Stock Option Agreement for Non-Employee Directors - Mid Atlantic Medical Services Inc.
MID ATLANTIC MEDICAL SERVICES, INC.
STOCK OPTION AGREEMENT FOR NON-EMPLOYEE DIRECTORS
AGREEMENT ("Agreement") dated the date indicated on the attached Face Sheet
by and between Mid Atlantic Medical Services, Inc., a Delaware corporation
("Corporation"), and the person indicated on the attached Face Sheet, a
non-employee director of the Corporation and/or one of its Subsidiaries
("Optionee").
WHEREAS, the Corporation desires to have Optionee continue to serve on its
Board of Directors and to provide Optionee with an incentive by sharing in the
success of the Corporation;
WHEREAS, in order to provide such an incentive to its non-employee
directors, the Corporation has adopted the Mid Atlantic Medical Services, Inc.
2003 Non-Qualified Stock Option Plan ("Plan");
WHEREAS, the option granted hereby is not intended to qualify as an
"incentive stock option" within the meaning of Section 422 or any successor
provision of the Internal Revenue Code of 1986, as amended; and
WHEREAS, unless otherwise provided herein, capitalized terms used in this
Agreement shall have the meaning given them in the Plan;
NOW, THEREFORE, in consideration of the mutual covenants and
representations herein contained and intending to be legally bound, the parties
hereto agree as follows:
1. Number of Shares and Price. The Corporation hereby grants to the
Optionee an option ("Option") to purchase the number of shares of Common Stock
set forth on the attached Face Sheet of this Agreement. The exercise price per
share of Common Stock of the Option shall be as is set forth on the attached
Face Sheet of this Agreement, such price being the Fair Market Value per share
of Common Stock on the Date of Grant of the Option. The Option is not intended
to qualify as an "incentive stock option" under Section 422 of the Code.
2. Term and Exercise. The Option shall expire five (5) years from the date
hereof. The Option is exercisable in full on the Date of Grant. If the
Optionee's service with the Corporation terminates for any reason or if the
Optionee ceases to be a Non-Employee Director, the Option may be exercised but
only to the extent it was exercisable on the date of such termination of service
until the Option expires in accordance with the first sentence of this Section
2.
Notwithstanding anything to the contrary in this Section 2, if one of the
events specified in Section 7.05(d)(i), (ii), (iii) or (iv) of the Plan occurs,
the provisions of such Section 7.05(d) shall determine when the Option becomes
exercisable, when it may be exercised and when it expires.
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3. Exercise Procedures. The Option shall be exercisable by written notice
to the Corporation, which must be received by the Secretary of the Corporation
not later than 5:00 P.M. local time at the principal executive office of the
Corporation on the expiration date of the Option. Such written notice shall set
forth (a) the number of shares of Common Stock being purchased, (b) the total
exercise price for the shares of Common Stock being purchased, (c) the exact
name as it should appear on the stock certificate(s) to be issued for the shares
of Common Stock being purchased, and (d) the address to which the stock
certificate(s) should be sent. The exercise price of shares of Common Stock
purchased upon exercise of the Option shall be paid in full (a) in cash, (b) by
delivery to the Corporation of shares of Common Stock (which shares of Common
Stock must have been held for at least six months), (c) in any combination of
cash and shares of Common Stock, or (d) by delivery of such other consideration
as the Committee deems appropriate and in compliance with applicable law
(including payment in accordance with a cashless exercise program approved by
the Committee). If any shares of Common Stock shall be transferred to the
Corporation to satisfy all or any part of the exercise price, the part of the
exercise price deemed to have been satisfied by such transfer of shares of
Common Stock shall be equal to the product derived by multiplying the Fair
Market Value as of the date of exercise times the number of shares of Common
Stock transferred to the Corporation. Any shares of Common Stock tendered in
payment shall be duly endorsed in blank or accompanied by stock powers duly
endorsed in blank. The Optionee may not transfer to the Corporation in
satisfaction of the exercise price any fraction of a share of Common Stock, and
any portion of the exercise price that would represent less than a full share of
Common Stock must be paid in cash by the Optionee. Subject to Sections 7 and 8
hereof, certificates for the purchased shares of Common Stock will be issued and
delivered to the Optionee as soon as practicable after the receipt of such
payment of the exercise price; provided, however, that delivery of any such
shares of Common Stock shall be deemed effected for all purposes when a stock
transfer agent of the Corporation shall have deposited such certificates in the
United States mail, addressed to Optionee, at the address set forth on the last
page of this Agreement or to such other address as Optionee may from time to
time designate in a written notice to the Corporation. The Optionee shall not be
deemed for any purpose to be a shareholder of the Corporation in respect of any
shares of Common Stock as to which the Option shall not have been exercised, as
herein provided, until such shares of Common Stock have been issued to Optionee
by the Corporation hereunder.
