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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-B/A
FOR REGISTRATION OF SECURITIES OF CERTAIN SUCCESSOR ISSUERS
Filed Pursuant to Section 12(b) or (g) of the
Securities and Exchange Act of 1934
N-T Holdings, Inc.
(Exact name of registrant as
specified in its charter)
Delaware
(State of incorporation or organization)
95-4591529
(I.R.S. Employer Identification No.)
5995 Plaza Drive, Cypress, CA 90630-5028
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class to Name of each exchange on which
be so registered each class is to be registered
None
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Securities to be registered pursuant to Section 12(g) of the Act:
Class A Common Stock, $.01 par value
(Title of class)
Class B Common Stock, $.01 par value
(Title of class)
Series A Cumulative Convertible Preferred Stock, $.01 par value
(Title of class)
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ITEM 5. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Reference is made to pages F-1 through F-3 of the Prospectus, which
are hereby incorporated herein by reference.
(b) Exhibits.
EXHIBIT
NUMBER DESCRIPTION
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2.01+ Amended and Restated Agreement and Plan of Merger and Reorganization
("Reorganization Agreement"), dated as of November 11, 1996, among
PacifiCare Health Systems, Inc. ("PacifiCare"), Registrant, Neptune
Merger Corp., Tree Acquisition Corp. and FHP International
Corporation ("FHP"). See Appendix A to the Registrant's S-4.
3.01++ Certificate of Incorporation of Registrant.
3.02+ Form of Certificate of Incorporation of Registrant to be filed
pursuant to the Reorganization Agreement. See Exhibit 1.4 to
Appendix A of the Registrant's S-4.
3.03+ Bylaws of Registrant.
4.01+ Form of Specimen Certificate for Registrant's Class A Common Stock.
4.02+ Form of Specimen Certificate for Registrant's Class B Common Stock.
4.03+ Form of Specimen Certificate for Registrant's Series A Cumulative
Convertible Preferred Stock.
4.04* Indenture, dated as of September 22, 1993, between FHP and the Chase
Manhattan Bank, N.A. in regard to $100,000,000 7% Senior Notes due
2003.
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+ Incorporated herein by reference from Registrant's S-4.
* Incorporated herein by reference from FHP's Form 10-K for the Fiscal Year
Ended June 30, 1993.
++ Incorporated herein by reference from Registrant's Form 8-B
Registration Statement (No. 000-21949).
2
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10.01+ Credit Agreement, dated as of October 31, 1996, among the
Registrant, the several financial institutions from time to time
party to the Credit Agreement, The Bank of New York, The Bank of
Nova Scotia, Banque Nationale de Paris, Dai-Ichi Kangyo Bank, Ltd.,
The Industrial Bank of Japan Limited, Rabobank Nederland, Sanwa
Bank California, The Sumitomo Bank, Limited, and Wells Fargo Bank,
N.A., as co-agents, The Chase Manhattan Bank and Citicorp. USA,
Inc., as managing agents, and Bank of America National Trust and
Savings Association, as agent for the Banks.
10.02+++ Form of contract for the period January 1, 1993, through December
31, 1993 between PacifiCare of California and the Department of
Health and Human Services.
10.03** Health Insurance Benefits for the Aged and Disabled Contracts dated
January 1, 1992 between FHP, Inc. and the Secretary of Health and
Human Services.
10.04*** Group Health Benefits Contract dated January 1, 1986 between FHP,
Inc. and the Federal Office of Personnel Management.
10.05 1996 Stock Option Plan for Officers and Key Employees of the
Registrant.
10.06++ 1996 Non-Officer Directors Stock Option Plan of the Registrant.
10.07++ 1996 Management Incentive Compensation Plan of the Registrant.
10.08++ 1996 Long-Term Performance Incentive Plan of the Registrant.
11.01++++ Statement re: Computation of Earnings Per Share.
12.01**** Statement re: Computation of Ratios.
21.01+ Subsidiaries of the Registrant.
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** Incorporated herein by reference from FHP's Form 10-K for the Fiscal Year
Ended June 30, 1992.
*** Incorporated herein by reference from FHP's Registration Statement on
Form S-1 (No. 33-5596).
**** Incorporated herein by reference from FHP's Form 10-K for the Fiscal Year
Ended June 30, 1996 ("FHP 1996 10-K") and the Registrant's S-4.
+++ Incorporated herein by reference from PacifiCare's Registration
Statement on Form S-3 (No. 33-72012).
++++ Incorporated herein by reference from FHP 1996 10-K and PacifiCare's Form
10-K for the Fiscal Year Ended September 30, 1996.
3
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27.01++ Financial Data Schedule of Registrant.
99.01+++++ Joint Proxy Statement of PacifiCare and FHP and Prospectus of
Registrant dated November 21, 1996.
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+++++ Incorporated herein by reference from the Prospectus.
4
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
N-T HOLDINGS, INC.
Date: January 23, 1997 By: /s/ Joseph S. Konowiecki
----------------------------------
Joseph S. Konowiecki
Secretary
5
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INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBITS
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2.01+ Amended and Restated Agreement and Plan of Merger and
Reorganization ("Reorganization Agreement"), dated as of November
11, 1996, among PacifiCare Health Systems, Inc. ("PacifiCare"),
Registrant, Neptune Merger Corp., Tree Acquisition Corp. and FHP
International Corporation ("FHP"). See Appendix A to the
Registrant's S-4.
3.01++ Certificate of Incorporation of Registrant.
3.02+ Form of Certificate of Incorporation of Registrant to be filed
pursuant to the Reorganization Agreement. See Exhibit 1.4 to
Appendix A of the Registrant's S-4.
3.03+ Bylaws of Registrant.
4.01+ Form of Specimen Certificate for Registrant's Class A Common Stock.
4.02+ Form of Specimen Certificate for Registrant's Class B Common Stock.
