Document:

exv4w7

 

Exhibit 4.7

WELLCARE HEALTH PLANS, INC.

2005 EMPLOYEE STOCK PURCHASE PLAN

 

 

WELLCARE HEALTH PLANS, INC.

2005 EMPLOYEE STOCK PURCHASE PLAN

	 	 	 	 	 
	1. Purpose
	 	 	1	 
	2. Definitions
	 	 	1	 
	3. Eligibility
	 	 	3	 
	(a) First Offering Date
	 	 	3	 
	(b) Subsequent Offering Periods
	 	 	3	 
	4. Offering Periods
	 	 	3	 
	(a) In General
	 	 	3	 
	(b) Changes by Committee
	 	 	3	 
	5. Participation
	 	 	4	 
	(a) Entry Dates
	 	 	3	 
	(b) Special Rule for First Offering Date
	 	 	3	 
	6. Plan Contributions
	 	 	4	 
	(a) Contribution by Payroll Deduction
	 	 	4	 
	(b) Payroll Deduction Election on Enrollment Agreement
	 	 	4	 
	(c) Commencement of Payroll Deduction
	 	 	4	 
	(d) Automatic Continuation of Payroll Deductions
	 	 	4	 
	(e) Change of Payroll Deduction Election
	 	 	4	 
	7. Grant of Option
	 	 	5	 
	(a) Shares of Common Stock Subject to Option
	 	 	5	 
	(b) Exercise Price
	 	 	5	 
	(c) Fair Market Value
	 	 	5	 
	(d) Limitation on Option that may be Granted
	 	 	5	 
	(e) No Rights as Shareholder
	 	 	6	 
	8. Exercise of Options
	 	 	6	 
	(a) Automatic Exercise
	 	 	6	 
	(b) Carryover of Excess Contributions
	 	 	6	 
	9. Issuance of Shares
	 	 	6	 
	(a) Delivery of Shares
	 	 	6	 
	(b) Registration of Shares
	 	 	6	 
	(c) Compliance with Applicable Laws
	 	 	6	 
	(d) Withholding
	 	 	6	 
	10. Participant Accounts
	 	 	7	 
	(a) Bookkeeping Accounts Maintained
	 	 	7	 
	(b) Participant Account Statements
	 	 	7	 
	(c) Withdrawal of Account Balance Following Exercise Date
	 	 	7	 
	11. Designation of Beneficiary
	 	 	7	 
	(a) Designation
	 	 	7	 
	(b) Change of Designation
	 	 	7	 
	12. Transferability
	 	 	7	 
	13. Withdrawal; Termination of Employment
	 	 	7	 

 

 

	 	 	 	 	 
	(a) Withdrawal
	 	 	8	 
	(b) Effect of Withdrawal on Subsequent Participation
	 	 	8	 
	(c) Termination of Employment
	 	 	8	 
	14. Common Stock Available under the Plan
	 	 	8	 
	(a) Number of Shares
	 	 	8	 
	(b) Adjustments Upon Changes in Capitalization; Corporate
Transactions
	 	 	9	 
	15. Administration
	 	 	9	 
	(a) Committee
	 	 	10	 
	(b) Requirements of Exchange Act
	 	 	10	 
	16. Amendment, Suspension and Termination of the Plan
	 	 	10	 
	(a) Amendment of the Plan
	 	 	10	 
	(b) Suspension of the Plan
	 	 	10	 
	(c) Termination of the Plan
	 	 	10	 
	17. Notices
	 	 	10	 
	18. Expenses of the Plan
	 	 	11	 
	19. No Employment Rights
	 	 	11	 
	20. Applicable Law
	 	 	11	 
	21. Additional Restrictions of Rule 16b-3
	 	 	11	 
	22. Effective Date
	 	 	11	 

 

 

WELLCARE HEALTH PLANS, INC.

2005 EMPLOYEE STOCK PURCHASE PLAN

     1. Purpose. The purpose of the Plan is to provide an incentive for
present and future employees of the Company and any Designated Subsidiary to
acquire a proprietary interest (or increase an existing proprietary interest)
in the Company through the purchase of Common Stock. It is the Company’s
intention that the Plan qualify as an “employee stock purchase plan” under
Section 423 of the Code. Accordingly, the provisions of the Plan shall be
administered, interpreted and construed in a manner consistent with the
requirements of that section of the Code.

     2. Definitions.

          (a) “Applicable Percentage” means, with respect to each Offering Period,
ninety-five percent (95%), unless and until such Applicable Percentage is
increased or decreased by the Committee, in its sole discretion, provided that
any such increase or decrease in the Applicable Percentage with respect to a
given Offering Period must be established not less than fifteen (15) days prior
to the Offering Date thereof.

          (b) “Board” means the Board of Directors of the Company.

          (c) “Code” means the Internal Revenue Code of 1986, as amended, and any
successor thereto.

          (d) “Committee” means the committee appointed by the Board to administer
the Plan as described in Section 15 of the Plan or, if no such Committee is
appointed, the Board.

          (e) “Common Stock” means the Company’s common stock, par value $0.01 per
share.

          (f) “Company” means WellCare Health Plans, Inc., a Delaware corporation.

