Document:

exv10w11

 

EXHIBIT 10.11

THIRD ADDITIONAL SPACE COMMENCEMENT DATE AGREEMENT

NEWTOWER TRUST MULTI-EMPLOYER PROPERTY TRUST

(“LANDLORD”)

AND

THE MANAGEMENT NETWORK GROUP, INC.

(“TENANT”)

     THIS EFFECTIVE DATE AGREEMENT IS MADE THIS 28TH DAY OF February, 2006
BY AND BETWEEN Landlord and Tenant pertaining to certain space (the “Lease Premises”) in
Lighton Plaza I, 7300 College Boulevard, Overland Park, Kansas (“Building”).

WITNESSETH:

WHEREAS,

     A. By Lease executed between Landlord and Tenant on April 23, 1998, as amended by
Certificate of Acceptance dated September 10, 1998, as amended by First Amendment to Lease
Agreement dated May 11, 1999, as amended by the Second Amendment to Lease dated May 30,
2000, as amended by the Third Amendment to Lease dated August 30, 2005 (collectively the
“Lease”), the Landlord has demised and leased to Tenant, and Tenant has rented from Landlord,
the office space commonly knowen as Suite 302 in the office building located at 7300 College
Boulevard, Overland Park, Kansas. The Leased Premises are more particularly described in the
Lease. All terms which are capitalized but not defined in this Agreement shall have the same
meaning
as set forth for such terms in the Lease.

     B. Landlord and Tenant now desire to amend the lease to establish the Third Additional
Space Commencement Date for the expansion space defined in the Third Amendment to Lease.

     C. The Landlord has completed the tenant improvements to the Third Additional Space.

     NOW, THEREFORE, Landlord and Tenant hereby agree to the following:

	1.	 	The Third Additional Space Commencement Date shall be February 17, 2006.
	 
	2.	 	Rent for February, 2006 will be prorated to reflect the Third Additional Space.
	 
	3.	 	The Termination Date for the Lease shall remain August 31, 2010.
	 
	4.	 	By execution hereof, Tenant hereby acknowledges that all improvements required of
Landlord have been satisfactorily performed and Tenant does hereby accept the Premises
delivered by Landlord as being in full compliance with the terms of the Lease.
	 
	5.	 	Except as hereby amended, the Lease shall continue in full force and effect.
	 
	6.	 	This Agreement shall be binding upon the parties hereto, their heirs, executors,
successors and assigns.

      IN WITNESS THEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.

	 	 	 
	LANDLORD:

	 	TENANT:
	NewTower Trust Company
	 	 
	Multi-Employer Property Trust
	 	 
	A trust organized under 12 C.F.R. Section 9.18

	 	The Management Network Group, Inc.
	By: Kennedy Associates Real Estate Counsel, Inc.,
	 	 
	Authorized Signatory
	 	 

	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Mark D. Reinikka
	 	 	 	By:
	 	/s/ Donald E. Klumb	 	 
	Printed Name:

	 	 

Mark D. Reinikka
	 	 
	 	Printed Name:
	 	 

Donald E. Klumb
	 	 
	Its:

	 	Vice President
	 	 	 	Its:
	 	CFOEx-10.1

 

EXHIBIT 10.1

HEALTHSPRING, INC.

2006 EQUITY INCENTIVE PLAN, as amended

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Tab
	Section 1. Purpose
	 	 	1	 
	Section 2. Definitions
	 	 	1	 
	Section 3. Administration
	 	 	4	 
	Section 4. Shares Available For Awards
	 	 	5	 
	Section 5. Eligibility
	 	 	6	 
	Section 6. Stock Options And Stock Appreciation Rights
	 	 	6	 
	Section 7. Restricted Shares And Restricted Share Units
	 	 	8	 
	Section 8. Performance Awards
	 	 	9	 
	Section 9. Other Stock-Based Awards
	 	 	10	 
	Section 10. Non-Employee Director Awards
	 	 	10	 
	Section 11. Provisions Applicable To Covered Officers And Performance Awards
	 	 	10	 
	Section 12. Termination Of Employment
	 	 	12	 
	Section 13. Change In Control
	 	 	12	 
	Section 14. Amendment And Termination
	 	 	12	 
	Section 15. General Provisions
	 	 	13	 
	Section 16. Term Of The Plan
	 	 	15	 

 

 

HEALTHSPRING, INC.

2006 EQUITY INCENTIVE PLAN

Section 1. Purpose.

     This plan shall be known as the “HealthSpring, Inc. 2006 Equity Incentive Plan” (the “Plan”).
The purpose of the Plan is to promote the interests of HealthSpring, Inc., a Delaware corporation
(the “Company”), its Subsidiaries and its stockholders by (i) attracting and retaining key
officers, employees, and directors of, and consultants to, the Company and its Subsidiaries and
Affiliates; (ii) motivating such individuals by means of performance-related incentives to achieve
long-range performance goals; (iii) enabling such individuals to participate in the long-term
growth and financial success of the Company; (iv) encouraging ownership of stock in the Company by
such individuals; and (v) linking their compensation to the long-term interests of the Company and
its stockholders. With respect to any awards granted under the Plan that are intended to comply
with the requirements of “performance-based compensation” under Section 162(m) of the Code, the
Plan shall be interpreted in a manner consistent with such requirements.

Section 2. Definitions.

     As used in the Plan, the following terms shall have the meanings set forth below:

     (a) “Affiliate” shall mean (i) any entity that, directly or indirectly, is
controlled by the Company, (ii) any entity in which the Company has a significant equity interest,
(iii) an affiliate of the Company, as defined in Rule 12b-2 promulgated under Section 12 of the
Exchange Act, and (iv) any entity in which the Company has at least twenty percent (20%) of the
combined voting power of the entity’s outstanding voting securities, in each case as designated by
the Board as being a participating employer in the Plan.

