Exhibit 10.6-20

SIERRA HEALTH SERVICES, INC.
1995 LONG-TERM INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT

 

        AGREEMENT made as of the        day of       , 20,      by and between
Sierra Health Services, Inc. (the "Company"), and                      
("Optionee").

W I T N E S S E T H:

                1.     Grant of Option.

Pursuant to the provisions of the Sierra Health Services, Inc. 1995 Long-Term
Incentive Plan (the "Plan"), the Company hereby confirms the grant to the
Optionee, subject to the terms and conditions of the Plan (as it presently
exists and as it may hereafter be amended) and this Non-Qualified Stock Option
Agreement (the "Agreement"), of the right and option to purchase from the
Company all or any part of an aggregate of ( ) shares of the Stock of the
Company (the "Shares") at the exercise price of $ per Share (the "Option"), such
Option to be exercisable as hereinafter provided. This Option is not intended to
be, and will not be treated as, an incentive stock option within the meaning of
section 422 of the Internal Revenue Code of 1986, as amended. The number of
shares with respect to which this Option is exercisable, and the exercise price
with respect to each Share, are each subject to adjustment under certain
circumstances, as more fully set forth in the Plan and Section 7.

                2.     Incorporation of Plan by Reference. The Option has been
granted to the Optionee under the Plan, a copy of which is attached hereto as
Attachment A. The Optionee hereby acknowledges receipt of the attached copy of
the Plan and agrees to be bound by all the terms and provisions thereof (as
presently in effect or hereafter amended), and by all decisions and
determinations of the Committee thereunder. All of the terms, conditions, and
other provisions of the Plan are hereby incorporated by reference into this
Agreement. Capitalized terms used in this Agreement but not defined herein shall
have the same meanings as in the Plan. If there is any conflict between the
provisions of this Agreement and the provisions of the Plan, the provisions of
the Plan shall govern.

                3.     Expiration of Option.

The Option, to the extent that it has not theretofore been exercised, shall
expire at 11:59 p.m. (Las Vegas, NV time) the day prior to the _____anniversary
of the date hereof, or earlier at such time as the Option shall have terminated
under the second paragraph of Section 4 or been forfeited under Section 5.

                4.     Option Exercise Limitations.

Unless the Option has previously expired, the Option will become exercisable as
to ______ percent of the total Shares subject thereto on ________________and
thereafter, at each successive anniversary date of the date of grant of the
Option (through the ____ such anniversary date), the Option shall become
exercisable as to an additional _______percent of the total Shares subject
thereto, except as otherwise provided in this Section 4. All Option exercise
privileges shall be cumulative, so that any part of the Option that has become
exercisable but that has not been exercised shall remain exercisable until
expiration of the Option regardless of the additional exercise privileges
becoming available during such exercise period. The foregoing notwithstanding,
the Option shall become exercisable in full in the event of a Change in Control
prior to the expiration of the Option, in accordance with Section 8 of the Plan,
and the Committee may, in its discretion, accelerate the exercisability of the
Option. The Option may be exercised only to purchase whole shares; no fractional
shares will be issued upon exercise of the Option.

                All options granted hereunder shall terminate and may no longer
be exercised upon the Optionee's Termination of Employment (as defined herein),
except that (i) if Termination of Employment is involuntary on the part of the
Optionee for any reason other than death, disability, or for Cause (as defined
herein), the Option shall terminate on, and may no longer be exercised after,
the 90th day following such Termination of Employment (or the earlier expiration
of the Option under Section 3), and during such 90-day period following
Termination of Employment the Option may be exercised only to the extent it was
exercisable immediately prior to such Termination of Employment; and (ii) if
Termination of Employment is due to the death or disability of the Optionee, the
Option shall terminate on and may no longer be exercised after the first
anniversary of such Termination of Employment (or the earlier expiration of the
Option under Section 3), and during such one-year period following Termination
of Employment the Option may be exercised only to the extent it was exercisable
immediately prior to such Termination of Employment. For purposes hereof,
"Termination of Employment" shall mean a termination of Optionee's employment by
or service to the Company or any subsidiary or affiliate of the Company if,
immediately thereafter, the Optionee is not an employee or director of or
consultant to the Company or any subsidiary of the Company and is not an
employee of or independent contractor for any other entity in which capacity
Optionee provides substantial services to the Company or any subsidiary or
affiliate of the Company.

                For purposes hereof, "Cause" shall mean dishonesty, any illegal
or disreputable conduct which impairs the reputation, goodwill or business of
the Company or any subsidiary, or any conduct which involves the
misappropriation of funds of the Company or any subsidiary. A termination for
Cause will include any resignation in anticipation of termination for Cause or
accepted by the Company or any subsidiary in lieu of a formal termination for
Cause.

                5.

     Optionee Obligations.