          (g) “Compensation” means, with respect to each Participant for each pay
period, the full base salary and overtime paid to such Participant by the
Company or a Designated Subsidiary. Except as otherwise determined by the
Committee, “Compensation” does not include: (i) bonuses or commissions, (ii)
any amounts contributed by the Company or a Designated Subsidiary to any
pension plan, (iii) any automobile or relocation allowances (or reimbursement
for any such expenses), (iv) any amounts paid as a starting bonus or finder’s
fee, (v) any amounts realized from the exercise of any stock options or
incentive awards, (vi) any amounts paid by the Company or a Designated
Subsidiary for other fringe benefits, such as health and welfare,
hospitalization and group life insurance benefits, or perquisites, or paid in
lieu of such benefits, or (vii) other similar forms of extraordinary
compensation.

 

 

          (h) “Continuous Status as an Employee” means the absence of any
interruption or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the case of a leave of absence
agreed to in writing by the Company or the Designated Subsidiary that employs
the Employee, provided that such leave is for a period of not more than 90 days
or reemployment upon the expiration of such leave is guaranteed by contract or
statute.

          (i) “Designated Subsidiaries” means the Subsidiaries that have been
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan.

          (j) “Employee” means any employee of the Company or a Designated
Subsidiary. However, the term Employee shall not include the Chief Executive
Officer, the President, any Senior Vice President, Medical Director, Vice
President or any regional president, vice president, chief operating officer or
similar position or any other Officers of the Company, provided such employee
is considered a “highly compensated employee” within the meaning of Code
Section 414(q), taking into account the application of Code Section
414(q)(1)(B)(ii) for the preceding year.

          (k) “Entry Date” means the First Offering Date, and thereafter, with
respect to each eligible Employee, the date on which the eligible Employee
files an enrollment agreement with the Company.

          (l) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          (m) “Exercise Date” means the last Trading Day of each Offering Period.

          (n) “Exercise Price” means the price per share of Common Stock offered in
a given Offering Period determined as provided in Section 7(b).

          (o) “Fair Market Value” means, with respect to a share of Common Stock,
the Fair Market Value as determined under Section 7(c).

          (p) “First Offering Date” means the first Trading Day on or after January
1, 2005.

          (q) “Offering Date” means the first Trading Day of each Offering Period.

          (r) “Offering Period” means, subject to adjustment as provided in Section
4(b), the quarterly periods during which the Company’s Common Stock will be
offered under the Plan, beginning on each Trading Day on or after each January
1, April 1, July 1 and October 1 and ending on the last Trading Day on or
before the immediately following March 31, June 30, September 30 or December 31
of each year while the Plan is in effect. The initial Offering Period shall be
the period beginning on the First Offering Date and ending on the last Trading
Day on or before March 31, 2005.

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          (s) “Officer” means a person who is an officer of the Company within the
meaning of Section 16 under the Exchange Act and the rules and regulations
promulgated thereunder.

          (t) “Participant” means an Employee who has elected to participate in the
Plan by filing an enrollment agreement with the Company as provided in Section
5 hereof.

          (u) “Plan” means this WellCare Health Plans, Inc. 2005 Employee Stock
Purchase Plan.

          (v) “Plan Contributions” means, with respect to each Participant, the lump
sum cash transfers, if any, made by the Participant to the Plan pursuant to
Section 6(a) hereof, plus the after-tax payroll deductions, if any, withheld
from the Compensation of the Participant and contributed to the Plan for the
Participant as provided in Section 6 hereof, and any other amounts contributed
to the Plan for the Participant in accordance with the terms of the Plan.

          (w) “Subsidiary” means any corporation, domestic or foreign, of which the
Company owns, directly or indirectly, 50% or more of the total combined voting
power of all classes of stock, and that otherwise qualifies as a “subsidiary
corporation” within the meaning of Section 424(f) of the Code.

          (x) “Trading Day” means a day on which the national stock exchanges and
the Nasdaq system are open for trading.

     3. Eligibility.

          (a) First Offering Date. Any Employee who has completed at least one (1)
month of employment with the Company or any Subsidiary as of the First Offering
Date shall be eligible to become a Participant as of the First Offering Date.

          (b) Subsequent Offering Periods. Any Employee who has completed at least
one (1) month of employment with the Company or any Subsidiary shall be
eligible to become a Participant as of any subsequent Entry Date under the
Plan.

     4. Offering Periods.

          (a) In General. The Plan shall generally be implemented by a series of
successive Offering Periods, with purchases of Common Stock occurring on each
Exercise Date.

          (b) Changes by Committee. The Committee shall have the power to make
changes to the duration and/or the frequency of Offering Periods with respect
to future offerings, if any such change is announced at least five (5) days
prior to the scheduled beginning of the first Offering Period to be affected.
In addition, the Committee may shorten the duration of any Offering Period then
in progress, if such change is announced at least thirty (30) days prior to the
date on which the Committee proposes that the Offering Period terminate.

3

 

     5. Participation.

          (a) Entry Dates. Employees meeting the eligibility requirements of
Section 3 hereof may elect to participate in the Plan commencing on any Entry
Date by completing an enrollment agreement on the form provided by the Company
and filing the enrollment agreement with the Company.