     (b) “Award” shall mean any Option, Stock Appreciation Right, Restricted Share Award,
Restricted Share Unit, Performance Award, Other Stock-Based Award or other award granted under the
Plan, whether singly, in combination or in tandem, to a Participant by the Committee (or the Board)
pursuant to such terms, conditions, restrictions and/or limitations, if any, as the Committee (or
the Board) may establish.

     (c) “Award Agreement” shall mean any written agreement, contract or other instrument
or document evidencing any Award, which may, but need not, be executed or acknowledged by a
Participant.

     (d) “Board” shall mean the Board of Directors of the Company.

     (e) “Cause” shall mean, unless otherwise defined in the applicable Award Agreement,
(i) the engaging by the Participant in willful misconduct that is injurious to the Company or its
Subsidiaries or Affiliates, or (ii) the embezzlement or misappropriation of funds or property of
the Company or its Subsidiaries or Affiliates by the Participant. For purposes of this paragraph,
no act, or failure to act, on the Participant’s part shall be considered “willful” unless done, or
omitted to be done, by the Participant not in good faith and without reasonable belief that the
Participant’s action or omission was in the best interest of the Company. Any determination of
Cause for purposes of the Plan or any Award shall be made by the Committee in its sole discretion.
Any such determination shall be final and binding on a Participant.

 

 

     (f) “Change in Control” shall mean, unless otherwise defined in the applicable Award
Agreement, any of the following events:

     (i) any person on entity, including a “group” as defined in Section 13(d)(3)
of the Exchange Act, other than investment funds affiliated with GTCR Golder Rauner II,
L.L.C., the Company or a wholly-owned subsidiary thereof or any employee benefit plan of the
Company or any of its Subsidiaries, becomes the beneficial owner of the Company’s securities
having 35% or more of the combined voting power of the then outstanding securities of the
Company that may be cast for the election of directors of the Company (other than as a
result of an issuance of securities initiated by the Company in the ordinary course of
business);

     (ii) as the result of, or in connection with, any cash tender or exchange
offer, merger or other business combination or contested election, or any combination of the
foregoing transactions, less than a majority of the combined voting power of the then
outstanding securities of the Company or any successor company or entity entitled to vote
generally in the election of the directors of the Company or such other corporation or
entity after such transaction are held in the aggregate by the holders of the Company’s
securities entitled to vote generally in the election of directors of the Company
immediately prior to such transaction;

     (iii) during any period of two (2) consecutive years, individuals who at the
beginning of any such period constitute the Board cease for any reason to constitute at
least a majority thereof, unless the election, or the nomination for election by the
Company’s shareholders, of each director of the Company first elected during such period was
approved by a vote of at least two-thirds (2/3rds) of the directors of the Company then
still in office who were (i) directors of the Company at the beginning of any such period,
and (ii) not initially (a) appointed or elected to office as result of either an actual or
threatened election and/or proxy contest by or on behalf of a Person other than the Board,
or (b) designated by a Person who has entered into an agreement with the Company to effect a
transaction described in (i) or (ii) above or (iv) or (v) below;

     (iv) a complete liquidation or dissolution of the Company; or

     (v) the sale or other disposition of all or substantially all of the assets
of the Company to any Person (other than a transfer to a Subsidiary).

     (g) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.

     (h) “Committee” shall mean the Board, and following an initial public offering by
the Company, shall mean a committee of the Board composed of not less than two Non-Employee
Directors, at least two of whom shall be (i) a “non-employee director” for purposes of Exchange Act
Section 16 and Rule 16b-3 thereunder, (ii) an “outside director” for purposes of Section 162(m) and
the regulations promulgated under the Code, and each of whom shall be, subject to any applicable
transitional rules for newly public issuers, “independent” within the meaning of the listing
standards of the New York Stock Exchange.

     (i) “Consultant” shall mean any consultant to the Company or its Subsidiaries or
Affiliates.

     (j) “Covered Officer” shall mean at any date (i) any individual who, with respect to
the previous taxable year of the Company, was a “covered employee” of the Company within the
meaning of Section 162(m); provided, however, that the term “Covered Officer” shall not include any
such individual who is designated by the Committee, in its discretion, at the time of any Award or
at any subsequent time,

2

 

as reasonably expected not to be such a “covered employee” with respect to the current taxable
year of the Company and (ii) any individual who is designated by the Committee, in its discretion,
at the time of any Award or at any subsequent time, as reasonably expected to be such a “covered
employee” with respect to the current taxable year of the Company or with respect to the taxable
year of the Company in which any applicable Award will be paid or vested.

     (k) “Director” shall mean a member of the Board.

     (l) “Disability” shall mean, unless otherwise defined in the applicable Award
Agreement, a disability that would qualify as a total and permanent disability under the Company’s
then current long-term disability plan.

     (m) “Employee” shall mean a current or prospective officer or employee of the
Company or of any Subsidiary or Affiliate.

     (n) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from
time to time.

     (o) “Fair Market Value” with respect to the Shares, shall mean, for purposes of a
grant of an Award as of any date, (i) the closing sales price of the Shares on the New York Stock
Exchange, or any other such exchange on which the shares are traded, on such date, or in the
absence of reported sales on such date, the closing sales price on the immediately preceding date
on which sales were reported or (ii) in the event there is no public market for the Shares on such
date, the fair market value as determined, in good faith, by the Board or Committee in its sole
discretion, and for purposes of a sale of a Share as of any date, the actual sales price on that
date.

     (p) “Incentive Stock Option” shall mean an option to purchase Shares from the
Company that is granted under Section 6 of the Plan and that is intended to meet the
requirements of Section 422 of the Code or any successor provision thereto.

     (q) “Non-Qualified Stock Option” shall mean an option to purchase Shares from the
Company that is granted under Sections 6 or 10 of the Plan and is not intended to
be an Incentive Stock Option.

