EXHIBIT 10.12
PACIFICARE HEALTH SYSTEMS, INC.
FORM OF RESTRICTED STOCK GRANT NOTICE AND RESTRICTED STOCK GRANT AGREEMENT
UNDER THE 1996 STOCK OPTION PLAN
FOR OFFICERS AND KEY EMPLOYEES
PACIFICARE HEALTH SYSTEMS, INC. ("PacifiCare"), pursuant to its 1996 Stock
Option Plan for Officers and Key Employees (the "Plan"), hereby awards to the
Employee as a restricted stock award the number of shares of PacifiCare's Common
Stock set forth below (the "Shares"). This Award is subject to all of the terms
and conditions as set forth in this Restricted Stock Grant Notice (this "Grant
Notice") and in the Restricted Stock Grant Agreement (and any attachments
thereto) and the Plan, each of which is incorporated herein in its entirety.
Employee: __________________________________
Date of Grant: __________________________________
Vesting Commencement Date: __________________________________
Number of Shares: __________________________________
VESTING SCHEDULE: The Shares shall vest in periodic installments as follows:
o 1/3rd of the Shares shall vest on the second anniversary of the Date of
Xxxxx,
o 1/3rd of the Shares shall vest on the third anniversary of the Date of
Xxxxx, and
o 1/3rd of the Shares shall vest on the fourth anniversary of the Date of
Xxxxx.
ADDITIONAL TERMS/ACKNOWLEDGEMENTS: The undersigned Employee acknowledges receipt
of, and understands and agrees to, this Grant Notice, the Restricted Stock Grant
Agreement and the Plan. The Employee further acknowledges that as of the Date of
Grant, this Grant Notice, the Restricted Stock Grant Agreement (and attachments
thereto) and the Plan set forth the entire understanding between the Employee
and PacifiCare regarding the grant of restricted stock pursuant to this Grant
Notice:
IN WITNESS WHEREOF, this Grant Notice has been executed and delivered by
the parties hereto.
PACIFICARE HEALTH SYSTEMS, INC.
By:
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Employee
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Address
Social Security Number:
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1.
ATTACHMENT: Restricted Stock Grant Agreement
2.
PACIFICARE HEALTH SYSTEMS, INC.
RESTRICTED STOCK GRANT AGREEMENT
UNDER THE 1996 STOCK OPTION PLAN FOR OFFICERS AND KEY EMPLOYEES
Pursuant to the terms of the Restricted Stock Grant Notice (the "Grant
Notice") and this Restricted Stock Agreement (collectively, this "Agreement"),
PacifiCare Health Systems, Inc., a Delaware corporation ("PacifiCare"), grants
to the individual identified in the Grant Notice (the "Employee") shares of
PacifiCare's Common Stock under the following terms and conditions:
a. PacifiCare's management has implemented a long-term incentive program
by granting shares of restricted stock to certain employees;
b. The restricted stock to be used for this long-term incentive will be
granted pursuant to the 1996 Stock Option Plan for Officers and Key Employees,
the terms of which are hereby incorporated by reference and made a part of this
Agreement;
c. PacifiCare has determined that it would be to the advantage and best
interest of PacifiCare and its stockholders to grant the shares provided for
herein to the Employee as an inducement to remain in the service of PacifiCare
or its Subsidiaries and as an incentive for increased efforts during such
service; and
d. Any capitalized terms used throughout this Agreement, which are not
defined elsewhere herein, shall have the meanings ascribed to them in Section 1
of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 - Chief Financial Officer
"Chief Financial Officer" shall mean the Chief Financial Officer of
PacifiCare.
Section 1.2 - Code
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.3 - Committee
"Committee" shall mean the Compensation Committee of PacifiCare's Board
of Directors.
Section 1.4 - Common Stock
"Common Stock" shall mean the Common Stock, par value $.01 per share, of
PacifiCare.
Section 1.5 - Date of Grant
"Date of Grant" shall mean the date set forth in the Grant Notice.
3.
Section 1.6 - Plan
"Plan" shall mean the 1996 Stock Option Plan for Officers and Key
Employees.
Section 1.7 - President
"President" shall mean the President of PacifiCare.
Section 1.8 - Pronouns
The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.
Section 1.9 - Shares
"Shares" shall mean the shares of Common Stock granted to the Employee
under this Agreement.
Section 1.10 - Stock Unit Plan
"Stock Unit Plan" shall mean the Third Amended and Restated Stock Unit
Deferred Compensation Plan, as amended.
