Annual Report — Form 10-K — Sect. 13 / 15(d) – SEA’34 Filing Table of Contents
Document/ExhibitDescriptionPagesSize
1: 10-K Annual Report HTML 1.48M
2: EX-10.2 Material Contract HTML 85K
3: EX-10.3 Material Contract HTML 92K
4: EX-10.34 Material Contract HTML 79K
6: EX-21.1 Subsidiaries List HTML 166K
7: EX-23.1 Consent of Experts or Counsel HTML 35K
8: EX-24.1 Power of Attorney HTML 43K
5: EX-12.1 Statement re: Computation of Ratios HTML 47K
9: EX-31.1 Certification -- §302 - SOA'02 HTML 50K
10: EX-32.1 Certification -- §906 - SOA'02 HTML 39K
78: R1 Document and Entity Information Document HTML 65K
62: R2 Consolidated Balance Sheets HTML 145K
74: R3 Consolidated Balance Sheet (Parenthetical) HTML 65K
Consolidated Balance Sheet (Parenthetical)
82: R4 Consolidated Statements of Operations HTML 114K
105: R5 Consolidated Statements of Comprehensive Income HTML 76K
64: R6 Consolidated Statements of Changes in HTML 98K
Shareholders' Equity
73: R7 Consolidated Statements of Cash Flows HTML 142K
56: R8 Description of Business (Notes) HTML 37K
46: R9 Basis of Presentation, Use of Estimates and HTML 117K
Significant Accounting Policies
107: R10 Investments HTML 284K
84: R11 Fair Value HTML 332K
83: R12 Property, Plant, and Capitalized Software (Notes) HTML 58K
90: R13 Goodwill and Intangible Assets (Notes) HTML 129K
91: R14 Medical Cost and Medical Costs Payable HTML 71K
88: R15 Commercial Paper and Long-Term Debt HTML 249K
92: R16 Income Taxes (Notes) HTML 157K
75: R17 Shareholders' Equity Shareholder's Equity HTML 60K
79: R18 Share-Based Compensation HTML 118K
86: R19 Commitments and Contingencies HTML 58K
115: R20 Segment Financial Information HTML 294K
100: R21 Quarterly Financial Data (Notes) HTML 85K
69: R22 Schedule I (Notes) HTML 194K
85: R23 Basis of Presentation, Use of Estimates and HTML 161K
Significant Accounting Policies (Policy)
71: R24 Fair Value Fair Value (Policies) HTML 50K
37: R25 Income Taxes Income Taxes (Policies) HTML 42K
101: R26 Shareholders' Equity Shareholders' Equity HTML 47K
(Policies)
111: R27 Share-Based Compensation Share-Based Compensation HTML 49K
(Policies)
51: R28 Segment Financial Information Segment Financial HTML 43K
Information (Policies)
50: R29 Basis of Presentation, Use of Estimates and HTML 76K
Significant Accounting Policies Basis of
Presentation, Use of Estimates and Significant
Accounting Policies (Tables)
54: R30 Investments (Tables) HTML 283K
55: R31 Fair Value (Tables) HTML 324K
57: R32 Property, Plant, and Capitalized Software (Tables) HTML 58K
26: R33 Goodwill and Intangible Assets (Tables) HTML 127K
98: R34 Medical Cost and Medical Costs Payable Medical HTML 72K
Cost and Medical Costs Payable (Tables)
67: R35 Commercial Paper and Long-Term Debt (Tables) HTML 253K
70: R36 Income Taxes (Tables) HTML 156K
41: R37 Shareholders' Equity Shareholder's Equity (Tables) HTML 43K
114: R38 Share-Based Compensation (Tables) HTML 118K
17: R39 Commitments and Contingencies Commitments and HTML 44K
Contingencies (Tables)
59: R40 Segment Financial Information (Tables) HTML 279K
104: R41 Quarterly Financial Data (Tables) HTML 85K
39: R42 Schedule I (Tables) HTML 198K
49: R43 Basis of Presentation, Use of Estimates and HTML 82K
Significant Accounting Policies Narrative
(Details)
53: R44 Basis of Presentation, Use of Estimates and HTML 40K
Significant Accounting Policies Basis of
Presentation, Use of Estimates and Significant
Accounting Policies Medicare Part D (Details)
63: R45 Basis of Presentation, Use of Estimates and HTML 41K
Significant Accounting Policies Basis of
Presentation, Use of Estimates and Significant
Accounting Policies Useful lives for property,
equipment and capitalized software (Details)
25: R46 Investments (Narrative) (Details) HTML 36K
45: R47 Investments (Short-Term and Long-Term Investments) HTML 86K
(Details)
19: R48 Investments (Fair Value of Mortgage-Backed HTML 52K