     (r) “Non-Employee Director” shall mean a member of the Board who is not an officer
or employee of the Company or any Subsidiary or Affiliate; provided, however, that employees of
GTCR, Golder Rauner II, L.L.C., or its Affiliates, shall not for these purposes be deemed to be
employees of an Affiliate of the Company.

     (s) “Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option.

     (t) “Option Price” shall mean the purchase price payable to purchase one Share upon
the exercise of an Option.

     (u) “Other Stock-Based Award” shall mean any Award granted under Sections 9
or 10 of the Plan.

     (v) “Participant” shall mean any Employee, Director, Consultant or other person who
receives an Award under the Plan.

3

 

     (w) “Performance Award” shall mean any Award granted under Section 8 of the
Plan.

     (x) “Person” shall mean any individual, corporation, partnership, limited liability
company, association, joint-stock company, trust, unincorporated organization, government or
political subdivision thereof or other entity.

     (y) “Restricted Share” shall mean any Share granted under Sections 7 or
10 of the Plan.

     (z) “Restricted Share Unit” shall mean any unit granted under Sections 7 or
10 of the Plan.

     (aa) “Retirement” shall mean, unless otherwise defined in the applicable Award
Agreement, retirement of a Participant from the employ or service of the Company or any of its
Subsidiaries or Affiliates in accordance with the terms of the applicable Company retirement plan
or, if a Participant is not covered by any such plan, retirement on or after such Participant’s
65th birthday.

     (bb) “SEC” shall mean the Securities and Exchange Commission or any successor
thereto.

     (cc) “Section 16” shall mean Section 16 of the Exchange Act and the rules
promulgated thereunder and any successor provision thereto as in effect from time to time.

     (dd) “Section 162(m)” shall mean Section 162(m) of the Code and the regulations
promulgated thereunder and any successor provision thereto as in effect from time to time.

     (ee) “Shares” shall mean shares of the common stock, $0.01 par value, of the
Company.

     (ff) “Stock Appreciation Right” or “SAR” shall mean a stock appreciation right
granted under Sections 6 or 10 of the Plan that entitles the holder to receive,
with respect to each Share encompassed by the exercise of such SAR, the amount determined by the
Committee and specified in an Award Agreement. In the absence of such a determination, the holder
shall be entitled to receive, with respect to each Share encompassed by the exercise of such SAR,
the excess of the Fair Market Value on the date of exercise over the Fair Market Value on the date
of grant.

     (gg) “Subsidiary” shall mean any Person (other than the Company) of which a majority
of its voting power or its equity securities or equity interest is owned directly or indirectly by
the Company.

     (hh) “Substitute Awards” shall mean Awards granted solely in assumption of, or in
substitution for, outstanding awards previously granted by a company acquired by the Company or
with which the Company combines.

Section 3. Administration.

     3.1 Authority of Committee. The Plan shall be administered by the Committee, which shall be
appointed by and serve at the pleasure of the Board; provided, however, with respect to Awards to
Non-Employee Directors, all references in the Plan to the Committee shall be deemed to be
references to the Board. Subject to the terms of the Plan and applicable law, and in addition to
other express powers and authorizations conferred on the Committee by the Plan, the Committee shall
have full power and authority in its discretion to: (i) designate Participants; (ii) determine the
type or types of Awards to be granted to a Participant; (iii) determine the number of Shares to be
covered by, or with respect to which payments, rights or other matters are to be calculated in
connection with Awards; (iv) determine the timing, terms, and conditions of any Award; (v)
accelerate the time at which all or any part of an Award

4

 

may be settled or exercised; (vi) determine whether, to what extent, and under what
circumstances Awards may be settled or exercised in cash, Shares, other securities, other Awards or
other property, or canceled, forfeited or suspended and the method or methods by which Awards may
be settled, exercised, canceled, forfeited or suspended; (vii) determine whether, to what extent,
and under what circumstances cash, Shares, other securities, other Awards, other property, and
other amounts payable with respect to an Award shall be deferred either automatically or at the
election of the holder thereof or of the Committee; (viii) interpret and administer the Plan and
any instrument or agreement relating to, or Award made under, the Plan; (ix) except to the extent
prohibited by Section 6.2, amend or modify the terms of any Award at or after grant with
the consent of the holder of the Award; (x) establish, amend, suspend or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the proper administration of
the Plan; and (xi) make any other determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan, subject to the exclusive authority of
the Board under Section 14 hereunder to amend or terminate the Plan. The exercise of an
Option or receipt of an Award shall be effective only if an Award Agreement shall have been duly
executed and delivered on behalf of the Company following the grant of the Option or other Award.

     3.2 Committee Discretion Binding. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations, and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and
shall be final, conclusive, and binding upon all Persons, including the Company, any Subsidiary or
Affiliate, any Participant and any holder or beneficiary of any Award.

     3.3 Delegation. Subject to the terms of the Plan, the Committee’s charter and applicable law,
the Committee may delegate to one or more officers or managers of the Company or of any Subsidiary
or Affiliate, or to a Committee of such officers or managers, the authority, subject to such terms
and limitations as the Committee shall determine, to grant Awards to or to cancel, modify or waive
rights with respect to, or to alter, discontinue, suspend or terminate Awards held by Participants
who are not officers or directors of the Company for purposes of Section 16 or who are otherwise
not subject to such Section.

Section 4. Shares Available For Awards.

