SECURITIES AND UNITED STATES EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
THE WELLCARE MANAGEMENT GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, $.01 PAR VALUE
- --------------------------------------------------------------------------------
(Title of Class of Securities)
949470 10 8
- --------------------------------------------------------------------------------
(CUSIP Number)
December 23, 1996
- --------------------------------------------------------------------------------
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box. |_|
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
(Continued on following pages)
(Page 1 of 18 Pages)
(List of Exhibits is on Page 5)
- ----------
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 (the "Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE>
CUSIP No. 949470 10 8 SCHEDULE 13D Page 2 of 18 Pages
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Robert W. Morey, Jr., S.S. ####-##-####
- --------------------------------------------------------------------------------
2 Check the Appropriate Box If a Member of a Group*
a. |_|
b. |X|
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds*
00 See Item 3.
- --------------------------------------------------------------------------------
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Item
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
U.S.A.
- --------------------------------------------------------------------------------
7 Sole Voting Power
Number of
Shares 787,157
Beneficially --------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 0
Person --------------------------------------------------------
With 9 Sole Dispositive Power
787,157
--------------------------------------------------------
10 Shared Dispositive Power
0
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
787,157 See Item 5(a).
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
15.1% See Item 5(a).
- --------------------------------------------------------------------------------
14 Type of Reporting Person*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 3 of 18 Pages
Item 3. Source and Amount of Funds or Other Consideration.
Item 3 is hereby supplemented as follows:
On January 7, 1997, RWM Management Co. Defined Benefit Pension Plan
(the "Plan") purchased 2,000 shares of Common Stock, $.01 par value (the "Common
Stock"), of The WellCare Management Group, Inc. (the "Issuer"), a corporation
organized under the laws of the State of New York. The Plan acquired such shares
of Common Stock at a price of $9.25 per share (for the aggregate consideration
of $18,500), using funds from the Plan. Robert W. Morey, Jr., the reporting
person, is trustee of the Plan; however, Mr. Morey disclaims beneficial
ownership of all shares of Common Stock beneficially owned by the Plan.
Item 5. Interest in Securities of the Issuer.
Item 5 is hereby supplemented as follows:
(a) The aggregate number of shares of Common Stock and the
percentage of outstanding shares of Common Stock (based upon the 4,928,684
shares of Common Stock outstanding on December 31, 1996 as represented by the
Issuer) beneficially owned by Mr. Morey as of the close of business on December
31, 1996, are set forth below:
Shares Percentage of
Name of Holder Beneficially Owned Outstanding Shares
-------------- ------------------ ------------------
Robert W. Morey, Jr. 787,157 (1) 15.1% (2)
- ----------
(1) Includes 281,957 shares of Class A Common Stock, $.01 par value ("Class A
Common Stock"), which are identical to the shares of Common Stock in all
respects except that the Class A Common Stock has ten votes per share as
compared to one vote for each share of Common Stock, is not transferable,
and is convertible into shares of Common Stock on a share-for-share basis
at the option of the holder. Also includes 2,000 shares of Common Stock
purchased by the Plan on January 7, 1997. Mr. Morey, the trustee of the
Plan, disclaims beneficial ownership of all shares of Common Stock
beneficially owned by the Plan.
(2) As a result of his Class A Common Stock ownership, Mr. Morey is the
beneficial owner of 17.9% of the total combined votes of the outstanding
shares of Common Stock and Class A Common Stock (based on the 4,928,684
shares of Common Stock and 1,369,492 shares of Class A Common Stock
outstanding as of December 31, 1996 as represented by the Issuer).
(b) Mr. Morey has sole power to vote or direct the vote and sole
power to dispose of or direct the disposition of the shares of Common Stock and
Class A Common Stock beneficially owned by him.
(c) On January 7, 1997, the Plan purchased 2,000 shares of Common
Stock at a price of $9.25 per share (for the aggregate consideration of
$18,500), using funds from the Plan. Mr. Morey is trustee of the Plan; however,
Mr. Morey disclaims beneficial ownership of all shares of Common Stock
beneficially owned by the Plan.