4.03+ Form of Specimen Certificate for Registrant's Series A Cumulative
Convertible Preferred Stock.
4.04* Indenture, dated as of September 22, 1993, between FHP and the Chase
Manhattan Bank, N.A. in regard to $100,000,000 7% Senior Notes due
2003.
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+ Incorporated herein by reference from Registrant's Registration
Statement on Form S-4 (File No. 333-16271) filed on November 18, 1996
("Registrant's S-4".)
* Incorporated herein by reference from FHP's Form 10-K for the Fiscal Year
Ended June 30, 1993.
++ Incorporated herein by reference for Registrant's Form 8-B.
Registration Statement (No. 000-21949).
6
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10.01+ Credit Agreement, dated as of October 31, 1996, among the
Registrant, the several financial institutions from time to time
party to the Credit Agreement, The Bank of New York, The Bank of
Nova Scotia, Banque Nationale de Paris, Dai-Ichi Kangyo Bank, Ltd.,
The Industrial Bank of Japan Limited, Rabobank Nederland, Sanwa
Bank California, The Sumitomo Bank, Limited, and Wells Fargo Bank,
N.A., as co-agents, The Chase Manhattan Bank and Citicorp. USA,
Inc., as managing agents, and Bank of America National Trust and
Savings Association, as agent for the Banks.
10.02+++ Form of contract for the period January 1, 1993, through December
31, 1993 between PacifiCare of California and the Department of
Health and Human Services.
10.03** Health Insurance Benefits for the Aged and Disabled Contracts dated
January 1, 1992 between FHP, Inc. and the Secretary of Health and
Human Services.
10.04*** Group Health Benefits Contract dated January 1, 1986 between FHP,
Inc. and the Federal Office of Personnel Management.
10.05 1996 Stock Option Plan for Officers and Key Employees of the
Registrant.
10.06++ 1996 Non-Officer Directors Stock Option Plan of the Registrant.
10.07++ 1996 Management Incentive Compensation Plan of the Registrant.
10.08++ 1996 Long-Term Performance Incentive Plan of the Registrant.
11.01++++ Statement re: Computation of Earnings Per Share.
12.01**** Statement re: Computation of Ratios.
21.01+ Subsidiaries of the Registrant.
27.01++ Financial Data Schedule of Registrant.
99.01+++++ Joint Proxy Statement of PacifiCare and FHP and Prospectus of
Registrant dated November 21, 1996.
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** Incorporated herein by reference from FHP's Form 10-K for the Fiscal Year
Ended June 30, 1992.
*** Incorporated herein by reference from FHP's Registration Statement on
Form S-1 (No. 33-5596).
**** Incorporated herein by reference from FHP's Form 10-K for the Fiscal Year
Ended June 30, 1996 ("FHP 1996 10-K") and the Registrant's S-4.
+++ Incorporated herein by reference from PacifiCare's Registration
Statement on Form S-3 (No. 33-72012).
++++ Incorporated herein by reference from FHP 1996 10-K and PacifiCare's Form
10-K for the Fiscal Year Ended September 30, 1996.
+++++ Incorporated herein by reference from Registrant's Prospectus filed
pursuant to Rule 424(b)(3) promulgated under the Securities Act of
1933, as amended, filed on November 26, 1996 ("Prospectus").
7
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Exhibit 10.05
1996 STOCK OPTION PLAN
FOR OFFICERS AND KEY EMPLOYEES
The Company hereby adopts this 1996 Stock Option Plan for Officers and Key
Employees of N-T Holdings, Inc. (the "Plan"), subject to shareholder approval.
The purposes of this Plan are as follows:
(1) To further the growth, development and financial success of the
Company by providing additional incentives to certain of its officers and
other key employees who have been or will be given responsibility for the
management or administration of the Company's business affairs.
(2) To enable the Company to obtain and retain the services of the
type of professional, technical and managerial personnel considered
essential to the long-range success of the Company by providing and
offering them an opportunity to become owners of capital stock.
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Plan, they shall have the
meaning specified below unless the context clearly indicates to the contrary.
Section 1.1 - Act
"Act" shall mean the Securities Exchange Act of 1934, as amended.
Section 1.2 - Award
"Award" shall mean an Incentive Stock Option, Non-Qualified Stock Option, a
Stock Appreciation Right, a Stock Payment, or any combination thereof, granted
under the Plan.
Section 1.3 - Board
"Board" shall mean the Board of Directors of the Company.
Section 1.4 - Chief Financial Officer
"Chief Financial Officer" shall mean the Chief Financial Officer of the
Company.
Section 1.5 - Class A Common Stock
"Class A Common Stock" shall mean the Class A Common Stock of the Company,
par value
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$.01 per share.
Section 1.6 - Class B Common Stock
"Class B Common Stock" shall mean the Class B Common Stock of the Company,
par value $.01 per share.
Section 1.7 - Code
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
Section 1.8 - Committee
"Committee" shall mean the Committee of the Board of Directors of the
Company as defined in Section 7.1 hereof.
Section 1.9 - Common Stock
"Common Stock" shall mean either or both, as the context requires, the
Class A Common Stock and the Class B Common Stock.
Section 1.10 - Company
"Company" shall mean N-T Holdings, Inc. or such other name which N-T
Holdings, Inc. may adopt.
Section 1.11 - Director
"Director" shall mean a member of the Board.
Section 1.12 - Employee
"Employee" shall mean any employee (as defined in accordance with the
Treasury Regulations and Revenue Rulings then applicable under Section 3401(c)
of the Code) of the Company, or of any corporation which is then a Subsidiary or
a consultant who is providing bona fide services to the Company, whether such
employee is so employed, or such consultant is retained, at the time this Plan
is adopted or becomes so employed or retained subsequent to the adoption of this
Plan.