Securities by Credit Rating Origination) (Details)
103: R49 Investments (Amortized Cost and Fair Value of HTML 73K
Available-for-Sale Debt Securities by Contractual
Maturity) (Details)
38: R50 Investments (Amortized Cost and Fair Value of HTML 65K
Held-To-Maturity Debt Securities by Contractual
Maturity) (Details)
99: R51 Investments (Fair Value of Available-For-Sale HTML 63K
Investments with Gross Unrealized Losses by
Investment Type and Length of Time That Individual
Securities Have Been in a Continuous Unrealized
Loss Position) (Details)
42: R52 Investments (Net Realized Gains) (Details) HTML 60K
60: R53 Fair Value (Narrative) (Details) HTML 53K
18: R54 Fair Value (Financial Assets and Liabilities, HTML 79K
Excluding AARP, Measured at Fair Value on a
Recurring Basis) (Details)
22: R55 Fair Value (Financial Assets and Liabilities, HTML 54K
Excluding AARP, Not Measured at Fair Value on a
Recurring Basis) (Details)
52: R56 Fair Value (Reconciliation of Assets Measured at HTML 62K
Fair Value on a Recurring Basis Using Level 3
Inputs) (Details)
30: R57 Fair Value Fair Value Inputs Assets Quantitative HTML 42K
Information (Details)
108: R58 Fair Value (Assets and Liabilities measured at HTML 77K
fair value on a recurring basis) (Details)
66: R59 Property, Plant, and Capitalized Software HTML 39K
(Details)
89: R60 Property, Plant, and Capitalized Software HTML 60K
Property, Equipment, and Capitalized Software
Property, Equipment, and Capitalized Software
table (Details)
44: R61 Goodwill and Intangible Assets (Details) HTML 72K
47: R62 Goodwill and Intangible Assets Goodwill and HTML 53K
Intangible Assets Changes in the Carrying Amount
of Goodwill by Reporting Segment (Details)
96: R63 Goodwill and Intangible Assets Goodwill and HTML 52K
Intangible Assets Gross carrying value,
accumulated amortization and net carrying value of
intangible assets (Details)
93: R64 Goodwill and Intangible Assets Goodwill and HTML 43K
Intangible Assets Weighted-average useful lives
assigned to finite-lived intangible assets
acquired in business combinations (Details)
68: R65 Goodwill and Intangible Assets Goodwill and HTML 46K
Intangible Assets Amortization Expense relating to
Intangible Assets (Details)
95: R66 Medical Cost and Medical Costs Payable (Details) HTML 35K
43: R67 Medical Cost and Medical Costs Payable Medical HTML 54K
Costs and Medical Costs Payable Rollforward
(Details)
72: R68 Commercial Paper and Long-Term Debt (Narrative) HTML 59K
(Details)
110: R69 Commercial Paper and Long-Term Debt (Details) HTML 128K
21: R70 Commercial Paper and Long-Term Debt Maturities of HTML 48K
commercial paper and long-term debt (Details)
36: R71 Commercial Paper and Long-Term Debt Balance Sheet HTML 43K
Location of Fair Value Derivatives (Details)
61: R72 Commercial Paper and Long-Term Debt Income HTML 44K
Statement Recognition of Fair Value Hedge
(Details)
28: R73 Income Taxes Narrative (Details) HTML 51K
113: R74 Income Taxes Income Taxes Reconciliation of HTML 54K
Provision for Income Taxes (Details)
40: R75 Income Taxes Income Tax Reconciliation of the tax HTML 79K
provision at the U.S. Federal Statutory Rate
(Details)
31: R76 Income Taxes Income Taxes Components of Deferred HTML 94K
Tax Assets and Liabilities (Details)
35: R77 Income Taxes Income Taxes Reconciliation of the HTML 50K
beginning and ending amount of unrecognized tax
benefits (Details)
23: R78 Shareholders' Equity Shareholder's Equity HTML 67K
(Details)
27: R79 Shareholders' Equity Shareholder's Equity HTML 38K
Dividends (Details)
80: R80 Share-Based Compensation (Narrative) (Details) HTML 39K
33: R81 Share-Based Compensation (Stock Option and SAR HTML 82K
Activity) (Details)
109: R82 Share-Based Compensation (Restricted Share HTML 57K
Activity) (Details)
58: R83 Share-Based Compensation Other Share-Based HTML 63K
Compensation Data (Details)
87: R84 Share-Based Compensation (Share-Based Compensation HTML 52K
