EXHIBIT 10.46

 

FORM OF RESTRICTED STOCK AGREEMENT

UNDER THE PACIFICARE HEALTH SYSTEMS, INC.

2005 EQUITY INCENTIVE PLAN

 

Pursuant to the terms of the Restricted Stock Grant Notice (the “Grant Notice”)
and this Restricted Stock Agreement (collectively, this “Agreement”), PacifiCare
Health Systems, Inc., a Delaware corporation (“PacifiCare”), grants to the
individual identified in the Grant Notice (the “Grantee”) shares of PacifiCare’s
Common Stock under the following terms and conditions:

 

WHEREAS, PacifiCare’s management has implemented a long-term incentive program
by granting shares of restricted stock to certain employees and consultants of
PacifiCare;

 

WHEREAS, the restricted stock to be used for this long-term incentive program
will be granted pursuant to the 2005 Equity Incentive Plan of PacifiCare (the
“Plan”), the terms of which are hereby incorporated by reference and made a part
of this Agreement;

 

WHEREAS, PacifiCare has determined that it would be to the advantage and best
interest of PacifiCare and its stockholders to grant the shares provided for
herein to the Grantee as an inducement to remain in the service of PacifiCare or
its Subsidiaries and as an incentive for increased efforts during such service;
and

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto do hereby agree as follows:

 

ARTICLE 1

 

DEFINITIONS

 

Capitalized terms not otherwise defined herein shall have the same meaning as
set forth in the Plan. Whenever the following capitalized terms are used in this
Agreement, they shall have the meaning specified below unless the context
clearly indicates to the contrary.

 

Section 1.1    Chief Financial Officer

 

“Chief Financial Officer” shall mean the Chief Financial Officer of PacifiCare.

 

Section 1.2    Date of Grant

 

“Date of Grant” shall mean the date of grant of the Shares as set forth in the
Grant Notice.

 

Section 1.3    Director

 

“Director” shall mean a member of the Board of Directors of PacifiCare.

 

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Section 1.4    Disability

 

“Disability” for purposes of this Agreement means that an Employee is (i) unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than twelve
(12) months, or (ii) by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than twelve (12) months, receiving income
replacement benefits for a period of not less than three (3) months under an
accident and health plan covering employees of PacifiCare.

 

Section 1.5    Pronouns

 

The masculine pronoun shall include the feminine and neuter, and the singular
the plural, where the context so indicates.

 

Section 1.6    Secretary

 

“Secretary” shall mean the Secretary of PacifiCare.

 

Section 1.7    Shares

 

“Shares” shall mean the shares of Common Stock granted to the Grantee under this
Agreement.

 

Section 1.8    Subsidiary

 

“Subsidiary” shall mean any corporation in an unbroken chain of corporations
beginning with PacifiCare 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 1.9    Termination of Employment

 

“Termination of Employment” shall mean the time when the Grantee ceases to be an
employee or a consultant of PacifiCare or a Subsidiary, in either case, for any
reason, including, but not limited to, a termination by resignation, discharge,
death or retirement, but excluding terminations where there is a simultaneous
employment, engagement or appointment of the Grantee as an employee, consultant
or Director of PacifiCare or a Subsidiary. For purposes of the Plan and this
Agreement, if an entity ceases to be a Subsidiary of PacifiCare (a “Former
Subsidiary”), an employee of such Former Subsidiary who does not continue as an
employee or service provider in respect of PacifiCare or another Subsidiary
after such giving effect to such Former Subsidiary’s change in status shall be
deemed to have suffered a Termination of Employment. The Committee, in its
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 particular leaves of absence constitute Terminations of
Employment, subject to the requirements of applicable laws.

 

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ARTICLE 2

 

GRANT OF SHARES

 

Section 2.1    Grant of Shares

 

On the terms and conditions set forth in this Agreement, PacifiCare agrees to
grant to the Grantee, and the Grantee agrees to receive from PacifiCare, the
number of Shares set forth in the Grant Notice.