Section 1.13 - Fair Market Value
The "Fair Market Value" of a share of the Company's Common Stock on the
date such determination is made shall mean: (i) the closing price of such share
on the principal exchange on which the shares of Common Stock are then trading,
if any, on such date, or, if shares of such stock were not traded on such date,
then on the next preceding trading day during which a sale occurred; or (ii) if
such stock is not traded on an exchange but is quoted on Nasdaq or a successor
quotation system, (1) the last sales price (if the stock is then listed as a
National Market Issue under the NASD National Market System), or (2) the mean
between the closing representative bid and asked prices
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(in all other cases) for the stock on such date as reported by Nasdaq or such
successor quotation system; or (iii) if such stock is not publicly traded on an
exchange and not quoted on Nasdaq or a successor quotation system, the mean
between the closing bid and asked prices for the stock on such date as
determined in good faith by the Committee; or (iv) if the Company's Common Stock
is not publicly traded, the fair market value established by the Committee
acting in good faith.
Section 1.14 - Incentive Stock Option
"Incentive Stock Option" shall mean an Option which qualifies under Section
422 of the Code and which is designated as an Incentive Stock Option by the
Committee.
Section 1.15 - Nasdaq
"Nasdaq" shall mean the National Association of Securities Dealers Inc.
Automated Quotation System.
Section 1.16 - Non-Qualified Stock Option
"Non-Qualified Stock Option" shall mean an Option which is not an Incentive
Stock Option and which is designated as a Non-Qualified Stock Option by the
Committee.
Section 1.17 - Officer
"Officer" shall mean an officer of the Company (including, without
limitation, the Chairman and Vice Chairman of the Board) or any corporation
which is then a Subsidiary, whether such Officer becomes an Officer at the time
this Plan is adopted or subsequent to the adoption of the Plan.
Section 1.18 - Option
"Option" shall mean an option to purchase shares of the Class A Common
Stock or Class B Common Stock of the Company, granted under the Plan. "Options"
includes both Incentive Stock Options and Non-Qualified Stock Options.
Section 1.19 - Parent Corporation
"Parent Corporation" shall mean any corporation in an unbroken chain of
corporations ending with the Company if each of the corporations other than the
Company 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 1.20 - Participant
"Participant" shall mean an Officer or Employee who is selected by the
Committee to receive an award.
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Section 1.21 - Plan
"Plan" shall mean this 1996 Stock Option Plan for Officers and Key
Employees of the Company.
Section 1.22 - Pronouns
The masculine pronoun shall include the feminine and neuter and the
singular shall include the plural, where the context so indicates.
Section 1.23 - Regulations
"Regulations" shall mean final, temporary or proposed regulations
promulgated under the Code.
Section 1.24 - Secretary
"Secretary" shall mean the Secretary of the Company.
Section 1.25 - Stock Appreciation Right
"Stock Appreciation Right" or "Right" shall mean a right granted pursuant
to Article VI of the Plan to receive an amount of cash or, in the discretion of
the Committee, a number of shares of Class A Common Stock or Class B Common
Stock of the Company or a combination of shares of Class A Common Stock or
Class B Common Stock and cash, based on the increase in the Fair Market Value of
the shares of Class A Common Stock or Class B Common Stock subject to the right.
Section 1.26 - Stock Payment
"Stock Payment" shall mean a payment in shares of Class B Common Stock
valued at the Fair Market Value at the time of the payment: (i) to replace all
or any portion of the compensation, other than base salary, that would otherwise
become payable to a Participant in cash; or (ii) to encourage employment with
the Company for employees.
Section 1.27 - Subsidiary
"Subsidiary" shall mean 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.
Section 1.28 - Termination of Employment
"Termination of Employment" shall mean: (i) the time when the Participant
ceases to be an Employee or Officer of the Company or a Subsidiary for any
reason, including, but not limited to, a termination by resignation, discharge,
death or retirement, and with respect to a Participant who is
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a consultant, the time when such consultant is no longer retained by the Company
or any Subsidiary of the Company, but excluding terminations where there is a
simultaneous reemployment or reappointment of the Participant as an Employee or
Officer by the Company or a Subsidiary; or (ii) with respect to a Participant
who is an Employee or Officer of a Subsidiary, the time when such Subsidiary
ceases to be a Subsidiary of the Company. The Committee, in its absolute
discretion, shall determine the effect of all other 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 all questions of whether particular leaves of absence constitute
Terminations of Employment; provided, however, that, with respect to Incentive
Stock Options, a leave of absence shall constitute a Termination of Employment
if, and to the extent that, such leave of absence interrupts employment for the
purposes of Section 422(a)(2) of the Code.
ARTICLE II
SHARES SUBJECT TO PLAN
Section 2.1 - Shares Subject to Plan
The shares of stock subject to Awards shall be shares of the Company's
Class A Common Stock and shares of the Company's Class B Common Stock. The
aggregate number of such shares which may be subject to Awards granted under
the Plan shall be 4,300,000 shares of Common Stock, subject to adjustment as
provided herein including, but not limited to, adjustments for dividends
consisting of one share of Class B Common Stock for one share of Class A
Common Stock. With respect to each fiscal year, on and after October 1, 1997,
the aggregate number of shares of Common Stock which may be subject to Awards
granted during such year shall not exceed two percent (2%) of the aggregate
outstanding shares of Class A and Class B Common Stock of the Company as of
the last day of the previous fiscal year, subject to adjustment as provided
herein. To the extent permissible under Rule 16b-3 of the Act, any shares of
Common Stock available to be subject to Awards granted during a fiscal year
and not made subject to Awards shall be added to the aggregate number of
shares of Common Stock available for Awards in succeeding fiscal years. The
maximum number of Incentive Stock Options available for grant under the Plan
shall be 1,800,000, subject to adjustment as provided herein.
The maximum number of Incentive Stock Options, Non-Qualified Stock Options
and Stock Appreciation Rights available for grant to any Participant during any
fiscal year shall not exceed 200,000, subject to adjustment as provided herein.