Principal Fair Value Assumptions) (Details)
94: R85 Commitments and Contingencies (Details) HTML 51K
32: R86 Commitments and Contingencies Commitments and HTML 49K
Contingencies Future Lease Payments (Details)
34: R87 Segment Financial Information Segment Financial HTML 43K
Information (Narrative) (Details)
106: R88 Segment Financial Information (Details) HTML 137K
29: R89 Quarterly Financial Data Quarterly Financial Data HTML 61K
(Unaudited) (Details)
81: R90 Schedule I (Details) HTML 63K
77: R91 Schedule I Condensed Balance Sheet (Details) HTML 115K
97: R92 Schedule I Condensed Balance Sheet (Parenthetical) HTML 57K
(Details)
76: R93 Schedule I Condensed Income Statement (Details) HTML 81K
65: R94 Schedule I Condensed Cash Flow (Details) HTML 104K
102: R95 Schedule I Maturities of Commercial Paper and HTML 48K
Long-Term Debt (Details)
112: XML IDEA XML File -- Filing Summary XML 180K
20: EXCEL IDEA Workbook of Financial Reports XLSX 450K
48: EXCEL IDEA Workbook of Financial Reports (.xls) XLS 4.30M
11: EX-101.INS XBRL Instance -- unh-20131231 XML 6.54M
13: EX-101.CAL XBRL Calculations -- unh-20131231_cal XML 317K
14: EX-101.DEF XBRL Definitions -- unh-20131231_def XML 1.48M
15: EX-101.LAB XBRL Labels -- unh-20131231_lab XML 2.66M
16: EX-101.PRE XBRL Presentations -- unh-20131231_pre XML 1.75M
12: EX-101.SCH XBRL Schema -- unh-20131231 XSD 284K
24: ZIP XBRL Zipped Folder -- 0000731766-14-000008-xbrl Zip 465K
THIS CERTIFIES THAT UnitedHealth Group Incorporated (the “Company”) has on the award date specified above (the “Award Date”) granted to
[Participant Name]
(the
“Optionee”) the option (the “Option”) to purchase that number of shares of UnitedHealth Group Incorporated Common Stock, $.01 par value per share (the “Common Stock”), indicated above (the “Option Shares”). The Option that this Award represents will expire on the expiration date indicated above (the “Expiration Date”), unless it is terminated prior to that time in accordance with this Award.
The Option Shares represented by this Award shall become exercisable as follows: ___% on each of the ___________________________ anniversaries, unless this Option shall have terminated or the vesting shall have accelerated as provided in this Award. Once this Option has become exercisable for all or a portion of the Option Shares, it will remain exercisable for all or such portion of the Option Shares, as the case may be, until the Option expires or is terminated as provided in this Award.
By
accepting this Award, the Optionee acknowledges that the Optionee will not have any of the rights of a shareholder with respect to the Option Shares until the Optionee has duly exercised the Option and paid the exercise price indicated above (the “Exercise Price”) and applicable withholding taxes in accordance with this Award. The Optionee further acknowledges and agrees that the Company may deliver, by electronic mail, the use of the Internet, including through the website of the agent appointed by the Committee to administer the UnitedHealth Group Incorporated 2011 Stock Incentive Plan (the “Plan”), the Company intranet web pages or otherwise, any information concerning
the Company, this Award, the Plan pursuant to which the Company granted this Award, and any information required by the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
This Option is subject to the further terms and conditions set forth below and to the terms of the Plan. A copy of the Plan is available upon request. In the event of any conflict between the terms of the Plan and this Award, the terms of the Plan shall govern. Any terms not defined herein shall have the meaning set forth in the Plan.
* * * * *
1. Nonqualified Option. The
Company does not intend that the Option shall be an Incentive Stock Option governed by the provisions of Section 422 of the Internal Revenue Code of 1986, as amended.