Section 1.11 - Subsidiary
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with PacifiCare if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50 percent
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
Section 1.12 - Termination of Employment
"Termination of Employment" shall mean (a) the time when the Employee
ceases to be an employee or officer of PacifiCare or a Subsidiary for any
reason, including, but not limited to, a termination by resignation, discharge,
death or retirement, or if the Employee is a consultant, the time when the
Employee is no longer retained by PacifiCare or any Subsidiary of PacifiCare in
any capacity whatsoever, but excluding terminations where there is a
simultaneous re-employment or re-appointment of the Employee as an employee or
officer by XxxxxxXxxx or a Subsidiary, or (b) with respect to an Employee who is
an employee or officer of a Subsidiary, the time when such Subsidiary ceases to
be a Subsidiary of PacifiCare. The Committee, in its absolute discretion, shall
have the power to determine the effect of all matters and questions relating to
Termination of Employment, including, but not limited to, the question of
whether a Termination of Employment resulted from a discharge for good cause,
and whether particular leaves of absence constitute Terminations of Employment.
ARTICLE II
GRANT OF SHARES
Section 2.1 - Grant of Shares
On the terms and conditions set forth in this Agreement, XxxxxxXxxx
agrees to grant to the Employee, and the Employee agrees to receive from
PacifiCare, the number of Shares set forth in the Grant Notice.
4.
Section 2.2 - Consideration
The Employee is receiving the Shares in consideration of past services rendered
during the Employee's employment with PacifiCare, so no payment is required from
the Employee for the Shares; provided however, that if the Employee is receiving
the Shares in connection with the Employee's initial employment, the Employee
shall pay PacifiCare an amount equal to the aggregate par value of the Shares.
Section 2.3 - Rights as a Stockholder
Unless the receipt of the Shares is deferred pursuant to Article IV,
upon the Date of Grant, the Employee shall have all rights as a stockholder of
PacifiCare, including without limitation the right to vote the Shares. If the
Shares do not vest and are forfeited, the Employee will lose any and all rights
as a stockholder with respect to the forfeited Shares.
Section 2.4 - Escrow
Upon the Date of Grant, the certificates for the Shares not deferred
pursuant to Article IV (the "Non-Deferred Shares") shall be deposited in escrow
with PacifiCare or an agent acting on behalf of PacifiCare to be held in
accordance with the provisions of this Agreement. Any new, substituted or
additional securities or other property described in Section 2.6 below shall
immediately be delivered to PacifiCare or its agent to be held in escrow until
vesting of the Non-Deferred Shares. All regular cash dividends, if any, on the
Non-Deferred Shares (or other securities at the time held in escrow) shall be
paid directly to the Employee and shall not be held in escrow. The Non-Deferred
Shares shall be released from escrow to the Employee within thirty (30) days
upon vesting of the Non-Deferred Shares as provided in Section 3.2 of this
Agreement, together with any other assets or securities held in escrow
hereunder. If the Non-Deferred Shares do not vest as provided herein, the
Non-Deferred Shares shall be surrendered to PacifiCare for cancellation.
Section 2.5 - No Retention Rights
Nothing in this Agreement or in the Plan shall confer upon the Employee
a right to continue in the employ of PacifiCare or any Subsidiary or shall
interfere with or restrict in any way the rights of PacifiCare and its
Subsidiaries, which are hereby expressly reserved, to discharge the Employee.
Section 2.6 - Additional Shares or Substituted Securities
In the event that the outstanding shares of Common Stock are hereafter
changed into or exchanged for a different number or kind of shares or other
securities of PacifiCare, or of another corporation, by reason of
reorganization, merger, consolidation, recapitalization, reclassification, stock
split, stock dividend or combination of shares, or in the event of extraordinary
cash or non-cash dividends being declared with respect to the outstanding shares
of Common Stock or other similar transactions, proportionate adjustments shall
be made to the Shares by the Committee.
ARTICLE III
VESTING; RISKS OF FORFEITURE
Section 3.1 - Risk of Forfeiture
The Shares shall initially be restricted Shares and shall be subject to
the risk of forfeiture. Upon an Employee's Termination of Employment for any
reason, except death or Disability, prior to the vesting of the Shares, such
Employee shall lose all rights to any and all unvested Shares.
