CENTENE CORPORATION Nonstatutory Stock Option Agreement Granted Under Amended and Restated 2003 Stock Incentive Plan
Exhibit 10.5
CENTENE
CORPORATION
Nonstatutory
Stock Option Agreement Granted Under
Amended and Restated 2003
Stock Incentive Plan
THIS
AGREEMENT is entered into by and between CENTENE CORPORATION, a Delaware
corporation (hereinafter the “Company”), and the undersigned employee of the
Company (hereinafter the “Participant”).
WHEREAS,
the Participant renders important services to the Company and acquires access to
Confidential Information (as defined below) of the Company in connection with
Participant’s relationship with the Company; and
WHEREAS,
the Company desires to align the long-term interests of its valued employees
with those of the Company by providing the ownership interest granted herein and
to prevent former employees whose interest may become adverse to the Company
from maintaining an ownership interest in the Company;
NOW,
THEREFORE, in consideration of the foregoing and the mutual agreements herein
contained, the parties hereto hereby agree as follows:
1. Grant of
Option
This
agreement evidences the grant by the Company on __________ (the “Grant
Date”) to __________ (the
“Participant”), of an option to purchase, in whole or in part, on the terms
provided herein and in the Company’s Amended and Restated 2003 Stock Incentive
Plan (the “Plan”), a total of __________ shares (the
“Shares”) of common stock, $0.001 par value per share, of the Company (“Common
Stock”) at $_____ per Share.1 Unless earlier terminated, this
option shall expire at 3:00 p.m., Central time, on __________ (the “Final
Exercise Date”). If the Final Exercise Date is not an open trading
date then this option shall expire at 3:00 p.m., Central Standard Time, on the
last open trading date prior to the Final Exercise Date.
It is
intended that the option evidenced by this agreement shall not be an incentive
stock option as defined in Section 422 of the Internal Revenue Code of 1986, as
amended, and any regulations promulgated thereunder (the
“Code”). Except as otherwise indicated by the context, the term
“Participant,” as used in this option, shall be deemed to include any person who
acquires the right to exercise this option validly under its terms.
2. Vesting
Schedule
This
option will become exercisable (“vest”) as to __% of the original
number of Shares on the _____ anniversary of
the Grant Date and as to an additional __% of the original
number of Shares at the end of each successive __________ period following the
first anniversary of the Grant Date until the ______ anniversary of
the Grant Date.
The right
of exercise shall be cumulative so that to the extent the option is not
exercised in any period to the maximum extent permissible it shall continue to
be exercisable, in whole or in part, with respect to all Shares for which it is
vested until the earlier of the Final Exercise Date or the termination of this
option under Section 3 hereof or the Plan.
In the
event of a “Change in Control” of the Company, all of the Shares that (but for
the application of this clause) are not vested at the time of the occurrence of
such Change in Control event shall vest. A “Change in Control” shall
be deemed to have occurred if any of the events set forth in any one of the
following clauses shall occur: (i) any Person (as defined in section
3(a)(9) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
and as such term is modified in sections 13(d) and 14(d) of the Exchange Act),
excluding a group of persons including the Participant, is or becomes the
“beneficial owner” (as defined in Rule 13(d)(3) under the Exchange Act),
directly or indirectly, of securities representing forty percent or more of the
combined voting power of the Company’s then outstanding securities; (ii)
individuals who, as of the Grant Date, constitute the Board of Directors of the
Company (the “Incumbent Board”), cease for any reason to constitute a majority
thereof (provided,
however, that an individual becoming a director subsequent to the Grant
Date whose election, or nomination for election by the Company’s stockholders,
was approved by at least a majority of the directors then comprising the
Incumbent Board shall be included within the definition of Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual election contest (or such terms
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on behalf
of a person other than the Board of Directors of the Company); or (iii) the
stockholders of the Company consummate a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result 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) at least fifty percent
of the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation.