2. Termination of Option. The Option shall terminate on the Expiration Date. The Option shall terminate prior to the Expiration Date if the Optionee ceases to be employed by the Company or any Affiliate, except that:
(a) General. Except as expressly provided in Section 10 or this Section 2, if prior to vesting of the Options as set forth
herein, the Optionee ceases to be an employee of the Company or any Affiliate for any reason (voluntary or involuntary), then the Optionee may, at any time within the Exercise Period (as defined below), exercise the Option to the extent of the full number of Option Shares which were exercisable and which the Optionee was entitled to purchase under the Option on the date of the termination of his or her employment.
(b) Death or Long-Term Disability. If the Optionee dies while employed by the Company or any Affiliate, or if the Optionee’s employment by the Company or any Affiliate is terminated due to the
Optionee’s failure to return to work as the result of a long-term disability which renders the Optionee incapable of performing his or her duties as determined under the provisions of the Company’s long-term disability insurance program (“Disability”), then: (i) all unvested Option Shares hereunder shall immediately vest and be exercisable, and (ii) the Optionee (or the Optionee’s personal representatives, administrators or guardians, as applicable, or any person or persons to whom the Option is transferred by will or the applicable laws of descent and distribution) may (subject to earlier expiration on the Expiration Date) at any time within a period of five years after the Optionee’s death or Disability, or for such other longer period established at the discretion of the Committee, exercise the Option to the extent of the full number of Option Shares which are exercisable following
such vesting.
(c) Severance. Subject to Section 10, if Optionee’s employment with the Company or any Affiliate terminates at a time when Optionee is not eligible for Retirement (as defined below) and, in the circumstances, Optionee is entitled to severance or separation pay, the following provisions will apply. If the Optionee is entitled to severance under the Company’s severance pay plan as in effect on the date hereof and the Optionee is not eligible for Retirement (as defined below) at the time of termination of employment, then the Option shall continue to vest and become exercisable for the period of such severance. If Optionee is entitled
to severance under an employment agreement entered into with the Company, then the Option shall continue to vest and become exercisable for the period of such severance that Optionee is entitled to receive as of the date hereof. If the Optionee is entitled to separation pay other than under the Company’s severance pay plan or an employment agreement, then vesting of the Option shall continue for the lesser of the period (i) the Optionee would have received payments under the severance pay plan as in effect on the date hereof, had the Optionee been eligible for such payments; or (ii) of separation pay. In either case, should the Optionee be paid in a lump sum versus bi-weekly payments, the Option shall continue to vest for the time in which severance or separation pay would have been paid had it been
paid bi-weekly. Any portion of the Option that vests after the Optionee’s termination of employment pursuant to this Section 2(c) may be exercised during the Exercise Period (as defined below). For avoidance of doubt, any Options that are unvested on the date of termination of Optionee’s employment and do not vest under the schedule set forth herein during the applicable severance or separation pay period identified above in this Section 2(c) shall be forfeited.
2
(d) Retirement. If the Optionee’s employment by the Company or
any Affiliate is terminated and at the time of termination the Optionee is eligible for Retirement, then (i) the Option shall continue to vest and become exercisable as if such termination of employment had not occurred and (ii) the Optionee may, at any time within the shorter of (1) the Expiration Date of the Option, or (2) a period of five years after such termination of employment or for such other longer period established at the discretion of the Committee, exercise the Option to the extent of the full number of Option Shares which are then exercisable.
(e) For the purposes of this Award, “Exercise Period” shall mean the greater of: (i) a period of three months after the date of termination of the Optionee’s employment; (ii) a period of three months after vesting ceases as provided in Section 2(c) if Optionee receives severance or separation pay; or (iii) such other
longer period established at the discretion of the Committee. This Option shall in no event be exercisable after the Expiration Date.
(f) For purposes of this Award, “Retirement” means the termination of employment of an Optionee who is age 55 or older with at least ten years of Recognized Employment with the Company or any Affiliate other than by reason of (i) death or Disability or (ii) Cause.
(g) For purposes of this Award, “Recognized Employment” shall include only employment since the Optionee’s most recent date of hire by the Company or any Affiliate, and shall not include employment with a company
acquired by UnitedHealth Group or any Affiliate before the date of such acquisition.
3. Forfeiture of Option and Shares. This section sets forth circumstances under which the Optionee shall forfeit all or a portion of the Options, or be required to repay the Company for the value realized in respect of all or a portion of the Options.