Section 3.2 - Vesting of Shares
Subject to Sections 3.1 and 3.3, beneficial ownership of the Shares
shall vest on the date or dates set forth in the Grant Notice (each, a "Vesting
Date").
5.
Section 3.3 - Acceleration of Vesting
(a) Notwithstanding anything to the contrary in Section 3.2 hereof or
any provisions in the Plan, the Employee acknowledges and agrees that instead of
such contrary provisions, beneficial ownership of all of the Shares shall vest
immediately upon the first to occur of the following events:
(i) Employee's death;
(ii) Employee's Disability (as defined in Section 3.3(b) below);
or
(iii) The effective date of a "Change of Control" (as defined
below in Section 3.3(c) ).
(b) For purposes of this Section 3.3, "Disability" shall mean a
medically determinable physical or mental impairment which has lasted or can be
expected to last for a continuous period of not less than 12 months and which
renders the Employee substantially unable to function as an officer or employee
of PacifiCare or a Subsidiary.
(c) Notwithstanding anything to the contrary contained in Section 8.2 of
the Plan or any other provision thereof, the Employee acknowledges and agrees
that instead of such contrary provisions, for purposes of this Section 3.3, the
term "Change of Control" shall mean the occurrence of any of the following:
(i) the acquisition by any Person (as hereinafter defined) of
Beneficial Ownership (as hereinafter defined) of 20% or more of the outstanding
common stock of PacifiCare (the "Outstanding PacifiCare Stock"), provided that,
for purposes of this Subsection 3.3(c)(i), the following acquisitions shall not
constitute a Change of Control: (I) any acquisition by PacifiCare, (II) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by PacifiCare or any Person that controls, is controlled by or is
under common control with, PacifiCare or (III) a Non-Qualifying Business
Combination (as hereinafter defined); or
(ii) individuals who, as of December 17, 2003 or such subsequent
date as the Board may determine from time to time to be applicable for this
Change of Control definition (the "Base Date"), constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board, provided that, for purposes of this Subsection 3.3(c)(ii), any individual
who becomes a director subsequent to the Base Date whose election, or nomination
for election by XxxxxxXxxx's stockholders, was approved BY a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board,
excluding, however any such individual who initially assumes office as a result
of an actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(iii) consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
PacifiCare or the acquisition of assets or stock of another corporation (a
"Business Combination"), in each case, unless, following such Business
Combination, the Persons who had Beneficial Ownership of the Outstanding
PacifiCare Stock immediately prior to such Business Combination have Beneficial
Ownership immediately following the consummation of such Business Combination,
directly or indirectly, of more than 50% of the combined voting power of the
then outstanding securities entitled to vote generally in the election of
directors of the corporation resulting or surviving from such Business
Combination (including, without limitation, a corporation which as a result of
such transaction owns PacifiCare or all or substantially all of PacifiCare's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership immediately prior to such Business
Combination of the Outstanding PacifiCare Stock (a Business Combination that
satisfies this exception shall be deemed to be a "Non-Qualifying Business
Combination"); or
6.
(iv) approval by the stockholders of PacifiCare of a complete
liquidation or dissolution of PacifiCare; or
(v) the consummation of any other transaction involving a
significant issuance of PacifiCare's securities, a change in the composition of
the Board or other material event that the Board determines to be a Change of
Control for purposes of this section.
Notwithstanding the foregoing provisions of this definition, unless
otherwise determined by the Board, no Change of Control shall be deemed to have
occurred if (1) the Employee is a member of a group that first announces a
proposal which, if successful, would result in a Change of Control and which
proposal (including any modifications thereof) is ultimately successful, or (2)
the Employee acquires a two percent (2%) or more equity interest in the entity
which ultimately acquires PacifiCare pursuant to the transaction described in
clause (1), above.
For purposes of this definition, "Person" means an individual,
partnership, joint venture corporation, trust, unincorporated organization,
government (or agency or political subdivision thereof), group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) or any other
entity, and "Beneficial Ownership" means beneficial ownership within the meaning
of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended.
(d) By a resolution adopted after the Shares are granted, the Committee
may in its absolute discretion, on such terms and conditions as it may determine
to be appropriate and subject to Section 3.1, accelerate the time at which the
Shares or any portion thereof shall vest.
(e) The Committee may make such determinations and adopt such rules and
conditions as it, in its absolute discretion, deems appropriate in connection
with a Change in Control and acceleration of vesting, including, without
limitation, provisions to ensure that any such acceleration shall be conditioned
upon the consummation of the contemplated corporate transaction. All such
determinations by the Committee shall be conclusive.