3. Exercise of
Option
(a) Form of
Exercise. Each election to exercise this option shall be in
writing, signed by the Participant, and received by the Company at its principal
office, accompanied by this agreement, and payment in full in the manner
provided in the Plan. Common Stock purchased upon the exercise of
this option shall be paid for as follows
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(1)
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in
cash or by check, payable to the order of the
Company;
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(2)
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by
(i) delivery of an irrevocable and unconditional undertaking by a
creditworthy broker to deliver promptly to the Company sufficient funds to
pay the exercise price and any required tax withholding or (ii) delivery
by the Participant to the Company of a copy of irrevocable and
unconditional instructions to a creditworthy broker to deliver promptly to
the Company cash or a check sufficient to pay the exercise price and any
required tax withholding;
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(3)
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when
the Common Stock is registered under the Securities and Exchange Act of
1934, as amended, by delivery of shares of Common Stock owned by the
Participant valued at their fair market value as determined by (or in a
manner approved by) the board of directors of the Company (the “Board”) in
good faith (“Fair Market Value”), provided (i) such
method of payment is then permitted under applicable law and (ii) such
Common Stock, if acquired directly from the Company was owned by the
Participant at least six months prior to such
delivery;
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(4)
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to
the extent permitted under applicable law and permitted by the Board, in
its sole discretion, provided that at least
an amount equal to the par value of the Common Stock being purchased shall
be paid in cash; or
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(5)
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by
any combination of the above permitted forms of
payment.
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The
Participant may purchase less than the number of shares covered hereby, provided
that no partial exercise of this option may be for any fractional share or for
fewer than ten whole shares.
(b) Continuous Relationship with
the Company Required. Except as otherwise provided in this
Section 3, this option may not be exercised unless the Participant, at the
time he or she exercises this option, is, and has been at all times since the
Grant Date, an employee, officer or director of, or consultant or advisor to,
the Company or any other entity the employees, officers, directors, consultants
or advisors of which are eligible to receive option grants under the Plan (an
“Eligible Participant”).
(c) Termination of Relationship
with the Company. If the Participant ceases to be an Eligible
Participant for any reason, then, except as provided in paragraphs (d) and
(e) below, the right to exercise this option shall terminate 30 days after such
cessation (but in no event after the Final Exercise Date), provided that this option
shall be exercisable only to the extent that the Participant was entitled to
exercise this option on the date of such cessation. Notwithstanding
the foregoing, if the Participant, prior to the Final Exercise Date, violates
the non-competition or confidentiality provisions of any employment, consulting,
advisory, nondisclosure, non-competition or other agreement between the
Participant and the Company, the right to exercise this option shall terminate
immediately upon such violation.
(d) Exercise Period Upon Death
or Disability. If the Participant dies or becomes disabled
(within the meaning of Section 22(e)(3) of the Code) prior to the Final
Exercise Date while he or she is an Eligible Participant and the Company has not
terminated such relationship for “cause” as specified in paragraph (e) below,
this option shall be exercisable, within the period of 90 days following the
date of death or disability of the Participant, by the Participant (or in the
case of death by an authorized transferee), provided that this option
shall be exercisable only to the extent that this option was exercisable by the
Participant on the date of his or her death or disability, and further provided that this
option shall not be exercisable after the Final Exercise Date.
(e) Discharge for
Cause. If the Participant, prior to the Final Exercise Date,
is discharged by the Company for “cause” (as defined below), the right to
exercise this option shall terminate immediately upon the effective date of such
discharge. “Cause” shall include acts or omissions that the
Company determines in writing, after affording the Participant an
opportunity to be heard, are (i) criminal, dishonest or fraudulent or
constitute misconduct that reflect negatively on the reputation of
the Company (including any parent, subsidiary, affiliate or division of the
Company); (ii) acts or omissions that could expose the Company or any parent,
subsidiary, affiliate or division of the Company to claims of illegal harassment
or discrimination in employment;(iii) material breaches of this Agreement; or
(iv) continued and repeated failure to perform substantially the duties of
his/her employment.