(a) Violation of Restrictive Covenants. If the Optionee violates any provision of the Restrictive Covenants in Section 4 of this Award, then any (i) unvested Options and (ii) Options that vested within one year prior to the Optionee’s termination of employment with the
Company or any Affiliate or at any time after such termination of employment and that have not been exercised shall be immediately cancelled and rendered null and void without any payment therefor (the “Forfeited Options”). If any such Forfeited Options have been exercised prior to the Optionee’s violation of the Restrictive Covenants, the Optionee shall be required to repay or otherwise reimburse the Company, upon demand, an amount in cash or Common Stock having a value equal to the amount described in this Section 3(a) below.
To the extent that such Option Shares have been sold, the amount shall be the aggregate proceeds received from such sale of the net Option Shares acquired after payment of the Exercise Price and any applicable taxes (“Net Option Shares”) . To the extent that the Net Option Shares have not been sold
at the time Company demand is made, the amount shall be the aggregate Fair Market Value of the Net Option Shares on the date the Forfeited Options were exercised.
3
(b) Fraud. If the Board determines that the Optionee has engaged in fraud that, in whole or in part, caused the need for a material restatement of the Company’s consolidated financial statements, then any vested and unvested Options then held by the Optionee shall be immediately cancelled and rendered null and void without any payment therefor. In addition, for any Options that were exercised during the 12-month
period following the first public issuance or filing with the Securities Exchange Commission (whichever occurs first) of the incorrect financial statements (the “Covered Options”), the Optionee shall be required to repay or otherwise reimburse the Company, upon demand, an amount in cash or Common Stock having a value equal to the amount described in this Section 3(b) below, depending on whether the Optionee still holds the Option Shares acquired upon exercise of the Covered Options.
To the extent that such Option Shares have been sold, the amount shall be the aggregate proceeds received from such sale of the Net Option Shares. To the extent that the Net Option Shares have not been sold at the time Company demand is made, the amount shall be the aggregate Fair Market Value of the Net Option Shares on the date the Covered Options were exercised.
(c) In General. This section does not constitute the Company’s exclusive remedy for the Optionee’s violation of the Restrictive Covenants or commission of fraudulent conduct. As the forfeiture and repayment provisions are not adequate remedies at law, the Company may seek any additional legal or equitable remedy, including injunctive relief, for any such violations. The provisions in this section are essential economic conditions to the Company’s grant of Options to the Optionee. By receiving the grant of Options hereunder, the Optionee agrees that the
Company may deduct from any amounts it owes the Optionee from time to time (such as wages or other compensation, deferred compensation credits, vacation pay, any severance or other payments owed following a termination of employment, as well as any other amounts owed to the Optionee by the Company) to the extent of any amounts the Optionee owes the Company under this section. The provisions of this section and any amounts repayable by the Optionee hereunder are intended to be in addition to any rights to repayment the Company may have under Section 304 of the Sarbanes-Oxley Act of 2002 and other applicable law.
4. Restrictive
Covenants. In consideration of the terms of this Award and the Company’s sharing of Confidential Information with the Optionee, the Optionee agrees to the Restrictive Covenants set forth below. For purposes of these Restrictive Covenants, the “Company” means UnitedHealth Group Incorporated and all of any Affiliate and other affiliates.
(a) Confidential Information. The Optionee will be given access to and provided with sensitive, confidential, proprietary and trade secret information (“Confidential Information”) in the course of the Optionee’s employment. Examples of Confidential Information include: inventions; new product or marketing plans; business strategies and plans; merger and acquisition targets; financial and pricing information;
computer programs, source codes, models and databases; analytical models; customer lists and information; and supplier and vendor lists and other information which is not generally available to the public. The Optionee agrees not to disclose or use Confidential Information, either during
4
or after the Optionee’s employment with the Company, except as necessary to perform the Optionee’s duties or as the Company may consent in writing.
(b) Non-Solicitation.
