EXHIBIT 10(c)
UNITEDHEALTH GROUP INCORPORATED
NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
AMENDED AND RESTATED EFFECTIVE OCTOBER 30, 2001
SECTION 1. PURPOSE.
This plan shall be known as the "UnitedHealth Group Incorporated
Nonemployee Director Stock Option Plan, Amended and Restated Effective October
30, 2001" and is hereinafter referred to as the "Plan." The purpose of the Plan
is to promote the interests of UnitedHealth Group Incorporated, a Minnesota
corporation (the "Company"), by enhancing its ability to attract and retain the
services of experienced and knowledgeable independent directors and by providing
additional incentive for these directors to increase their interest in the
Company's long-term success and progress. Nonqualified stock options or
restricted stock may be granted under the Plan.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by a committee (the "Committee") of two
or more persons appointed by the Board of Directors of the Company. Except as
set forth in Section 6(c) hereof, grants of stock options under the Plan and the
amount and nature of the awards to be granted shall be automatic as described in
Sections 6(a) and 6(b). Grants of restricted stock under the Plan and the amount
and nature of restricted stock to be granted shall be at the discretion of the
Committee. All questions of interpretation of the Plan or of any options or
restricted stock granted under it shall be determined by the Committee and such
determination shall be final and binding upon all persons having an interest in
the Plan.
SECTION 3. PARTICIPATION IN THE PLAN.
Each director of the Company shall be eligible to participate in the
Plan unless such director is also an employee of the Company or any subsidiary
or affiliate of the Company. Notwithstanding the foregoing, no single director
shall be eligible to acquire under the Plan more than 1% of the shares of the
Company's common stock outstanding as of May 12, 1999.
SECTION 4. STOCK SUBJECT TO THE PLAN.
Subject to the provisions of Section 11 hereof, the stock to be subject
to grants under the Plan shall be authorized but unissued shares of the
Company's common stock, par value $.01 per share (the "Common Stock"). Subject
to adjustment as provided in Section 11 hereof, the maximum number of shares
with respect to which grants may be authorized under this Plan shall be
1,700,000 shares of Common Stock. If a grant under the Plan expires or for any
reason is terminated prior to the exercise of an option or the lapse of a
restriction on the shares underlying a restricted stock grant, the shares
underlying such grant shall again be available for grants thereafter during the
term of the Plan.
SECTION 5. NONQUALIFIED STOCK OPTIONS.
All options granted under the Plan shall be nonqualified stock options
that do not qualify as incentive stock options within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.
Each option granted under this plan may, but is not required to, be
evidenced by a written agreement or certificate in such form as the Committee
shall from time to time approve. Each option granted under this plan shall
comply with and be subject to the following terms and conditions:
a) Annual Option Grants. Each eligible director of the Company in office
on the first business day immediately following each annual meeting of
the Company's shareholders (the "Annual Option Grant Date") held during
the term of the Plan shall be granted automatically an option to
purchase 10,000 shares of Common Stock (the "Annual Option Grant"),
granted in 4 installments of 2,500 each on the first business day of
each fiscal quarter following the Annual Option Grant Date. A director
must be in office on the day of each installment of the Annual Option
Grant or that installment will be forfeited. Notwithstanding the
foregoing, no director shall be granted an Annual Option Grant if such
director has been granted an option under Section 6(b) hereof within 12
months of such Annual Option Grant Date. Each option granted pursuant
to this Section 6(a) shall have an exercise price as determined
pursuant to Section 7 hereof.
b) Initial Option Grants. Each eligible director of the Company that is
elected to the Board of Directors shall be granted automatically on the
date that the director is elected to the Board of Directors an option
to purchase 18,000 shares of Common Stock. Notwithstanding Section
6(f), the options granted pursuant to this Section 6(b) shall not be
exercisable for a period of one year after the date on which they were
granted, but thereafter will become exercisable as to one-third of the
shares covered by the option on each anniversary date of the option
grant. Each option granted pursuant to this Section 6(b) shall have an
exercise price as determined pursuant to Section 7 hereof.
c) Stock Option Conversion Program. Each eligible director of the Company
in office on the last business day of any calendar year may elect to
convert into options to purchase Common Stock any percentage of the
annual retainer and Board of Director and committee meeting fees to be
paid to such director in the following year (the "Conversion Option").
