Exhibit 2
NON-INCENTIVE STOCK OPTION AGREEMENT
To: XXXXXX X. XXXXX, XX.
We are pleased to notify you that by the determination of the
Compensation Committee (hereinafter called the "Committee") a non-incentive
stock option to purchase 450,000 shares of the Common Stock of The WellCare
Management Group, Inc. (herein called the "Company") at a price of $10.00 per
share has this 23rd day of December, 1996 been granted to you under the
Company's 1996 Non-Incentive Executive Stock Option Plan (herein called the
"Plan"). This option and the Plan are subject to shareholder approval and,
following such approval, this option may be exercised only upon the terms and
conditions set forth below. All capitalized terms not herein defined shall have
the meanings set forth in the Plan, unless the context requires a different
meaning.
1. Purpose of Option.
The purpose of this Plan is to acknowledge exceptional services to
the Company by senior executives and to provide an added incentive for such
senior executives to continue to provide such services and to promote the best
interests of the Company.
2. Acceptance of Option Agreement.
Your execution of this non-incentive stock option agreement will
indicate your acceptance of and your willingness to be bound by its terms; it
imposes no obligation upon you to purchase any of the shares purchasable
hereunder. Your obligation to purchase shares will arise only upon your exercise
of this option in the manner set forth in Section 3 hereof.
3. When Option May Be Exercised.
If this option has not terminated, lapsed or expired pursuant to
Section 6 hereof, this option may be exercised in its entirety prior to its
expiration on December 22, 2001, but only upon the occurrence of any of the
following:
(a) If the closing sale price of the Company's Common Stock (or the
average of the closing bid and asked prices if closing sale prices
are not reported) for thirty consecutive Trading Days (as defined
below) is equal to or greater than $20.00 per share. The term
"Trading Day" shall mean a day on which the principal national
securities exchange (or The Nasdaq National Market) on which the
Common Stock is listed or admitted to trading is open for the
transaction of business;
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(b) A Change of Control (as defined below) of the Company, if (i) on
the date of such Change of Control the Fair Market Value of the
Company's Common Stock is equal to or greater than $17.50 per share
or (ii) shares of Common Stock are purchased at a price equal to or
greater than $17.50 per share in the transaction implementing such
Change of Control. If neither (i) nor (ii) above occurs upon a
Change of Control of the Company, this option shall immediately
terminate, lapse and expire. For purposes of this Section 3, a
"Change In Control" shall mean (x) the sale or other disposition to
a person, entity or group (as such term is defined in Rule 13d-5
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) of 50% or more of the Company's consolidated assets or (y)
the acquisition of 50% or more of the outstanding shares of Common
Stock by a person or group (as such term is defined in Rule 13d-5
under the Exchange Act);
(c) Your death or Disability. The term "Disability" shall have the
meaning set forth in Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended (the "Code"); or
(d) The thirty day period commencing November 23, 2001 and ending
December 22, 2001.
4. How Option May Be Exercised.
This option is exercisable by a written notice signed by you and
delivered to the Company at its executive offices signifying your election to
exercise this option. The notice must state the number of shares of Common Stock
being purchased, must contain a statement by you (in a form acceptable to the
Company) that such shares are being acquired by you for investment and not with
a view to their distribution or resale (unless a registration statement covering
the shares purchasable has been declared effective by the Securities and
Exchange Commission) and must be accompanied by payment as set forth in Section
5 hereof for the full purchase price of the shares being purchased, plus such
amount, if any, as is required for withholding taxes. Notwithstanding anything
herein to the contrary, this option may not be exercised for less than fifty
thousand shares at any one time (or the remaining shares then purchasable if
less than fifty thousand).
If notice of the exercise of this option is given by a person or
persons other than you, the Company may require, as a condition to the exercise
of this option, the submission to the Company of appropriate proof of the right
of such person or persons to exercise this option.
Certificates for shares of the Common Stock so purchased will be
issued as soon as practicable. The Company, however, shall not be required to
issue or deliver a certificate for any shares until it has complied with all
requirements of the Securities Act of 1933, the Exchange Act, The Nasdaq
National Market or any stock exchange on which the Company's Common Stock may
then be listed and all applicable state laws in connection with the issuance or
sale of such shares or the listing of such shares thereon. Further, in the event
a registration statement relating to the shares of Common Stock purchasable upon
exercise of this option has
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been declared effective by the Securities and Exchange Commission, you agree by
accepting this option to refrain from selling or offering to sell any of the
shares of Common Stock purchasable hereunder for such reasonable period of time
after the effective date of a registration statement relating to an underwritten
offering of securities of the Company as may be requested by the managing
underwriter of such underwritten offering and approved by the Company's Board of
Directors.
Until the issuance of the certificate for such shares, you or such
other person as may be entitled to exercise this option, shall have none of the
rights of a shareholder with respect to the shares purchasable upon exercise of
this option.
5. Payment of Options.
Payment for the shares of Common Stock may be made (i) in cash or by
check payable to the order of the Company, (ii) by surrender of shares of Common
Stock having a Fair Market Value equal to the exercise price of this option; or
(iii) by any combination of the foregoing where approved by the Committee in its
sole discretion; provided, however, in the event of payment for the shares of
Common Stock by method (ii) above, the shares of Common Stock so surrendered, if
originally issued to you upon exercise of an option granted by the Company, must
have been held by you for more than six months.
6. Term and Termination of Options.
This option expires on December 22, 2001 at 5 p.m., New York time,
whether or not it has been duly exercised.
Notwithstanding anything herein to the contrary, this option shall
immediately terminate, lapse and expire upon the occurrence of any of the
following: (i) your refusal, prior to December 31, 1999, to act at the Company's
request as Chief Executive Officer of the Company; (ii) your refusal, prior to
December 31, 2001, to act at the Company's request as a director of the Company;
(iii) your removal as Chief Executive Officer by the Company With Cause (as
defined below) or (iv) your removal as a director by the Company "for cause"
pursuant to the procedures set forth in the Company's charter. For purposes of
this Section 6, the term "With Cause" shall mean (a) your willful failure to
perform your reasonable responsibilities and duties attendant to your position
with the Company or (b) your indictment for any felony.
If you cease being either Chief Executive Officer or a director of
the Company other than by reason of (i) through (iv) above, including without
limitation by reason of your death or Disability, this option shall continue in
full force and effect until its expiration on December 22, 2001.
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7. Subject to Terms of the Plan.
This non-incentive stock option agreement shall be subject in all
respects to the terms and conditions of the Plan. In the event of any question
or controversy relating to the terms of the Plan, the decision of the Committee
shall be conclusive.
8. Tax Status.
This option does not qualify as an "incentive stock option" under
the provisions of Section 422 of the Code and the income tax implications of
your receipt of a non-incentive stock option and your exercise of such an option
should be discussed with your tax counsel.
Sincerely yours,
THE WELLCARE MANAGEMENT GROUP, INC.
By: /s/ Marystephanie Corsones
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Name: Marystephanie Corsones
Title: Vice President and Chief Financial Officer
AGREED TO AND ACCEPTED:
/s/ Xxxxxx X. Xxxxx, Xx.
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Signature of Optionholder
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