During the Optionee’s employment and for the greater of two years after the termination of the Optionee’s employment for any reason whatsoever, or the period of time for which the Option remains exercisable, the Optionee may not, without the Company’s prior written consent, directly or indirectly, for the Optionee or for any other person or entity, as agent, employee, officer, director, consultant, owner, principal, partner or shareholder, or in any other individual or representative capacity:
(i)
Solicit or conduct business with any business competitive with the Company from any person or entity:
(A) who was a Company provider or customer within the 12 months before Optionee’s employment termination and with whom Optionee had contact regarding the Company’s activity, products or services, or for whom Optionee provided services or supervised employees who provided those services, or about whom the Optionee learned Confidential Information during employment related to the Company’s provision of products or services to such Company provider or customer, or (B) was a prospective provider or customer the Company solicited within the 12 months before Optionee’s employment termination and with whom Optionee had contact for the purposes of soliciting the person or entity to become a provider or customer of the
Company, or supervised employees who had those contacts, or about whom the Optionee learned Confidential Information during employment related to the Company’s provision of products or services to such prospective Company provider or customer;
(ii)
Raid, hire, employ, recruit or solicit any Company employee or consultant who possesses Confidential Information of the Company to leave the Company;
(iii)
Induce
or influence any Company employee, consultant, or provider who possesses Confidential Information of the Company to terminate his, her or its employment or other relationship with the Company; or
(iv)
Assist anyone in any of the activities listed above.
(c) Non-Competition. During the Optionee’s employment
and for the greater of one year after the termination of the Optionee’s employment for any reason whatsoever or the period of time for which the Option remains exercisable, the Optionee may not, without the Company’s prior written consent, directly or indirectly, for the Optionee or for any other person or entity, as agent, employee, officer, director, consultant, owner, principal, partner or shareholder, or in any other individual or representative capacity:
5
(i)
Engage in or participate
in any activity that competes, directly or indirectly, with any Company activity, product or service that Optionee engaged in, participated in, or had Confidential Information about during Optionee’s last 36 months of employment with the Company; or
(ii)
Assist anyone in any of the activities listed above.
Notwithstanding the foregoing, this Section 4(c) will apply to the extent permissible under the ABA Model Rules of Professional Conduct’s provisions regarding restrictions on the right to practice law or any applicable state counterpart.
(d) Because
the Company’s business competes on a nationwide basis, the Optionee’s obligations under this “Restrictive Covenants” section shall apply on a nationwide basis anywhere in the United States.
(e) To the extent Optionee and the Company agree at any time to enter into separate agreements containing restrictive covenants with different or inconsistent terms than those contained herein, Optionee and the Company acknowledge and agree that such different or inconsistent terms shall not in any way affect or have relevance to the Restrictive Covenants contained herein.
By accepting this
Option, the Optionee agrees that the provisions of this Restrictive Covenants section are reasonable and necessary to protect the legitimate interests of the Company.
5. Manner of Exercise. On the terms set forth herein, the Option may be exercised by the Optionee in whole or in part from time to time by delivering notice of exercise (in a form and manner acceptable to the Company) to the Company or the Committee’s designated agent, accompanied by payment of the Exercise Price and any applicable withholding taxes (i) in cash, by wire transfer, certified check or bank cashier’s check payable to the
Company, (ii) by delivery of shares of Common Stock already owned by the Optionee, (iii) by withholding shares of Common Stock from the total number of shares of Common Stock acquired upon exercise under this Award having a fair market value, on the exercise date, equal to the aggregate Exercise Price and any applicable withholding taxes, or (iv) by delivery of a combination of cash, withholding of shares of Common Stock acquired upon exercise of this Award, and/or delivery of shares of Common Stock already owned by the Optionee; provided, that the Optionee shall not be entitled to tender shares of Common Stock pursuant to successive, substantially simultaneous exercises of options to purchase Common Stock. Any shares already owned by the Optionee referred to in the preceding sentence must have been owned by the Optionee for no less than six months prior to the date of exercise of the Option if such shares were acquired upon the exercise of another option or upon
the vesting of restricted stock or restricted stock units. Notwithstanding anything to the contrary in this Award, the Company shall not be required to issue or deliver any shares of Common Stock upon exercise of any Option until the requirements of any federal or state securities laws, rules or regulations or other laws or rules (including the rules of any
6
securities exchange) as may be determined by the Company to be applicable have been and continue to be satisfied (including an effective registration of the shares under federal and state securities laws).
6. No
Guarantee of Employment. This Award does not confer on the Optionee any right to continued employment or any other relationship with the Company or any Affiliate, nor will it interfere in any way with the right of the Company to terminate Optionee at any time. Optionee’s employment with the Company is at will.
