Exhibit 10.25

 

WELLCHOICE, INC.

2003 EMPLOYEE STOCK PURCHASE PLAN

 

Effective January 1, 2004, as amended July 21, 2004

 

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WELLCHOICE, INC.

2003 EMPLOYEE STOCK PURCHASE PLAN

 

ARTICLE I. PURPOSE AND DEFINITIONS

 

1.01 Purpose; Administration. The purpose of the WellChoice, Inc. 2003 Employee
Stock Purchase Plan, as amended from time to time (the “Plan”), is to provide
employees of WellChoice, Inc. (the “Company”) and certain related companies or
corporations with an opportunity to share in the ownership of the Company by
providing for regular and systematic purchases of common stock, and, thus, to
develop a stronger incentive to work for the continued success of the Company.
The Plan is intended to qualify as an employee stock purchase plan under Section
423 of the Internal Revenue Code of 1986, as amended (the “Code”), but is not
intended to be subject to Section 401(a) of the Code or the Employee Retirement
Income Security Act of 1974.

 

1.02 Committee. The Plan shall be administered by a Committee, which shall
consist of such members as determined by the Company (the “Committee”). The
Committee shall interpret and apply the provisions of the Plan in its good faith
discretion, and the Committee’s decision is final and binding. The Committee may
establish rules for the administration of the Plan.

 

1.03 Definitions. A term defined in the Plan shall have the meaning ascribed to
it wherever it is used herein unless the context indicates otherwise.

 

ARTICLE II. PARTICIPATION

 

2.01 Adoption by Subsidiaries. The Board of Directors of the Company (the
“Board”) may authorize the adoption of the Plan by one or more subsidiary
companies or corporations of the Company (“Participating Subsidiaries”).

 

2.02 Eligibility to Participate. A person is eligible to participate in an
Offering under the Plan (as defined in Paragraph 4.02) if, as of the first day
of such Offering, such person is (i) an employee of the Company or a
Participating Subsidiary and (ii) scheduled to work more than five (5) months
per year for the Company or any of its Participating Subsidiaries (as determined
by reference to the Company’s employment records).

 

2.04 Participation Agreement. Participation in the Plan is voluntary with
respect to each Offering. To participate in an Offering, a person must be
eligible and must complete a written enrollment form provided by the Company
(“Participation Agreement”) authorizing payroll deductions from his or her
paycheck. The Participation Agreement will remain in effect through each
consecutive Offering unless the participant chooses to revise or revoke it, or
becomes ineligible to participate in the Plan.

 

2.05 Termination of Participation. A participant may withdraw at any time from
any Offering by written notice to the Committee in such form as it may require,
provided the participant agrees not to participate in the first Offering (and
not more than one Offering) concurrent with or immediately following the date of
withdrawal. Participation will also end upon termination of a participant’s
employment with the Company and/or a Participating Subsidiary, if applicable, or
when a participant becomes ineligible to participate (including by reason of the
Company or any Participating Subsidiary terminating its participation in the
Plan).

 

2.06

Designation of Beneficiary. A participant shall, by written notice to the
Committee, designate a person or persons to receive the value of his or her
Account (as defined in Paragraph 5.01) in the

 

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event of the participant’s death. A participant may, by written notice to the
Committee during employment, alter or revoke such designation, subject always to
any applicable law governing the designation of beneficiaries. Such written
notice shall be in such form and shall be executed in such manner as the
Committee may determine. If upon a participant’s death the participant has not
designated a beneficiary under the Plan or such beneficiary does not survive the
participant, the value of a participant’s Account shall be paid to his or her
estate.