     4.1 Shares Available. Subject to the provisions of Section 4.2 hereof, the stock to
be subject to Awards under the Plan shall be the Shares of the Company and the maximum number of
Shares with respect to which Awards may be granted under the Plan shall be 6,250,000, no more than
50% of which Shares may be granted as Incentive Stock Options. If, after the effective date of the
Plan, any Shares covered by an Award granted under this Plan, or to which such an Award relates,
are forfeited, or if such an Award is settled for cash or otherwise terminates, expires unexercised
or is canceled without the delivery of Shares, then the Shares covered by such Award, or to which
such Award relates, or the number of Shares otherwise counted against the aggregate number of
Shares with respect to which Awards may be granted, to the extent of any such settlement,
forfeiture, termination, expiration or cancellation, shall again become Shares with respect to
which Awards may be granted. In the event that any Option or other Award granted hereunder is
exercised through the delivery of Shares or in the event that withholding tax liabilities arising
from such Award are satisfied by the withholding of Shares by the Company, the number of Shares
available for Awards under the Plan shall be increased by the number of Shares so surrendered or
withheld. Notwithstanding the foregoing and subject to adjustment as provided in Section
4.2 hereof, no Participant may receive Options or SARs under the Plan in any calendar year
that, taken together, relate to more than 625,000 Shares.

     4.2 Adjustments. In the event that any dividend or other distribution (whether in the form of
cash, Shares, other securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or
exchange of Shares or

5

 

other securities of the Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction or event affects the Shares, then
the Committee shall in an equitable and proportionate manner (and, with respect to Incentive Stock
Options, in such equitable and proportionate manner as is consistent with Section 422 of the Code
and the regulations thereunder and with respect to Non-Qualified Stock Options, in such equitable
and proportionate manner as is consistent with Section 409A of the Code and the regulations
thereunder, and with respect to Awards to Covered Officers, in such equitable and proportionate
manner as is consistent with Section 162(m)): (i) adjust any or all of (1) the aggregate number of
Shares or other securities of the Company (or number and kind of other securities or property) with
respect to which Awards may be granted under the Plan; (2) the number of Shares or other securities
of the Company (or number and kind of other securities or property) subject to outstanding Awards
under the Plan, provided that the number of shares subject to any Award shall always be a whole
number; (3) the grant or exercise price with respect to any Award under the Plan; and (4) the
limits on the number of Shares that may be granted to Participants under the Plan in any calendar
year; (ii) provide for an equivalent award in respect of securities of the surviving entity of any
merger, consolidation or other transaction or event having a similar effect; or (iii) make
provision for a cash payment to the holder of an outstanding Award.

     4.3 Substitute Awards. Any Shares issued by the Company as Substitute Awards in connection
with the assumption or substitution of outstanding grants from any acquired corporation shall not
reduce the Shares available for Awards under the Plan.

     4.4 Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award may
consist, in whole or in part, of authorized and unissued Shares or of issued Shares which have been
reacquired by the Company.

Section 5. Eligibility.

     Any Employee, Director or Consultant shall be eligible to be designated a Participant;
provided, however, that Non-Employee Directors shall only be eligible to receive Awards granted
consistent with Section 10.

Section 6. Stock Options And Stock Appreciation Rights.

     6.1 Grant. Subject to the provisions of the Plan, including, without limitation, Section
3.3 above, the Committee shall have sole and complete authority to determine the Participants
to whom Options and SARs shall be granted, the number of Shares subject to each Award, the exercise
price and the conditions and limitations applicable to the exercise of each Option and SAR. An
Option may be granted with or without a related SAR. An SAR may be granted with or without a
related Option. The Committee shall have the authority to grant Incentive Stock Options, and to
grant Non-Qualified Stock Options. In the case of Incentive Stock Options, the terms and
conditions of such grants shall be subject to and comply with such rules as may be prescribed by
Section 422 of the Code, as from time to time amended, and any regulations implementing such
statute. A person who has been granted an Option or SAR under this Plan may be granted additional
Options or SARs under the Plan if the Committee shall so determine; provided, however, that to the
extent the aggregate Fair Market Value (determined at the time the Incentive Stock Option is
granted) of the Shares with respect to which all Incentive Stock Options are exercisable for the
first time by an Employee during any calendar year (under all plans described in subsection (d) of
Section 422 of the Code of the Employee’s employer corporation and its parent and Subsidiaries)
exceeds $100,000 such Options shall be treated as Non-Qualified Stock Options.

     6.2 Price. The Committee in its sole discretion shall establish the Option Price at the time
each Option is granted. Except in the case of Substitute Awards, the Option Price of an Option may
not be less

6

 

than one hundred percent (100%) of the Fair Market Value of the Shares with respect to which the
Option is granted on the date of grant of such Option. Notwithstanding the foregoing and except as
permitted by the provisions of Section 4.2 and Section 14 hereof, the Committee
shall not have the power to (i) amend the terms of previously granted Options to reduce the Option
Price of such Options, or (ii) cancel such Options and grant substitute Options with a lower Option
Price than the cancelled Options. Except with respect to Substitute Awards, SARs may not be
granted at a price less than the Fair Market Value of a Share on the date of grant.

     6.3 Term. Subject to the Committee’s authority under Section 3.1 and the provisions
of Section 6.6, each Option and SAR and all rights and obligations thereunder shall expire
on the date determined by the Committee and specified in the Award Agreement. The Committee shall
be under no duty to provide terms of like duration for Options or SARs granted under the Plan.
Notwithstanding the foregoing, no Option or SAR shall be exercisable after the expiration of ten
(10) years from the date such Option or SAR was granted.

     6.4 Exercise.

     (a) Each Option and SAR shall be exercisable at such times and subject to such terms
and conditions as the Committee may, in its sole discretion, specify in the applicable Award
Agreement or thereafter. The Committee shall have full and complete authority to determine,
subject to Section 6.6 herein, whether an Option or SAR will be exercisable in full
at any time or from time to time during the term of the Option or SAR, or to provide for the
exercise thereof in such installments, upon the occurrence of such events and at such times
during the term of the Option or SAR as the Committee may determine.

     (b) The Committee may impose such conditions with respect to the exercise of Options,
including without limitation, any relating to the application of federal, state or foreign
securities laws or the Code, as it may deem necessary or advisable. The exercise of any
Option granted hereunder shall be effective only at such time as the sale of Shares pursuant
to such exercise will not violate any state or federal securities or other laws.