<PAGE>
Page 4 of 18 Pages
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
Item 6 is hereby supplemented as follows:
On December 16, 1996, the Compensation Committee of the Board of
Directors of the Issuer (the "Compensation Committee") granted Mr. Morey
non-incentive stock options (the "Options") to purchase an aggregate of 600,000
shares of Common Stock under the Issuer's 1996 Non-Incentive Executive Stock
Option Plan (the "Plan", a copy of which is attached as Exhibit 1 hereto and
incorporated herein by reference thereto). Mr. Morey received an Option (a) to
purchase 450,000 shares of Common Stock at a price of $10.00 per share pursuant
to a Non-Incentive Stock Option Agreement, dated December 23, 1996 (a copy of
which is attached as Exhibit 2 hereto and incorporated herein by reference
thereto) and (b) to purchase 150,000 shares of Common Stock at a price of $15.00
per share pursuant to a Non-Incentive Stock Option Agreement, dated December 23,
1996 (a copy of which is attached as Exhibit 3 hereto and incorporated herein by
reference thereto) (collectively, the "Stock Option Agreements"). The Plan was
approved by Issuer's Board of Directors on December 23, 1996. The Plan and the
Stock Option Agreements are subject to approval by the shareholders of the
Issuer.
After shareholder approval of the Plan and the Stock Option
Agreements, Mr. Morey's Options may be exercised in their entirety prior to
their expiration on December 22, 2001, but only upon the occurrence of any of
the following:
(a) If the closing sale price of the Issuer's Common Stock (or the
average of the closing bid and asked prices if closing sale prices
are not reported) for thirty consecutive Trading Days (as defined in
the Stock Option Agreements) is equal to or greater than (i) $20.00
per share for the Option to purchase 450,000 shares or (ii) $25.00
per share for the Option to purchase 150,000 shares;
(b) A Change of Control (as defined in the Stock Option Agreements)
of the Issuer, if (i) on the date of such Change of Control the Fair
Market Value (as defined in the Plan) of the Issuer's Common Stock
is equal to or greater than (A) $17.50 per share for the Option to
purchase 450,000 shares or (B) $22.50 per share for the Option to
purchase 150,000 shares or (ii) shares of Common Stock are purchased
at a price in the transaction implementing such Change of Control
equal to or greater than (A) $17.50 per share for the Option to
purchase 450,000 shares or (B) $22.50 per share for the Option to
purchase 150,000 shares. An Option not meeting either (i) or (ii)
upon a Change of Control of the Issuer shall immediately terminate,
lapse and expire;
(c) Mr. Morey's death or Disability (as defined in Section 22(e)(3)
of the Internal Revenue Code of 1986, as amended); or
(d) The thirty day period commencing November 23, 2001 and ending
December 22, 2001.
Notwithstanding the foregoing, the Options shall immediately
terminate, lapse and expire upon the occurrence of any of the following: (i) Mr.
Morey's refusal, prior to December 31, 1999, to act at the Issuer's request as
Chief Executive Officer of the Issuer; (ii) Mr. Morey's refusal, prior to
December 31, 2001, to act at the Issuer's request as a director of the Issuer;
(iii) Mr. Morey's removal as Chief Executive Officer by the Issuer With Cause
(as defined below) or (iv) Mr. Morey's removal as a director by the Issuer "for
cause" pursuant to the procedures set forth in the Issuer's charter. The term
"With Cause" shall mean (a) Mr. Morey's willful failure to perform Mr. Morey's
reasonable responsibilities and duties attendant to Mr. Morey's position with
the Issuer or (b) Mr. Morey's indictment for any felony.
<PAGE>
Page 5 of 18 Pages
Item 7. Material to be filed as Exhibits.
Item 7 is hereby supplemented as follows:
1. Copy of Issuer's 1996 Non-Incentive Executive Stock Option
Plan that was approved by Issuer's Board of Directors on
December 23, 1996 (subject to approval by Issuer's
shareholders).