If any Award, expires or is terminated or cancelled without having been fully
exercised, the number of shares subject to such Award but as to which such Award
was not exercised prior to its expiration or cancellation may again be granted
hereunder, subject to the limitations contained herein, provided, however, that,
in the case of the cancellation or termination of an Incentive Stock Option, a
Non-Qualified Stock Option or Stock Appreciation Right in the same fiscal year
that such Incentive Stock Option, Non-Qualified Stock Option or Stock
Appreciation Right was granted, both the cancelled or terminated Incentive Stock
Option, Non-Qualified Stock Option or Stock Appreciation Right and the newly
granted Incentive Stock Option, Non-Qualified Stock Option or Stock Appreciation
Right shall be counted in
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determining whether the recipient has received the maximum number of such Awards
permitted under the Plan.
Section 2.2 - Limitation on Incentive Stock Option Exercise
The aggregate Fair Market Value (determined as of the time the Option is
granted) of the shares subject to Incentive Stock Options which may first become
exercisable by any Officer or key Employee in any calendar year (under the Plan
and all other incentive stock option plans of the Company, any Subsidiary and
any Parent Corporation) shall not exceed $100,000.
Section 2.3 - Changes in Company's Shares
In the event that the outstanding shares of Class A Common Stock or Class B
Common Stock of the Company are hereafter changed into or exchanged for a
different number or kind of shares or other securities of the Company, or
(subject to Section 8.2 hereof) 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 outstanding shares of
Class A Common Stock or Class B Common Stock or similar transactions,
proportionate adjustments shall be made by the Committee in the number and kind
of shares which are subject to Awards, including adjustments of the limitations
contained herein on the maximum number and kind of shares which may be subject
to Awards under the Plan.
ARTICLE III
GRANTING OF AWARDS
Section 3.1 - Eligibility
Any Officer or key Employee of the Company or of any corporation which is
then a Subsidiary shall be eligible to be granted Awards, except as otherwise
provided herein.
Section 3.2 - Qualifications of Incentive Stock Options
No Incentive Stock Option shall be granted unless such Option, when
granted, qualifies as an "incentive stock option" under Section 422 of the Code.
Section 3.3 - Stock Payments
The Committee may approve Stock Payments of Class B Common Stock valued at
the Fair Market Value at the time of payment to an Employee or Officer: (i) for
all or any portion of the compensation, other than base salary, that would
otherwise become payable to an Employee or Officer in cash; or (ii) as an
incentive to employment with the Company. Each Stock Payment will be evidenced
by a written instrument signed by the Participant or granted pursuant to a
written performance plan adopted by the Committee and may include any other
terms and conditions consistent with the Plan as the Committee may in its
discretion determine.
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Section 3.4 - Granting of Awards
(a) The Committee shall from time to time, in its absolute discretion:
(i) Determine which Employees are key Employees and select from
among the Officers or key Employees (including those to whom Awards have
been previously granted under the Plan) such of them as in its opinion
should be granted Awards;
(ii) Determine the number of shares to be subject to such Awards
granted to such selected Officer or key Employees, and determine whether
such Awards are to be Incentive Stock Options, Non-Qualified Stock Options,
Stock Payments, Stock Appreciation Rights or any combination thereof; and
(iii) Determine the terms and conditions of such Awards,
consistent with the Plan.
(b) Upon the selection of an Officer or key Employee to be granted an
Award, the Committee shall, by resolution, set forth the terms and conditions of
the Award, instruct the Secretary or Chief Financial Officer to issue such Award
and, in the case of a grant of an Option, specify in the resolution whether such
Option is intended to be an Incentive Stock Option or a Non-Qualified Stock
Option; provided, however, that in the event no such specification is made in
such resolutions, the Committee will be deemed to have specified that such
Option is intended to be a Non-Qualified Stock Option; provided further,
however, that in the event such specification, whether explicit or implicit, is
inconsistent with terms set forth in such resolutions for such Option, then such
specification shall be deemed of no force or effect, and the Committee will be
deemed to have made a specification which is consistent with such terms. The
Committee may, in its discretion and on such terms as it deems appropriate,
require as a condition on the grant of a Non-Qualified Stock Option to a
Participant that the Participant surrender for cancellation some or all of the
unexercised Non-Qualified Stock Options which have been previously granted to
him. A Non-Qualified Stock Option, the grant of which is conditioned upon such
surrender, may have an option price lower (or higher) than the option price of
the surrendered Non-Qualified Stock Option, may cover the same (or a lesser or
greater) number of shares as the surrendered Non-Qualified Stock Option, may
contain such other terms as the Committee deems appropriate and shall be
exercisable in accordance with its terms, without regard to the number of
shares, price, option period or any other term or condition of the surrendered
Non-Qualified Stock Option.
(c) Awards may not be granted by the Committee to Directors who are not
Officers or key Employees of the Company.
ARTICLE IV
TERMS OF OPTIONS
Section 4.1 - Option Price
The exercise price per share of the shares subject to each Option shall be
set by the Committee; provided, however, that the exercise price per share shall
be not less than 100 percent
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of the Fair Market Value of such shares on the date such Option is granted;
provided further, that, in the case of an Incentive Stock Option, the exercise
price per share shall be not less than 110 percent of the Fair Market Value of
such shares on the date such Option is granted in the case of an individual then
owning (within the meaning of Section 425(d) of the Code) more than 10 percent
of the total combined voting power of all classes of stock of the Company, any
Subsidiary or any Parent Corporation.
Section 4.2 - Commencement of Exercisability
(a) Except as the Committee may otherwise provide, no Option may be
exercised in whole or in part during the first year after such Award is granted.