 

Section 2.2    Consideration

 

The Grantee is receiving the Shares in consideration of past services previously
rendered or future services to be rendered during the Grantee’s employment or
engagement with PacifiCare, so no payment is required from the Grantee for the
Shares.

 

Section 2.3    Rights as a Stockholder

 

Upon the Date of Grant, the Grantee shall have all rights as a stockholder of
PacifiCare, including without limitation the right to vote the Shares. If the
Shares do not vest and are forfeited, the Grantee will lose any and all rights
as a stockholder with respect to the forfeited Shares.

 

Section 2.4    Escrow

 

Upon the Date of Grant, the Shares shall be deposited in escrow with PacifiCare
or an agent acting on behalf of PacifiCare to be held in accordance with the
provisions of this Agreement. Any new, substituted or additional securities or
other property described in Section 2.6 below shall immediately be delivered to
PacifiCare or its agent to be held in escrow until vesting of the Shares. All
regular cash dividends, if any, on the Shares (or other securities at the time
held in escrow) shall be paid directly to the Grantee and shall not be held in
escrow. The Shares shall be released from escrow to the Grantee within thirty
(30) days upon vesting of the Shares as provided in Section 3.2 of this
Agreement, together with any other assets or securities held in escrow
hereunder. If the Shares do not vest as provided herein, upon Termination of
Employment the unvested Shares shall be surrendered to PacifiCare for
cancellation.

 

Section 2.5    No Retention Rights

 

Nothing in this Agreement or in the Plan shall confer upon the Grantee a right
to continue in the employ of PacifiCare or any Subsidiary or shall interfere
with or restrict in any way the rights of PacifiCare and its Subsidiaries, which
are hereby expressly reserved, to discharge the Grantee.

 

Section 2.6    Additional Shares or Substituted Securities

 

If any extraordinary dividend or other extraordinary distribution occurs in
respect of the Common Stock (whether in the form of cash, Common Stock, other
securities or other property), or any reclassification, recapitalization, stock
split (including a stock split in the form of a stock

 

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dividend), reverse stock split, reorganization, merger, combination,
consolidation, split-up, spin-off, combination, repurchase or exchange of Common
Stock or other securities of PacifiCare, or any similar, unusual or
extraordinary corporate transaction (or event in respect of the Common Stock) or
a sale of substantially all the assets of PacifiCare occurs, proportionate
adjustments shall be made to the Shares by the Committee in accordance with the
provisions of Section 15 of the Plan.

 

ARTICLE 3

 

VESTING; RISKS OF FORFEITURE

 

Section 3.1    Risk of Forfeiture

 

The Shares shall initially be restricted Shares and shall be subject to a risk
of forfeiture that shall lapse over the Grantee’s period of continuous service
with PacifiCare. Upon a Grantee’s Termination of Employment for any reason,
except death or Disability, prior to the vesting of the Shares, such Grantee
shall forfeit and lose all rights to any and all unvested Shares.

 

Section 3.2    Vesting of Shares

 

Subject to Sections 3.1 and 3.3, beneficial ownership of the Shares shall vest
and the risk of forfeiture shall lapse on the vesting date or dates set forth in
the Grant Notice applicable to the Shares (each, a “Vesting Date”).

 

Section 3.3    Acceleration of Vesting

 

(a)    Notwithstanding anything to the contrary in Section 3.2 , the Grantee
acknowledges and agrees that beneficial ownership of all of the Shares shall
vest immediately upon the first to occur of the following events:

 

(i)    Grantee’s death;

 

(ii)    Grantee’s Disability; or

 

(iii)    The effective date of a Change of Control

 

(b)    By a resolution adopted after the Shares are granted, the Committee may
in its absolute discretion, on such terms and conditions as it may determine to
be appropriate and subject to Section 3.1, accelerate the time at which the
Shares or any portion thereof shall vest.

