WELLCARE HEALTH PLANS, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
FOR
THOMAS F. O’NEIL III
Agreement
1.
Grant of
Option . WellCare Health Plans, Inc. (the
“Company”) hereby grants, as of April 1, 2008, to
Thomas F. O’Neil III (the
“Optionee”) an option (the “Option”)
to purchase up to 100,000 shares of the Company’s Common
Stock, $0.01 par value per share (the “Shares”),
at an exercise price per share equal to $39.70 (the
“Option Price”). The Option is being
granted as an “employee inducement award” within
the meaning of Section 303A(8) of the New York Stock Exchange
Listed Company Manual. The Option shall be subject
to the terms and conditions set forth herein. The
Option is a non-qualified stock option, and not an incentive
stock option conforming to the requirements of Section 422 of
the Code. The Optionee agrees to be bound by all of
the terms and conditions hereof and all applicable laws and
regulations.
i. “Board”
means the Board of Directors of the Company.
ii. “Cause”
shall have such meaning as otherwise set forth in the
Employment Agreement.
iii. “Change
in Control” shall have such meaning as otherwise
set forth in the Employment Agreement.
iv. “Code”
means the Internal Revenue Code of 1986, as
amended.
v. “Committee”
means the Compensation Committee of the
Board.
vi. “Common
Stock” means the Common Stock, par value $.01 per
share, of the Company, and any other shares into which such
stock may be changed by reason of a recapitalization,
reorganization, merger, consolidation or any other change in
the corporate structure or capital stock of the
Company.
vii. “Competition” is
deemed to occur if a person whose employment with the Company
or its Subsidiaries has terminated engages as an officer,
director, shareholder, owner, partner, joint venturer, or in
any managerial capacity, whether as an employee, independent
contractor, consultant or advisor (paid or unpaid), or as a
sales representative, or otherwise participates, in each
case, in any business that sells, markets, or provides any
benefits or services within any state in which the Company,
Comprehensive Health Management, Inc. or their respective
subsidiaries (each, a “WellCare Company”) is
doing business at the time the Optionee ceases to be employed
by the Company that are in direct competition with the
benefits or services provided by such WellCare Company in
such state.
viii. “Disability”
means a disability that would entitle an eligible
participant to payment
of
monthly disability payments under any Company disability plan
or any agreement between the eligible participant and the
Company as otherwise determined by the Committee.
ix. “Employment
Agreement” means the employment agreement
dated April 1, 2008 between the Optionee, the
Company and Comprehensive Health Management, Inc., a Florida
corporation (“CHMI”).
x. “Exchange
Act” means the Securities Exchange Act of 1934, as
amended.
xi. “Fair
Market Value” of a share of Common Stock of the
Company means, as of the date in question, the
officially-quoted closing selling price of the stock (or if
no selling price is quoted, the bid price) on the principal
securities exchange on which the Common Stock is then listed
for trading (including for this purpose the Nasdaq National
Market) (the “Market”) for the applicable trading
day or, if the Common Stock is not then listed or quoted in
the Market, the Fair Market Value shall be the fair value of
the Common Stock determined in good faith by the Board;
provided, however, that when shares received upon exercise of
an option are immediately sold in the open market, the net
sale price received may be used to determine the Fair Market
Value of any shares used to pay the exercise price or
applicable withholding taxes and to compute the withholding
taxes.
xii. “Good
Reason” shall have such meaning as otherwise set forth
in the Employment Agreement.
xiii. “Subsidiary”
means a corporation or other entity of which outstanding
shares or ownership interests representing 50% or more of the
combined voting power of such corporation or other entity
entitled to elect the management thereof, or such lesser
percentage as may be approved by the Committee, are owned
directly or indirectly by the Company.
3.
Exercise
Schedule . Except as otherwise provided in
Sections 6 and 7 of this Agreement, the Option is exercisable
in installments as provided below, which shall be cumulative.
To the extent that the Option has become exercisable with
respect to a percentage of Shares as provided below, the
Option may thereafter be exercised by the Optionee, in whole
or in part, at any time or from time to time prior to the
expiration of the Option as provided herein. The Option shall
vest in equal annual installments on each of April, 2009,
2010, 2011 and 2012 (each, a “Vesting Date”)
provided that the Optionee’s employment or service with
the Company and its Subsidiaries during the period beginning
on April 1, 2008 continues through and on the applicable
Vesting Date.