(b) Subject to the provisions of Section 2.2, 4.2(a) , 4.2(c) and 8.2,
Options shall become exercisable at such times and in such installments (which
may be cumulative) as the Committee shall provide in the terms of each
individual Option; provided, however, that by a resolution adopted after an
Option is granted the Committee may in its absolute discretion, on such terms
and conditions as it may determine to be appropriate and subject to Sections
4.2(a) and 4.2(c) accelerate the time at which such Option or any portion
thereof may be exercised
(c) No portion of an Option which is unexercisable at Termination of
Employment shall thereafter become exercisable.
Section 4.3 - Expiration of Options
(a) No Incentive Stock Option may be exercised to any extent by anyone
after the first to occur of the following events:
(i) The expiration of ten years from the date the Incentive
Stock Option was granted; or
(ii) In the case of a Participant owning (within the meaning of
Section 425(d) of the Code), at the time the Incentive Stock Option was
granted, more than 10 percent of the total combined voting power of all
classes of stock of the Company, any Subsidiary or any Parent Corporation,
the expiration of five years from the date the Incentive Stock Option was
granted; or
(iii) Except in the case of any Participant who is disabled, the
expiration of three months from the date of the Participant's Termination
of Employment for any reason other than such participant's death, unless
the Participant dies within said three-month period; or
(iv) In the case of a Participant who is disabled, the expiration
of one year from the date of the Participant's Termination of Employment
for any reason other than such Participant's death, unless the Participant
dies within said one-year period; or
(v) The expiration of one year from the date of the
Participant's death.
For purposes of this Section 4.3, "disabled" shall mean a medically
determinable physical or
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mental impairment which has lasted or can be expected to last for a continuous
period of not less than 12 months (and in the case of an Incentive Stock Option,
or which can be expected to result in death) and which renders the Participant
substantially unable to function as an Officer or Employee of the Company or a
Subsidiary.
(b) Subject to the provisions of Section 4.3(a), the Committee shall
provide, in the terms of each individual Option, when such Option expires and
becomes unexercisable; and (without limiting the generality of the foregoing)
the Committee may provide in the terms of individual Options that said Options
expire immediately upon a Termination of Employment for any reason.
Section 4.4 - Employment of Participant
Nothing in this Plan or in any Stock Option Agreement, Stock Appreciation
Right Agreement or in any written instrument or written performance plan related
to Stock Payments hereunder shall confer upon any Participant any right to
continue in the employ of, or be retained by the Company or any Subsidiary or
shall interfere with or restrict in any way the rights of the Company and
Subsidiaries, which are hereby expressly reserved, to discharge any Participant,
or to terminate the services of any consultant, at any time for any reason
whatsoever, with or without good cause.
ARTICLE V
EXERCISE OF AWARDS
Section 5.1 - Person Eligible to Exercise
During the lifetime of the Participant, only he, his guardian, legal
representative or other person approved by the Committee in its sole discretion
and described in the terms of the agreements documenting such Award may exercise
an Award granted to him, or any portion thereof (unless, in the case of an Award
which is an Incentive Stock Option, such exercise would disqualify such Option
as an Incentive Stock Option). After the death of the Participant, any
exercisable portion of an Award may, prior to the time when such portion becomes
unexercisable under Article IV or Section 8.2, be exercised by his personal
representative or by any person empowered to do so under the deceased
Participant's will or under the then applicable laws of descent and
distribution.
Section 5.2 - Partial Exercise
At any time and from time to time prior to the time when any exercisable
Award or exercisable portion thereof becomes unexercisable under Article IV or
Section 8.2, such Award or portion thereof may be exercised in whole or in part;
provided, however, that the Company shall not be required to issue fractional
shares and the Committee may, by the terms of the Award, require any partial
exercise to be with respect to a specified minimum number of shares.
Section 5.3 - Manner of Exercise
An exercisable Award, or any exercisable portion thereof, may be exercised
solely by delivery
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to the Secretary or Chief Financial Officer or their respective offices of all
of the following prior to the time when such Award or such portion becomes
unexercisable under Section 4.3 or Section 8.2:
(a) Notice in writing by the Participant or other person then entitled to
exercise such Award or portion, stating that such Award or portion is exercised,
such notice complying with all applicable rules established by the Committee;
(b) (i) With respect to the exercise of Options, full payment (in
cash or by check) for the shares with respect to which such Option or
portion is thereby exercised;
(ii) With the consent of the Committee, shares of any Class of
the Company's Common Stock owned by the Participant either duly endorsed
for transfer to the Company or duly attested as to ownership with a Fair
Market Value (as determinable under Section 1.13) on the date of delivery
equal to the aggregate Option price of the shares with respect to which
such Option or portion is thereby exercised (which shares shall be owned by
the Participant 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 a Participant would not violate Rule 16(b) under
the Act), delivery to the Company of (x) irrevocable instructions to
deliver the stock certificates representing the shares for which the Option
is 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
sole proceeds equal to the aggregate Option exercise price;
(iv) With the consent of the Committee, any other form of
cashless exercise permitted under Section 5.4 hereof; or
(v) Any combination of the consideration provided in the
foregoing subsections (i), (ii), (iii) and (iv).
(c) Such representations and documents as the Committee, in its absolute
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any other
federal or state securities laws or regulations. The Committee may, in its
absolute discretion, also take whatever additional actions it deems appropriate
to effect such compliance including, without limitation, placing legends on
share certificates and issuing stop-transfer orders to transfer agents and
registrars; and
(d) In the event that the Award or portion thereof shall be exercised
pursuant to Section 5.1 by any person or persons other than the Participant,
appropriate proof of the right of such person or persons to exercise the Award
or portion thereof.
Section 5.4 - Cashless Exercise Procedures
The Company, in its sole discretion, may establish procedures whereby a
Participant, subject to the requirements of Rule 16b-3 under the Act, Regulation
T issued by the Board of Governors of the Federal Reserve System pursuant to the
Act, federal income tax laws, and other federal, state and local tax and
securities laws, can exercise an 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
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exercise program, the Company shall determine, in its sole discretion and from
time to time, such administrative procedures and policies as its deems
appropriate and such procedures and policies shall be binding on any participant
wishing to utilize the cashless exercise program.
