Exhibit 10.4
WELLCARE HEALTH PLANS, INC.
2004 EQUITY INCENTIVE PLAN
PERFORMANCE SHARE
AWARD AGREEMENT
FOR
TODD S. FARHA
This PERFORMANCE SHARE AWARD
AGREEMENT (the “ Agreement ”) is made
and entered into effective as of June 6, 2005, by and between
WellCare Health Plans, Inc., a Delaware corporation (the “
Company ”), and Todd S. Farha (the “
Grantee ”).
RECITALS
In consideration of services to be
rendered by the Grantee and to provide an incentive to the Grantee
to remain with the Company and its Subsidiaries, it is in the best
interests of the Company to make a Performance Award to Grantee in
accordance with the terms of this Agreement; and
The Performance Award is granted
pursuant to the WellCare Health Plans, Inc. 2004 Equity Incentive
Plan (the “ Plan ”) which is incorporated
herein for all purposes. The Grantee hereby acknowledges receipt of
a copy of the Plan. Unless otherwise provided herein, terms used
herein that are defined in the Plan and not defined herein shall
have the meanings attributable thereto in the Plan.
NOW, THEREFORE , for and in
consideration of the mutual premises, covenants and agreements
contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as
follows:
1. Grant of Performance Shares . Pursuant to the
provisions of the Plan, the Company on the date set forth above
(the “ Grant Date ”) has granted and
hereby evidences the grant to the Grantee, subject to the terms and
conditions set forth herein and in the Plan, of an award (the
“ Award ”) of up to 240,279 shares of
common stock, par value $.01 per share, of the Company (the “
Performance Shares ”). The target number of
Performance Shares to be issued in the aggregate pursuant to this
Award is 130,000, and the actual number of Performance Shares to be
issued shall be between zero and 240,279, based upon the
Company’s achievement of the Performance Goals as set forth
herein.
2. Settlement of Performance Shares . Subject to
the provisions of this Section 2, Section 3 and
Section 4, each Performance Share covered by the Award which
the Company determines, in writing, to be earned pursuant to
Section 3, shall be delivered by the Company on the 3
rd or 5 th anniversary, as applicable, of the
Grant Date (each, a “ Vesting Date ”).
Payments hereunder shall be made by the delivery of shares of
Common Stock.
3. Vesting Criteria Applicable to Performance
Shares .
(a) Performance Cycle .
There shall be two “ Performance Cycles ”
for this Award of Performance Shares. The first Performance Cycle
shall commence on January 1, 2005, and shall end on
December 31, 2007. The second Performance Cycle shall commence
on January 1, 2005 and shall end on December 31, 2009.
Any Performance Shares earned on account of the first Performance
Cycle shall vest and be issued to the Grantee on the first Vesting
Date, and any Performance Shares earned on account of the second
Performance Cycle shall vest and be issued to the Grantee on the
second Vesting Date.
(b) Performance Goals .
The “ Performance Goal ” for each
Performance Cycle shall be the Company’s achievement of
Cumulative Adjusted EPS (as herein defined) for the full fiscal
years within such Performance Cycle at or above the levels set
forth on Exhibit A attached hereto. The extent to which
Performance Shares shall become earned on each Vesting Date shall
be determined in accordance with the schedule set forth on such
Exhibit A (in each case, rounded to the nearest whole
number). The target number of Performance Shares to be issued on
the first Vesting Date (based on the Company’s achievement of
the Target Cumulative Adjusted EPS goal for the first Performance
Cycle) is 65,000, and a maximum of 130,000 of the Performance
Shares shall be available for issuance on the first Vesting Date
(based on the Company’s achievement of the Maximum Cumulative
Adjusted EPS goal for the first Performance Cycle). The balance of
any Performance Shares not awarded on the first Vesting Date
(because the Maximum Cumulative Adjusted EPS goal for the first
Performance Cycle shall not have been achieved) shall be available
for vesting on the second Vesting Date should the targets then be
reached (based on Cumulative Adjusted EPS for the second
Performance Cycle), and the greater of (i) one-half of such
available balance of Performance Shares and (ii) 65,000 shall
be the target number of Performance Shares to be issued on the
second Vesting Date (based on the Company’s achievement of
the Target Cumulative Adjusted EPS goal for the second Performance
Cycle). The target number of Performance Shares to be issued on
each Vesting Date, as set forth in the two preceding sentences, is
referred to herein as the applicable “ Target
Shares .”