Notwithstanding
anything contained herein to the contrary, once the Option has
vested and become exercisable with respect to 100% of the
Shares, then the Option shall be fully vested and the
provisions of the preceding sentence shall cease to
apply.
Except
as otherwise specifically provided herein, there shall be no
proportionate or partial vesting in the periods prior to each
Vesting Date, and all vesting shall occur only on the
appropriate Vesting Date. Upon the termination of the
Optionee’s employment or service with the Company and
its Subsidiaries, any unvested portion of the Option shall
terminate and be null and void.
4.
Method of
Exercise . The vested portion of this Option
shall be exercisable in whole or in part in accordance with
the exercise schedule set forth in Section 3 hereof by
delivery of written notice by the Optionee which shall state
the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (which number
must be a whole number), and such other representations and
agreements as to the holder’s investment intent with
respect to such Shares as may be required by the Company
pursuant to the provisions of the Plan. Such
written notice shall be signed by the Optionee and shall be
delivered in person or by certified mail to the Secretary of
the Company. The Optionee shall deliver, together
with the written notice, payment of the Option
Price. This Option shall be deemed to be exercised
after both (a) receipt by the Company of such written notice
accompanied by the Option Price and (b) arrangements that are
satisfactory to the Committee in its sole discretion have been
made for Optionee’s payment to the Company of the
amount, if any, that is necessary to be withheld in accordance
with applicable Federal or state withholding
requirements. No Shares will be issued pursuant to
the Option unless and until such issuance and such exercise
shall comply with all relevant provisions of applicable law,
including the requirements of any stock exchange (including
the New York Stock Exchange) or interdealer quotation system
upon which the Shares then may be traded.
5.
Method of
Payment . Payment of the Option
Price shall be by any of the following, or a combination
thereof, at the election of the Optionee: (a) in
cash (including check, bank draft, money order or wire
transfer of immediately available funds), (b) by delivery of
outstanding shares of Common Stock with a Fair Market Value on
the date of exercise equal to the aggregate exercise price
payable with respect to the Options’ exercise, (c) to
the extent permissible, by simultaneous sale through a broker
reasonably acceptable to the Committee of Shares acquired on
exercise, as permitted under Regulation T of the Federal
Reserve Board, (d) by
authorizing the Company to withhold from issuance a number of
Shares issuable upon exercise of the Option which, when
multiplied by the Fair Market Value of a share of Common Stock
on the date of exercise, is equal to the Option Price payable
with respect to the portion of the Option being exercised or
(e) by any combination of the foregoing.
In
the event the Optionee elects to pay the Option Price pursuant
to clause (b) above, (i) only a whole number of share(s) of
Common Stock (and not fractional shares of Common Stock) may
be tendered in payment, (ii) the Optionee must present
evidence acceptable to the Company that the Optionee has owned
any such shares of Common Stock tendered in payment of the
Option Price (and that such tendered shares of Common Stock
have not been subject to any substantial risk of forfeiture)
for at least six months prior to the date of exercise, and
(iii) Common Stock must be delivered to the
Company. Delivery for this purpose may, at the
election of the Optionee, be made either by (A) physical
delivery of the certificate(s) for all such shares of Common
Stock tendered in payment of the Option Price, accompanied by
duly executed instruments of transfer in a form acceptable to
the Company, or (B) direction to the Optionee’s broker
to transfer, by book entry, such shares of Common Stock from a
brokerage account of the Optionee to a brokerage account
specified by the Company. When payment of the
Option Price is made by delivery of Common Stock, the
difference, if any, between the Option Price payable with
respect to the portion of the Option being exercised and the
Fair Market Value of the shares of Common Stock tendered in
payment (plus any applicable taxes) shall be paid in
cash. The Optionee may not tender shares of Common
Stock having a Fair Market Value exceeding the Option Price
payable with respect to the portion of the Option being
exercised (plus any applicable taxes).
In
the event the Optionee elects to pay the Option Price pursuant
to clause (d) above, (i) only a whole number of Share(s) (and
not fractional Shares) may be withheld in payment and (ii) the
Optionee must present evidence acceptable to the Company that
the Optionee has owned a number of shares of Common Stock at
least equal to the number of Shares to be withheld in payment
of the O