 

ARTICLE III. CONTRIBUTIONS

 

3.01 Payroll Deductions. A participant may accumulate after-tax compensation to
purchase Shares in an Offering by authorizing payroll deductions pursuant to a
Participation Agreement, subject to such minimum and maximum limits (expressed
in dollars or as a percentage of base salary or base wages) as the Committee may
impose. Such savings shall be credited to a participant’s Account with respect
to the Offering to which they relate. Payroll deductions for an Offering shall
commence with the first paycheck a participant receives during such Offering and
shall end with the last paycheck a participant receives during such Offering.
Paychecks will be treated as having been received when they are sent out or
otherwise distributed.

 

3.02 Alternative Contributions. Where payroll deductions are not permitted by
applicable law in a jurisdiction outside of the United States, the Committee may
permit contributions by alternate means.

 

3.03 Change in Rate or Suspension of Contributions. A participant may increase
or decrease the rate of his or her payroll deductions one (1) time during an
Offering by written notice to the Committee in such form and manner as it
requires. In addition, a participant may, at any time during an Offering,
suspend his or her payroll deductions by written notice to the Committee in such
form and manner as it requires, provided the participant agrees not to
participate in the first Offering (and not more than one Offering) concurrent
with or immediately following the date of withdrawal. Such change shall be
effective as of the first pay period thereafter by which the Company is able to
process the change.

 

3.04 Possession of Contributions. All payroll deductions made pursuant to the
Plan shall be held for a participant’s benefit and on his or her behalf by the
Company or any custodian selected by the Committee. Such payroll deductions
shall constitute a participant’s personal property notwithstanding that they may
be commingled with the general assets of the Company or such custodian.

 

ARTICLE IV. OPTIONS TO ACQUIRE SHARES

 

4.01 Maximum Number of Shares. The number of shares of common stock, $0.01 par
value per share, of the Company (“Shares”) available for issuance under the Plan
shall be 3,000,000 with respect to the ten (10) years following the adoption of
the Plan and the total number of Shares purchasable under Offerings in any
calendar year shall not exceed .075% of the Shares outstanding at the end of
such calendar year. Any Shares that are not actually purchased under the Plan
for any reason shall remain available for purchase hereunder. In the event the
number of Shares to be purchased by participants during any Offering exceeds the
number of Shares then available for issuance under the Plan, the Committee shall
make a pro rata allocation of the Shares remaining available in such uniform
manner as it shall determine to be equitable. Any excess cash amounts remaining
in a participant’s Account as a consequence of the implementation of the
provisions of this paragraph shall be returned to the participant, without
interest, as soon as administratively feasible.

 

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4.02 Offerings. The Company will offer Shares for purchase under the Plan
(“Offering”) for six-month periods beginning on January 1 and July 1 of each
calendar year, commencing on January 1, 2004. The Company may make additional
Offerings for different periods, provided that no Offering shall extend for more
than 27 months.

 

4.03 Options. Each Offering shall constitute an option to purchase whole Shares
at a price per Share equal to 85% of the lesser of (i) the fair market value of
a Share on the first day of such Offering or (ii) the fair market value of a
Share on the last day of such Offering. The fair market value of a Share on any
date shall be its closing sale price reported by The New York Stock Exchange on
which Shares are traded for such date or for the next earliest date on which
Shares were traded.

 

4.04 Individual Limit on Options. In no event shall the fair market value of all
shares purchased by an employee under the Plan or other plans qualifying under
Section 423 of the Code exceed $25,000 (determined on the date of grant, which
is the first day of an Offering) with respect to any calendar year.

 

4.05 Purchase of Shares. Unless a participant withdraws or becomes ineligible
prior to the end of an Offering, the accumulated payroll deductions, and/or such
alternative contributions as permitted by the Committee, deposited to his or her
Account shall be automatically applied on the last day of the Offering to
purchase whole Shares to the extent feasible in accordance with the Offering.
Such purchase shall be treated as the exercise of an option represented by the
Offering. Any amount remaining in a participant’s Account after such purchase
shall be applied to the next Offering. A participant is not entitled or
permitted to make cash payments in lieu of payroll deductions to acquire Shares
in an Offering. In no event shall any Shares be purchased pursuant to an
Offering more than 27 months after the commencement of the Offering.

