EXHIBIT 10.21
PACIFICARE HEALTH SYSTEMS, INC.
FORM OF STOCK OPTION AGREEMENT
UNDER THE AMENDED AND RESTATED
2000 NON-EMPLOYEE DIRECTORS STOCK PLAN
This Agreement, dated _______________ ("Agreement"), is made by and
between PacifiCare Health Systems, Inc., a Delaware corporation (the "Company"),
and ____________ (the "Optionee"):
WHEREAS, the terms of the Amended and Restated 2000 Non-Employee
Directors Stock Plan of PacifiCare Health Systems, Inc. (the "Directors Plan"),
the terms of which are hereby incorporated by reference and made a part of this
Agreement, provide for an automatic annual grant of non-qualified stock options
(the "Options") to purchase shares of the Company's Common Stock to non-employee
directors of the Company on June 30th of each year;
WHEREAS, the Company wishes to carry out the terms of the Directors
Plan; and
WHEREAS, the Company continues to believe that it is to the advantage
and best interest of the Company and its stockholders that the Optionee receive
the Options provided for herein as an incentive for the Optionee to continue to
serve as a member of the Company's Board of Directors (the "Board") and has
instructed the authorized officers to issue such Options;
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall have
the meaning specified below unless the context clearly indicates to the
contrary.
Section 1.1 - Board
"Board" means the Company's Board of Directors.
Section 1.1 - Chief Financial Officer
"Chief Financial Officer" means the Chief Financial Officer of the
Company.
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Section 1.2 - Committee
"Committee" means a committee of the Board comprised of two or more
members of the Board with such members of the committee being non-employee
directors as defined in Rule 16b-3(b) (or any successor provision) promulgated
under the Exchange Act.
Section 1.2 - Common Stock
"Common Stock" means the Company's common stock, par value $.01 per
share.
Section 1. - Date of Grant
"Date of Grant" means the date on which the Options are granted to
Optionee pursuant to the terms of this Agreement.
Section 1.6 - Directors Plan
"Directors Plan" means the Amended and Restated 2000 Non-Employee
Directors Stock Plan of PacifiCare Health Systems, Inc.
Section 1.3 - Employee Plan
"Employee Plan" means the 1996 Stock Option Plan for Officers and Key
Employees of PacifiCare Health Systems, Inc., as amended.
Section 1.4 - Exchange Act
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
Section 1. - Option Price
"Option Price" means the purchase price per share of the shares of
Common Stock underlying the Options granted pursuant to this Agreement.
Section 1.5 - Options
"Options" mean the non-qualified stock options to purchase shares of
Common Stock granted under this Agreement.
Section 1.7 - Pronouns
The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.
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Section 1.8 - Secretary
"Secretary" means the Secretary of the Company.
Section 1.9 - Subsidiary
"Subsidiary" means any corporation in an unbroken chain of corporations
beginning with the Company 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.
ARTICLE II
GRANT OF OPTIONS
Section 2.1 - Grant of Options
The Company irrevocably grants to the Optionee the Options to purchase
an aggregate of ____________ shares of Common Stock upon the terms and
conditions set forth in this Agreement. The Date of Grant for the Options is
_____________.
Section 2.2 - Option Price
The Option Price shall be _______ per share without commission or other
charge.
Section 2.3 - Consideration to Company
The Options are being granted in consideration of the Optionee's
agreement to render services to the Company as a member of the Board.
Section 2.4 - Adjustments in Options
(a) Changes in Company's Shares. 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 the Company, 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 by the Committee in the
number and kind of shares for the purchase of which options may be granted
(including adjustments of the limitation on the maximum number and kind of
shares which may be issued on exercise of options), which adjustments shall be
consistent with comparable adjustments made pursuant to the corresponding
provision in the Employee Plan.
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(b) Adjustments in Outstanding Awards. 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 the Company, 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, the Committee shall make proportionate adjustments in the number
and kind of shares as to which all outstanding options, or portions thereof then
unexercised, shall be exercisable, to the end that after such event the
optionee's proportionate interest shall be maintained as before the occurrence
of such event. Such adjustments shall be consistent with comparable adjustments
made pursuant to the corresponding provision in the Employee Plan. Such
adjustment in an outstanding option shall be made without change in the total
price applicable to the option or the unexercised portion of the option (except
for any change in the aggregate price resulting from rounding-off of share
quantities or prices) and with any necessary corresponding adjustment in option
price per share. Any such adjustment made by the Committee shall be final and
binding upon all optionees, the Company and all other interested persons.