(f) Right to
Exercise. The Participant’s right to exercise this option and
to retain any gains upon a sale or other disposition of the Shares therefrom is
subject to the Participant’s compliance with the covenants set forth in Section
4 hereof.
4. Optionee’s
Covenants. For and in consideration of the option hereunder,
the Participant agrees to the provisions of this Section 4.
(a) Confidential
Information. As used in this Section 4, “Confidential
Information” shall mean the Company’s trade secrets and other non-public
proprietary information relating to the Company or the business of the Company,
including information relating to financial statements, existing or proposed
target markets, employee skills and compensation, employee data, acquisition
targets, servicing methods, programs, strategies and information, analyses,
expansion plans and strategies, profit margins, financial, promotional, training
or operational information, and other information developed or used by the
Company that is not known generally to the public or the
industry. Confidential Information shall not include any information
that is in the public domain or becomes known in the public domain through no
wrongful act on the part of the Participant.
(b) Non-Disclosure. The
Participant agrees that the Confidential Information is a valuable, special and
unique asset of the Company’s business, that such Confidential Information is
important to the Company and the effective operation of the Company’s business,
and that during employment with the Company and at all times thereafter, the
Participant shall not, directly or indirectly, disclose to any competitor or
other person or entity (other than current employees of the Company) any
Confidential Information that the Participant obtains while performing services
for the Company, except as may be required in the Participant’s reasonable
judgment to fulfill the Participant’s duties hereunder or to comply with any
applicable legal obligation.
(c) Non-Competition;
Non-Solicitation.
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(1)
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During
Participant’s employment with the Company and for the period of six (6)
months immediately after the termination of Participant’s employment with
the Company (including any parent, subsidiary, affiliate or division of
the Company) for any reason whatsoever, and whether voluntary or
involuntary, Participant shall not invest in (other than in a publicly
traded company with a maximum investment of no more than 1% of outstanding
shares), counsel, advise, consult, be employed or otherwise engaged by or
with any entity or enterprise (“Competitor”) that competes with (A) the
Company’s business of providing Medicaid managed care services,
Medicaid-related services, behavioral health, nurse triage or pharmacy
compliance specialty services or (B) any other business in which, after
the date of this Agreement, the Company (or any parent, subsidiary,
affiliate or division of the Company) becomes engaged (or has taken
substantial steps in which to become engaged) on or prior to the date of
termination of Participant’s employment. For purposes of paragraph 4,
Participant agrees that this agreement not to compete applies to any
Competitor that does business within the state of Missouri or and any
other state in which Centene does business, and that such geographical
limitation is reasonable.
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(2)
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During
the Participant’s employment with the Company (or any parent, subsidiary,
affiliate or division of the Company) and for the period of twelve months
immediately after the termination of the Participant’s employment with the
Company (or any parent, subsidiary, affiliate or division of the Company)
for any cause whatsoever, and whether voluntary or involuntary
(“Restricted Period”), the Participant will not, either directly or
indirectly, either for himself or for any other person, firm, company or
corporation, call upon, solicit, divert, or take away, or attempt to
solicit, divert or take away any of the customers, prospective customers,
business, vendors or suppliers of the Company that the Participant had
dealings with, or responsibility for, or the Participant had access to,
confidential information of such customers’, vendors’ or suppliers’
confidential information.
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(3)
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The
Participant shall not, at any time during the Restricted Period, without
the prior written consent of the Company, (i) directly or indirectly,
solicit, recruit or employ (whether as an employee, officer, director,
agent, consultant or independent contractor) any person who was or is at
any time during the previous six months an employee, representative,
officer or director of the Company (or any parent, subsidiary, affiliate
or division of the Company); or (ii) take any action to encourage or
induce any employee, representative, officer or director of the Company
(or any parent, subsidiary, affiliate or division of the Company) to cease
their relationship with the Company (or any parent, subsidiary, affiliate
or division of the Company) for any
reason.