Section 5.5 - Conditions to Issuance of Stock Certificates
The shares of stock issuable and deliverable upon the exercise of an Award,
or any portion thereof, may be either previously authorized but unissued shares
or issued shares which have then been reacquired by the Company. The Company
shall not be required to issue or deliver any certificate or certificates for
shares of stock purchased upon the exercise of any Award or portion thereof or
upon a Stock Payment prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges on
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 the rulings or regulations of the
Securities and Exchange Commission or any other governmental regulatory body,
which the Committee shall, in its absolute discretion, deem necessary and
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 it is required to
withhold under federal, state or local law in connection with the exercise of
the Award or grant of a Stock Payment; and
(e) The lapse of such reasonable period of time following the exercise of
the Award as the Committee may establish from time to time for reasons of
administrative convenience.
Section 5.6 - Rights as Stockholders
The holders of Awards shall not be, nor have any of the rights or
privileges of, stockholders of the Company in respect of any shares receivable
upon the exercise of any part of an Award unless and until certificates
representing such shares have been issued by the Company to such holders.
Section 5.7 - Transfer Restrictions
The Committee, in its absolute discretion, may impose such restrictions on
the transferability of the shares receivable upon the exercise of an Award or
upon the grant of a Stock Payment, as it deems appropriate. Any such
restriction shall be set forth in the respective Stock Option Agreement or Stock
Appreciation Right Agreement and may be, and in the case of a Stock Payment will
be, referred to on the certificates evidencing such shares. The Committee may
require the Participant to give the Company prompt notice of any disposition of
shares of stock, acquired by exercise of an Incentive Stock Option, within two
years from the date of granting such Option or one year after the transfer of
such shares to such Participant. The Committee may direct that the certificates
evidencing
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shares acquired by exercise of an Award refer to such requirement to give prompt
notice of disposition.
ARTICLE VI
STOCK APPRECIATION RIGHTS
Section 6.1 - Conditions to Grant of Rights
The Committee may approve the grant of Rights related or unrelated to
Options to Participants, subject to the following terms and conditions:
A Stock Appreciation Right may be granted: (i) at any time
if unrelated to an Option; (ii) either at the time of
grant, or at any time thereafter during the option term if
related to a Non-Qualified Stock Option; or (iii) only at
the time of grant if related to an Incentive Stock Option.
Section 6.2 - Rights Granted in Connection with Options
(a) A Stock Appreciation Right granted in connection with an Option will
require the holder of the related Option, upon exercise of the Stock
Appreciation Right, to surrender such Option, or any portion thereof to the
extent unexercised, with respect to the number of shares as to which such Stock
Appreciation Right is exercised, and will entitle the holder to receive payment
of an amount computed pursuant to Section 6.2(c). Upon the exercise of a Stock
Appreciation Right, the number of shares subject to exercise under the related
Option shall be automatically reduced by the number of shares represented by the
Option or portion thereof surrendered. Upon the exercise of an Option, the
number of shares subject to the related Stock Appreciation Right shall be
automatically reduced by the number of shares with respect to which the Option
was exercised.
(b) Subject to Section 6.4(b) and (c), a Stock Appreciation Right granted
in connection with an Option hereunder will be exercisable at such time or
times, and only to the extent that a related Option is exercisable, and will not
be transferable except to the extent that such related Option may be
transferable. A Stock Appreciation Right granted in connection with an
Incentive Stock Option shall be exercisable only if the Fair Market Value of a
share of Common Stock of the Company on the date of exercise exceeds the
purchase price per share of Common Stock specified in the related Option.
(c) Upon the exercise of a Stock Appreciation Right related to an Option,
the Option holder will be entitled to receive payment of an amount determined by
multiplying:
(i) The difference obtained by subtracting the purchase price of
a share of the Class A Common Stock or a share of the Class B Common Stock
specified in the related Option from the Fair Market Value of a share of
the Class A Common Stock or Class B Common Stock, as the case may be, on
the date of exercise of such Stock Appreciation Right,
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by
(ii) The number of shares of Class A Common Stock or the number
of shares of Class B Common Stock as to which such Stock Appreciation Right
has been exercised.
Section 6.3 - Rights Granted Unrelated to Options
The Committee may grant Stock Appreciation Rights unrelated to Options to
Participants. The amount payable upon exercise of such a Stock Appreciation
Right shall be determined in accordance with Section 6.2(c), except that "Fair
Market Value of a share of Class A Common Stock or a share of the Class B Common
Stock, as the case may be on the date of the grant of the Stock Appreciation
Right" shall be substituted for "purchase price of a share of the Class A Common
Stock or a share of Class B Common Stock specified in the related Option."
Section 6.4 - Form of Payment; Conditions
(a) Payment of the amount determined under Sections 6.2(c) or 6.3 shall be
made solely in cash or alternatively, at the sole discretion of the Committee,
may be made solely in whole shares of Class A Common Stock or Class B Common
Stock in a number determined at their Fair Market Value on the date of exercise
of the Stock Appreciation Right, or in a combination of cash and shares as the
Committee deems advisable. If the Committee decides to make full payment in
shares of Class A Common Stock or Class B Common Stock, and the amount payable
results in a fractional share, payment for the fractional share will be made in
cash.
(b) The Committee may, at the time a Stock Appreciation Right is granted,
impose such conditions on the exercise of the Stock Appreciation Right as may be
required to satisfy the requirements of Rule 16b-3 under the Act (or any other
comparable provisions in effect at the time or times in question).