 

(c)    The Committee may make such determinations and adopt such rules and
conditions as it, in its absolute discretion, deems appropriate in connection
with a Change of Control and acceleration of vesting, including, without
limitation, provisions to ensure that any such acceleration shall be conditioned
upon the consummation of the contemplated corporate transaction. All such
determinations by the Committee shall be conclusive.

 

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ARTICLE 4

 

MISCELLANEOUS

 

Section 4.1    Shares Granted Under The Plan

 

The Shares will be granted under the Plan, and will be governed by the terms of
the Plan.

 

Section 4.2    Administration

 

The Committee shall have the power to interpret the Plan and this Agreement 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. All actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon the Grantee, PacifiCare
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, this Agreement or the Shares.

 

Section 4.3    Shares Not Transferable

 

Prior to the applicable Vesting Date, none of the Shares, nor any interest or
right therein or part thereof, may be transferred, alienated, pledged,
encumbered, assigned or otherwise disposed of by Grantee, whether such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy) and any attempted disposition thereof shall be null and
void and of no effect; provided, however, that this Section 4.3 shall not
prevent transfers by will, by qualified domestic relations order or by the
applicable laws of descent and distribution.

 

Section 4.4    Notices

 

Any notice to be given under the terms of this Agreement to PacifiCare shall be
addressed to PacifiCare in care of its Secretary or Chief Financial Officer and
any notice to be given to the Grantee shall be addressed to him at the address
given beneath his signature hereto. By a notice given pursuant to this
Section 4.4, either party may hereafter designate a different address for
notices to be given to him. Any notice which is required to be given to the
Grantee shall, if the Grantee is then deceased, be given to the Grantee’s
personal representative if such representative has previously informed
PacifiCare of his status and address by written notice under this Section 4.4.
Any notice shall have been deemed duly given when enclosed in a properly sealed
envelope or wrapper addressed as aforesaid, deposited (with postage prepaid) in
a post office or branch post office regularly maintained by the United States
Postal Service.

 

Section 4.5    Withholding

 

The Grantee hereby authorizes any required withholding from, at PacifiCare’s
election, the Shares, payroll and any other amounts payable to Grantee and
otherwise agrees to make adequate provision for any sums required to satisfy the
federal, state, local and foreign tax withholding obligations of PacifiCare, if
any, which arise in connection with the vesting or

 

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issuance of the Shares. Unless the tax withholding obligations of PacifiCare are
satisfied, PacifiCare shall have no obligation to issue the Shares.

 

Grantee may satisfy any federal, state or local tax withholding obligation
relating to the vesting of any Shares by any of the following means (in addition
to PacifiCare’s right to withhold from any compensation paid to Grantee by
PacifiCare) or by a combination of such means: (i) tendering a cash payment;
(ii) authorizing PacifiCare to withhold shares of Common Stock from fully vested
shares of Common Stock otherwise issuable to Grantee as a result of the vesting
of any Shares, having a fair market value, determined as of the date of
withholding, not in excess of the amount of such tax obligation; or
(iii) delivering to PacifiCare owned and unencumbered shares of Common Stock
having a fair market value, determined as of the date of delivery, not in excess
of such tax obligation. A share withholding election shall be deemed made when
written notice of such election, signed by Grantee, has been delivered or
transmitted to the Secretary or Chief Financial Officer of PacifiCare at its
then principal office. Delivery of such notice shall constitute an irrevocable
election to have shares withheld.

 

Section 4.6    Titles

 

Titles are provided herein for convenience only and are not to serve as a basis
for interpretation or construction of this Agreement.

 

Section 4.7    Inconsistency between Agreement and Plan

 

In the event of any inconsistency between the provisions of this Agreement and
the Plan, the provisions of the Plan shall govern.

 

Section 4.8    Choice of Law

 

This Agreement shall be construed and enforced in accordance with the laws of
the State of Delaware.

 

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