7. No Transfer. During the Optionee’s lifetime, only the Optionee can exercise the Option. The Optionee may not transfer the Option except by will or the laws of descent and distribution, or pursuant to a domestic relations order as described in the Code or Title I of the Employee
Retirement Income Security Act (or the rules promulgated thereunder), to the extent provided in Section 2 (b) entitled “Termination of Option.” Any attempt to otherwise transfer the Option shall be void.
8. Special Restriction on Transfer for Certain Optionees. If the Optionee is an officer of the Company within the meaning of Section 16 of the Securities Exchange Act of 1934 and Rule 16a-1 issued thereunder, as such status is reasonably determined from time to time by the Board of Directors of the Company (a “Section 16 Officer”), at any time that the Option is exercised in whole or in part and the
Company has theretofore communicated the Optionee’s status as a Section 16 Officer to the Optionee, the following special transfer restrictions apply to any shares of Common Stock acquired upon the exercise of the Option. One-third (1/3) of the net number of any shares of Common Stock acquired upon the exercise of the Option at a time when the Optionee is a Section 16 Officer (including any shares of Common Stock or other securities subject to the Option following any adjustment made pursuant to this Option or Section 7 of the Plan) must be retained, and may not be sold or otherwise transferred, for a period of at least one year following the date the Option is exercised. For purposes of this Option, the “net number of any shares of Common Stock acquired” shall mean the number of shares of Common Stock received with respect to the particular exercise after reduction for any shares of Common Stock withheld by or tendered to the
Company, or sold on the market, to cover the Exercise Price of the Option and/or to cover any federal, state, local or other payroll, withholding, income or other applicable tax withholding required in connection with the exercise of the Option. The restrictions of this Section 8 are in addition to, and not in lieu of, the restrictions imposed under other Company policies and applicable laws.
9. Adjustments to Option Shares. In the event that any dividend or other distribution (whether in the form of cash, shares of Common Stock, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company or other
similar corporate transaction or event affecting the Shares would be reasonably likely to result in the diminution or enlargement of any of the benefits or potential benefits intended to be made available under the Option (including, without limitation, the benefits or potential benefits of provisions relating to the term, vesting or exercisability of the Option), the Committee shall, in such manner as it shall deem equitable or appropriate in order to prevent such diminution or enlargement of any such benefits or potential benefits, adjust any or all of (a) the number and type of shares
7
(or other securities or other property) subject to the Option and (b) the exercise price with respect to the Option; provided, however, that
the number of shares covered by the Option shall always be a whole number. Without limiting the foregoing, if any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with another entity, or the sale of all or substantially all of the Company’s assets to another entity, shall be effected in such a way that holders of the Company’s Common Stock shall be entitled to receive stock, securities, cash or other assets with respect to or in exchange for such shares, the Optionee shall have the right to purchase and receive upon the basis and upon the terms and conditions specified
in this Award and in lieu of the shares of Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the Option, with appropriate adjustments to prevent diminution or enlargement of benefits or potential benefits intended to be made available under the Option, such shares of stock, other securities, cash or other assets as would have been issued or delivered to the Optionee if the Optionee had exercised the Option and had received such shares of Common Stock prior to such reorganization, reclassification, consolidation, merger or sale. The Company shall not effect any such reorganization, consolidation, merger or sale unless prior to the consummation thereof the successor entity (if other than the
Company) resulting from such reorganization, consolidation or merger or the entity purchasing such assets shall assume by written instrument the obligation to deliver to the Optionee such shares of stock, securities, cash or other assets as, in accordance with the foregoing provisions, the Optionee may be entitled to purchase or receive.
10. Certain Terminations on or After Change in Control. Notwithstanding the other vesting provisions set forth herein, but subject to the other terms and conditions set forth herein, the Option shall become fully vested and exercisable if, on or within two years after the effective date of a Change in Control, the Optionee ceases to be an employee of the Company or any Affiliate as a result of a termination of employment (i) by the
Optionee for Good Reason, (ii) by the Company or any Affiliate without Cause, (iii) at a time when Optionee is eligible for Retirement, (iv) due to Optionee’s Disability, or (v) in the circumstances described in Section 2(c). For purposes of this Award:
(a)
“Change in Control” shall mean the sale of all or substantially all of the Company’s assets or any merger, reorganization, or exchange or tender offer which, in each case, will result in a change in the power to elect 50% or more of the members of the Board of Directors of the
Company; provided, however, that such a sale, merger or other event must also constitute either (i) a “change in the ownership” of the Company within the meaning of Treasury Regulation 1.409A-3(i)(5)(v), (ii) a “change in the effective control” of the Company within the meaning of Treasury Regulation 1.409A-3(i)(5)(vi)(A)(1) (replacing “30 percent” with “50 percent” as used in such regulation), or (iii) a change “in the ownership of a substantial portion of the assets” of the Company within the meaning of Treasury Regulation 1.409A-3(i)(5)(vii).