2. Copy of Non-Incentive Stock Option Agreement, dated December
23, 1996, between Issuer and Mr. Morey, granting Mr. Morey an
Option to purchase 450,000 shares of Common Stock at $10.00
per share (subject to approval by Issuer's shareholders).
3. Copy of Non-Incentive Stock Option Agreement, dated December
23, 1996, between Issuer and Mr. Morey, granting Mr. Morey an
Option to purchase 150,000 shares of Common Stock at $15.00
per share (subject to approval by Issuer's shareholders).
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
February 10, 1997
-------------------------------------------------
(Date)
/s/ Robert W. Morey, Jr.
-------------------------------------------------
(Signature)
Robert W. Morey, Jr.
Chairman of the Board and Chief Executive Officer
-------------------------------------------------
(Name/Title)
Exhibit 1
THE WELLCARE MANAGEMENT GROUP, INC.
1996 NON-INCENTIVE EXECUTIVE STOCK OPTION PLAN
1. Purpose of Plan.
The purpose of this 1996 Non-Incentive Executive Stock Option Plan
("Plan") of The WellCare Management Group, Inc. ("Company") is to acknowledge
exceptional services to the Company by senior executives and to provide an added
incentive for such senior executives to continue to provide such services and to
promote the best interests of the Company.
2. Stock Subject to the Plan.
An aggregate of 650,000 shares of the Company's Common Stock, par
value $0.01 per share ("Common Stock"), subject, however, to adjustment or
change pursuant to Section 8 hereof, shall be reserved for issuance upon the
exercise of non-incentive stock options which may be granted from time to time
in accordance with the Plan ("Options"). Such shares may be, in whole or in
part, as the Compensation Committee of the Board of Directors ("Committee")
shall from time to time determine, authorized but unissued shares or issued
shares which have been reacquired by the Company. If, for any reason, an Option
shall lapse, expire or terminate without having been exercised in full, the
unpurchased shares covered thereby shall again be available for purposes of the
Plan. Options to purchase in excess of 600,000 shares of Common Stock may not be
granted to any one senior executive.
3. Administration.
(a) The Board of Directors has appointed the Committee from among
its members to administer and help set policy for the Plan.
The Committee shall at all times be comprised only of three or
more Non-Employee Directors (as defined in Rule 16b-3 under
the Securities Exchange Act of 1934, as amended ("Exchange
Act")), and shall have and may exercise any and all of the
powers relating to the administration of the Plan and the
grant of Options thereunder as are set forth herein. The Board
of Directors shall have the power at any time to fill
vacancies in, to change the membership of, or to discharge
such Committee. The Committee shall select one of its members
as its chairman and shall hold its meetings at such time and
at such places as it shall deem advisable. At such meetings, a
majority of the Committee shall constitute a quorum and such
majority shall determine its action; provided, however, any
action may be taken without a meeting by written consent of
all the members of the Committee. The Committee shall keep
minutes of its proceedings and
<PAGE>
shall report the same to the Board of Directors at the meeting
next succeeding.
(b) The Committee shall administer the Plan and, subject to the
provisions of the Plan, shall have sole authority in its
discretion to determine the persons to whom, and the time or
times at which, Options shall be granted and the number of
shares to be subject to each such Option; provided, however,
that options to purchase in excess of 600,000 shares may not
be granted to any one senior executive. In making such
determinations, the Committee may take into account the nature
of the services rendered by such persons, their contributions
and potential contributions to the Company's success and such
other factors as the Committee in its sole discretion may deem
relevant. Subject to the express provisions of the Plan, the
Committee shall also have the authority to interpret the Plan,
to prescribe, amend and rescind rules and regulations relating
thereto, to determine the terms and provisions of the
respective Option Agreements, and to make all other
determinations necessary or advisable for the administration
of the Plan, all of which determinations shall be conclusive
and not subject to review.
4. Eligibility for Receipt of Options.
Options may be granted only to senior executives of the Company.