With respect to any eligible director who is not a director on the last
business day of any calendar year, such director shall have thirty (30)
days after his or her election as a director in which to elect
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the Conversion Option. Options granted pursuant to this Section 6(c)
shall be granted on the dates of regularly scheduled Board of Director
meetings, and each such option shall enable the holder thereof to
purchase that number of shares of Common Stock as is equal to (i) four
(4) times the sum of (A) the annual retainer that would have been
received by the electing director (including any retainer that would
have been received for acting as the chairperson of any committee of
the Board of Directors), had such director not elected the Conversion
Option, divided by the number of regularly scheduled Board of Director
meetings for the calendar year and (B) the total Board of Director and
committee meeting fees that would have been received by such director,
had such director not elected the Conversion Option, for meetings
attended subsequent to the date of the immediately preceding regularly
scheduled Board of Directors meeting but prior to and including the
date of the regularly scheduled Board of Directors meeting on which
such option is to be granted, divided by (ii) the closing per share
price of Common Stock on the date of grant; provided, however, that if
such number is not a multiple of ten (10), such number shall be rounded
up to the nearest multiple of ten (10) exceeding such number.
d) Options Non-Transferable. No option granted under the Plan shall be
transferable by the optionee otherwise than by will or by the laws of
descent and distribution as provided in Section 6(g) hereof. During the
lifetime of the optionee, the options shall be exercisable only by such
optionee. No option or interest therein may be transferred, assigned,
pledged or hypothecated by the optionee during such optionee's
lifetime, whether by operation of law or otherwise, or be made subject
to execution, attachment or similar process. 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.
e) Period of Options. Options shall terminate upon the expiration of 10
years from the date on which they were granted.
f) Exercise of Options.
i. Options granted under the Plan shall not be exercisable for a
period of six months after the date on which they were
granted, but thereafter will be exercisable in full at any
time or from time to time during the term of the option,
provided that options granted under the Plan may become fully
exercisable upon a director's resignation from the Board of
Directors or the death of the optionee.
ii. The exercise of any option granted hereunder shall only be
effective at such time as counsel to the Company shall have
determined that the issuance and delivery of Common Stock
pursuant to such exercise will not violate any federal or
state securities or other laws. An optionee desiring to
exercise an option may be required by the Company, as a
condition of
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the effectiveness of any exercise of an option granted
hereunder, to agree in writing that all Common Stock to be
acquired pursuant to such exercise shall be held for his or
her own account without a view to any distribution thereof,
that the certificates that may be issued for such shares shall
bear an appropriate legend to that effect and that such shares
will not be transferred or disposed of except in compliance
with applicable federal and state securities laws.
iii. An optionee electing to exercise an option, or his or her
representative, shall give notice to the Company of such
election and of the number of shares subject to such exercise.
The full purchase price of such shares shall be tendered
either prior to the issuance of shares pursuant to the
exercise or, if such option is exercised pursuant to a
cashless exercise and sale transaction, on or prior to the
settlement date of such transaction. Payment shall be made to
the Company in cash (including check, bank draft, money order
or wire transfer).
g) Effect of Death. If the optionee shall die prior to the time the option
is fully exercised, such option may be exercised at any time within one
year after his or her death by the personal representatives or
administrators of the optionee or by any person or persons to whom the
option is transferred by will or the applicable laws of descent and
distribution, to the extent of the full number of shares the optionee
was entitled to purchase under the option on the date of death and
subject to the condition that no option shall be exercisable after the
expiration of the term of the option.
SECTION 7. OPTION EXERCISE PRICE.
The option exercise price per share for the shares covered by each
option shall be equal to the "fair market value" of a share of Common Stock as
of the date on which the option is granted. For purposes of Section 6(a), the
date on which the option is granted shall be the date of each quarterly
installment. For the purposes of the Plan, the fair market value of the Common
Stock on a given date shall be the closing price of the Common Stock on such
date on the New York Stock Exchange, Inc. (the "NYSE") Composite Tape, if the
Common Stock is then being traded on the NYSE. If on the date as of which the
fair market value is being determined the Common Stock is not publicly traded,
the Committee shall make a good faith attempt to determine such fair market
value and, in connection therewith, shall take such actions and consider such
factors as it deems necessary or advisable.