     6. Plan Contributions.

          (a) Contribution by Payroll Deduction. Except as otherwise authorized or
required by the Committee, all contributions to the Plan shall be made only by
payroll deductions. The Committee may, but need not, permit Participants to
make after-tax contributions to the Plan at such times and subject to such
terms and conditions as the Committee may in its discretion determine. All
such additional contributions shall be made in a manner consistent with the
provisions of Section 423 of the Code or any successor thereto, and shall be
treated in the same manner as payroll deductions contributed to the Plan as
provided herein.

          (b) Payroll Deduction Election on Enrollment Agreement. At the time a
Participant files the enrollment agreement with respect to an Offering Period,
the Participant may authorize payroll deductions to be made on each payroll
date during the portion of the Offering Period that he or she is a Participant
in an amount not less than 1% and not more than 10% of the Participant’s
Compensation on each payroll date during the portion of the Offering Period
that he or she is a Participant; provided, however, that no Participant’s Plan
Contributions may total more than $3,000 in any one calendar year.

          (c) Commencement of Payroll Deductions. Except as otherwise determined by
the Committee under rules applicable to all Participants, payroll deductions
for Participants enrolling in the Plan shall commence with the earliest
administratively practicable payroll period that begins on or after the
Participant’s Entry Date.

          (d) Automatic Continuation of Payroll Deductions. Unless a Participant
elects otherwise prior to the Exercise Date of an Offering Period, such
Participant shall be deemed (i) to have elected to participate in the
immediately succeeding Offering Period and (ii) to have authorized the same
payroll deduction for the immediately succeeding Offering Period as was in
effect for the Participant immediately prior to the commencement of the
succeeding Offering Period.

          (e) Change of Payroll Deduction Election. A Participant may decrease or
increase the rate or amount of his or her payroll deductions during an Offering
Period (within the limitations of Section 6(b) above) by completing and filing
with the Company a new enrollment agreement authorizing a change in the rate or
amount of payroll deductions; provided, that a Participant may not change the
rate or amount of his or her payroll deductions more than once in any Offering
Period. Except as otherwise determined by the Committee under rules applicable
to all Participants, the change in rate or amount shall be effective as of the
earliest administratively practicable payroll period that begins on or after
the date the Company receives the new enrollment agreement. Additionally, a
Participant may discontinue his or her participation in the Plan as provided in
Section 13(a).

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     7. Grant of Option.

          (a) Shares of Common Stock Subject to Option. On each Offering Date,
subject to the limitations set forth in Section 6(b), Section 7(d), and this
Section 7(a), a Participant shall be granted an option to purchase on the
Exercise Date of the Offering Period (at the Exercise Price determined as
provided in Section 7(b) below) up to a number of shares of Common Stock
determined by dividing such Participant’s Plan Contributions accumulated prior
to such Exercise Date and retained in the Participant’s account as of such
Exercise Date by the Exercise Price; provided that the maximum number of shares
a Participant may purchase on any Exercise Date shall be 500.

          (b) Exercise Price. The Exercise Price per share of Common Stock offered
to each Participant in a given Offering Period shall be the Applicable
Percentage of the Fair Market Value of a share of Common Stock on the Exercise
Date.

          (c) Fair Market Value. The Fair Market Value of a share of Common Stock
on a given date shall be determined by the Committee in its discretion;
provided, that if there is a public market for the Common Stock, the Fair
Market Value per share shall be either (i) in the event the Common Stock is
listed on a stock exchange, the closing price of the Common Stock on such
exchange on such date (or, in the event that the Common Stock is not traded on
such date, on the immediately preceding trading date), as reported in The Wall
Street Journal, (ii) the closing price of the Common Stock on such date (or, in
the event that the Common Stock is not traded on such date, on the immediately
preceding trading date), as reported by the National Association of Securities
Dealers Automated Quotation (Nasdaq) National Market System, (iii) if such
price is not reported, the average of the bid and asked prices for the Common
Stock on such date (or, in the event that the Common Stock is not traded on
such date, on the immediately preceding trading date), as reported by Nasdaq,
or (iv) if no such quotations are available for a date within a reasonable time
prior to the valuation date, the value of the Common Stock as determined by the
Committee using any reasonable means.

          (d) Limitation on Option that may be Granted. Notwithstanding any
provision of the Plan to the contrary, no Participant shall be granted an
option under the Plan (i) to the extent that if, immediately after the grant,
such Employee (or any other person whose stock would be attributed to such
Employee pursuant to Section 424(d) of the Code) would own stock and/or hold
outstanding options to purchase stock possessing 5% or more of the total
combined voting power or value of all classes of stock of the Company or of any
Subsidiary of the Company, or (ii) to the extent that his or her rights to
purchase stock under all employee stock purchase plans of the Company and its
Subsidiaries intended to qualify under Section 423 of the Code accrue at a rate
which exceeds $25,000 of fair market value of stock (determined at the time
such option is granted) for each calendar year in which such option is
outstanding at any time.

          (e) No Rights as Shareholder. A Participant will have no interest or
voting right in shares covered by his option until such option has been
exercised.

5

 

     8. Exercise of Options.

          (a) Automatic Exercise. A Participant’s option for the purchase of shares
will be exercised automatically on each Exercise Date, and the maximum number
of full shares subject to the option shall be purchased for the Participant at
the applicable Exercise Price with the accumulated Plan Contributions then
credited to the Participant’s account under the Plan. No fractional shares
shall be purchased for any Participant’s account. During a Participant’s
lifetime, a Participant’s option to purchase shares hereunder is exercisable
only by the Participant.