5. Option Price.
The purchase price of the shares of Common Stock under each Option
shall be determined by the Committee, which determination shall be conclusive
and not subject to review, but in no event shall such purchase price be less
than the Fair Market Value (as defined below) of the Common Stock on the date of
grant.
In determining the fair market value of the Common Stock as of a
specified date ("Fair Market Value"), the Committee shall consider, if the
Common Stock is: (a) publicly traded and listed on the New York Stock Exchange
or another national securities exchange or The Nasdaq National Market, the
closing sale price of the Common Stock on the business day immediately preceding
the date as of which the Fair Market Value is being determined, or on the next
preceding date on which such Common Stock is traded if no Common Stock was
traded on such immediately preceding business day, or, if the Common Stock is
not so listed on a national securities exchange or The Nasdaq National Market,
but publicly traded, the representative closing sale price in the
over-the-counter market as quoted by the National Quotation Bureau or a
recognized dealer in the Common Stock, on the date immediately preceding the
date as of which the Fair Market Value is being determined, or on the next
2
<PAGE>
preceding date on which such Common Stock is traded if no Common Stock was
traded on such immediately preceding business day; or (b) not publicly traded,
the fair market value as determined by the Committee in good faith based on such
factors as it shall deem appropriate.
6. Term and Termination of Options.
The term of each Option shall be five years from the date of grant
but shall terminate, lapse and expire at such earlier time or times as the
Committee provides in the Option Agreement governing such Option. No Option may
be exercised following its termination, lapse or expiration.
7. Exercise of Options.
(a) Options shall be exercisable within the times or upon the
events determined by the Committee as set forth in the Option
Agreements.
(b) An Option may not be exercised for fractional shares of the
Company's Common Stock.
(c) The exercise of an Option shall be contingent upon receipt by
the Company from the holder of such Option of a written
representation that at the time of such exercise it is the
Optionholder's then present intention to acquire the Option
shares for investment and not with a view to the distribution
or resale thereof (unless a Registration Statement covering
the shares purchasable upon exercise of the Options shall have
been declared effective by the Securities and Exchange
Commission) and upon receipt by the Company of payment for the
full purchase price of such shares.
(d) Payment for the shares of Common Stock may be made (i) in cash
or by check to the order of the Company, (ii) by surrender of
shares of Common Stock having a Fair Market Value equal to the
exercise price of the Option or (iii) by any combination of
the foregoing where approved by the Committee in its sole
discretion; provided, however, in the event of payment for the
shares of Common Stock by method (ii) above, the shares of
Common Stock so surrendered, if originally issued to the
Optionholder upon exercise of an Option(s) granted by the
Company, must have been held by the Optionholder for more than
six months.
(e) The holder of an Option shall have none of the rights of a
shareholder with respect to the shares purchasable upon
exercise of the Option until a certificate for such shares
shall have been issued to the holder upon due exercise of the
Option.
3
<PAGE>
(f) The proceeds received by the Company upon exercise of an
Option shall be added to the Company's working capital and be
available for general corporate purposes.
8. Adjustments Upon Changes in Capitalization.
If at any time after the date of grant of an Option, the Company
shall by stock dividend, split-up, combination, reclassification or exchange, or
through merger or consolidation or otherwise, change its shares of Common Stock
into a different number or kind or class of shares or other securities or
property, then the number of shares covered by such Option and the price per
share thereof shall be proportionately adjusted for any such change by the
Committee, whose determination thereon shall be conclusive. In the event that a
fraction of a share results from the foregoing adjustment, said fraction shall
be eliminated and the price per share of the remaining shares subject to the
Option adjusted accordingly.
9. Vesting of Rights Under Options.
Nothing contained in the Plan or in any resolution adopted or to be
adopted by the Committee or the shareholders of the Company shall constitute the
vesting of any rights under any Option. The vesting of such rights shall take
place only when a written Option Agreement shall be duly executed and delivered
by and on behalf of the Company and the person to whom the Option shall be
granted.
