Exhibit 10.38
WELLCARE HEALTH PLANS, INC.
2004 EQUITY INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
FOR
[Insert name of Optionee here]
Agreement
1. Grant of Option. WellCare Health Plans, Inc. (the “Company”) hereby grants,
as of                        , to                         (the “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 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.
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 (the “Vesting Date”) upon which the Optionee
shall be entitled to exercise the Option with respect to the percentage of
Shares granted as indicated beside the date, provided that the Optionee’s
employment or service with the Company and its Subsidiaries during the period
beginning on                      (the “Vesting Commencement Date”) continues
through and on the applicable Vesting Date:

      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.

 

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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.
     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).

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     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.
     (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

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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                      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.

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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.
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 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. 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

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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.
15. 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 an 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 U.S. Securities and Exchange Commission 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 (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.
* * * * *

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

                  COMPANY:    
 
                WELLCARE HEALTH PLANS, INC.    
 
           
 
  By:        
 
           
 
  Name:   Heath 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:

     
 
[Insert name of Optionee here]
   

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