          (b) Carryover of Excess Contributions. Any amount remaining to the credit
of a Participant’s account after the purchase of shares by the Participant on
an Exercise Date, or which is insufficient to purchase a full share of Common
Stock, shall remain in the Participant’s account, and be carried over to the
next Offering Period, unless the Participant withdraws from participation in
the Plan or elects to withdraw his or her account balance in accordance with
Section 10(c).

     9. Issuance of Shares.

          (a) Delivery of Shares. As promptly as practicable after each Exercise
Date, the Company shall arrange for the delivery to each Participant (or the
Participant’s beneficiary), as appropriate, or to a custodial account for the
benefit of each Participant (or the Participant’s beneficiary) as appropriate,
of a certificate representing the shares purchased upon exercise of the
Participant’s option.

          (b) Registration of Shares. Shares to be delivered to a Participant under
the Plan will be registered in the name of the Participant or in the name of
the Participant and his or her spouse, as requested by the Participant.

          (c) Compliance with Applicable Laws. The Plan, the grant and exercise of
options to purchase shares under the Plan, and the Company’s obligation to sell
and deliver shares upon the exercise of options to purchase shares shall be
subject to compliance with all applicable federal, state and foreign laws,
rules and regulations and the requirements of any stock exchange on which the
shares may then be listed.

          (d) Withholding. The Company may make such provisions as it deems
appropriate for withholding by the Company pursuant to federal or state tax
laws of such amounts as the Company determines it is required to withhold in
connection with the purchase or sale by a Participant of any Common Stock
acquired pursuant to the Plan. The Company may require a Participant to
satisfy any relevant tax requirements before authorizing any issuance of Common
Stock to such Participant.

     10. Participant Accounts.

          (a) Bookkeeping Accounts Maintained. Individual bookkeeping accounts will
be maintained for each Participant in the Plan to account for the balance of
his Plan Contributions, options issued, and shares purchased under the Plan.
However, all Plan Contributions made for a Participant shall be deposited in
the Company’s general corporate

6

 

accounts, and no interest shall accrue or be credited with respect to a
Participant’s Plan Contributions. All Plan Contributions received or held by
the Company may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate or otherwise set apart such Plan
Contributions from any other corporate funds.

          (b) Participant Account Statements. Statements of account will be given
to Participants from time to time, which statements will set forth the amounts
of payroll deductions, the per share purchase price(s), the number of shares
purchased and the remaining cash balance, if any.

          (c) Withdrawal of Account Balance Following Exercise Date. A Participant
may elect at any time within the first thirty (30) days following any Exercise
Date, or at such other time as the Committee may from time to time prescribe,
to receive in cash any amounts carried-over in accordance with Section 8(b).
An election under this Section 10(c) shall not be treated as a withdrawal from
participation in the Plan under Section 13(a).

     11. Designation of Beneficiary.

          (a) Designation. A Participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
Participant’s account under the Plan in the event of the Participant’s death
subsequent to an Exercise Date on which the Participant’s option hereunder is
exercised but prior to delivery to the Participant of such shares and cash. In
addition, a Participant may file a written designation of a beneficiary who is
to receive any cash from the Participant’s account under the Plan in the event
of the Participant’s death prior to the exercise of the option.

          (b) Change of Designation. A Participant’s beneficiary designation may be
changed by the Participant at any time by written notice. In the event of the
death of a Participant and in the absence of a beneficiary validly designated
under the Plan who is living at the time of such Participant’s death, the
Company shall deliver such shares and/or cash to the executor or administrator
of the estate of the Participant, or if no such executor or administrator has
been appointed (to the knowledge of the Company), the Company, in its
discretion, may deliver such shares and/or cash to the spouse or to any one or
more dependents or relatives of the Participant, or if no spouse, dependent or
relative is known to the Company, then to such other person as the Company may
designate.

     12. Transferability. Neither Plan Contributions credited to a
Participant’s account nor any rights to exercise any option or receive shares
of Common Stock under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will or the laws of descent and
distribution, or as provided in Section 11). Any attempted assignment,
transfer, pledge or other distribution shall be without effect, except that the
Company may treat such act as an election to withdraw in accordance with
Section 13(a).

     13. Withdrawal; Termination of Employment.

          (a) Withdrawal. A Participant may withdraw from the Plan at any time by
giving written notice to the Company. Payroll deductions, if any have been
authorized, shall cease as soon as administratively practicable after receipt
of the Participant’s notice of

7

 

withdrawal, and, subject to administrative practicability, no further
purchases shall be made for the Participant’s account. All Plan Contributions
credited to the Participant’s account, if any, and not yet invested in Common
Stock, will be paid to the Participant as soon as administratively practicable
after receipt of the Participant’s notice of withdrawal. The Participant’s
unexercised options to purchase shares pursuant to the Plan automatically will
be terminated. Payroll deductions will not resume on behalf of a Participant
who has withdrawn from the Plan (a “Former Participant”) unless the Former
Participant enrolls in a subsequent Offering Period in accordance with Section
5(a) and subject to the restriction provided in Section 13(b), below.