10. Withholding Taxes.
Whenever under the Plan shares are to be issued in satisfaction of
the exercise of Options granted thereunder, the Company shall have the right to
require the recipient to remit to the Company an amount sufficient to satisfy
federal, state and local withholding tax requirements prior to the delivery of
any certificate or certificates for such shares.
11. Termination and Amendment.
The Committee may at any time terminate, amend or modify this Plan
in any respect (including, but not limited to, any form of grant, agreement or
instrument to be executed pursuant to this Plan); provided, however, that
shareholder approval shall be required to be obtained by the Company if required
to comply with the listed company requirements of The Nasdaq National Market or
of a national securities exchange on which the shares of Common Stock are
traded, or other applicable provisions of state or federal law or
self-regulatory agencies; provided, further, that no termination, amendment or
modification of this Plan may, without the written consent of such Optionholder,
materially adversely affect the rights of a holder of an Option previously
granted under this Plan.
4
<PAGE>
12. Applicable Law.
The validity, interpretation and enforcement of this Plan shall be
governed in all respects by the laws of the State of New York and the United
States of America.
13. Issuance of Shares.
The shares of Common Stock, when issued and paid for pursuant to the
Options granted hereunder, shall be fully paid and non-assessable shares.
14. Term of Plan.
No Option shall be granted pursuant to this Plan on or after
December 22, 2006, but Options theretofore granted may extend beyond that date
and the terms of this Plan shall continue to apply to such Options and to any
shares of Common Stock acquired upon exercise thereof.
5
Exhibit 2
NON-INCENTIVE STOCK OPTION AGREEMENT
To: ROBERT W. MOREY, JR.
We are pleased to notify you that by the determination of the
Compensation Committee (hereinafter called the "Committee") a non-incentive
stock option to purchase 450,000 shares of the Common Stock of The WellCare
Management Group, Inc. (herein called the "Company") at a price of $10.00 per
share has this 23rd day of December, 1996 been granted to you under the
Company's 1996 Non-Incentive Executive Stock Option Plan (herein called the
"Plan"). This option and the Plan are subject to shareholder approval and,
following such approval, this option may be exercised only upon the terms and
conditions set forth below. All capitalized terms not herein defined shall have
the meanings set forth in the Plan, unless the context requires a different
meaning.
1. Purpose of Option.
The purpose of this Plan is to acknowledge exceptional services to
the Company by senior executives and to provide an added incentive for such
senior executives to continue to provide such services and to promote the best
interests of the Company.
2. Acceptance of Option Agreement.
Your execution of this non-incentive stock option agreement will
indicate your acceptance of and your willingness to be bound by its terms; it
imposes no obligation upon you to purchase any of the shares purchasable
hereunder. Your obligation to purchase shares will arise only upon your exercise
of this option in the manner set forth in Section 3 hereof.
3. When Option May Be Exercised.
If this option has not terminated, lapsed or expired pursuant to
Section 6 hereof, this option may be exercised in its entirety prior to its
expiration on December 22, 2001, but only upon the occurrence of any of the
following:
(a) If the closing sale price of the Company's Common Stock (or the
average of the closing bid and asked prices if closing sale prices
are not reported) for thirty consecutive Trading Days (as defined
below) is equal to or greater than $20.00 per share. The term
"Trading Day" shall mean a day on which the principal national
securities exchange (or The Nasdaq National Market) on which the
Common Stock is listed or admitted to trading is open for the
transaction of business;
1
<PAGE>
(b) A Change of Control (as defined below) of the Company, if (i) on
the date of such Change of Control the Fair Market Value of the
Company's Common Stock is equal to or greater than $17.50 per share
or (ii) shares of Common Stock are purchased at a price equal to or
greater than $17.50 per share in the transaction implementing such
Change of Control. If neither (i) nor (ii) above occurs upon a
Change of Control of the Company, this option shall immediately
terminate, lapse and expire. For purposes of this Section 3, a
"Change In Control" shall mean (x) the sale or other disposition to
a person, entity or group (as such term is defined in Rule 13d-5
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) of 50% or more of the Company's consolidated assets or (y)
the acquisition of 50% or more of the outstanding shares of Common
Stock by a person or group (as such term is defined in Rule 13d-5
under the Exchange Act);
(c) Your death or Disability. The term "Disability" shall have the
meaning set forth in Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended (the "Code"); or
(d) The thirty day period commencing November 23, 2001 and ending
December 22, 2001.