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(4)
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This
Section 4(c) shall not apply if a "Change in Control" (as defined in
Section 2) occurs under Section 2(ii) thereof, or if such Change in
Control occurs under Section 2(i) or 2(iii) thereof without the prior
approval, recommendation or consent of the Board of Directors of the
Corporation
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(d) Enforcement. If
any of the provisions of this Section 4 shall be held to be invalid or
unenforceable by a court of competent jurisdiction, the remaining provisions or
subparts thereof shall nevertheless continue to be valid and enforceable
according to their terms. Further, if any restriction contained in
the provisions or subparts of this Section 4 is held to be overbroad or
unreasonable as written, the parties agree that the applicable provision should
be considered to be amended to reflect the maximum period, scope or geographical
area deemed reasonable and enforceable by the court and enforced as
amended.
(e) Remedy for
Breach.
(1) Because
the Participant’s services are unique and because the Participant has access to
the Company’s Confidential Information, the parties agree that any breach or
threatened breach of this Section 4 will cause irreparable harm to the Company
and that money damages alone would be an inadequate remedy. The
parties therefore agree that, in the event of any breach or threatened breach of
this Section 4, and in addition to all other rights and remedies available to
it, the Company may apply to any court of competent jurisdiction for specific
performance and/or injunctive or other relief, without a bond, in order to
enforce or prevent any violations of the provisions of this
Section 4.
(2) The
Participant shall immediately repay to the Company a cash sum in the principal
amount equal to all gross proceeds (before-tax) realized by the Participant upon
the sale or other disposition of shares occurring at any time during the period
commencing on the date that is three years before the date of the termination of
the Participant’s employment with the Company and ending on the date of the
breach or threatened breach of this Section 4 (the “Refund
Period”), together with interest accrued thereon from the date of
such breach or threatened breach, at the prime rate (compounded calendar
monthly) as published from time to time in The Wall Street Journal, electronic
edition (“Interest”); and
(3) The
Participant shall repay to the Company a cash sum equal to the fair market value
of all Shares and all or any portion of the option transferred by the
Participant as a gift or gifts at any time during the Refund Period, together
with Interest, and for which purpose, “fair market value” per Share shall be the
Fair Market Value of one Share on the date such gift occurs and per option Share
shall be the positive difference, if any, between the Fair Market Value of a
Share and the exercise price of such option.
(4) The
Participant acknowledges and agrees that nothing contained herein shall be
construed to be an excessive remedy to prohibit the Company from pursuing any
other remedies available to it for such actual or threatened breach, including
but not limited to the recovery of money damages, proximately caused by the
Participant’s breach of this Section 4.
(f) Survival. The
provisions of this Section 4 shall survive and continue in full force in
accordance with their terms notwithstanding any forfeiture, termination or
expiration of this option in accordance with its terms or any termination of the
Participant’s employment for any reason (whether voluntary or
involuntary).
5. Withholding
No Shares
will be issued pursuant to the exercise of this option unless and until the
Participant pays to the Company, or makes provision satisfactory to the Company
for payment of, any federal, state or local withholding taxes required by law to
be withheld in respect of this option.
6. Nontransferability of
Option
This
option may not be sold, assigned, transferred, pledged or otherwise encumbered
by the Participant, either voluntarily or by operation of law, except by will or
the laws of descent and distribution, and, during the lifetime of the
Participant, this option shall be exercisable only by the
Participant.
7. Provisions of the
Plan
This
option is subject to the provisions of the Plan, a copy of which is furnished to
the Participant with this option.
In
Witness Whereof, the Company has caused this option to be executed under its
corporate seal by its duly authorized officer. This option shall take
effect as a sealed instrument.
Centene
Corporation
By:
Chairman,
President and CEO
PARTICIPANT’S
ACCEPTANCE
The
undersigned hereby accepts the foregoing option and agrees to the terms and
conditions thereof. The undersigned hereby acknowledges receipt of a
copy of the Company’s Amended and Restated 2003 Stock Incentive
Plan.
Participant:
Dated: _________________