereof and an
authenticated copy of the will and/or such other evidence as the Committee may deem necessary or
appropriate to establish the validity of the transfer.
9. Reservation of Shares. At all times during the term of this Option, the Company
shall use its best efforts to reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of this Agreement.
10. Plan Governs. The Optionee hereby acknowledges receipt of a copy of the Plan and
agrees to be bound by all the terms and provisions thereof. The terms of this Agreement are
governed by the terms of the Plan, and in the case of any inconsistency between the terms of this
Agreement and the terms of the Plan, the terms of the Plan shall govern.
11. Severability. If any provision of this Agreement is, or becomes, or is deemed to
be invalid, illegal or unenforceable in any jurisdiction or as to any Person or the Award, or would
disqualify the Plan or Award under any laws deemed applicable by the Committee, such provision
shall be construed or deemed amended to conform to the applicable laws, or if it cannot be
construed or deemed amended without, in the determination of the Committee, materially altering the
intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person
or Award, and the remainder of the Plan and Award shall remain in full force and effect.
12. Notices. All notices required to be given under this Option shall be deemed to be
received if delivered or mailed as provided for herein to the parties at the following addresses,
or to such other address as either party may provide in writing from time to time.
To the Company:
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0000 Xxxxxxxxx Xxxxxxx
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Xxxxx 000
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Xxxxxxxx, Xxxxxxxxx 00000 |
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Attn: Corporate Secretary |
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| To the Optionee: | ||
| The address then maintained | ||
| with respect to the Optionee | ||
| in the Company’s records. | ||
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13. Governing Law. The validity, construction and effect of this Agreement shall be
determined in accordance with the laws of the State of Delaware without giving effect to conflicts
of laws principles.
14. Resolution of Disputes. Any dispute or disagreement which may arise under, or as
a result of, or in any way related to, the interpretation, construction or application of this
Agreement shall be determined by the Committee. Any determination made hereunder shall be final,
binding and conclusive on the Optionee and the Company for all purposes.
15. Successors in Interest. This Agreement shall inure to the benefit of and be
binding upon any successor to the Company. This Agreement shall inure to the benefit of the
Optionee’s legal representative and assignees. All obligations imposed upon the Optionee and all
rights granted to the Company under this Agreement shall be binding upon the Optionee’s heirs,
executors, administrators, successors and assignees.
16. Excessive Shares. In the event that the number of Shares subject to this Option
exceeds any maximum established under the Code for Incentive Stock Options that may be granted to
Optionee, or in the event that any part of this Option (as aggregated with all other Incentive
Stock Options held by the Grantee) becomes first exercisable in any calendar year to obtain Common
Stock having a Fair Market Value (determined at the time of grant) in excess of One Hundred
Thousand and No/100 Dollars ($100,000.00), this Option shall be treated as a Non-Qualified Stock
Option to the extent of such excess. The preceding sentence shall be interpreted consistently
with the provisions of Section 422(d) of the Code.
IN WITNESS WHEREOF, the parties have caused this Incentive Stock Option Agreement to be duly
executed effective as of the day and year first above written.
| HEALTHSPRING, INC. |
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| By: | ||||
| OPTIONEE: |
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| Signature | ||||
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