          (b) Effect of Withdrawal on Subsequent Participation. A Former
Participant who has withdrawn from the Plan pursuant to this Section 13(b)
shall again be eligible to participate in the Plan as of the beginning of the
Offering Period following the Offering Period during which the Former
Participant withdrew. The Former Participant must submit a new enrollment
agreement in order to again become a Participant as of that date.

          (c) Termination of Employment. Upon termination of a Participant’s
Continuous Status as an Employee prior to any Exercise Date for any reason,
including retirement or death, the Plan Contributions credited to the
Participant’s account and not yet invested in Common Stock will be returned to
the Participant or, in the case of death, to the Participant’s beneficiary as
determined pursuant to Section 11, and the Participant’s option to purchase
shares under the Plan will automatically terminate.

     14. Common Stock Available under the Plan.

          (a) Number of Shares. Subject to adjustment as provided in Section 14(b)
below, the maximum number of shares of the Company’s Common Stock that shall be
made available for sale under the Plan shall be 381,141 shares. Shares of
Common Stock subject to the Plan may be newly issued shares or shares
reacquired in private transactions or open market purchases. If and to the
extent that any right to purchase reserved shares shall not be exercised by any
Participant for any reason or if such right to purchase shall terminate as
provided herein, shares that have not been so purchased hereunder shall again
become available for the purpose of the Plan unless the Plan shall have been
terminated, but all shares sold under the Plan, regardless of source, shall be
counted against the limitation set forth above.

          (b) Adjustments Upon Changes in Capitalization; Corporate Transactions.

               i. If the outstanding shares of Common Stock are increased or decreased,
or are changed into or are exchanged for a different number or kind of shares,
as a result of one or more reorganizations, restructurings, recapitalizations,
reclassifications, stock splits, reverse stock splits, stock dividends or the
like, upon authorization of the Committee, appropriate adjustments shall be
made in the number and/or kind of shares, and the per-share option price
thereof, which may be issued in the aggregate and to any Participant upon
exercise of options granted under the Plan.

               ii. In the event of the proposed dissolution or liquidation of the
Company, the Offering Period will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the
Committee.

8

 

               iii. In the event of a proposed sale of all or substantially all of the
Company’s assets, or the merger of the Company with or into another corporation
(each, a “Sale Transaction”), each option under the Plan shall be assumed or an
equivalent option shall be substituted by such successor corporation or a
parent or subsidiary of such successor corporation, unless the Committee
determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, to shorten the Offering Period then in progress by
setting a new Exercise Date (the “New Exercise Date”). If the Committee
shortens the Offering Period then in progress in lieu of assumption or
substitution in the event of a Sale Transaction, the Committee shall notify
each Participant in writing, at least ten (10) days prior to the New Exercise
Date, that the exercise date for such Participant’s option has been changed to
the New Exercise Date and that such Participant’s option will be exercised
automatically on the New Exercise Date, unless prior to such date the
Participant has withdrawn from the Plan as provided in Section 13(a). For
purposes of this Section 14(b), an option granted under the Plan shall be
deemed to have been assumed if, following the Sale Transaction, the option
confers the right to purchase, for each share of option stock subject to the
option immediately prior to the Sale Transaction, the consideration (whether
stock, cash or other securities or property) received in the Sale Transaction
by holders of Common Stock for each share of Common Stock held on the effective
date of the Sale Transaction (and if such holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding shares of Common Stock); provided, that if the consideration
received in the Sale Transaction was not solely common stock of the successor
corporation or its parent (as defined in Section 424(e) of the Code), the
Committee may, with the consent of the successor corporation and the
Participant, provide for the consideration to be received upon exercise of the
option to be solely common stock of the successor corporation or its parent
equal in fair market value to the per share consideration received by the
holders of Common Stock in the Sale Transaction.

               iv. In all cases, the Committee shall have sole discretion to exercise any
of the powers and authority provided under this Section 14, and the Committee’s
actions hereunder shall be final and binding on all Participants. No
fractional shares of stock shall be issued under the Plan pursuant to any
adjustment authorized under the provisions of this Section 14.

     15. Administration.

          (a) Committee. The Plan shall be administered by the Committee. The
Committee shall have the authority to interpret the Plan, to prescribe, amend
and rescind rules and regulations relating to the Plan, and to make all other
determinations necessary or advisable for the administration of the Plan. The
administration, interpretation, or application of the Plan by the Committee
shall be final, conclusive and binding upon all persons.

          (b) Requirements of Exchange Act. Notwithstanding the provisions of
Section 15(a) above, in the event that Rule 16b-3 promulgated under the
Exchange Act or any successor provision thereto (“Rule 16b-3”) provides
specific requirements for the administrators of plans of this type, the Plan
shall only be administered by such body and in such a manner as shall comply
with the applicable requirements of Rule 16b-3. Unless permitted by Rule
16b-3, no discretion concerning decisions regarding the Plan shall be afforded
to any person that is not “disinterested” as that term is used in Rule 16b-3.

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     16. Amendment, Suspension and Termination of the Plan.

          (a) Amendment of the Plan. The Board or the Committee may at any time, or
from time to time, amend the Plan in any respect; provided, that (i) no such
amendment may make any change in any option theretofore granted which adversely
affects the rights of any Participant and (ii) the Plan may not be amended in
any way that will cause rights issued under the Plan to fail to meet the
requirements for employee stock purchase plans as defined in Section 423 of the
Code or any successor thereto. To the extent necessary to comply with Rule
16b-3 under the Exchange Act, Section 423 of the Code, or any other applicable
law or regulation), the Company shall obtain shareholder approval of any such
amendment.

