Back to Form 8-K [form8-k.htm]
Exhibit 10.4
 
[Associate Version]

WELLCARE HEALTH PLANS, INC.
2004 EQUITY INCENTIVE PLAN

NON-QUALIFIED STOCK OPTION AGREEMENT

This NON-QUALIFIED STOCK OPTION AGREEMENT (the “Agreement”) is made and entered
into effective as of _________________, by and between WellCare Health Plans,
Inc., a Delaware corporation (the “Company”), and ____________________ (the
“Optionee”).

RECITALS

In consideration of services to be rendered by the Optionee as an employee of or
service provider to the Company or any of its Subsidiaries and to provide
incentive to the Optionee to remain with the Company or any of its Subsidiaries,
it is in the best interests of the Company to make a grant of an Option to
Option in accordance with the terms of this Agreement; and

The Option is granted pursuant to the WellCare Health Plans, Inc. 2004 Equity
Incentive Plan (the “Plan”) which is incorporated herein for all purposes.  The
Optionee hereby acknowledges receipt of a copy of the Plan.  Unless otherwise
provided herein, terms used herein that are defined in the Plan and not defined
herein shall have the meanings attributable thereto in the Plan.

NOW, THEREFORE, for and in consideration of the mutual premises, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:

                1.           Grant of Option.  The Company hereby grants, on the
date set forth above, to 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 in
this Agreement and in the Plan.  The Option is a Non-Qualified Stock Option, and
not an Incentive Stock Option.  As a condition to entering into this Agreement,
and as a condition to the issuance of the Option, the Optionee agrees to be
bound by all of the terms and conditions herein and in the Plan.  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 upon which
the Optionee shall become entitled to exercise the Option with respect to the
percentage of Shares granted as indicated beside the date (each such date being
a “Vesting Date”), provided that the Optionee’s employment with the Company or
any its Subsidiaries continues through and on the applicable Vesting Date:

 
 

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Percentage of Shares
 
Vesting Date
                       

 
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.

 
 

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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) 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 an 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.

 
 

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                (b)           Retirement.  If the Optionee ceases to be an
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 by, 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 an
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
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 an 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.
           

(f)           Extension of Post-Termination of Service Exercise Period.  The
period during which the Option can be exercised after a termination of service
subject to Sections 6(a), (b), (d) or (e) 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.

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.

 

 
 

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                                (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 Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.

                9.           Rights of with Respect to the Option.

(a)           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.  

(b)           If at any time while this Agreement is in effect (or the Option
granted hereunder shall be or remain unvested while Optionee’s employment or
provision of services continues and has not yet terminated or ceased for any
reason), there shall be any increase or decrease in the number of issued and
outstanding shares of the Company through the declaration of a stock dividend or
through any recapitalization resulting in a stock split-up, combination or
exchange of such shares, then and in that event, the Committee shall make any
adjustments it deems fair and appropriate, in view of such increase or decrease,
in the number of Shares and to the Option Price then subject to this
Agreement.  If any such adjustment shall result in a fractional share, such
fraction shall be disregarded and no share will be issued in connection with
such fraction.

 
 

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(c)           In the event of any merger, consolidation or other reorganization
in which the Company is not the surviving or continuing corporation or in which
a Change in Control is to occur, all of the Company’s obligations regarding the
Option shall, on such terms as may be approved by the Committee prior to such
event, be assumed by the surviving or continuing corporation or canceled in
exchange for property (including cash).

(d)           Notwithstanding any term or provision of this Agreement to the
contrary, the existence of this Agreement, or the Option awarded hereunder,
shall not affect in any manner the right, power or authority of the Company to
make, authorize or consummate: (i) any or all adjustments, recapitalizations,
reorganizations or other changes in the Company’s capital structure or its
business, (ii) any merger, consolidation or similar transaction by or of the
Company, (iii) any offer, issue or sale by the Company of any capital stock of
the Company, including any equity or debt securities, or preferred or preference
stock that would rank prior to or on parity with the Option and/or that would
include, have or possess other rights, benefits and/or preferences superior to
those that the Option includes, has or possesses, or any warrants, options or
rights with respect to any of the foregoing, (iv) the dissolution or liquidation
of the Company, (v) any sale, transfer or assignment of all or any part of the
stock, assets or business of the Company, or (vi) any other corporate
transaction, act or proceeding (whether of a similar character or otherwise).

               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 8735
Henderson Road, Renaissance One, Tampa, Florida 33634, or if the Company should
move its principal office, to such principal office, and, in the case of the
Grantee, to the Grantee’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.

 
 

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               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.

                                (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 parties hereto, intending to be legally bound, have
executed this Agreement as of the date first written above.

 
WELLCARE HEALTH PLANS, INC
 
 
 
By: ______________________________
Name: Heath G. Schiesser
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:

By:  ___________________________                                                                         
[Insert name of Optionee]