ARTICLE III
PERIOD OF EXERCISABILITY
Section 3.1 - Commencement of Exercisability
Subject to Section 3.3, the Options shall be fully vested and
exercisable on the Date of Grant; provided, however, that the underlying shares
of Common Stock may not be sold within the first six (6) months of the Date of
Grant.
Section 3.2 - Duration of Exercisability
The Options shall remain exercisable until they become unexercisable
under Section 3.3.
Section 3.3 - Expiration of Options
The Options may not be exercised to any extent by anyone after the
expiration of 10 years from the Date of Grant.
ARTICLE IV
EXERCISE OF OPTIONS
Section 4.1 - Person Eligible to Exercise
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During the lifetime of the Optionee, only he, his guardian, legal
representative or other person approved by the Committee in its sole discretion
may exercise the Options or any portion thereof. After the death of the
Optionee, any exercisable portion of the Options may, prior to the time when the
Options become unexercisable under Article III, be exercised by his personal
representative or by any person empowered to do so under the Optionee's will or
under the then applicable laws of descent and distribution.
Section 4.2 - Partial Exercise
Any exercisable portion of the Options or the entire Options may be
exercised in whole or in part at any time prior to the time when the Options or
portion thereof become unexercisable under Article III; provided, however, that
each partial exercise shall be for not less than 100 shares and shall be for
whole shares only.
Section 4.3 - Manner of Exercise
Any exercisable portion of the Options, or the entire Options may be
exercised solely by delivery to the Secretary or Chief Financial Officer or
their respective offices of all of the following prior to the time when the
Option or such portion becomes unexercisable under Section 3.3:
a. Notice in writing signed by the Optionee or the other person then
entitled to exercise the Options or portion thereof, stating that such Options
or portion are being exercised, such notice complying with all applicable rules
established by the Committee;
b. (i) Full payment (in cash or by check) for the shares with respect to
which such Options or portion are exercised;
(ii) With the consent of the Committee, shares of any class of the
Company's stock owned by the Optionee duly endorsed for transfer to the
Company with a Fair Market Value (as determinable under Section 4(c) of
the Directors Plan) on the date of delivery equal to the aggregate
Option Price with respect to which such Options or portion being
exercised (which shares shall be owned by the Optionee for more than six
months at the time they are delivered);
(iii) With the consent of the Committee and provided the use of the
following procedure by an Optionee would not violate Rule 16(b) under
the Exchange Act delivery to the Company of (x) irrevocable instructions
to deliver the stock certificates representing the shares for which the
Options are being exercised directly to a broker, and (y) instructions
to the broker to sell such shares and promptly deliver to the Company
the portion of the sale proceeds equal to the aggregate Option Price;
(iv) With the consent of the Committee, any other form of cashless
exercise permitted under Section 4.4 hereof; or
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(v) Any combination of the consideration provided in the foregoing
subparagraphs (i), (ii), (iii) and (iv);
c. A bona fide written representation and agreement, in a form
satisfactory to the Committee, signed by the Optionee or other person then
entitled to exercise such Options or portion, stating that the shares of stock
are being acquired for his own account, for investment and without any present
intention of distributing or reselling said shares or any of them except as may
be permitted under the Securities Act of 1933, as amended (the "Act"), and then
applicable rules and regulations thereunder, and that the Optionee or other
person then entitled to exercise such Options or portion will indemnify the
Company against and hold it free and harmless from any loss, damage, expense or
liability resulting to the Company if any sale or distribution of the shares by
such person is contrary to the representation and agreement referred to above.
The Committee may, in its absolute discretion, take whatever additional actions
it deems appropriate to insure the observance and performance of such
representation and agreement and to effect compliance with the Act and any other
federal or state securities laws or regulations. Without limiting the generality
of the foregoing, the Committee may require an opinion of counsel acceptable to
it to the effect that any subsequent transfer of shares acquired on an Option
exercise does not violate the Act, and may issue stop-transfer orders covering
such shares. Share certificates evidencing stock issued on exercise of the
Options shall bear an appropriate legend referring to the provisions of this
subsection (c) and the agreements herein. The written representation and
agreement referred to in the first sentence of this subsection (c) shall,
however, not be required if the shares to be issued pursuant to such exercise
have been registered under the Act, and such registration is then effective in
respect of such shares;
d. Full payment to the Company of all amounts which, under federal,
state or local law, it is required to withhold upon exercise of the Options; and
e. In the event the Options or portion thereof shall be exercised
pursuant to Section 4.1 by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to exercise the
Options.
