UNITED HEALTHCARE CORPORATION
AMENDED AND RESTATED
1991 STOCK AND INCENTIVE PLAN,
AMENDED AND RESTATED EFFECTIVE MAY 14, 1997
1. PURPOSE OF PLAN.
This Plan shall be known as the "United HealthCare Corporation 1991
Stock and Incentive Plan" and is hereinafter referred to as the "Plan". The
purpose of the Plan is to aid in maintaining and developing personnel capable
of contributing to the future success of United HealthCare Corporation, a
Minnesota corporation (the "Company"), to offer such personnel additional
incentives to put forth maximum efforts for the success of the business, and
to afford them an opportunity to acquire a proprietary interest in the
Company through stock options and other awards as provided herein. Options
granted under this Plan may be either incentive stock options ("Incentive
Stock Options") within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code), or options which do not qualify as
Incentive Stock Options. Awards granted under this Plan shall be SARs,
restricted stock or performance awards as hereinafter described.
2. STOCK SUBJECT TO PLAN.
Subject to the adjustments authorized by Section 15 hereof and the
provisions of the remaining subsection of this Section 2, the stock to be
subject to options or other awards under the Plan shall be the Company's
authorized common shares, par value $.01 per share (the "Shares"). Such
shares may be either authorized but unissued shares, or issued shares which
have been reacquired by the Company. Subject to adjustment as provided in
Section 15 hereof, the number of shares on which options may be exercised or
other awards issued under this Plan shall be 3,000,000 shares plus a number
of shares equal to the sum of (i) one and one-half percent of the number of
shares of the Company's Common Stock outstanding as of the December 31
immediately preceding the year in which such options may be granted plus (ii)
options for such number of shares of Common Stock as were available for grant
in any preceding year and were not otherwise granted. If awards lapse,
expire, terminate or are canceled prior to the issuance of shares, or if
shares issued under an option are reacquired by the Company pursuant to this
Plan, those shares will be available for new awards. Notwithstanding the
foregoing, the number of Shares that may be subject to Incentive Stock
Options granted under the Plan may not exceed 1,000,000; such number may be
adjusted pursuant to Section 15.
3. ADMINISTRATION OF PLAN.
(a) The Plan shall be administered by a committee (the "Committee") of
two or more directors of the Company, none of whom shall be officers or
employees of the Company and all of whom shall be "Non-Employee Directors"
with respect to the Plan within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, and any successor rule. The members of the
Committee shall be appointed by and serve at the pleasure of the Board of
Directors.
(b) The Committee shall have plenary authority in its discretion, but
subject to the express provisions of the Plan: (i) to determine the purchase
price of the Common Shares covered by each option, (ii) to determine the
employees to whom and the time or times at which such options and awards
shall be granted and the number of shares to be subject to each, (iii) to
determine the form of payment to be made upon the exercise of an SAR or in
connection with performance awards, either cash, Common Shares of the Company
or a combination thereof, (iv) to determine the terms of exercise of each
option and award, (v) to accelerate the time at which all or any part of an
option or award may be exercised, (vi) to amend or modify the terms of any
option or award with the consent of the holder of the optionee or grantee,
(vii) to interpret the Plan, (viii) to prescribe, amend and rescind rules and
regulations relating to the Plan, (ix) to determine the terms and provisions
of each option or award agreement under the Plan (any of which agreements
need not be identical), including the designation of those options intended to
be Incentive Stock Options, (x) to delegate such of its authority granted
herein as it deems is in the best interests of the Company, and (xi) to make
all other determinations necessary or advisable for the administration of the
Plan, subject to the exclusive authority of the Board of Directors under
Section 16 herein to amend or terminate the Plan. The Committee's
determinations on the foregoing matters, unless otherwise disapproved by the
Board of Directors of the Company, shall be final and conclusive; provided,
however, that the Committee's determinations with respect to the matters set
forth in clauses (ii) and (iii) above, unless delegated as provided in
subsection 3(C) below, shall be final and conclusive without any right of
disapproval by the Board of Directors of the Company.
(c) The Chief Executive Officer of the Company shall have the
authority, as granted by the Committee pursuant to clause (x) of the
preceding subsection, to grant, pursuant to the Plan, options or other awards
to eligible persons who are not considered by the Company as its officers or
directors for purposes of Section 16 of the Securities Exchange Act of 1934,
as amended. The Chief Executive Officer of the Company shall provide
information as to any grants made pursuant to this subsection to the
Committee at its next meeting.