     (c) An Option or SAR may be exercised in whole or in part at any time, with respect to
whole Shares only, within the period permitted thereunder for the exercise thereof, and
shall be exercised by written notice of intent to exercise the Option or SAR, delivered to
the Company at its principal office, and payment in full to the Company at the direction of
the Committee of the amount of the Option Price for the number of Shares with respect to
which the Option is then being exercised.

     (d) Payment of the Option Price shall be made in cash or cash equivalents, or, at the
discretion of the Committee, (i) by transfer, either actually or by attestation, to the
Company of Shares that have been held by the Participant for at least six (6) months (or
such lesser period as may be permitted by the Committee), valued at the Fair Market Value of
such Shares on the date of exercise (or next succeeding trading date, if the date of
exercise is not a trading date), together with any applicable withholding taxes, such
transfer to be upon such terms and conditions as determined by the Committee, or (ii) by a
combination of such cash (or cash equivalents) and such Shares; provided, however, that the
optionee shall not be entitled to tender Shares pursuant to successive, substantially
simultaneous exercises of an Option or any other stock option of the Company. Subject to
applicable securities laws, an Option may also be exercised by delivering a notice of
exercise of the Option and simultaneously selling the Shares 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 Price, together with any applicable
withholding

7

 

taxes. Until the optionee has been issued the Shares subject to such exercise, he or she
shall possess no rights as a stockholder with respect to such Shares.

     (e) At the Committee’s discretion, the amount payable as a result of the exercise of an
SAR may be settled in cash, Shares or a combination of cash and Shares. A fractional Share
shall not be deliverable upon the exercise of a SAR but a cash payment will be made in lieu
thereof.

     6.6 Ten Percent Stock Rule. Notwithstanding any other provisions in the Plan, if at the time
an Option is otherwise to be granted pursuant to the Plan, the optionee or rights holder owns
directly or indirectly (within the meaning of Section 424(d) of the Code) Shares of the Company
possessing more than ten percent (10%) of the total combined voting power of all classes of Stock
of the Company or its parent or Subsidiary or Affiliate corporations (within the meaning of Section
422(b)(6) of the Code), then any Incentive Stock Option to be granted to such optionee or rights
holder pursuant to the Plan shall satisfy the requirement of Section 422(c)(5) of the Code, and the
Option Price shall be not less than one hundred ten percent (110%) of the Fair Market Value of the
Shares of the Company, and such Option by its terms shall not be exercisable after the expiration
of five (5) years from the date such Option is granted.

Section 7. Restricted Shares And Restricted Share Units.

     7.1 Grant.

     (a) Subject to the provisions of the Plan, the Committee shall have sole and complete
authority to determine the Participants to whom Restricted Shares and Restricted Share Units
shall be granted, the number of Restricted Shares and/or the number of Restricted Share
Units to be granted to each Participant, the duration of the period during which, and the
conditions under which, the Restricted Shares and Restricted Share Units may be forfeited to
the Company, and the other terms and conditions of such Awards. The Restricted Share and
Restricted Share Unit Awards shall be evidenced by Award Agreements in such form as the
Committee shall from time to time approve, which agreements shall comply with and be subject
to the terms and conditions provided hereunder and any additional terms and conditions
established by the Committee that are consistent with the terms of the Plan.

     (b) Each Restricted Share and Restricted Share Unit Award made under the Plan shall be
for such number of Shares as shall be determined by the Committee and set forth in the Award
Agreement containing the terms of such Restricted Share or Restricted Share Unit Award.
Such agreement shall set forth a period of time during which the grantee must remain in the
continuous employment of the Company in order for the forfeiture and transfer restrictions
to lapse. If the Committee so determines, the restrictions may lapse during such restricted
period in installments with respect to specified portions of the Shares covered by the
Restricted Share or Restricted Share Unit Award. The Award Agreement may also, in the
discretion of the Committee, set forth performance or other conditions that will subject the
Shares to forfeiture and transfer restrictions. The Committee may, at its discretion, waive
all or any part of the restrictions applicable to any or all outstanding Restricted Share
and Restricted Share Unit Awards.

     7.2 Delivery of Shares and Transfer Restrictions. At the time of a Restricted Share Award, a
certificate representing the number of Shares awarded thereunder shall be registered in the name of
the grantee. Such certificate shall be held by the Company or any custodian appointed by the
Company for the account of the grantee subject to the terms and conditions of the Plan, and shall
bear such a legend setting forth the restrictions imposed thereon as the Committee, in its
discretion, may determine. Unless otherwise provided in the applicable Award Agreement, the
grantee shall have all rights of a stockholder with respect to the Restricted Shares, including the
right to receive dividends and the right to vote such Shares, subject to

8

 

the following restrictions: (i) the grantee shall not be entitled to delivery of the stock
certificate until the expiration of the restricted period and the fulfillment of any other
restrictive conditions set forth in the Award Agreement with respect to such Shares; (ii) none of
the Shares may be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered or
disposed of during such restricted period or until after the fulfillment of any such other
restrictive conditions; and (iii) except as otherwise determined by the Committee at or after
grant, all of the Shares shall be forfeited and all rights of the grantee to such Shares shall
terminate, without further obligation on the part of the Company, unless the grantee remains in the
continuous employment of the Company for the entire restricted period in relation to which such
Shares were granted and unless any other restrictive conditions relating to the Restricted Share
Award are met. Unless otherwise provided in the applicable Award Agreement, any Shares, any other
securities of the Company and any other property (except for cash dividends) distributed with
respect to the Shares subject to Restricted Share Awards shall be subject to the same restrictions,
terms and conditions as such restricted Shares.