ARTICLE VII
ADMINISTRATION
Section 7.1 - Duties and Powers of Committee
(a) The Plan shall be administered by a committee of the Board consisting
of two or more members of the Board, selected by the Board, all of which members
may be both a "Non-Employee Director" as defined in Rule 16b-3(b)(3) (or any
successor provision) promulgated under the Act, and an "Outside Director" as
defined for purposes of Section 162(m) (or any successor provision) of the Code
and the Regulations promulgated thereunder. It shall be the duty of the
Committee to conduct the general administration of the Plan in accordance with
its provisions. The Committee shall have the power to interpret the Plan and
the Awards 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. The Committee shall in its absolute discretion determine
whether to grant Non-Qualified Stock Options, Incentive Stock Options, Stock
Payments and/or Stock Appreciation Rights; provided that in the case of the
granting of Incentive Stock Options, any such interpretations
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and rules in regard to Incentive Stock Options shall be consistent with the
purposes of the Plan to grant "incentive stock options" within the meaning of
Section 422 of the Code.
(b) No Award granted hereunder shall be exercisable unless and until
evidenced by a written Stock Option Agreement, Stock Appreciation Right
Agreement or a written instrument related to a Stock Payment, if applicable,
which shall be executed by the participant and an authorized Officer of the
Company and which shall contain such terms and conditions as the Committee shall
determine, consistent with the Plan. Each such agreement shall expressly
incorporate by reference the provisions of this Plan (a copy of which shall be
made available for inspection by the Participant during normal business hours at
the principal office of the Company) and shall state that in the event of any
inconsistency between the provisions hereof and the provisions of such
agreement, the provisions of this Plan shall govern. Stock Option Agreements
evidencing Incentive Stock Options shall contain such terms and conditions as
may be necessary to qualify such Options as "incentive stock options" under
Section 422 of the Code.
Section 7.2 - Majority Rule
The Committee shall act by a majority of its members in office. The
Committee may act either by vote at a meeting or by a memorandum or other
written instruments signed by a majority of the Committee.
Section 7.3 - Compensation; Professional Assistance; Good Faith Actions
Members of the Committee shall not receive compensation for their services
as members but all expenses and liabilities they incur in connection with the
administration of the Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Company and its
Officers and Directors shall be entitled to rely upon the advice, opinions or
valuations of any such persons. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon all Participants, 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 Plan or the Options and
all members of the Committee shall be fully protected by the Company in respect
to any such action, determination or interpretation.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 - Adjustments in Outstanding Awards
In the event that the outstanding shares of the stock subject to Rights or
Options are changed into or exchanged for a different number or kind of shares
of the Company or other securities of the Company or (subject to Section 8.2
hereof) 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
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outstanding shares of Common Stock or similar transactions, the Committee shall
make an appropriate and equitable adjustment in the number and kind of shares as
to which all outstanding Rights or Options, or portions thereof then
unexercised, shall be exercisable, to the end that after such event the
Participant's proportionate interest shall be maintained as before the
occurrence of such event. Such adjustment in an outstanding Right or Option or
the unexercised portion of the Right or 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 the exercise price per share (or,
with respect to Rights granted without Options, the Fair Market Value per share
on the date the Right was granted); provided, however, that, in the case of
Incentive Stock Options, each such adjustment shall be made in such manner as
not to constitute a "modification" within the meaning of Section 424(h)(3) of
the Code; provided, further, that each such adjustment shall be made in such
manner as not to constitute: (i) a "material modification" to any Award
intended to qualify for treatment as an "existing binding contract" in each case
within the meaning of Section 162(m)(4)(D) of the Code; or (ii) a cancellation
and reissuance of an Incentive Stock Option, Non-Qualified Stock Option or Stock
Appreciation Right for purposes of 162(m) of the Code, or the Regulations
promulgated thereunder to the extent that such reissuance would result in the
grant of such Awards in excess of the maximum permitted to be granted to any
Participant in any fiscal year. Any such adjustment made by the Committee shall
be final and binding upon all Participants, the Company and all other interested
persons.
Section 8.2 - Merger, Consolidation, Acquisition, Liquidation or Dissolution
a. Notwithstanding anything to the contrary in Section 4.2(a), Section
4.2(b) or any vesting provisions of any Award, any Award outstanding under the
Plan which has been held for at least six months shall become exercisable
immediately upon the effective date of a "Change of Control." As used in this
Section 8.2, the term "Change of Control" shall mean the occurrence of any of
the following: (i) a business combination effectuated through the merger or
consolidation of the Company with or into another entity where the Company is
not the Surviving Organization; (ii) any business combination effectuated
through the merger or consolidation of the Company with or into another entity
where the Company is the Surviving Organization and such business combination
occurred with an entity whose market capitalization prior to the transaction was
greater than 50 percent of the Company's market capitalization prior to the
transaction; (iii) the sale in a transaction or series of transactions of all or
substantially all of the Company's assets; (iv) any "person" or "group" (within
the meaning of Sections 13(d)and 14(d) of the Act) other than UniHealth, a
California non-profit public benefit corporation ("UniHealth"), acquires
beneficial ownership (within the meaning of Rule 13d-3 of the Act), directly or
indirectly, of 20 percent or more of the voting common stock of the Company and
the beneficial ownership of the voting common stock of the Company owned by
UniHealth at that date is less than or equal to the beneficial ownership
interest of voting securities attributable to such other person or group; (v) a
dissolution or liquidation of the Company; or (vi) the Company ceases to be
subject to the reporting requirements of the Act as a result of a "going private
transaction" (within the meaning of the Act). For purposes hereof, "Surviving
Organization" shall mean any entity where the majority of the members of such
entity's board of directors are persons who were members of the Company's board
of directors prior to the merger, consolidation or other business combination
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and the senior management of the surviving entity includes all of the
individuals who were the Company's executive management (the Company's chief
executive officer and those individuals who report directly to the Company's
chief executive officer) prior to the merger, consolidation or other business
combination and such individuals are in at least comparable positions with such
entity
b. The Committee may make such determinations and interpretations and
adopt such rules and conditions as it, in its absolute discretion, deems
appropriate in connection with a Change in Control and acceleration of
exercisability. All such determinations and interpretations by the Committee
shall be conclusive.
c. Each Participant shall receive at least 10 days' notice prior to the
effective date of the Change of Control that their Awards will be exercisable
upon the effective date of the Change of Control and the officers of the Company
shall make adequate provisions to permit all Participants to exercise their
Awards as of the effective date of the Change of Control.