4. Plan Provisions Control Option Terms; Modifications. The Option is
granted pursuant and subject to the terms and conditions of the Plan, the
provisions of which are incorporated herein by reference. If any provision of
this Agreement conflicts with any of the terms in the Plan as constituted on the
Date of Grant, the terms of the Plan as constituted on the Date of Grant shall
control. Except as provided in Sections 7.03 and 7.05 of the Plan, the Option
shall not be modified after the Date of Grant except by express written
agreement between the Corporation and the Optionee; provided, however, that any
such modification (a) shall not be inconsistent with the terms of the Plan, and
(b) shall be approved by the Committee. In addition, the repricing of any Option
granted under this Plan shall require shareholder approval.
5. Limitations on Transfer. The Option may not be assigned or transferred
other than by will, by the laws of descent and distribution, or pursuant to a
domestic relations order.
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6. Taxes. The Corporation shall be entitled to withhold (or secure payment
from the Optionee in lieu of withholding) the amount of any withholding or other
tax required by law to be withheld or paid by the Corporation with respect to
any shares of Common Stock issuable under this Agreement, and the Corporation
may defer issuance of shares of Common Stock upon the exercise of the Option
unless the Corporation is indemnified to its satisfaction against any liability
for any such tax. The amount of such withholding or tax payment shall be
determined by the Committee or its delegate and shall be payable by the Optionee
at such time as the Committee determines. The Optionee may satisfy his or her
tax withholding obligation by (a) having cash withheld from the Optionee's
salary or other compensation payable by the Corporation or a Subsidiary, (b) the
payment of cash to the Corporation, (c) the payment in shares of Common Stock
already owned by the Optionee valued at Fair Market Value, and/or (d) the
withholding from the Option, at the appropriate time, of a number of shares of
Common Stock sufficient, based upon the Fair Market Value of such shares of
Common Stock, to satisfy such tax withholding requirements. The Committee shall
be authorized, in its sole and absolute discretion, to establish such rules and
procedures relating to any such withholding methods as it deems necessary or
appropriate, including, without limitation, rules and procedures relating to
elections to have shares of Common Stock withheld upon exercise of the Option to
meet such withholding obligations.
7. No Exercise in Violation of Law. Notwithstanding any of the provisions
of this Agreement, the Optionee hereby agrees that he or she will not exercise
the Option granted hereby, and that the Corporation will not be obligated to
issue any shares of Common Stock to the Optionee hereunder, if the exercise
thereof or the issuance of such shares of Common Stock shall constitute a
violation by the Optionee or the Corporation of any provision of any law or
regulation of any governmental authority. Any determination in this connection
by the Committee shall be final, binding and conclusive.
8. Securities Law Compliance. The Optionee agrees, for the Optionee and his
or her Beneficiaries, with respect to all shares of Common Stock acquired
pursuant to the terms and conditions of the Plan and the Option (or any other
shares of Common Stock issued pursuant to a stock dividend or stock split
thereon or any securities issued in lieu thereof or in substitution or exchange
therefor), that the Optionee and his or her Beneficiaries will not sell or
otherwise dispose of these shares except pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Act"), or except in
a transaction that, in the opinion of counsel for the Corporation, is exempt
from registration under the Act. Further, the Corporation shall not be required
to sell or issue any shares under the Option if, in the opinion of the
Corporation, (a) the issuance of such shares would constitute a violation by the
Optionee or the Corporation of any applicable law or regulation of any
government authority or (b) the consent or approval of any governmental body is
necessary or desirable as condition of, or in connection with, the issuance of
such shares.
9. Adjustments. The existence of the Option shall not affect in any way the
right or power of the Corporation or its directors or shareholders to make or
authorize any or all adjustments, recapitalizations, reorganizations, or other
changes in the Corporation's capital structure or its business, or any merger or
consolidation of the Corporation, or any issuance of bonds, debentures,
preferred stock or prior preference stock ahead of or affecting the Common Stock
or the rights thereof, or dissolution or liquidation of the Corporation, or any
sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.
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10. Dispute Resolution. As a condition of granting the Option, the Optionee
agrees, for the Optionee and his or her Beneficiaries, that any dispute or
disagreement that may arise under or as a result of or pursuant to the Plan and
the Option shall be determined by the Committee in its sole and absolute
discretion, and any interpretation by the Committee of the terms of the Plan and
Option shall be final, binding and conclusive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above specified.
ATTEST: MID ATLANTIC MEDICAL SERVICES, INC.
__________________________ By:
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Thomas P. Barbera
President and Chief Executive Officer
By:
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Member of the Stock Option Committee
WITNESS: OPTIONEE
__________________________
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FACE SHEET
Notice Addresses:
Optionee:
-----------------------
4 Taft Court
Rockville, Maryland 20850
Corporation:
Mid Atlantic Medical Services, Inc.
4 Taft Court
Rockville, Maryland 20850
Attention: Secretary
Grant Date: _________________
Total Options Granted: _________________
Exercise Price per share of Common Stock: $________________
Expiration Date:
Optioned shares must be purchased within five (5) years from the date of
grant, which is ________________. That is, all options must be exercised by
________________.