     7.3 Termination of Restrictions. At the end of the restricted period and provided that any
other restrictive conditions of the Restricted Share Award are met, or at such earlier time as
otherwise determined by the Committee, all restrictions set forth in the Award Agreement relating
to the Restricted Share Award or in the Plan shall lapse as to the restricted Shares subject
thereto, and a stock certificate for the appropriate number of Shares, free of the restrictions and
restricted stock legend, shall be delivered to the Participant or the Participant’s beneficiary or
estate, as the case may be.

     7.4 Payment of Restricted Share Units. Each Restricted Share Unit shall have a value equal to
the Fair Market Value of a Share. Restricted Share Units shall be paid in cash, Shares, other
securities or other property, as determined in the sole discretion of the Committee, upon the lapse
of the restrictions applicable thereto, or otherwise in accordance with the applicable Award
Agreement. Unless otherwise provided in the applicable Award Agreement, a Participant shall
receive dividend rights in respect of any vested Restricted Stock Units at the time of any payment
of dividends to stockholders on Shares. The amount of any such dividend right shall equal the
amount that would be payable to the Participant as a stockholder in respect of a number of Shares
equal to the number of vested Restricted Stock Units then credited to the Participant. Any such
dividend right shall be paid in accordance with the Company’s payment practices as may be
established from time to time and as of the date on which such dividend would have been payable in
respect of outstanding Shares. Unless otherwise provided in the applicable Award Agreement,
dividend equivalents shall be paid in respect of Restricted Share Units that are not yet vested.
Except as otherwise determined by the Committee at or after grant, Restricted Share Units may not
be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed of, and
all Restricted Share Units and all rights of the grantee to such Restricted Share Units shall
terminate, without further obligation on the part of the Company, unless the grantee remains in
continuous employment of the Company for the entire restricted period in relation to which such
Restricted Share Units were granted and unless any other restrictive conditions relating to the
Restricted Share Unit Award are met.

Section 8. Performance Awards.

     8.1 Grant. The Committee shall have sole and complete authority to determine the Participants
who shall receive a Performance Award, which shall consist of a right that is (i) denominated in
cash or Shares (including but not limited to Restricted Shares and Restricted Share Units), (ii)
valued, as determined by the Committee, in accordance with the achievement of such performance
goals during such performance periods as the Committee shall establish, and (iii) payable at such
time and in such form as the Committee shall determine.

     8.2 Terms and Conditions. Subject to the terms of the Plan and any applicable Award
Agreement, the Committee shall determine the performance goals to be achieved during any
performance

9

 

period, the length of any performance period, the amount of any Performance Award and the amount
and kind of any payment or transfer to be made pursuant to any Performance Award, and may amend
specific provisions of the Performance Award; provided, however, that such amendment may not
adversely affect existing Performance Awards made within a performance period commencing prior to
implementation of the amendment.

     8.3 Payment of Performance Awards. Performance Awards may be paid in a lump sum or in
installments following the close of the performance period or, in accordance with the procedures
established by the Committee, on a deferred basis. Termination of employment prior to the end of
any performance period, other than for reasons of death or Disability, will result in the
forfeiture of the Performance Award, and no payments will be made. A Participant’s rights to any
Performance Award may not be sold, assigned, transferred, pledged, hypothecated or otherwise
encumbered or disposed of in any manner, except by will or the laws of descent and distribution,
and/or except as the Committee may determine at or after grant.

Section 9. Other Stock-Based Awards.

     The Committee shall have the authority to determine the Participants who shall receive an
Other Stock-Based Award, which shall consist of any right that is (i) not an Award described in
Sections 6 or 7 above and (ii) an Award of Shares or an Award denominated or
payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares
(including, without limitation, securities convertible into Shares), as deemed by the Committee to
be consistent with the purposes of the Plan. Subject to the terms of the Plan and any applicable
Award Agreement, the Committee shall determine the terms and conditions of any such Other
Stock-Based Award.

Section 10. Non-Employee Director Awards.

     10.1 The Board may provide that all or a portion of a Non-Employee Director’s annual retainer,
meeting fees and/or other awards or compensation as determined by the Board, be payable (either
automatically or at the election of a Non-Employee Director) in the form of Non-Qualified Stock
Options, Restricted Shares, Restricted Share Units and/or Other Stock-Based Awards, including
unrestricted Shares. The Board shall determine the terms and conditions of any such Awards,
including the terms and conditions which shall apply upon a termination of the Non-Employee
Director’s service as a member of the Board, and shall have full power and authority in its
discretion to administer such Awards, subject to the terms of the Plan and applicable law.

     10.2 The Board may also grant Awards to Non-Employee Directors pursuant to the terms of the
Plan, including any Award described in Sections 6, 7 or 9 above.

Section 11. Provisions Applicable To Covered Officers And Performance Awards.

     11.1 Notwithstanding anything in the Plan to the contrary, unless the Committee determines
that a Performance Award to be granted to a Covered Officer should not qualify as
“performance-based compensation” for purposes of Section 162(m), Performance Awards granted to
Covered Officers shall be subject to the terms and provisions of this Section 11.

     11.2 The Committee may grant Performance Awards to Covered Officers based solely upon the
attainment of performance targets related to one or more performance goals selected by the
Committee from among the goals specified below. For the purposes of this Section 11,
performance goals shall be limited to one or more of the following Company, Subsidiary, operating
unit, business segment or division financial performance measures:

10

 

	 	(a)	 	earnings before interest, taxes, depreciation and/or
amortization;
	 
	 	(b)	 	operating income or profit;
	 
	 	(c)	 	operating efficiencies;
	 
	 	(d)	 	return on equity, assets, capital, capital employed or
investment;
	 
	 	(e)	 	net income;
	 
	 	(f)	 	earnings per Share;
	 
	 	(g)	 	utilization management;
	 
	 	(h)	 	membership;
	 
	 	(i)	 	gross profit;
	 
	 	(j)	 	medical loss ratios;
	 
	 	(k)	 	stock price or total stockholder return;
	 
	 	(l)	 	provider network growth;
	 
	 	(m)	 	debt reduction;
	 
	 	(n)	 	strategic business objectives, consisting of one or more
objectives based on meeting specified cost targets, business expansion goals and
goals relating to acquisitions or divestitures; or
	 
	 	(o)	 	any combination thereof.