Section 8.3 - Awards Not Transferable
No Award or interest or right therein or part thereof, excluding Stock
Payments, shall be liable for the debts, contracts or engagements of the
Participant 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 nothing in this
Section 8.3 shall prevent transfers by will or by the applicable laws of descent
and distribution or by other methods to any approved person pursuant to Section
5.1.
Section 8.4 - Withholding Tax Liability
(a) A holder of an Award granted hereunder may elect to deliver shares to
the Company or have the Company withhold shares otherwise issuable upon the
exercise of an Award in order to satisfy federal and state withholding tax
liability (a "share withholding election"), provided: (i) the Board or, if so
designated, the Committee, shall not have revoked its advance approval of the
holder's share withholding election; and (ii) the share withholding election is
made on or prior to the date on which the amount of withholding tax liability is
determined (the "Tax Date"). Notwithstanding the foregoing, a holder whose
transactions in Common Stock are subject to Section 16(b) of the Act may make a
share withholding election only if the following additional conditions are met:
(i) the withholding is made at least six months after the date of the grant of
the Award; and (ii) either (x) the share withholding election is irrevocably
made at least six months in advance of the withholding, or (y) the share
withholding election and the share withholding take place during the period
beginning on the third business day following the date of release of the
Company's quarterly or annual financial results and ending on the twelfth
business day following such date.
(b) A share withholding election shall be deemed made when written notice
of such election, signed by the holder of the Award, has been delivered or
transmitted by registered or
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certified mail to the Secretary or Chief Financial Officer of the Company at its
then principal office. Delivery of said notice shall constitute an irrevocable
election to have shares withheld.
(c) Upon exercise of an Award by a holder, the Company shall transfer the
total number of shares of Class A Common Stock or Class B Common Stock of the
Company subject to the Award to the holder on the date of exercise, less any
shares the holder elects to withhold.
(d) If a Participant disposes of shares acquired pursuant to an Incentive
Stock Option in any transaction considered to be a disqualifying transaction
under Sections 421 and 422 of the Code, the Participant must give the Company
written notice of such transfer and the Company shall have the right to deduct
any taxes required by law to be withheld from any amounts otherwise payable to
the Participant.
Section 8.5 - Amendment, Suspension or Termination of the Plan
The Plan may be wholly or partially amended or otherwise modified,
suspended or terminated at any time or from time to time by the Board, but no
amendment may be awarded that is not subject to the approval of the stockholders
of the Company if stockholder approval would be required under Section 162(m) of
the Code, Section 422 of the Code or any other law or rule of any governmental
authority, stock exchange or other self-regulatory organization to which the
Company is subject. Neither the amendment, suspension nor termination of the
Plan shall, without the consent of the holder of the Award, impair any rights or
obligations under any Award heretofore granted. No Award may be granted during
any period of suspension nor after termination of the Plan, and in no event may
any Award be granted under this Plan after the expiration of ten years from the
date the Plan is approved by the Company's stockholders under Section 8.6. The
Committee may amend or otherwise modify any Award (either individually or as a
group) from time to time, but no amendment or modification shall, without the
consent of the holder of such Award, impair any rights or obligations of such
award.
Section 8.6 - Approval of Plan by Stockholders
The Plan will be submitted for the approval of the Company's stockholders
within 12 months after the date of the Board's initial adoption of the Plan and
as determined necessary or desirable for actions taken pursuant to Section 8.5.
Awards may be granted prior to such stockholder approval; provided, however,
that such Awards shall not be exercisable prior to the time when the Plan is
approved by the stockholders; provided further, that if such approval has not
been obtained at the end of said 12 month period, all Awards previously granted
under the Plan shall thereupon be cancelled and become null and void.
Section 8.7 - Effect of Plan Upon Other Incentive and Compensation Plans
The adoption of this Plan shall not affect any other compensation or
incentive plan in effect for the Company or any Subsidiary. Nothing in this
Plan shall be construed to limit the right of the Company or any Subsidiary:
(i) to establish any other forms of incentives or compensation
for Officers or
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Employees of the Company or any Subsidiary; or
(ii) to grant or assume Awards otherwise than under this Plan in
connection with any proper corporate purpose, including, but not limited
to, the grant or assumption of options or stock appreciation rights in
connection with the acquisition by purchase, lease, merger, consolidation
or otherwise, of the business, stock or assets of any corporation, firm or
association.
Section 8.8 - Titles
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of the Plan.
Section 8.9 - Exchange Options
Pursuant to Section 4.8(b) of the Amended and Restated Agreement and
Plan of Reorganization, dated as of November 11, 1996 (the "Reorganization
Agreement"), among PacifiCare Health Systems, Inc., a Delaware Corporation,
the Company, Neptune Merger Corp., a Delaware Corporation, Tree Acquisition
Corp., a Delaware Corporation, and FHP International Corporation, a Delaware
Corporation ("FHP"), the Company is required to issue options in exchange
for options granted by FHP (the "Exchange Options"). The Exchange Options
shall be granted under this Plan and shall be subject to the terms and
conditions of this Plan; provided, however, to the extent that the terms of
the Exchange Options or the provisions of Section 4.8(b) of the
Reorganization Agreement are inconsistent with the terms and conditions of
this Plan, the provisions of the Exchange Options and Section 4.8(b) shall
govern.
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