(d) The Committee shall select one of its members as its Chairperson
and shall hold its meetings at such times and places as it may determine. A
majority of its members shall constitute a quorum. All determinations of the
Committee shall be made by not less than a majority of its members. Any
decision or determination reduced to writing and signed by all of the members
of the Committee shall be fully effective as if it had been made by a
majority vote at a meeting duly called and held. The grant of an option or
award shall be effective only if a written agreement shall have been duly
executed and delivered by and on behalf of the Company following such grant.
The Committee may appoint a Secretary and may make such rules and regulations
for the conduct of its business as it shall deem advisable.
4. ELIGIBILITY.
Incentive Stock Options may be granted under this Plan only to any full
or part-time employee (which term as used herein includes, but is not limited
to, officers and directors who are also employees) of the Company and of its
present and future subsidiary corporations within the meaning of Section
424(f) of the Code (herein called "subsidiaries"). Full or part-time
employees, consultants or independent contractors to the Company or one of
its subsidiaries shall be eligible to receive awards and options which do not
qualify as Incentive Stock Options. In determining the persons to whom
options and awards shall be granted and the number of shares subject to each,
the Committee may take into account the nature of services rendered by the
respective employees or consultants, their present and potential
contributions to the success of the Company and such other factors as the
Committee in its discretion shall deem relevant. A person who has been
granted an option or award under this Plan may be granted additional options
or awards under the Plan if the Committee shall so determine; provided,
however, that for Incentive Stock Options granted after December 31, 1986, to
the extent the aggregate fair market value (determined at the time the
Incentive Stock Option is granted) of the Common Shares with respect to which
all Incentive Stock Options are exercisable for the first time by an employee
during any calendar year (under all plans described in subsection (d) of
Section 422 of the Code of his or her employer corporation and its parent and
subsidiary corporations) exceeds $100,000, such options shall be treated as
options which do not qualify as Incentive Stock Options. Nothing in the Plan
or in any agreement thereunder shall confer on any employee any right to
continue in the employ of the Company or any of its subsidiaries or affect in
any way the right of the Company or any of its subsidiaries to terminate his
or her employment at any time.
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5. PRICE.
The option price for all Incentive Stock Options granted under the Plan
shall be determined by the Committee but shall not be less than 100% of the
fair market value of the Common Shares at the date of grant of such option.
The option price for options granted under the Plan which do not qualify as
Incentive Stock Options and, if applicable, the price for all awards shall
also be determined by the Committee. For purposes of the preceding sentence
and for all other valuation purposes under the Plan, the fair market value of
the Common Shares shall be as reasonably determined by the Committee, but
shall not be less than the closing price of the stock on the date for which
fair market value is being determined, as reported on any national securities
exchange on which the Common Shares are then traded. If on the date of grant
of any option or award hereunder the Common Shares are not traded on an
established securities market, the Committee shall make a good faith attempt
to satisfy the requirements of this Section 5 and in connection therewith
shall take such action as it deems necessary or advisable.
6. TERM.
Each option and award and all rights and obligations thereunder shall
expire on the date determined by the Committee and specified in the option or
award agreement. The Committee shall be under no duty to provide terms of
like duration for options or awards granted under the Plan, but the term of
an Incentive Stock Option may not extend more than ten (10) years from the
date of grant of such option and the term of options granted under the Plan
which do not qualify as Incentive Stock Options may not extend more than
fifteen (15) years from the date of grant of such option.
7. EXERCISE OF OPTION OR AWARD.
(a) The Committee shall have full and complete authority to determine
whether the option or award will be exercisable in full at any time or from
time to time during the term thereof, or to provide for the exercise thereof
in such installments, upon the occurrence of such events, such as termination
of employment for any reason, and at such times during the term of the option
or award as the Committee may determine and specify in the option or award
agreement.
(b) The exercise of any option or award granted hereunder shall be
effective only at such time as the sale of Common Shares pursuant to such
exercise will not violate any state or federal securities or other laws. To
the extent required in order to comply with Rule 16b-3 of the Securities
Exchange Act of 1934, as amended, in the case of an option or award granted
to a person considered by the Company as one of its officers or directors for
purposes of Section 16 of the Securities Exchange Act of 1934, as amended,
the terms of the option or award will require that such shares are not
disposed of by such officer or director for a period of at least six months
from the date of grant.