4. How Option May Be Exercised.
This option is exercisable by a written notice signed by you and
delivered to the Company at its executive offices signifying your election to
exercise this option. The notice must state the number of shares of Common Stock
being purchased, must contain a statement by you (in a form acceptable to the
Company) that such shares are being acquired by you for investment and not with
a view to their distribution or resale (unless a registration statement covering
the shares purchasable has been declared effective by the Securities and
Exchange Commission) and must be accompanied by payment as set forth in Section
5 hereof for the full purchase price of the shares being purchased, plus such
amount, if any, as is required for withholding taxes. Notwithstanding anything
herein to the contrary, this option may not be exercised for less than fifty
thousand shares at any one time (or the remaining shares then purchasable if
less than fifty thousand).
If notice of the exercise of this option is given by a person or
persons other than you, the Company may require, as a condition to the exercise
of this option, the submission to the Company of appropriate proof of the right
of such person or persons to exercise this option.
Certificates for shares of the Common Stock so purchased will be
issued as soon as practicable. The Company, however, shall not be required to
issue or deliver a certificate for any shares until it has complied with all
requirements of the Securities Act of 1933, the Exchange Act, The Nasdaq
National Market or any stock exchange on which the Company's Common Stock may
then be listed and all applicable state laws in connection with the issuance or
sale of such shares or the listing of such shares thereon. Further, in the event
a registration statement relating to the shares of Common Stock purchasable upon
exercise of this option has
2
<PAGE>
been declared effective by the Securities and Exchange Commission, you agree by
accepting this option to refrain from selling or offering to sell any of the
shares of Common Stock purchasable hereunder for such reasonable period of time
after the effective date of a registration statement relating to an underwritten
offering of securities of the Company as may be requested by the managing
underwriter of such underwritten offering and approved by the Company's Board of
Directors.
Until the issuance of the certificate for such shares, you or such
other person as may be entitled to exercise this option, shall have none of the
rights of a shareholder with respect to the shares purchasable upon exercise of
this option.
5. Payment of Options.
Payment for the shares of Common Stock may be made (i) in cash or by
check payable to the order of the Company, (ii) by surrender of shares of Common
Stock having a Fair Market Value equal to the exercise price of this option; or
(iii) by any combination of the foregoing where approved by the Committee in its
sole discretion; provided, however, in the event of payment for the shares of
Common Stock by method (ii) above, the shares of Common Stock so surrendered, if
originally issued to you upon exercise of an option granted by the Company, must
have been held by you for more than six months.
6. Term and Termination of Options.
This option expires on December 22, 2001 at 5 p.m., New York time,
whether or not it has been duly exercised.
Notwithstanding anything herein to the contrary, this option shall
immediately terminate, lapse and expire upon the occurrence of any of the
following: (i) your refusal, prior to December 31, 1999, to act at the Company's
request as Chief Executive Officer of the Company; (ii) your refusal, prior to
December 31, 2001, to act at the Company's request as a director of the Company;
(iii) your removal as Chief Executive Officer by the Company With Cause (as
defined below) or (iv) your removal as a director by the Company "for cause"
pursuant to the procedures set forth in the Company's charter. For purposes of
this Section 6, the term "With Cause" shall mean (a) your willful failure to
perform your reasonable responsibilities and duties attendant to your position
with the Company or (b) your indictment for any felony.
If you cease being either Chief Executive Officer or a director of
the Company other than by reason of (i) through (iv) above, including without
limitation by reason of your death or Disability, this option shall continue in
full force and effect until its expiration on December 22, 2001.
3
<PAGE>
7. Subject to Terms of the Plan.
This non-incentive stock option agreement shall be subject in all
respects to the terms and conditions of the Plan. In the event of any question
or controversy relating to the terms of the Plan, the decision of the Committee
shall be conclusive.