 

4.06 Source of Shares. Shares offered under the Plan may be authorized and
issued Shares, authorized but unissued Shares or treasury Shares. Shares may be
purchased directly from the Company or by the Custodian (as defined in Paragraph
5.02) pursuant to directions from the Committee. If the Custodian acquires
Shares pursuant to an open market transaction, such purchase shall be made at
the market price prevailing on the applicable exchange.

 

4.07 5% Owner Prohibition and Restriction. No employee shall be permitted to
purchase Shares under the Plan, if immediately after such purchase, such
employee would Beneficially Own more than 5% of the issued and outstanding
Capital Stock of the Company, the terms “Beneficially Own” and “Capital Stock”
having the meanings ascribed to them in the Company’s Certificate of
Incorporation. In addition, even if otherwise not deemed to Beneficially Own
more than 5% of the Capital Stock of the Company under the Company’s Certificate
of Incorporation, no employee shall be permitted to purchase Shares under the
Plan if, immediately after such purchase, such employee would possess stock
having five percent (5%) or more of the total combined voting power of all
classes of stock of the Company or any of its parent or subsidiary corporations,
determined by applying the stock ownership rules of Section 424(d) of the Code.

 

4.08 Prohibition Against Assignment. A participant’s right to purchase Shares
under the Plan is exercisable only by the participant and may not be sold,
pledged, assigned, surrendered or transferred in any manner other than by will
or the laws of descent and distribution. Any attempt to sell, pledge, assign,
surrender or transfer such rights shall be void and shall automatically cause
any purchase rights held by the participant to be terminated. In such event, the
Committee may refund in cash, without interest, all contributions credited to a
participant’s Account.

 

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4.09 Holding Period. Shares acquired under the Plan by any officer of the
Company or any of its subsidiaries who is subject to Section 16 of the Exchange
Act (or by any other participant the Committee so designates) shall be subject
to a two (2) year holding period (or such shorter period as may be permitted
under the Act or by the Board). Shares subject to such holding period may not be
sold, pledged assigned, surrendered or transferred in any manner other than by
will or the laws of descent and distribution, except that such Shares may be
transferred by a participant to the participant’s spouse, siblings, parents,
children and grandchildren or to trusts for the benefit of such persons, or to
partnerships, corporations, limited liability companies or other entities owned
solely by the participant and/or such persons, including trusts, for such
persons subject to the holding period restriction applicable to the participant.
Any attempt to sell, pledge, assign, surrender or transfer Shares in violation
of this Section 4.09 shall be null and void ab initio.

 

ARTICLE V. ACCOUNTS

 

5.01 Establishment of Accounts. The Committee shall cause to be maintained a
separate account for each participant (“Account”) to record the amount of
payroll deductions with respect to each Offering, and the purchase price for and
the number of Shares, credited to such participant. No interest or other
earnings shall be credited to any contributions to an Account under the Plan.

 

5.02 Custody of Shares. The Committee shall select an administrator
(“Custodian”) which shall hold and act as custodian of Shares purchased pursuant
to the Plan. Absent written instructions to the contrary from a participant,
certificates for Shares purchased will not be issued by the Custodian to a
participant.

 

5.03 Voting of Shares. A participant shall direct the Custodian as to how to
vote the full Shares credited to his or her Account following the purchase of
such Shares.

 

ARTICLE VI. DISBURSEMENTS FROM ACCOUNT

 

6.01 Withdrawal of Contributions. Upon a participant’s withdrawal from any
Offering, all or any designated portion of the contributions credited to the
participant’s Account with respect to such Offering shall be disbursed, without
interest, to the participant.