(c) An optionee or grantee electing to exercise an option or award
shall give written notice to the Company of such election and of the number
of shares subject to such exercise. The Company will verify the
appropriateness of the election and determine the compensation and related
withholding tax amounts. The exercise amount and applicable taxes must be
tendered by the employee prior to the issuance of shares pursuant to the
exercise. Payment shall be made to the Company in cash (including wire
transfer, bank check, certified check, personal check, or money order), or,
at the discretion of the Committee and as specified by the Committee, (i) by
delivering certificates for the Company's Common Shares already owned by the
optionee or grantee having a fair market value as of the date of grant equal
to the full purchase price of the shares, together with any applicable
withholding taxes, or (ii) a combination of cash and such shares; provided,
however, that an optionee shall not be entitled to tender shares of the
Company's Common Stock pursuant to successive, substantially simultaneous
exercises of options granted under this or any other stock option plan of the
Company. The fair market value of such tendered shares shall be determined
as provided in Section 5 herein. Until such person has been issued
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the shares subject to such exercise, he or she shall possess no rights as a
shareholder with respect to such shares.
8. ALTERNATIVE STOCK APPRECIATION RIGHTS.
(a) GRANT. At the time of grant of an option or award under the Plan
(or at any other time), the Committee, in its discretion, may grant a Stock
Appreciation Right ("SAR") evidenced by an agreement in such form as the
Committee shall from time to time approve. Any such SAR may be subject to
restrictions on the exercise thereof as may be set forth in the agreement
representing such SAR, which agreement shall comply with and be subject to
the following terms and conditions and any additional terms and conditions
established by the Committee that are consistent with the terms of the Plan.
(b) EXERCISE. An SAR shall be exercised by the delivery to the Company
of a written notice which shall state that the holder thereof elects to
exercise his or her SAR as to the number of shares specified in the notice
and which shall further state what portion, if any, of the SAR exercise
amount (hereinafter defined) the holder thereof requests be paid to him or
her in cash and what portion, if any, is to be paid in Common Shares of the
Company. The Committee promptly shall cause to be paid to such holder the
SAR exercise amount, less any applicable withholding taxes, either in cash,
in Common Shares of the Company, or in any combination of cash and shares as
the Committee may determine. Such determination may be either in accordance
with the request made by the holder of the SAR or in the sole and absolute
discretion of the Committee. The SAR exercise amount is the excess of the
fair market value of one share of the Company's Common Shares on the date of
exercise over the per share exercise price in respect of which the SAR was
granted, multiplied by the number of shares as to which the SAR is exercised.
For the purposes, hereof, the fair market value of the Company's shares
shall be determined as provided in Section 5 herein.
9. RESTRICTED STOCK AWARDS.
Awards of Common Shares subject to forfeiture and transfer restrictions
may be granted by the Committee. Any restricted stock award shall be
evidenced by an agreement in such form as the Committee shall from time to
time approve, which agreement shall comply with and be subject to the
following terms and conditions and any additional terms and conditions
established by the Committee that are consistent with the terms of the Plan:
(a) GRANT OF RESTRICTED STOCK AWARDS. Each restricted stock award made
under the Plan shall be for such number of Common Shares as shall be
determined by the Committee and set forth in the agreement containing the
terms of such restricted stock award. Such agreement shall set forth a
period of time during which the grantee must remain in the continuous
employment of the Company in order for the forfeiture and transfer
restrictions to lapse. If the Committee so determines, the restrictions may
lapse during such restricted period in installments with respect to specified
portions of the shares covered by the restricted stock award. The agreement
may also, in the discretion of the Committee, set forth performance or other
conditions that will subject the Common Shares to forfeiture and transfer
restrictions. The Committee may, at its discretion, waive all or any part of
the restrictions applicable to any or all outstanding restricted stock
awards, provided that, in the case of restricted stock awards made to a
person considered by the Company as an officer or director for purposes of
Section 16 of the Securities Act of 1934, as amended, the terms of such
restricted stock agreement will provide that the stock so awarded may not be
disposed of for a period of at least six months from the date the award was
made.
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(b) DELIVERY OF COMMON SHARES AND RESTRICTIONS. At the time of a
restricted stock award, a certificate representing the number of Common
Shares awarded thereunder shall be registered in the name of the grantee.
