AMERIGROUP
CORPORATION
2005 EQUITY
INCENTIVE PLAN
NONQUALIFIED STOCK
OPTION AGREEMENT
This Nonqualified Stock Option
Agreement (the “Option Agreement”) is made and entered
into as of , 200
(the “Date of
Grant”), by and between AMERIGROUP Corporation, a Delaware
corporation (the “Company”), and
(the “Optionee”).
Capitalized terms not defined herein shall have the meaning
ascribed to them in the Company’s 2005 Equity Incentive Plan
(the “Plan”).
1. Number of Shares .
The Company hereby grants to Optionee an option (this
“Option”) to purchase
Shares (the “Option
Shares”) at an Exercise Price per Share of $
, subject to all of the terms
and conditions of this Option Agreement and the Plan.
2. Option Term . The
term of the Option (the “Option Term”) shall commence
on the Date of Grant set forth above and, unless the Option is
previously terminated pursuant to Section 5 below, shall
terminate on the [ ] anniversary thereof (the “Expiration
Date”). As of the Expiration Date, all rights of Optionee
hereunder shall terminate.
3. Conditions of
Exercise .
(a) Subject to Section 5
below, the Option shall become vested as follows: [INSERT VESTING
SCHEDULE].
(b) Prior to the Expiration
Date, this Option may, subject to Section 5 below, be
exercised in whole or in part at any time, but only as to Option
Shares that have vested.
(c) This Option may not be
exercised for a fraction of a share.
4. Method of Exercise of
Option .
(a) The Option may be exercised
by delivering to the Company an executed stock option exercise
agreement in the form attached hereto as Exhibit A , or
in such other form as may be approved by the Administrator from
time to time (the “Exercise Agreement”), which shall
set forth, inter alia , (i) Optionee’s
election to exercise the Option and (ii) the number of vested
Option Shares being purchased, and payment in full of the aggregate
Exercise Price of such Option Shares. If someone other than
Optionee exercises the Option, then such person must submit
documentation reasonably acceptable to the Company verifying that
such person has the legal right to exercise the Option.
(b) The Option may not be
exercised unless such exercise is in compliance with all applicable
federal and state securities law, as they are in effect on the date
of exercise.
(c) Payment of the aggregate
Exercise Price for Option Shares being purchased and any applicable
withholding taxes may be made (i) in cash or by check,
(ii) to the extent permitted by applicable law, by means of a
cashless exercise procedure through a broker acceptable to the
Administrator, (iii) through delivery of unrestricted Shares
already owned by Optionee for more than six months on the date of
surrender, to the extent the shares have an aggregate Fair Market
Value on the date of surrender equal to the aggregate Exercise
Price of the Shares as to which such Option shall be exercised, or
(iv) by any other means of exercise authorized from time to
time by the Administrator.
5. Effect of Termination of
Employment or Service, Change in Control and Disabling Conduct
.
(a) Termination of
Employment or Service Generally .
(i) Upon the termination of
Optionee’s employment or service with the Company and all
Subsidiaries and Affiliates, the Option shall immediately terminate
as to any Option Shares that have not previously vested as of the
date of such termination (the “Termination Date”).
(ii) Any portion of the Option
that has vested as of the Termination Date shall be exercisable in
whole or in part until [insert date] (the “Post-Termination
Exercise Period”) unless Optionee has been terminated for
Cause or engaged in Disabling Conduct (defined below). In no event
may the Option be exercised after the Expiration Date.
(iii) Upon the expiration of
the Post-Termination Exercise Period any unexercised portion of the
Option shall terminate in full.
(b) Termination for Cause;
Disabling Conduct .
(i) The Option shall terminate
in full (whether or not then exercisable) immediately upon the
termination of Optionee’s employment with the Company or any
Subsidiary or Affiliate for Cause.
(ii) The Option also shall
terminate in full (whether or not then exercisable) immediately if
Optionee engages in Disabling Conduct.
[At the discretion of the Administrator, either]
(c) Change in Control .