          (b) Suspension of the Plan. The Board or the Committee may, as of the
close of any Exercise Date, suspend the Plan; provided, that the Board or
Committee provides notice to the Participants at least five (5) business days
prior to the suspension. The Board or Committee may resume the normal
operation of the Plan as of any Exercise Date; provided further, that the Board
or Committee provides notice to the Participants at least twenty (20) business
days prior to the date of termination of the suspension period. A Participant
shall remain a Participant in the Plan during any suspension period (unless he
or she withdraws pursuant to Section 13(a)), however no options shall be
granted or exercised, and no payroll deductions shall be made in respect of any
Participant during the suspension period. Participants shall have the right to
withdraw carryover funds provided in Section 10(c) throughout any suspension
period. The Plan shall resume its normal operation upon termination of a
suspension period.

          (c) Termination of the Plan. The Plan and all rights of Employees
hereunder shall terminate on the earliest of:

               i. the Exercise Date that Participants become entitled to purchase a
number of shares greater than the number of reserved shares remaining available
for purchase under the Plan;

               ii. such date as is determined by the Board in its discretion; or

               iii. the last Exercise Date immediately preceding the tenth (10th)
anniversary of the approval of the Plan by the Company’s stockholders.

     In the event that the Plan terminates under circumstances described in
Section 16(c)(i) above, reserved shares remaining as of the termination date
shall be sold to Participants on a pro rata basis, based on the relative value
of their cash account balances in the Plan as of the termination date.

     17. Notices. All notices or other communications by a Participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.

10

 

     18. Expenses of the Plan. All costs and expenses incurred in
administering the Plan shall be paid by the Company, except that any stamp
duties or transfer taxes applicable to participation in the Plan may be charged
to the account of such Participant by the Company.

     19. No Employment Rights. The Plan does not, directly or indirectly,
create any right for the benefit of any employee or class of employees to
purchase any shares under the Plan, or create in any employee or class of
employees any right with respect to continuation of employment by the Company
or any Subsidiary, and it shall not be deemed to interfere in any way with the
right of the Company or any Subsidiary to terminate, or otherwise modify, an
employee’s employment at any time.

     20. Applicable Law. The internal laws of the State of Delaware shall
govern all matters relating to this Plan except to the extent (if any)
superseded by the laws of the United States.

     21. Additional Restrictions of Rule 16b-3. The terms and conditions of
options granted hereunder to, and the purchase of shares by, persons subject to
Section 16 of the Exchange Act shall comply with the applicable provisions of
Rule 16b-3. This Plan shall be deemed to contain, and such options shall
contain, and the shares issued upon exercise thereof shall be subject to, such
additional conditions and restrictions as may be required by Rule 16b-3 to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.

     22. Effective Date. Subject to adoption of the Plan by the Board, the
Plan shall become effective on the First Offering Date. The Board shall submit
the Plan to the shareholders of the Company for approval within twelve months
after the date the Plan is adopted by the Board.

11exv10w1

 

Exhibit 10.1

[FORM]

HOLLY CORPORATION

DIRECTOR

RESTRICTED STOCK AGREEMENT

     This Restricted Stock Agreement (the “Agreement”) is made and entered into
by and between HOLLY CORPORATION, a Delaware corporation (the “Company”), and                                         (the
“Director”). This Agreement is entered into as
of the       day of                     ,       (the “Date of Grant”).

WITNESSETH:

     WHEREAS, the Company has adopted the HOLLY CORPORATION LONG-TERM INCENTIVE
COMPENSATION PLAN (the “Plan”) to attract, retain and motivate employees,
directors and consultants; and

     WHEREAS, the issuance to the Director of restricted shares under the Plan
as part of the Director’s compensation for service as a member of the Board of
Directors of the Company (the “Board”) was authorized by resolution of the
Board on November 14, 2003.

     NOW, THEREFORE, in consideration of the Director’s agreement to serve as a
member of the Board, the Director and the Company agree as follows:

     1. Grant. The Company hereby grants to the Director as of the Date
of Grant an award of       Shares (as defined in the Plan), subject
to the terms and conditions set forth in this Agreement, including,
without limitation, those described in Section 5 (the “Restricted
Shares”).

     2. Restricted Shares. The Company shall issue in the Director’s
name the Restricted Shares and such Restricted Shares shall be held for
the Director in book entry form by the Company’s transfer agent with a
notation that the shares are subject to restrictions. The Director
hereby agrees that the Restricted Shares shall be held subject to
restrictions as provided in the Agreement until such time as the
Restricted Shares become Vested Shares (as defined in Section 4 below).
The Director hereby agrees that if part or all of the Restricted Shares
are forfeited pursuant to this Agreement, the Company shall have the
right to direct the Company’s transfer agent to cancel such forfeited
Restricted Shares or, at the Company’s election, transfer such Restricted
Shares to the Company or to any designee of the Company.