Such certificate shall be held by the Company or any custodian appointed by
the Company for the account of the grantee subject to the terms and
conditions of the Plan, and shall bear such a legend setting forth the
restrictions imposed thereon as the Committee, in its discretion, may
determine. The grantee shall have all rights of a shareholder with respect
to the Common Shares, including the right to receive dividends and the right
to vote such shares, subject to the following restrictions: (i) the grantee
shall not be entitled to delivery of the stock certificate until the
expiration of the restricted period and the fulfillment of any other
restrictive conditions set forth in the restricted stock agreement with
respect to such Common Shares; (ii) none of the Common Shares may be sold,
assigned, transferred, pledged, hypothecated or otherwise encumbered or
disposed of during such restricted period or until after the fulfillment of
any such other restrictive conditions; and (iii) except as otherwise
determined by the Committee, all of the shares shall be forfeited and all
rights of the grantee to such shares shall terminate, without further
obligation on the part of the Company, unless the grantee remains in the
continuous employment of the Company for the entire restricted period in
relation to which such Common Shares were granted and unless any other
restrictive conditions relating to the restricted stock award are met. Any
Common Shares, any other securities of the Company and any other property
(except for cash dividends) distributed with respect to the Common Shares
subject to restricted stock awards shall be subject to the same restrictions,
terms and conditions as such restricted Common Shares.
(c) TERMINATION OF RESTRICTIONS. At the end of the restricted period
and provided that any other restrictive conditions of the restricted stock
award are met, or at such earlier time as otherwise determined by the
Committee, all restrictions set forth in the agreement relating to the
restricted stock award or in the Plan shall lapse as to the restricted Common
Shares subject thereto. Upon payment by the grantee to the Company of any
withholding tax required to be paid, a stock certificate for the appropriate
number of Common Shares, free of the restrictions and the restricted stock
legend, shall be delivered to the grantee or his or her beneficiary or
estate, as the case may be.
10. PERFORMANCE AWARDS.
The Committee is further authorized to grant performance awards.
Subject to the terms of this Plan and any applicable award agreement, a
performance award granted under the Plan (i) may be denominated or payable in
cash, Common Shares (including, without limitation, restricted stock), other
securities, other awards, or other property and (ii) shall confer on the
holder thereof rights valued as determined by the Committee, in its
discretion, and payable to, or exercisable by, the holder of the performance
awards, in whole or in part, upon achievement of such performance goals
during such performance periods as the Committee, in its discretion, shall
establish. Subject to the terms of this Plan and any applicable award
agreement, the performance goals to be achieved during any performance
period, the length of any performance period, the amount of any performance
award granted, and the amount of any payment or transfer to be made by the
grantee and by the Company under any performance award shall be determined by
the Committee.
11. INCOME TAX WITHHOLDING AND TAX BONUSES.
(a) In order to comply with all applicable federal, state or local
income tax laws or regulations, the Company may take such action as it deems
appropriate to ensure that all applicable federal, state or local payroll,
withholding, income or other taxes, which are the sole and absolute
responsibility of an optionee or grantee under the Plan, are withheld or
collected from such optionee or grantee prior to his or her receipt of Common
Shares pursuant to the exercise of an option or the satisfaction of the
conditions of any other award. In order to assist an optionee or grantee in
paying all federal and state taxes to be withheld or collected upon exercise
of an option or award which does not qualify as an Incentive Stock
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Option hereunder, the Committee, in its absolute discretion and subject to
such additional terms and conditions as it may adopt, shall permit the
optionee or grantee to satisfy such tax obligation by (i) electing to have
the Company withhold a portion of the shares otherwise to be delivered upon
exercise of such option or award with a fair market value, determined in
accordance with Section 5 herein, equal to such taxes or (ii) delivering to
the Company Common Shares other than the shares issuable upon exercise of
such option or award with a fair market value, determined in accordance with
Section 5, equal to such taxes. The election must be made on or before the
date that the amount of tax to be withheld is determined.
(b) The Committee shall have the authority, at the time of grant of an
option under the Plan or at any time thereafter, to approve tax bonuses to
designated optionees or grantees to be paid upon their exercise of options or
awards granted hereunder. The amount of any such payments shall be
determined by the Committee but shall not exceed one hundred percent (100%)
of the excess of the fair market value of the shares received upon exercise
of an option or award over the price paid therefor. The Committee shall have
full authority in its absolute discretion to determine the amount of any such
tax bonus and the terms and conditions affecting the vesting and payment
thereof.
