Exhibit 10.8
HEALTHSPRING, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
(Performance Vesting)
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) is made and entered
into as of this  _____  day of                     , 20  _____  (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. Amended and Restated 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 $0.01 per
share, of the Company (the “Shares”); and
WHEREAS, the Company desires to afford the Optionee an opportunity to purchase
Shares as hereinafter provided in accordance with the provisions of the Plan.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Grant of Option.
(a) The Company grants as of the date of this Agreement the right and option
(the “Option”) to purchase                      Shares, in whole or in part (the
“Performance Option Stock”), at an exercise price of
                                                             and No/100 Dollars
($                     ) 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 stockholder
with respect to the Performance 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 a non-qualified stock option. 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.
(c) For purposes of this Agreement, the “Performance Period” shall mean the two
consecutive fiscal years of the Company beginning with the year in which the
Grant Date occurs.

 

 

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2. Exercise of Option.
(a) Except as provided herein and subject to such other exceptions as may be
determined by the Committee in its discretion:
(i) the number of shares of Performance Option Stock subject to this Option
shall be adjusted following the end of the Performance Period pursuant to the
performance criteria set forth on Exhibit A hereto (such adjusted number of
shares of Performance Option Stock, the “Option Stock”);
(ii) this Option shall become vested and exercisable with respect to fifty
percent (50%) of the Option Stock determined above on the later of (A) the
second anniversary of the Grant Date, or (B) the date on which the Committee
determines the number of shares of Option Stock as provided in (i) above, if and
only if the Optionee shall have been continuously employed by the Company from
the date of this Agreement through and including such dates, and
(iii) with respect to an additional twenty-five percent (25%) of the Option
Stock determined above on each of the third and fourth anniversaries of the
Grant Date if and only if the Optionee shall have been continuously employed by
the Company from the date of this Agreement through and including such dates.
The Option to acquire that number of shares of Performance Option Stock
originally subject to this Agreement that do not become Option Stock, if any, in
accordance with subsection (i) above shall be forfeited immediately by the
Optionee upon the determination of the Committee that the necessary performance
criteria have not been met. In the event of the Optionee’s death or Disability,
or a Change in Control, the Option to acquire Performance Option Stock subject
to this award (that has not previously been forfeited by the Grantee) shall
become an Option to acquire Option Stock. Notwithstanding subsections (ii) and
(iii) above, each outstanding unvested Option to acquire Option Stock shall vest
and become exercisable in full in the event of the Optionee’s death, Disability
or Retirement, provided the Optionee has remained continuously employed by the
Company from the date of this Agreement to such event. If the Optionee’s
termination meets the requirements of an Early Retirement (as defined below),
this Option shall vest as though the Optionee had undergone a Retirement. “Early
Retirement” means retirement with the express consent of the Committee at or
before the time of such retirement, from active employment with the Company
prior to age sixty-five (65).
(b) Notwithstanding the foregoing, upon the termination of the Optionee’s
employment within one year following a Change in Control, if the Optionee’s
employment with the Company (or its successor) is terminated by (A) the Optionee
for Good Reason, or (B) the Company for any reason other than for Cause, each
outstanding unvested Option to acquire Option Stock (to the extent not
previously forfeited) shall vest and become exercisable in full; provided that
in the event this Award is not assumed by the Acquiror under the terms set forth
in Section 13(a) of the Plan, this Option shall become fully vested and
exercisable (to the extent not previously terminated) with respect to 100% of
the Option Stock.

 

 

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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,
except as otherwise provided herein, 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 previously acquired
by the Optionee and 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 by a combination of such cash (or cash equivalents) and
Shares. Subject to applicable securities laws, the Optionee may also exercise
the Option (a) 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, or (b) by directing the Company
to withhold that number of whole Shares otherwise deliverable to the Optionee
pursuant to the Option having an aggregate Fair Market Value at the time of
exercise equal to the Option Payment. Unless otherwise provided by the Committee
at any time, to satisfy any applicable withholding taxes, in lieu of cash the
Optionee may direct the Company to withhold that number of whole Shares
otherwise deliverable to the Optionee pursuant to the Option.
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:
(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 (after giving effect to any acceleration of vesting provided
for in Section 2 above), 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 (after giving effect to any acceleration of vesting provided for in
Section 2 above), by the Optionee or personal representative or guardian of the
Optionee, as applicable, 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.
(c) Termination by Retirement or Early Retirement. If the Optionee’s employment
by the Company terminates by reason of 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 (after giving effect to any
acceleration of vesting provided for in Section 2 above), 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.
(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.

 

 

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(e) Other Termination. If the Optionee’s employment by the Company terminates
for any reason other than for Cause, death, Disability, 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 the Optionee the right to be retained in the employ of the
Company, and the Company may at any time dismiss the Optionee from employment,
free from any liability or any claim under the Plan.
6. Adjustment to Option Stock. The Committee may make equitable and appropriate
adjustments in the terms and conditions of, and the criteria included in, this
Option in recognition of unusual or nonrecurring events (and shall make the
adjustments for 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,
whenever the Committee determines that such event(s) affect the Shares. Any such
adjustments shall be effected in a manner that precludes the material
enlargement of rights and benefits under this Award.
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 materially and 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 the 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 (or
electronic link to) 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.

 

 

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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 Award 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:
  HealthSpring, Inc.
 
  9009 Carothers Parkway
 
  Suite 501
 
  Franklin, Tennessee 37067
 
  Attn: Corporate Secretary
 
   
To the Optionee:
  The address then maintained with respect to the Optionee in the Company’s
records.

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.

 

 

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IN WITNESS WHEREOF, the parties have caused this Non-Qualified Stock Option
Agreement to be duly executed effective as of the day and year first above
written.

            HEALTHSPRING, INC.
      By:           OPTIONEE:
            Signature