     3. Rights of Director. Effective as of the Date of Grant, the
Director is a stockholder with respect to all of the Restricted Shares
granted to him pursuant to Section 1 and has all of the rights of a
stockholder with respect to all such Restricted Shares, including the
right to vote such Restricted Shares and the right to receive all
dividends and other distributions paid with respect to such Restricted
Shares; provided,

1

 

however, that such Restricted Shares shall be subject to the
restrictions hereinafter described, including, without limitation, those
described in Section 5.

     4. Forfeiture and Expiration of Restrictions.

     (a) The Director shall forfeit to the Company all of the
Restricted Shares immediately and without any payment to the
Director whatsoever if the Director ceases to be a member of the
Board before the Annual Meeting of Stockholders of the Company in
            at which directors of the Company are elected (the “Vesting
Date”), for any reason, other than death, total and permanent
disability, or retirement, as provided in Section 4(b) below. On
and after such date, all such Restricted Shares shall be fully
vested and nonforfeitable (“Vested Shares”).

     (b) In the event of the Director’s (i) death, (ii) total and
permanent disability, as determined by the Long-Term Incentive
Compensation Plan Committee (the “Committee”) in its sole
discretion, or (iii) retirement, in accordance with the retirement
policy of the Company regarding Board members, before lapse of all
restrictions pursuant to Section 4(a) above, the Director shall be
vested with a number of the Restricted Shares equal to the number
of Restricted Shares specified in Section 1 times the percentage
that the period from the Date of Grant to the date of death,
disability or retirement bears to 1095 days and any remaining
Restricted Shares shall be forfeited; provided, however, that any
fractional shares will be forfeited to the Company. The Director
or his designated beneficiary or estate will have no right to any
Restricted Shares that remain subject to restrictions, and those
Restricted Shares will be forfeited.

     (c) In the event of a Change in Control before lapse of all
restrictions pursuant to Section 4(a) above, all restrictions
described in Section 5 shall lapse and the Restricted Shares will
become Vested Shares and the Company shall deliver a certificate or
certificates for the Vested Shares to the Director as soon as
practicable thereafter. For purposes of this Agreement, a “Change
in Control” shall occur if:

      (i) Any “Person” (as defined in Section 4(d)(i) below),
other than (1) the Company or any of its subsidiaries, (2) a
trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its
“Affiliates” (as defined in Section 4(d)(iv) below) (3) an
underwriter temporarily holding securities pursuant to an
offering of such securities, or (4) a corporation owned,
directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of
stock of the Company, is or becomes the “Beneficial Owner”
(as defined in Section 4(d)(ii) below), directly or
indirectly, of securities of the Company (not including in
the securities beneficially owned by such person any
securities acquired directly from the Company or its
Affiliates) representing more than forty percent (40%) of the
combined voting power of the Company’s then outstanding
securities, or more than

2

 

forty percent (40%) of the then outstanding common stock
of the Company, excluding any Person who becomes such a
Beneficial Owner in connection with a transaction described
in Section 4(c)(iii)(A) below.

      (ii) The individuals who as of the Date of Grant
constitute the Board of Directors of the Company and any “New
Director” (as defined in Section 4(d)(iii) below) cease for
any reason to constitute a majority of the Board.

      (iii) There is consummated a merger or consolidation of
the Company or any direct or indirect subsidiary of the
Company with any other corporation, except if:

         (A) the merger or consolidation results in the
voting securities of the Company outstanding
immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted
into voting securities of the surviving entity or any
parent thereof) at least sixty percent (60%) of the
combined voting power of the voting securities of the
Company or such surviving entity or any parent thereof
outstanding immediately after such merger or
consolidation; or

         (B) the merger or consolidation is effected to
implement a recapitalization of the Company (or similar
transaction) in which no Person is or becomes the
Beneficial Owner, directly, or indirectly, of
securities of the Company (not including in the
securities beneficially owned by such Person any
securities acquired directly from the Company or its
Affiliates other than in connection with the
acquisition by the Company or its Affiliates of a
business) representing more than forty percent (40%) of
the combined voting power of the Company’s then
outstanding securities.

      (iv) The stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or an
agreement for the sale or disposition by the Company of all
or substantially all of the Company’s assets, other than a
sale or disposition by the Company of all or substantially
all of the Company’s assets to an entity at least sixty
percent (60%) of the combined voting power of the voting
securities of which is owned by the stockholders of the
Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale.

3

 

(d) Definitions. For purposes of Section 4(c) above,

      (i) “Person” shall have the meaning given in section
3(a)(9) of the Securities Exchange Act of 1934 (the “1934
Act”) as modified and used in sections 13(d) and 14(d) of the
1934 Act.

      (ii) “Beneficial Owner” shall have the meaning provided
in Rule 13d-3 under the 1934 Act.

      (iii) “New Director” shall mean an individual whose
election by the Board or nomination for election by the
Company’s stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors as of the Date of Grant or whose
election or nomination for election was previously so
approved or recommended. However, “New Director” shall not
include a director whose initial assumption of office is in
connection with an actual or threatened election contest,
including but not limited to a consent solicitation relating
to the election of directors of the Company.

      (iv) “Affiliate” shall have the meaning set forth in
Rule 12b-2 promulgated under section 12 of the 1934 Act.