The date of exercise of the Options shall be deemed to be the date all
of the foregoing conditions are met.
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Section 4.4 - Cashless Exercise Procedures
The Company, in its sole discretion, may establish procedures whereby
the Optionee, subject to the requirements of Rule 16b-3 under the Exchange Act ,
Regulation T issued by the Board of Governors of the Federal Reserve System
pursuant to the Exchange Act, federal income tax laws, and other federal, state
and local tax and securities laws, can exercise the Option or a portion thereof
without making a direct payment of the Option Price to the Company. If the
Company so elects to establish a cashless exercise program, the Company shall
determine, in its sole discretion and from time to time, such administrative
procedures and policies as it deems appropriate consistent with those of any
cashless exercise program established pursuant to the Employee Plan and such
procedures and policies shall be binding on the Optionee should he elect to
utilize the cashless exercise program.
Section 4.5 - Conditions to Issuance of Stock Certificates
The shares of stock deliverable upon the exercise of the Options, or any
portion thereof, may be either previously authorized but unissued shares of
Common Stock or issued shares of Common Stock that have then been reacquired by
the Company. Such shares shall be fully paid and nonassessable. The Company
shall not be required to issue or deliver any certificate or certificates for
shares of stock purchased upon the exercise of the Options, or any portion
thereof, prior to fulfillment of all of the following conditions:
a. The admission of such shares of Common Stock to listing on all stock
exchanges which such class of stock is then listed;
b. The completion of any registration or other qualification of such
shares under any state or federal law or under rulings or regulations of the
Securities and Exchange Commission or of any other governmental regulatory body,
which the Committee shall, in its absolute discretion, deem necessary or
advisable;
c. The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable;
d. The payment to the Company of all amounts which, under federal, state
or local law, it is required to withhold upon exercise of the Options; and
e. The lapse of such reasonable period of time following the exercise of
the Options as the Committee may from time to time establish for reasons of
administrative convenience.
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Section 4.6 - Rights as Stockholder
The holder of the Options shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect of any shares of Common
Stock receivable upon the exercise of any part of the Option unless and until
certificates representing such shares of Common Stock shall have been issued by
the Company to such holder.
ARTICLE V
MISCELLANEOUS
Section 5.1 - Administration
The Committee shall have the power to interpret the Directors Plan and
this Agreement and to adopt such rules for the administration, interpretation
and application of the Directors 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 Optionee, the Company 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 Directors
Plan or the Options.
Section 5.2 - Options Not Transferable
Neither the Options nor any interest or right therein or part thereof
shall be liable for the debts, contracts or engagements of the Optionee or his
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
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 5.2
shall not prevent transfers by will or by the applicable laws of descent and
distribution.
Section 5.3 - Shares to Be Reserved
The Company shall at all times during the term of the Options reserve
and keep available such number of shares of stock as will be sufficient to
satisfy the requirements of this Agreement.
Section 5.4 - Withholding
The provisions of Section 12 of the Plan shall govern any withholding
that the Company is required to make with respect to the exercise of the
Options.
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Section 5.5 - Notices
Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Secretary or Chief Financial
Officer and any notice to be given to the Optionee shall be addressed to him at
the address given beneath his signature hereto. By a notice given pursuant to
this Section 5.5, 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
Optionee shall, if the Optionee is then deceased, be given to the Optionee's
personal representative if such representative has previously informed the
Company of his status and address by written notice under this Section 5.5. 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 5.6 - Titles
Titles are provided herein for convenience only and are not to serve as
a basis for interpretation or construction of this Agreement.
Section 5.7 - Inconsistency between Agreement and Directors Plan
In the event of any inconsistency between the provisions of this
Agreement and the Directors Plan, the provisions of the Directors 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.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto.
PACIFICARE HEALTH SYSTEMS, INC.
By:
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Optionee
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Address
Social Security Number:
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