 

6.02 Withdrawal of Shares. A participant may at any time withdraw all or any
number of whole Shares credited to his or her Account under the Plan by
directing the Custodian to cause his or her Shares to be (i) issued as
certificates in his or her name (subject to the charges described in Section
7.02) or (ii) sold and the net proceeds (less applicable commissions and other
charges) distributed in cash to the participant. A participant may also direct
the Custodian to cause Shares to be transferred to another brokerage account of
the participant, provided the Shares are held by the participant for at least
two (2) years following the first day of the Offering pursuant to which the
Shares were acquired.

 

6.03 Distribution Upon Termination. Upon termination of a person’s participation
in the Plan as a whole prior to the expiration of all Offerings thereunder, all
contributions and Shares credited to a participant’s Account shall be disbursed
to, and as directed by, him or her in accordance with the Plan. All
contributions credited to a participant’s Account that have not been applied to
the purchase of Shares shall be returned to him or her without interest. Shares
credited to a participant’s Account shall, in accordance with instructions to
the Custodian from a participant and at his or her expense, be distributed in
the same manner as permitted upon any withdrawal.

 

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6.04 Failure to Provide Directions. Following a participant’s withdrawal or
termination from the Plan, such participant’s Shares shall continue to be
maintained by the Custodian in the participant’s Account until such time as the
participant provides the Custodian with Distribution instructions.

 

6.05 Sale of Shares. If a participant elects to receive the proceeds from the
sale of his or her Shares, the amount payable shall be determined by the
Custodian on the date of sale, less any applicable commissions, fees and
charges. The Custodian, acting on a participant’s behalf, shall take such action
as soon as practicable, but in no event later than five (5) business days after
receipt of notification from the participant. The Company assumes no
responsibility in connection with such transactions, and all commissions, fees
or other charges arising in connection therewith shall be borne directly by the
participant. The amount thus determined shall be paid in a lump sum to the
participant.

 

6.06 Unpaid Leave of Absence. Unless a participant has voluntarily withdrawn his
or her contributions from the Plan, Shares will be purchased with contributions
to his or her Account on the last day of the Offering next following
commencement of an unpaid leave of absence by such participant provided such
leave does not constitute a termination of employment. The number of Shares to
be purchased will be determined by applying to the purchase the amount of the
participant’s contributions made up to the commencement of such unpaid leave of
absence. Upon the termination of a participant’s unpaid leave of absence and the
participant’s return to work at the Company, payroll deductions and/or such
alternative contributions as permitted by the Committee, shall resume at the
rate in effect at the commencement of the unpaid leave of absence.

 

ARTICLE VII. EXPENSES

 

7.01 Expenses for Purchase of Shares. The Company shall pay brokerage
commissions, fees and other charges, if any, incurred for purchases of Shares
with payroll deductions made under the Plan.

 

7.02 Expenses to Sell or Transfer Shares. All brokerage commissions, fees or
other charges in connection with any sale or other transfer of Shares shall be
paid by the participant. In addition, any charges by the Custodian in connection
with a participant’s request to have certificates representing Shares registered
in his or her name shall be paid by the participant.

 

7.03 Post-Termination Expenses. Upon a participant’s termination of employment
or withdrawal from the Plan for any other reason, all commissions, fees and
other charges thereafter relating to the participant’s Account will be the
participant’s responsibility.

 

ARTICLE VIII. MERGERS AND OTHER SHARE ADJUSTMENTS

 

8.01 Mergers or Other Consolidations. In the event that the Company is a party
to a sale of substantially all of its assets, a merger or consolidation,
outstanding options to purchase Shares under the Plan shall be subject to the
agreement of sale, merger or consolidation. Such agreement, without the consent
of any participant, may provide for:

 

  (a) the continuation of such outstanding options by the Company (if the
Company is the surviving corporation);

 

  (b) the assumption of the Plan and such outstanding options by the surviving
corporation or its parent;

 

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  (c) the substitution by the surviving corporation or its parent of options
with substantially the same terms for such outstanding options, including the
substitution of shares of common stock of the surviving corporation with such
appropriate adjustments so as not to enlarge or diminish the rights of
participants;