Each goal may be expressed on an absolute and/or relative basis, may be based on or otherwise
employ comparisons based on internal targets, the past performance of the Company or any
Subsidiary, operating unit, business segment or division of the Company and/or the past or current
performance of other companies, and in the case of earnings-based measures, may use or employ
comparisons relating to capital, stockholders’ equity and/or Shares outstanding, or to assets or
net assets. The Committee may appropriately adjust any evaluation of performance under criteria
set forth in this Section 11.2 to exclude any of the following events that occurs during a
performance period: (i) asset write-downs, (ii) litigation or claim judgments or settlements,
(iii) the effect of changes in tax law, accounting principles or other such laws or provisions
affecting reported results, (iv) accruals for reorganization and restructuring programs and (v) any
extraordinary non-recurring items as described in Accounting Principles Board Opinion No. 30 and/or
in management’s discussion and analysis of financial condition and results of operations appearing
in the Company’s annual report to stockholders for the applicable year.

     11.3 With respect to any Covered Officer, the maximum annual number of Shares in respect of
which all Performance Awards may be granted under Section 8 of the Plan is 250,000 and the
maximum amount of all Performance Awards that are settled in cash and that may be granted under
Section 8 of the Plan in any year is $5,000,000.00.

11

 

     11.4 To the extent necessary to comply with Section 162(m), with respect to grants of
Performance Awards, no later than 90 days following the commencement of each performance period (or
such other time as may be required or permitted by Section 162(m) of the Code), the Committee
shall, in writing, (1) select the performance goal or goals applicable to the performance period,
(2) establish the various targets and bonus amounts which may be earned for such performance
period, and (3) specify the relationship between performance goals and targets and the amounts to
be earned by each Covered Officer for such performance period. Following the completion of each
performance period, the Committee shall certify in writing whether the applicable performance
targets have been achieved and the amounts, if any, payable to Covered Officers for such
performance period. In determining the amount earned by a Covered Officer for a given performance
period, subject to any applicable Award Agreement, the Committee shall have the right to reduce
(but not increase) the amount payable at a given level of performance to take into account
additional factors that the Committee may deem relevant in its sole discretion to the assessment of
individual or corporate performance for the performance period.

     11.5 Unless otherwise expressly stated in the relevant Award Agreement, each Award granted to
a Covered Officer under the Plan is intended to be performance-based compensation within the
meaning of Section 162(m). Accordingly, unless otherwise determined by the Committee, if any
provision of the Plan or any Award Agreement relating to such an Award does not comply or is
inconsistent with Section 162(m), such provision shall be construed or deemed amended to the extent
necessary to conform to such requirements, and no provision shall be deemed to confer upon the
Committee discretion to increase the amount of compensation otherwise payable to a Covered Officer
in connection with any such Award upon the attainment of the performance criteria established by
the Committee.

Section 12. Termination Of Employment.

     The Committee shall have the full power and authority to determine the terms and conditions
that shall apply to any Award upon a termination of employment with the Company, its Subsidiaries
and Affiliates, including a termination by the Company with or without Cause, by a Participant
voluntarily, or by reason of death, Disability or Retirement, and may provide such terms and
conditions in the Award Agreement or in such rules and regulations as it may prescribe.

Section 13. Change In Control.

     The Committee may specify in the applicable Award Agreement, or otherwise by resolution prior
to a Change in Control, that all or a portion of the outstanding Awards shall vest, become
immediately exercisable or payable and have all restrictions lifted upon a Change in Control.

Section 14. Amendment And Termination.

     14.1 Amendments to the Plan. The Board may amend, alter, suspend, discontinue or terminate
the Plan or any portion thereof at any time; provided that no such amendment, alteration,
suspension, discontinuation or termination shall be made without stockholder approval if such
approval is necessary to comply with any tax or regulatory requirement for which or with which the
Board deems it necessary or desirable to comply.

     14.2 Amendments to Awards. Subject to the restrictions of Section 6.2, the Committee
may waive any conditions or rights under, amend any terms of or alter, suspend, discontinue, cancel
or terminate, any Award theretofore granted, prospectively or retroactively; provided that any such
waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would
materially and adversely affect

12

 

the rights of any Participant or any holder or beneficiary of any Award theretofore granted shall
not to that extent be effective without the consent of the affected Participant, holder or
beneficiary.

     14.3 Adjustments of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The
Committee is hereby authorized to make equitable and proportionate adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring
events (including, without limitation, the events described in Section 4.2 hereof) affecting the
Company, any Subsidiary or Affiliate, or the financial statements of the Company or any Subsidiary
or Affiliate, or of changes in applicable laws, regulations or accounting principles in accordance
with the Plan.

Section 15. General Provisions.

     15.1 Limited Transferability of Awards. Except as otherwise provided in the Plan, no Award
shall be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a
Participant, except by will or the laws of descent and distribution and/or as may be provided by
the Committee in its discretion, at or after grant, in the Award Agreement. No transfer of an
Award 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.

     15.2 Dividend Equivalents. In the sole and complete discretion of the Committee, an Award may
provide the Participant with dividends or dividend equivalents, payable in cash, Shares, other
securities or other property on a current or deferred basis. All dividend or dividend equivalents
which are not paid currently may, at the Committee’s discretion, accrue interest, be reinvested
into additional Shares, or, in the case of dividends or dividend equivalents credited in connection
with Performance Awards, be credited as additional Performance Awards and paid to the Participant
if and when, and to the extent that, payment is made pursuant to such Award. The total number of
Shares available for grant under Section 4 shall not be reduced to reflect any dividends or
dividend equivalents that are reinvested into additional Shares or credited as Performance Awards.