(c) Adjusted EPS . For purposes hereof, “
Adjusted EPS ” shall mean the Company’s
diluted net income per share of Common Stock for the applicable
fiscal year, as reported by the Company in its Form 10-K (or any
successor form) for such year, as adjusted by the Committee
pursuant to Section 3(d) below.
(d) Authority of
Committee . The Committee shall have the authority to determine
whether the Performance Goal for each Performance Cycle shall have
been met, the number of Performance Shares (if any) that shall be
earned on each Vesting Date, whether any adjustments in the
calculation of the achievement of any Performance Goal are
necessary or desirable, and otherwise to interpret this Agreement
and administer the Award, and, unless a Change in Control shall
have occurred, the Committee’s decisions with respect to any
of the foregoing shall be final and binding. Without limiting the
generality of the foregoing, the Committee shall have the authority
to make such adjustments to the Company’s reported diluted
net income per share as it may deem necessary or appropriate in
connection with the calculation of the achievement of any
Performance Goal in order to exclude significant amounts reported
by the Company which are typically excluded by the investment
community in their determination of company financial results, such
as, by way of example only, gains or losses on sales or
dispositions, asset write-downs, litigation or claims judgments or
settlements, changes in tax law or rates including impact on
deferred tax liabilities, uninsured catastrophic property losses,
cumulative effect of changes in accounting principles,
extraordinary items as described in Accounting Principles Bulletin
No. 30 and/or in management’s discussion and analysis of
financial performance appearing in the Company’s annual
report on Form 10-K, unbudgeted costs incurred relating to future
acquisitions or divestitures, discontinued operations and related
restructuring and severance charges, and gains or losses on debt
extinguishment or refinancing.
4. Termination of Employment . Except as otherwise
provided in this Section 4, the Grantee shall not have any
right to any payment hereunder unless the Grantee is employed by
the Company or a Subsidiary on the applicable Vesting Date.
(a) Upon the termination or
cessation of Grantee’s employment or service with the Company
and its Subsidiaries, for any reason whatsoever, any portion of the
Performance Shares which is not yet then vested, and which does not
then become vested pursuant to this Section 4, shall
automatically and without notice terminate, be forfeited and become
null and void.
(b) Notwithstanding the
foregoing, in the event that the Recipient’s employment with
the Company and its Subsidiaries is terminated by the Company
without Cause or by the Grantee for Good Reason, a portion of the
Performance Shares subject to this Agreement shall become
immediately vested as of the date of the termination of the
Recipient’s employment with the Company and its Subsidiaries
(the “ Date of Termination ”), as follows
(in each case, rounded to the nearest whole number): the number of
such Performance Shares that shall so vest shall be calculated by
multiplying (i) the Applicable Number of Shares (as defined
below) by (ii) the Applicable Percentage (as defined
below).
For purposes hereof, the “
Applicable Number of Shares ” shall mean
(i) if the Date of Termination occurs prior to the first
Vesting Date, the total number of Target Shares for each
Performance Cycle and (ii) if the Date of Termination occurs
after the first Vesting Date, the number of Target Shares for the
second Performance Cycle.
For purposes hereof, the “
Applicable Percentage ” shall be a fraction, as
follows: (x) if the Date of Termination occurs prior to the
first Vesting Date, the numerator shall be the number of full
months during the period beginning on the Grant Date and ending on
the Date of Termination, and the denominator shall be 60, and
(y) if the Date of Termination occurs after the fi