SECTION 8. GRANTS OF RESTRICTED STOCK
The Committee may grant restricted stock to eligible directors from
time to time in its discretion. Any grant of restricted stock shall be evidenced
by an agreement in such form as the Committee shall from time to time approve,
which agreement shall comply
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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. Each grant of restricted stock under the
Plan shall be for such number of shares of Common Stock as shall be
determined by the Committee and set forth in an agreement containing
the terms of the restricted stock grant. Each agreement shall set forth
the restrictions which apply to the grant of restricted stock and the
circumstances under which such restrictions lapse. The Committee may,
in its discretion, waive any or all of the restrictions applicable to
any or all outstanding grants of restricted stock, provided that for
purposes of Section 16 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), restricted stock may not be transferable
for a period of at least six months from the date of the grant.
b) Delivery of Common Shares and Restrictions. At the time of a restricted
stock grant, the number of shares of Common Stock granted thereunder
shall be registered in the name of the grantee. If a certificate
representing such shares is issued, such certificate shall bear a
legend referencing 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 restricted stock granted, including
the right to receive dividends and the right to vote such shares,
provided, however, that none of the shares of restricted stock 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. Any other
securities of the Company and any other property (except for cash
dividends) distributed with respect to the restricted stock shall be
subject to the same restrictions, terms and conditions as the
restricted stock.
c) Termination of Restrictions. At the end of the restricted period and
provided that any other restrictive conditions of the restricted stock
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
stock subject thereto.
SECTION 9. TIME FOR GRANTING OPTIONS.
Unless the Plan shall have been discontinued as provided in Section 12
hereof, the Plan shall terminate upon the expiration of 10 years from the date
upon which it takes effect as provided in Section 12 hereof. No grants shall be
made after such termination, but termination of the Plan shall not, without the
consent of the grantee, alter or impair any rights or obligations under any
option or restricted stock theretofore granted.
SECTION 10. LIMITATION OF RIGHTS.
a) No Right to Continue as a Director. Neither the Plan, nor the granting
of an option or restricted stock nor any other action taken pursuant to
the Plan, shall constitute,
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or be evidence of, any agreement or understanding, express or implied,
that the Company will retain a director for any period of time, or at
any particular rate of compensation.
b) No Shareholder Rights for Options. An optionee shall have no rights as
a shareholder with respect to the shares covered by options until the
date of the issuance to such optionee of a stock certificate therefor,
and no adjustment will be made for cash dividends or other rights for
which the record date is prior to the date such certificate is issued.
SECTION 11. ADJUSTMENTS TO COMMON STOCK.
If there shall be any change in the Common Stock through merger,
consolidation, reorganization, recapitalization, stock dividend (of whatever
amount), stock split or other change in the corporate structure, appropriate
adjustments in the Plan and outstanding options shall be made. 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 subject to
outstanding grants and the option exercise prices thereof in order to prevent
dilution or enlargement of rights previously granted.
SECTION 12. EFFECTIVE DATE OF THE PLAN.
The Plan shall take effect immediately upon its approval by the
affirmative vote of the holders of a majority of the shares present in person or
by proxy and voted at a duly held meeting of shareholders of the Company.
SECTION 13. AMENDMENT OF THE PLAN.
The Board may suspend or discontinue the Plan or revise or amend it in
any respect whatsoever; provided, however, that without approval of the
shareholders of the Company no revision or amendment shall be made that (a)
absent such shareholder approval, would cause Rule 16b-3 of the Exchange Act, or
any successor rule or regulation thereto, to become unavailable with respect to
the Plan, or (b) requires the approval of the Company's shareholders under any
rules or regulations of the NYSE that are applicable to the Company. The Board
shall not alter or impair any grant previously granted under the Plan without
the consent of the grantee.
SECTION 14. GOVERNING LAW.
The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Minnesota and construed
accordingly.
SECTION 15. COMPLIANCE WITH EXCHANGE ACT.
Transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of
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the Plan or action by the Committee fails to so comply, such provision or action
shall be deemed null and void to the extent permitted by law and deemed
advisable by the Committee.
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