(b)
“Cause”
shall mean Optionee’s (a) material failure to follow the Company’s reasonable direction or to perform any duties reasonably required on material matters, (b) material violation of, or failure to act upon or report known or suspected violations of, the Company’s Code of Conduct, as may be amended
8
from time to time, (c) conviction of any felony, (d) commission of any criminal, fraudulent, or dishonest act in connection with Optionee’s employment, or (e) material breach of any employment agreement between the Optionee and the
Company or any Affiliate, if any. The Company will, within 90 days of discovery of the conduct, give Optionee written notice specifying the conduct constituting Cause in reasonable detail and Optionee will have 60 days to remedy such conduct, if such conduct is reasonably capable of being remedied. In any instance where the Company may have grounds for Cause, failure by the Company to provide written notice of the grounds for Cause within 90 days of discovery shall be a waiver of its right to assert the subject conduct as a basis for termination for Cause.
(c)
“Good
Reason” shall mean the occurrence of any of the following without Optionee’s written consent, in each case, when compared to the arrangements in effect immediately prior to the Change in Control:
(i)
any reduction in Optionee’s base salary or a significant reduction in Optionee’s total compensation;
(ii)
a reduction in Optionee’s annual or long-term incentive opportunities;
(iii)
a
diminution in Optionee’s duties, responsibilities or authority;
(iv)
a significant diminution in the budget over which the Optionee retains authority;
(v)
a change in Optionee’s reporting relationship; or
(vi)
a relocation of more than 25 miles from Optionee’s primary office location.
Optionee
will, within 90 days of discovery of such circumstances, give the Company written notice specifying the circumstances constituting Good Reason in reasonable detail; provided however that this notice period shall be shortened or waived to the extent necessary if compliance with the notice period would cause the termination for Good Reason to occur following the second anniversary of the effective date of the Change in Control. Except as contemplated by the preceding sentence, in any instance where Optionee may have grounds for Good Reason, failure by Optionee to provide written notice of the grounds for Good Reason within 90 days of discovery shall be a waiver of Optionee’s right to assert the subject circumstance as a basis for termination for Good Reason.
11. Narrowed Enforcement and Severability.
If a court or arbitrator decides that any provision of this Award is invalid or overbroad, the Optionee agrees that the court or arbitrator should narrow such provision so that it is enforceable or, if narrowing is not possible or permissible, such provision should be considered severed and the other provisions of this Award should be unaffected.
12. Injunctive Relief. The Optionee agrees that (a) legal remedies (money damages) for any breach of the Restrictive Covenants in Section 4 of this Award will be inadequate, (b) the Company will suffer immediate and irreparable harm from any such breach, and (c) the Company will be entitled to injunctive relief from a court in addition to any legal
remedies the Company may seek in arbitration.
9
13. Survival. The Restrictive Covenants and provisions regarding the forfeiture of Options and shares in this Award shall survive the termination of the Option.
14. Other. An original record of this Award and all the terms thereof is held on file by the Company. To the extent there
is any conflict between the terms contained in this Award and the terms contained in the original held by the Company, the terms of the original held by the Company shall control. Neither the Plan nor the Option shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and Optionee or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Option, such right shall be no greater than the right of any unsecured creditor of the
Company or any Affiliate.
15. Governing Law. The validity, construction and effect of this Award and any rules and regulations relating to this Award shall be determined in accordance with the laws of the State of Minnesota (without regard to its conflict of laws principles).
16. Code Section 409A. It is intended that this Award and any amounts payable under this Award shall either be exempt from or comply with Code Section 409A (including the Treasury regulations and other published guidance relating thereto) so as not to subject Optionee to payment of any additional tax, penalty or interest imposed under Code Section 409A. .The provisions of this Award certificate shall be construed and interpreted to avoid the imputation of any such
additional tax, penalty or interest under Code Section 409A yet preserve (to the nearest extent reasonably possible) the intended benefit payable to Optionee.
Acceptance Date: [Acceptance Date]
Signed Electronically/Signed Manually: [Signed Electronically]