8. Tax Status.
This option does not qualify as an "incentive stock option" under
the provisions of Section 422 of the Code and the income tax implications of
your receipt of a non-incentive stock option and your exercise of such an option
should be discussed with your tax counsel.
Sincerely yours,
THE WELLCARE MANAGEMENT GROUP, INC.
By: /s/ Marystephanie Corsones
----------------------------------------------
Name: Marystephanie Corsones
Title: Vice President and Chief Financial Officer
AGREED TO AND ACCEPTED:
/s/ Robert W. Morey, Jr.
- -------------------------
Signature of Optionholder
4
Exhibit 3
NON-INCENTIVE STOCK OPTION AGREEMENT
To: ROBERT W. MOREY, JR.
We are pleased to notify you that by the determination of the
Compensation Committee (hereinafter called the "Committee") a non-incentive
stock option to purchase 150,000 shares of the Common Stock of The WellCare
Management Group, Inc. (herein called the "Company") at a price of $15.00 per
share has this 23rd day of December, 1996 been granted to you under the
Company's 1996 Non-Incentive Executive Stock Option Plan (herein called the
"Plan"). This option and the Plan are subject to shareholder approval and,
following such approval, this option may be exercised only upon the terms and
conditions set forth below. All capitalized terms not herein defined shall have
the meanings set forth in the Plan, unless the context requires a different
meaning.
1. Purpose of Option.
The purpose of this Plan is to acknowledge exceptional services to
the Company by senior executives and to provide an added incentive for such
senior executives to continue to provide such services and to promote the best
interests of the Company.
2. Acceptance of Option Agreement.
Your execution of this non-incentive stock option agreement will
indicate your acceptance of and your willingness to be bound by its terms; it
imposes no obligation upon you to purchase any of the shares purchasable
hereunder. Your obligation to purchase shares will arise only upon your exercise
of this option in the manner set forth in Section 3 hereof.
3. When Option May Be Exercised.
If this option has not terminated, lapsed or expired pursuant to
Section 6 hereof, this option may be exercised in its entirety prior to its
expiration on December 22, 2001, but only upon the occurrence of any of the
following:
(a) If the closing sale price of the Company's Common Stock (or the
average of the closing bid and asked prices if closing sale prices
are not reported) for thirty consecutive Trading Days (as defined
below) is equal to or greater than $25.00 per share. The term
"Trading Day" shall mean a day on which the principal national
securities exchange (or The Nasdaq National Market) on which the
Common Stock is listed or admitted to trading is open for the
transaction of business;
1
<PAGE>
(b) A Change of Control (as defined below) of the Company, if (i) on
the date of such Change of Control the Fair Market Value of the
Company's Common Stock is equal to or greater than $22.50 per share
or (ii) shares of Common Stock are purchased at a price equal to or
greater than $22.50 per share in the transaction implementing such
Change of Control. If neither (i) nor (ii) above occurs upon a
Change of Control of the Company, this option shall immediately
terminate, lapse and expire. For purposes of this Section 3, a
"Change In Control" shall mean (x) the sale or other disposition to
a person, entity or group (as such term is defined in Rule 13d-5
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) of 50% or more of the Company's consolidated assets or (y)
the acquisition of 50% or more of the outstanding shares of Common
Stock by a person or group (as such term is defined in Rule 13d-5
under the Exchange Act);
(c) Your death or Disability. The term "Disability" shall have the
meaning set forth in Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended (the "Code"); or
(d) The thirty day period commencing November 23, 2001 and ending
December 22, 2001.
4. How Option May Be Exercised.
This option is exercisable by a written notice signed by you and
delivered to the Company at its executive offices signifying your election to
exercise this option. The notice must state the number of shares of Common Stock
being purchased, must contain a statement by you (in a form acceptable to the
Company) that such shares are being acquired by you for investment and not with
a view to their distribution or resale (unless a registration statement covering
the shares purchasable has been declared effective by the Securities and
Exchange Commission) and must be accompanied by payment as set forth in Section
5 hereof for the full purchase price of the shares being purchased, plus such
amount, if any, as is required for withholding taxes. Notwithstanding anything
herein to the contrary, this option may not be exercised for less than fifty
thousand shares at any one time (or the remaining shares then purchasable if
less than fifty thousand).