12. ADDITIONAL RESTRICTIONS.
The Committee shall have full and complete authority to determine
whether all or any part of the Common Shares of the Company acquired upon
exercise of any of the options or awards granted under the Plan shall be
subject to restrictions on the transferability thereof or any other
restrictions affecting in any manner the optionee's or grantee's rights with
respect thereto, but any such restriction shall be contained in the agreement
relating to such options or awards.
13. TEN PERCENT SHAREHOLDER RULE.
Notwithstanding any other provision in the Plan, if at the time an
option is otherwise to be granted pursuant to the Plan the optionee owns
directly or indirectly (within the meaning of Section 424(d) of the Code)
Common Shares of the Company possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or its
parent or subsidiary corporations (within the meaning of Section 422(b)(5) of
the Code), then any Incentive Stock Option to be granted to such optionee
pursuant to the Plan shall satisfy the requirements of Section 422(c)(5) of
the Code, and the option price shall be not less than 110% of the fair market
value of the Common Shares of the Company determined as described herein, and
such option by its terms shall not be exercisable after the expiration of
five (5) years from the date such option is granted.
14. NONTRANSFERABILITY.
No option or award granted under the Plan shall be transferable by an
optionee or grantee, otherwise than by will or the laws of descent or
distribution. Except as otherwise provided in an option or award agreement,
during the lifetime of an optionee or grantee, the option or award shall be
exercisable only by such optionee or grantee. The Committee shall have the
authority to waive the provisions of this Section with respect to any grant
of options under the Plan subject to such terms, conditions or limitations as
they may, in their discretion impose.
15. DILUTION OR OTHER ADJUSTMENTS.
If there shall be any change in the Common Shares through merger,
consolidation, reorganization, recapitalization, dividend in the form of
stock (of whatever amount), stock split or other change in the corporate
structure, appropriate adjustments in the Plan and outstanding options and
awards shall be made by the Committee. In the event of any such changes,
adjustments shall include, where appropriate, changes in the aggregate number
of shares subject to the Plan, the number of shares
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and the price per share subject to outstanding options and awards and the
amount payable upon exercise of outstanding awards, in order to prevent
dilution or enlargement of option or award rights.
16. AMENDMENT OR DISCONTINUANCE OF PLAN.
The Board of Directors may amend or discontinue the Plan at any time.
Subject to the provisions of Section 15 no amendment of the Plan, however,
shall without shareholder approval: (a) increase the number of shares
authorized under the Plan as provided in Section 2 herein, (b) decrease the
minimum price provided in Section 5 herein, (c) extend the maximum term under
Section 6, or (d) modify the eligibility requirements for participation in
the Plan. The Committee, or the Company's Chief Executive Officer as
authorized by the Committee, may grant, each year, options and awards for the
number of shares authorized by Section 2 herein without further amendment to
the Plan increasing the number of shares authorized for distribution. The
Board of Directors shall not alter or impair any option or award theretofore
granted under the Plan without the consent of the holder of the option or
award.
17. TIME OF GRANTING.
Nothing contained in the Plan or in any resolution adopted or to be
adopted by the Board of Directors or by the shareholders of the Company, and
no action taken by the Committee, the Chief Executive Officer or the Board of
Directors (other than the execution and delivery of an option or award
agreement), shall constitute the granting of an option or award hereunder.
18. EFFECTIVE DATE AND TERMINATION OF PLAN.
(a) The Plan was approved by the Board of Directors on February 15,
1993, and shall be approved by the shareholders of the Company within twelve
(12) months thereof.
(b) Unless the Plan shall have been discontinued as provided in Section
16 hereof, the Plan shall terminate on February 14, 2003. No option or award
may be granted after such termination, but termination of the Plan shall not,
without the consent of the optionee or grantee, alter or impair any rights or
obligations under any option or award theretofore granted.
19. OPTION AND AWARD LIMITATIONS UNDER THE PLAN.
No participant who is an employee of the Company at the time of grant
may be granted an option or award the value of which is based solely on an
increase in the value of the shares after the date of grant of such option or
awards for more than 1,000,000 shares, in the aggregate, in any one calendar
year period beginning with the period commencing on January 1, 1996 and
ending December 31, 1996. The foregoing annual limitation specifically
includes the grant of any options or awards representing qualified
performance-based compensation within the meaning of Section 162(m) of the
Code.
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