ARTICLE IV
DEFERRAL OF RECEIPT OF SHARES
Section 4.1 - Eligibility
Only those employees who have the title of Vice President or above or
who have a salary grade of X14 or above are eligible to defer the receipt of
their Shares.
Section 4.2 - Deferral of the Shares
Under the terms of the Stock Unit Plan, any employee who has the title
of Vice President or who has a salary grade of X14 may elect to defer receipt of
all or a portion of his or her Shares and any employee who has the title of
Senior Vice President or above or who has a salary grade of X15 or above is
required to defer receipt of all of his or her Shares.
Section 4.3 - Conversion of Shares into Stock Units
Upon the deferral of receipt of all or a portion of the Shares, the
Shares deferred will be converted into an equal number of restricted stock units
(the "Restricted Stock Units"). Upon conversion of the Shares into Restricted
Stock Units, the Restricted Stock Units will be subject to the terms and
conditions of the Stock Unit Plan. The number of Restricted Stock Units shall be
credited to an account established under the Stock Unit Plan for Employee. The
Stock Units shall have the same vesting schedule as the Shares as provided in
Section 3.2. If the Stock Units do not vest, the unvested Stock Units will be
surrendered to PacifiCare for cancellation pursuant to the terms of the Stock
Unit Plan.
7.
ARTICLE V
MISCELLANEOUS
Section 5.1 - Shares Granted Under The Plan
The Shares will be granted under the Plan and the Non-Deferred Shares
will be governed by the terms of the Plan.
Section 5.2 - Administration
The Committee shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret, amend or
revoke any such rules. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon the Employee, PacifiCare and all other interested persons. No member of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Non-Deferred
Shares.
Section 5.3 - Non-Deferred Shares Not Transferable
Prior to the applicable Vesting Date, none of the Non-Deferred Shares,
nor any interest or right therein or part thereof, may be transferred,
alienated, pledged, encumbered, assigned or otherwise disposed of by Employee,
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy) and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that this Section 5.3
shall not prevent transfers by will, by qualified domestic relations order or by
the applicable laws of descent and distribution.
Section 5.4 - Notices
Any notice to be given under the terms of this Agreement to PacifiCare
shall be addressed to PacifiCare in care of its President or Chief Financial
Officer and any notice to be given to the Employee shall be addressed to him at
the address given beneath his signature hereto. By a notice given pursuant to
this Section 5.4, either party may hereafter designate a different address for
notices to be given to him. Any notice which is required to be given to the
Employee shall, if the Employee is then deceased, be given to the Employee's
personal representative if such representative has previously informed
XxxxxxXxxx of his status and address by written notice under this Section 5.4.
Any notice shall have been deemed duly given when enclosed in a properly sealed
envelope or wrapper addressed as aforesaid, deposited (with postage prepaid) in
a post office or branch post office regularly maintained by the United States
Postal Service.
Section 5.5 - Withholding
Employee may satisfy any federal, state or local tax withholding
obligation relating to the vesting of any Non-Deferred Shares by any of the
following means (in addition to PacifiCare's right to withhold from any
compensation paid to Employee by PacifiCare) or by a combination of such means:
(i) tendering a cash payment; (ii) authorizing PacifiCare to withhold shares of
Common Stock from fully vested shares of Common Stock otherwise issuable to
Employee as a result of the vesting of any Non-Deferred Shares, having a fair
market value, determined as of the date of withholding, not in excess of the
amount of such tax obligation; or (iii) delivering to PacifiCare owned and
unencumbered shares of Common Stock having a fair market value, determined as of
the date of delivery, not in excess of such tax obligation. A share withholding
election shall be deemed made when written notice of such election, signed by
Employee, has been delivered or transmitted to the Secretary or Chief Financial
Officer of PacifiCare at its then principal office. Delivery of such notice
shall constitute an irrevocable election to have shares withheld.
Section 5.6 - Titles
Titles are provided herein for convenience only and are not to serve as
a basis for interpretation or construction of this Agreement.
8.
Section 5.7 - Inconsistency between Agreement and Plan
In the event of any inconsistency between the provisions of this
Agreement and the Plan, the provisions of the Plan shall govern.
Section 5.8 - Choice of Law
This Agreement shall be construed and enforced in accordance with the
laws of the State of California.
9.