If notice of the exercise of this option is given by a person or
persons other than you, the Company may require, as a condition to the exercise
of this option, the submission to the Company of appropriate proof of the right
of such person or persons to exercise this option.
Certificates for shares of the Common Stock so purchased will be
issued as soon as practicable. The Company, however, shall not be required to
issue or deliver a certificate for any shares until it has complied with all
requirements of the Securities Act of 1933, the Exchange Act, The Nasdaq
National Market or any stock exchange on which the Company's Common Stock may
then be listed and all applicable state laws in connection with the issuance or
sale of such shares or the listing of such shares thereon. Further, in the event
a registration statement relating to the shares of Common Stock purchasable upon
exercise of this option has
2
<PAGE>
been declared effective by the Securities and Exchange Commission, you agree by
accepting this option to refrain from selling or offering to sell any of the
shares of Common Stock purchasable hereunder for such reasonable period of time
after the effective date of a registration statement relating to an underwritten
offering of securities of the Company as may be requested by the managing
underwriter of such underwritten offering and approved by the Company's Board of
Directors.
Until the issuance of the certificate for such shares, you or such
other person as may be entitled to exercise this option, shall have none of the
rights of a shareholder with respect to the shares purchasable upon exercise of
this option.
5. Payment of Options.
Payment for the shares of Common Stock may be made (i) in cash or by
check payable to the order of the Company, (ii) by surrender of shares of Common
Stock having a Fair Market Value equal to the exercise price of this option; or
(iii) by any combination of the foregoing where approved by the Committee in its
sole discretion; provided, however, in the event of payment for the shares of
Common Stock by method (ii) above, the shares of Common Stock so surrendered, if
originally issued to you upon exercise of an option granted by the Company, must
have been held by you for more than six months.
6. Term and Termination of Options.
This option expires on December 22, 2001 at 5 p.m., New York time,
whether or not it has been duly exercised.
Notwithstanding anything herein to the contrary, this option shall
immediately terminate, lapse and expire upon the occurrence of any of the
following: (i) your refusal, prior to December 31, 1999, to act at the Company's
request as Chief Executive Officer of the Company; (ii) your refusal, prior to
December 31, 2001, to act at the Company's request as a director of the Company;
(iii) your removal as Chief Executive Officer by the Company With Cause (as
defined below) or (iv) your removal as a director by the Company "for cause"
pursuant to the procedures set forth in the Company's charter. For purposes of
this Section 6, the term "With Cause" shall mean (a) your willful failure to
perform your reasonable responsibilities and duties attendant to your position
with the Company or (b) your indictment for any felony.
If you cease being either Chief Executive Officer or a director of
the Company other than by reason of (i) through (iv) above, including without
limitation by reason of your death or Disability, this option shall continue in
full force and effect until its expiration on December 22, 2001.
3
<PAGE>
7. Subject to Terms of the Plan.
This non-incentive stock option agreement shall be subject in all
respects to the terms and conditions of the Plan. In the event of any question
or controversy relating to the terms of the Plan, the decision of the Committee
shall be conclusive.
8. Tax Status.
This option does not qualify as an "incentive stock option" under
the provisions of Section 422 of the Code and the income tax implications of
your receipt of a non-incentive stock option and your exercise of such an option
should be discussed with your tax counsel.
Sincerely yours,
THE WELLCARE MANAGEMENT GROUP, INC.
By: /s/ Marystephanie Corsones
----------------------------------------------
Name: Marystephanie Corsones
Title: Vice President and Chief Financial Officer
AGREED TO AND ACCEPTED:
/s/ Robert W. Morey, Jr.
- -------------------------
Signature of Optionholder
4