     5. Limitations on Transfer. The Director agrees that he shall not
dispose of (meaning, without limitation, sell, transfer, pledge,
exchange, hypothecate or otherwise dispose of) prior to the Vesting Date
any Restricted Shares hereby acquired. Any attempted disposition of the
Restricted Shares in violation of the preceding sentence shall be null
and void, and the Company shall not recognize or give effect to such
transfer on its books and records or recognize the person or persons to
whom such proposed transfer has been made as the legal or beneficial
holder thereof. Notwithstanding the foregoing, part or all of the
Restricted Shares or rights under this Agreement may be transferred to a
spouse pursuant to a domestic relations order issued by a court of
competent jurisdiction; provided, however, such Restricted Shares shall
continue to be held pursuant to Section 2 of this Agreement, and the
transferee under the domestic relations order shall agree that the
Restricted Shares so transferred shall continue to be subject to the
terms of this Agreement, including forfeiture in accordance with Section
4(a) of this Agreement and pro rata forfeiture in accordance with
Sections 4(a) and (b) of this Agreement.

     6. Nontransferability of Agreement. This Agreement and all rights
under this Agreement shall not be transferable by the Director during his
life other than by will or pursuant to applicable laws of descent and
distribution. Any rights and privileges of the Director in connection
herewith shall not be transferred, assigned, pledged or hypothecated by
the Director or by any other person or persons, in any way, whether by
operation of law, or otherwise, and shall not be subject to execution,
attachment, garnishment or similar process. In the event of any such
occurrence, this Agreement shall automatically be terminated and shall
thereafter be null and void. Notwithstanding the foregoing, all or some
of the Restricted Shares or rights under this Agreement may be

4

 

transferred to a spouse pursuant to a domestic relations order
issued by a court of competent jurisdiction, subject to the limitations
on such transfer described in Section 5.

     7. Adjustment of Restricted Shares. The number of Restricted Shares
granted to the Director pursuant to this Agreement shall be adjusted to
reflect stock dividends, stock splits or other changes in the capital
structure of the Company, all in accordance with the Plan. All
provisions of this Agreement shall be applicable to such new or
additional or different shares or securities distributed or issued
pursuant to the Plan to the same extent that such provisions are
applicable to the shares with respect to which they were distributed or
issued. In the event that the outstanding Shares (as defined in the
Plan) of the Company are exchanged for a different number or kind of
shares or other securities, or if additional, new or different shares are
distributed with respect to the Shares (as defined in the Plan) through
merger, consolidation, or sale of all or substantially all of the assets
of the Company, each remaining share subject to this Agreement shall have
substituted for it a like number and kind of shares of new or replacement
securities as determined in the sole discretion of the Committee, subject
to the terms and provisions of the Plan.

     8. Delivery of Vested Shares. No Vested Shares shall be delivered
pursuant to this Agreement until the approval of any governmental
authority required in connection with this Agreement, or the issuance of
Vested Shares hereunder, has been received by the Company. The Committee
will delay delivery of Vested Shares until the restrictions of Section 5
lapse.

     9. Securities Act. The Company shall have the right, but not the
obligation, to cause the Restricted Shares to be registered under the
appropriate rules and regulations of the Securities and Exchange
Commission. The Company shall not be required to deliver any Vested
Shares of stock hereunder if, in the opinion of counsel for the Company,
such delivery would violate the Securities Act of 1933 or any other
applicable federal or state securities laws or regulations.

     10. Definitions; Copy of Plan. To the extent not specifically
provided herein, all terms used in this Agreement shall have the same
meanings ascribed to them in the Plan. By the execution of this
Agreement, the Director acknowledges receipt of a copy of the Plan. If
any provision of this Agreement is held to be illegal, invalid or
unenforceable under any applicable law, then such provision will be
deemed to be modified to the minimum extent necessary to render it legal,
valid and enforceable; and if such provision cannot be so modified, then
this Agreement will be construed as if not containing the provision held
to be invalid, and the rights and obligations of the parties will be
construed and enforced accordingly.

     11. Administration. This Agreement shall at all times be subject to
the terms and conditions of the Plan. The Committee shall have sole and
complete discretion with respect to all matters reserved to it by the
Plan and decisions of a majority of the Committee with respect thereto
and this Agreement shall be final and binding upon the Director and the
Company. In the event of any conflict between the terms and conditions
of this Agreement and the Plan, the provisions of the Plan shall control.

5

 

     12. Continuation as Director. This Agreement shall not be construed
to confer upon the Director any right to continue to serve as a member of
the Board.

     13. Governing Law. This Agreement shall be interpreted and
administered under the laws of the State of Texas, without giving effect
to any conflict of laws provisions.

     14. Amendments. This Agreement may be amended only by a written
agreement executed by the Company and the Director. Any such amendment
shall be made only upon the mutual consent of the parties, which consent
(of either party) may be withheld for any reason.

     15. No Liability for Good Faith Determinations. The Company and the
members of the Committee and the Board shall not be liable for any act,
omission or determination taken or made in good faith with respect to
this Agreement or the Restricted Shares granted hereunder.

     16. No Guarantee of Interests. The Board and the Company do not
guarantee the Shares (as defined in the Plan) from loss or depreciation.

            IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its officers thereunto duly authorized, and the Director has set his hand
effective as of the date and year first above written.

	 	 	 	 	 
	 	 HOLLY CORPORATION

 	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 
	 
	 	 

Director

 	 
	 	 	 
	 	 	 
	 	 	 
	 

6

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