For purposes of Section 5(a) above, any portion of the Option that
has not previously vested shall be deemed fully vested if
Optionee’s employment or service with the Company or any
Subsidiary or Affiliate is terminated by the Company or any
Subsidiary or Affiliate or any successor entity for any reason
(other than for Cause or as a result of Disabling Conduct) within
two years following a Change in Control or if Optionee terminates
employment or service with the Company or any Subsidiary or
Affiliate within two years following the Change in Control and
after there is a material adverse change in the nature or status of
Optionee’s duties or responsibilities from those in effect
immediately prior to the Change in Control.
[or]
(c) Change in Control .
Any portion of the Option that has not previously vested shall
become fully vested upon a Change in Control.
(d) Definition of Disabling
Conduct . As used herein, “Disabling Conduct” shall
mean conduct involving a breach of the covenants made in
Section 6 below.
6. Covenant Not to
Compete .
(a) In consideration for the
grant of the Option, and as a material condition to the grant,
Optionee hereby expressly agrees as follows:
(i) Optionee will act in the
best interests of the Company and its Subsidiaries and Affiliates
(each, an “AMERIGROUP Company” and collectively, the
“AMERIGROUP Companies”) throughout the period of
Optionee’s employment with any of the AMERIGROUP Companies;
and
(ii) at all times while
employed by any AMERIGROUP Company and at all times during the
Covered Post-Employment Period (defined below), Optionee will not
(A) compete with any AMERIGROUP Company by serving a
Competitor (defined below) in any managerial capacity, or in any
capacity that influences business strategy, with respect to a
Covered Product or Service (defined below) that the Competitor is
offering in a Covered Area (defined below) or developing to offer
in a Covered Area, or (B) solicit for employment, interfere
with the employment relationship of or endeavor to entice away any
employee of any AMERIGROUP Company.
(b) As used herein,
(i) The “Covered
Post-Employment Period” means the twelve (12) month
period beginning on the first day on which Optionee is no longer
employed by any AMERIGROUP Company as a result of Optionee’s
resignation or termination for Cause and ending on the first
anniversary of such date. (In the event the Company terminates
Optionee without Cause, there shall not be a Covered
Post-Employment Period.)
(ii) “Competitor”
means any entity or person that provides or is planning to provide
a Covered Product or Service in competition with a Covered Product
or Service that an AMERIGROUP Company is actively developing,
marketing, providing or selling.
(iii) “Confidential
Information” means an AMERIGROUP Company’s material
non-public information concerning its business and affairs,
including, without limitation, trade secrets, strategies, business
plans, marketing and advertising plans, member and provider
information , employee and personnel information, contracts,
training manuals, financial projections, budgets and non-public
financial data (including, without limitation, statements with
premium revenue and/or provider compensation terms, reports of
actuaries, medical loss reports, balance sheets and income
statements).
(iv) A “Covered Product
or Service” shall mean a managed health care product or
service offered or provided to any beneficiary of and/or
participant in any Medicaid, Medicaid-related, or SSI program, any
government-funded children’s health insurance program or any
federal and/or state sponsored health care program that is
substantially similar to any of such programs.
(v) The “Covered
Area” shall consist of each city, county and other similar
governmental territory in which an AMERIGROUP Company provides or
has made material efforts to develop and provide a Covered Product
or Service to its members, if in the course of Optionee’s
employment with an AMERIGROUP Company he or she (A) has
provided services to an AMERIGROUP Company with respect to the
Covered Products or Services in such city, county or governmental
territory, or (B) reviewed or discussed Confidential
Information of an AMERIGROUP Company with respect to the Covered
Product or Service in such city, county or governmental
territory.
(c) Optionee agrees that any
breach by Optionee of the covenants made in Section 6(a) above may
cause irreparable damage to one or more of the AMERIGROUP Companies
and that in the event of such breach each AMERIGROUP Company shall
have, in addition to any and all remedies of law, the right to an
injunction, specific performance or other equitable relief to
prevent the violation of Optionee&rsqu