 

  (d) the cancellation of such outstanding options without payment of any
consideration other than the return of contributions credited to participants’
Accounts, without interest; or

 

  (e) the shortening of the Offering Period and any Offering then in progress by
setting a new last day of the Offering (the “New Purchase Date”). The New
Purchase Date shall be before the date of the proposed sale, merger or
consolidation. Each participant will be notified in writing that the last day of
the Offering has been changed to the New Purchase Date and that the applicable
number of Shares will be purchased automatically on the New Purchase Date,
unless prior to such date the participant has withdrawn from the Plan as
provided in Paragraph 6.01.

 

8.02 Adjustments to Shares or Options. In the event of a subdivision of the
outstanding common stock, a declaration of a dividend payable in Shares, a
declaration of an extraordinary dividend payable in a form other than Shares in
an amount that has a material effect on the fair market value of the Shares, a
combination or consolidation of the outstanding Shares into a lesser number of
Shares, a recapitalization, a spin-off, a reclassification or a similar
occurrence, the Board shall make appropriate adjustments so as not to enlarge or
diminish the rights of participants, in one or more of (i) the number of Shares
available for purchase under the Plan, (ii) the number of Shares subject to
purchase under outstanding options, or (iii) the purchase price per Share under
each outstanding option.

 

ARTICLE IX. AMENDMENT AND TERMINATION

 

9.01 Authority. The Board may at any time terminate or amend the Plan in any
respect, including, but not limited to, terminating the Plan prior to the end of
an Offering Period or reducing the term of an Offering Period; provided,
however, that the number of Shares subject to purchase under the Plan shall not
be increased without approval of the Company’s stockholders.

 

9.02 Termination of the Plan. This Plan shall terminate at the earliest to occur
of:

 

(a) the tenth anniversary following shareholder approval of the Plan;

 

(b) the date the Board acts to terminate the Plan in accordance with Paragraph
9.01; and

 

(c) the date when the total number of Shares of Company common stock to be
offered under this Plan, as set forth in Paragraph 4.01, have been purchased.

 

9.03 Distributions on Plan Termination. Upon termination of the Plan at the end
of an Offering Period, Shares shall be issued to participants, and cash, if any,
remaining in the Accounts of the participants, shall be refunded to them. Upon
termination of the Plan prior to the end of an Offering Period, all amounts not
previously applied to the purchase of Shares shall be distributed to the
participants, as if the Plan had terminated at the end of an Offering Period.

 

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9.04 Effect on Custodian. No amendments to the Plan which affects the
responsibilities or duties of the Custodian shall be effective without the
agreement and approval of the Custodian.

 

ARTICLE X. MISCELLANEOUS

 

10.01 Joint Ownership. Shares may be registered in the name of the participant,
or, if he or she so designates, in his or her name jointly with his or her
spouse, with a right of survivorship.

 

10.02 No Employment Rights. The Plan shall not be deemed to constitute a
contract of employment between the Company and any participant, nor shall it
interfere with the right of the Company to terminate a participant and treat a
participant without regard to the effect which such treatment might have upon
you under the Plan.

 

10.03 Tax Withholding. The Company shall withhold from amounts to be paid to a
participant as wages, any applicable Federal, state or local withholding or
other taxes which it is from time to time required by law to withhold.

 

10.04 Compliance with Laws. The Company may direct the Custodian to delay the
issuance of any certificate in the name of any person or the delivery of Shares
to any person if it determines that listing, registration or qualification of
such Shares upon any national securities market or exchange or under any law, or
the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the sale or purchase of
Shares under the Plan, until such listing, registration, qualification, consent
or approval shall have been effected or obtained, or otherwise provided for,
free of any conditions not acceptable to the Company.

 

10.05 Governing Law. The Plan shall be governed by, and construed in accordance
with, the laws of the State of Delaware and without regard to the conflict of
laws principles of such state.