     15.3 No Rights to Awards. No Person shall have any claim to be granted any Award, and there
is no obligation for uniformity of treatment of Participants or holders or beneficiaries of Awards.
The terms and conditions of Awards need not be the same with respect to each Participant.

     15.4 Share Certificates. All certificates for Shares or other securities of the Company or
any Subsidiary or Affiliate delivered under the Plan pursuant to any Award or the exercise thereof
shall be subject to such stop transfer orders and other restrictions as the Committee may deem
advisable under the Plan or the rules, regulations and other requirements of the SEC or any state
securities commission or regulatory authority, any stock exchange or other market upon which such
Shares or other securities are then listed, and any applicable Federal or state laws, and the
Committee may cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

     15.5 Withholding. A Participant may be required to pay to the Company or any Subsidiary or
Affiliate and the Company or any Subsidiary or Affiliate shall have the right and is hereby
authorized to withhold from any Award, from any payment due or transfer made under any Award or
under the Plan, or from any compensation or other amount owing to a Participant the amount (in
cash, Shares, other securities, other Awards or other property) of any applicable withholding or
other tax-related obligations in respect of an Award, its exercise or any other transaction
involving an Award, or any payment or transfer under an Award or under the Plan and to take such
other action as may be necessary in the opinion of the Company to satisfy all obligations for the
payment of such taxes. The Committee may provide for additional cash

13

 

payments to holders of Options to defray or offset any tax arising from the grant, vesting,
exercise or payment of any Award.

     15.6 Award Agreements. Each Award hereunder shall be evidenced by an Award Agreement that
shall be delivered to the Participant and may specify the terms and conditions of the Award and any
rules applicable thereto. In the event of a conflict between the terms of the Plan and any Award
Agreement, the terms of the Plan shall prevail. The Committee shall, subject to applicable law,
determine the date an Award is deemed to be granted. The Committee or, except to the extent
prohibited under applicable law, its delegate(s) may establish the terms of agreements or other
documents evidencing Awards under this Plan and may, but need not, require as a condition to any
such agreement’s or document’s effectiveness that such agreement or document be executed by the
Participant, including by electronic signature or other electronic indication of acceptance, and
that such Participant agree to such further terms and conditions as specified in such agreement or
document. The grant of an Award under this Plan shall not confer any rights upon the Participant
holding such Award other than such terms, and subject to such conditions, as are specified in this
Plan as being applicable to such type of Award (or to all Awards) or as are expressly set forth in
the agreement or other document evidencing such Award.

     15.7 No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent
the Company or any Subsidiary or Affiliate from adopting or continuing in effect other compensation
arrangements, which may, but need not, provide for the grant of Options, Restricted Shares,
Restricted Share Units, Other Stock-Based Awards or other types of Awards provided for hereunder.

     15.8 No Right to Employment. The grant of an Award shall not be construed as giving a
Participant the right to be retained in the employ of the Company or any Subsidiary or Affiliate.
Further, the Company or a Subsidiary or Affiliate may at any time dismiss a Participant from
employment, free from any liability or any claim under the Plan, unless otherwise expressly
provided in an Award Agreement.

     15.9 No Rights as Stockholder. Subject to the provisions of the Plan and the applicable Award
Agreement, no Participant or holder or beneficiary of any Award shall have any rights as a
stockholder with respect to any Shares to be distributed under the Plan until such person has
become a holder of such Shares. Notwithstanding the foregoing, in connection with each grant of
Restricted Shares hereunder, the applicable Award Agreement shall specify if and to what extent the
Participant shall not be entitled to the rights of a stockholder in respect of such Restricted
Shares.

     15.10 Governing Law. The validity, construction and effect of the Plan and any rules and
regulations relating to the Plan and any Award Agreement shall be determined in accordance with the
laws of the State of Delaware without giving effect to conflicts of laws principles.

     15.11 Severability. If any provision of the Plan or any Award is, or becomes, or is deemed to
be invalid, illegal or unenforceable in any jurisdiction or as to any Person or Award, or would
disqualify the Plan or any Award under any law 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 any such Award shall remain in full force and effect.

     15.12 Other Laws. The Committee may refuse to issue or transfer any Shares or other
consideration under an Award if, acting in its sole discretion, it determines that the issuance or
transfer of such Shares or such other consideration might violate any applicable law or regulation
(including applicable non-U.S. laws or regulations) or entitle the Company to recover the same
under Exchange Act Section 16(b), and any payment tendered to the Company by a Participant, other
holder or beneficiary in

14

 

connection with the exercise of such Award shall be promptly refunded to the relevant Participant, holder or
beneficiary.

     15.13 No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed
to create a trust or separate fund of any kind or a fiduciary relationship between the Company or
any Subsidiary or Affiliate and a Participant or any other Person. To the extent that any Person
acquires a right to receive payments from the Company or any Subsidiary or Affiliate pursuant to an
Award, such right shall be no greater than the right of any unsecured general creditor of the
Company or any Subsidiary or Affiliate.

     15.14 No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the
Plan or any Award, and the Committee shall determine whether cash, other securities or other
property shall be paid or transferred in lieu of any fractional Shares or whether such fractional
Shares or any rights thereto shall be canceled, terminated or otherwise eliminated.

     15.15 Headings. Headings are given to the sections and subsections of the Plan solely as a
convenience to facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of the Plan or any provision thereof.

Section 16. Term Of The Plan.

     16.1 Effective Date. The Plan shall be effective as of February 2, 2006 provided it has been
approved by the Board and by the Company’s stockholders.

     16.2 Expiration Date. No new Awards shall be granted under the Plan after the tenth
anniversary of the Effective Date. Unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award granted hereunder may, and the authority of the Board or the
Committee to amend, alter, adjust, suspend, discontinue or terminate any such Award or to waive any
conditions or rights under any such Award shall, continue after the tenth anniversary of the
Effective Date.

15

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