                        (a)

Forfeiture of Options and Gains Realized Upon Prior Option Exercises. Optionee
hereby agrees that, if one of the events specified in Section 5(b)(i), (ii),
(iii) or (iv) occurs, all of the following forfeitures will result:

(i) That unexercised portion of the Option, whether or not vested, will be
immediately forfeited and cancelled at the later of Optionee's termination of
employment or the occurrence of such event; and

(ii) Optionee will be obligated to repay to the Company, at the later of
Optionee's termination of employment or the occurrence of such event, within
five business days after demand is made therefor by the Company, a portion of
the shares acquired upon any exercise of the Option that occurred since the date
six months prior to the date of Optionee's termination of employment with the
Company or a subsidiary (the "Forfeiture Period.") The number of shares to be
repaid hereunder shall equal the total amount of After-Tax Option Gain (as
defined herein) realized by Optionee upon each exercise of the Option that
occurred during the Forfeiture Period divided by the Fair Market Value of one
share of Company Common Stock on the date of exercise. For purposes of this
Section, the term "After-Tax Option Gain" in respect of a given exercise shall
mean the product of (X) the Fair Market Value per share at the date of such
exercise (without regard to any subsequent change in the market price of shares)
minus the exercise price times (Y) the number of shares as to which the Option
was exercised at that date, such product to be reduced by the amount of federal,
state, and local income taxes (not including FICA taxes) actually paid by
Optionee or payable as a result of such exercise. If Optionee has disposed of
Option shares during the Forfeiture Period, his or her obligation to repay
shares upon such forfeiture will continue (payment of cash or other property is
not permitted), so that Optionee will be required to acquire replacement shares
and deliver them to the Company in settlement of Optionee's forfeiture
obligation without regard to any subsequent market price increase or decrease
from the date of exercise. If Optionee fails to promptly deliver forfeited
shares and if, apart from this Agreement, the Company is obligated to pay any
cash amount to Optionee, the Company, as a setoff, may use such cash to purchase
shares in the open market on Optionee's behalf, which shares will be retained by
the Company in settlement of Optionee's forfeiture obligation hereunder.

                        (b) Events Triggering Forfeiture

. The forfeitures specified in Section 5(a) will be triggered upon the
occurrence of any one of the following events at any time during Optionee's
employment by the Company or a subsidiary or during the one-year period
following termination of such employment (but not later than 18 months after the
Option terminates or is fully exercised):

(i) Optionee, acting alone or with others, directly or indirectly, prior to a
Change in Control, (A) engages (either as employee, employer, owner, investor,
partner, stockholder, consultant, advisor, or director) in any business in
Nevada, Arizona, California, or Texas, or in any other state of the United
States in which the Company conducts business at the date hereof or at the time
such event occurs, which is directly in competition with a business then
conducted by the Company or a subsidiary; (B) induces any customer of the
Company or a subsidiary with whom Optionee has had contacts or relationships,
directly or indirectly, during and within the scope of his or her employment
with the Company or any subsidiary, to curtail, cancel, not renew, or not
continue his or her or its business with the Company or any subsidiary; or (C)
induces, or attempts to influence, any employee of the Company or a subsidiary
to terminate employment;

(ii) Optionee discloses, uses, sells, or otherwise transfers, except in the
course of employment with or other service to the Company or any subsidiary, any
proprietary information of the Company or any subsidiary so long as such
information has not otherwise been disclosed to the public or is not otherwise
in the public domain, except as required by law or pursuant to legal process; or

(iii) Optionee fails to cooperate with the Company or any subsidiary by making
himself or herself available to testify on behalf of the Company or such
subsidiary in any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, or otherwise fails to assist the Company or
any subsidiary in any such action, suit, or proceeding by providing information
and meeting and consulting with members of management of, other representatives
of, or counsel to, the Company or such subsidiary, as reasonably requested.

(iv) Optionee fails to submit to binding arbitration before a neutral arbitrator
any and all disputes or claims covered by the Arbitration Agreement executed by
Optionee, which would otherwise be subject to resolution in court, arising from
or relating to Employee's recruitment to or employment with the Company, or the
termination of that employment, including claims against any current or former
agent or employee of the company, whether the disputes or claims arise in tort,
contract, or pursuant to a statute, regulation, or ordinance now in existence or
which may in the future be enacted or recognized or any other claim or dispute
required to be arbitrated under the Arbitration Agreement.

                    (c) Agreement Does Not Prohibit Competition or Other
Optionee Activities

. This Agreement does not prohibit Optionee from engaging in any activity
specified in Section 5 (b)(i)-(iii), including but not limited to competition
with the Company and its subsidiaries. Rather, the non- occurrence of events set
forth in Section 5(b)(i)-(iii) is a condition to Optionee's right to realize and
retain value from his or her compensatory Option, and the only consequence if
Optionee engages in an activity giving rise to any such event, which events and
activities are hereby acknowledged to be harmful to the Company, are the
forfeitures specified herein. The Company and Optionee shall not be precluded by
this Agreement or otherwise from entering into other agreements concerning the
subject matter of Section 5(a) and 5(b).

                    (d) Right of Setoff

. Optionee agrees that the Company or any subsidiary may, to the extent
permitted by applicable law, deduct from and set off against any amounts the
Company or a subsidiary may owe to Optionee from time to time, including amounts
owed as wages or other compensation, fringe benefits, or other amounts owed to
Optionee, such amounts as may be owed by Optionee to the Company under Section
5(a), although Optionee shall remain liable for any part of Optionee's payment
obligation under Section 5(a) not satisfied through such deduction and setoff.

                    (e) Committee Discretion

. The Committee may, in its discretion, waive in whole or in part the Company's
right to forfeiture under this Section, but no such waiver shall be effective
unless evidenced by a writing signed by a duly authorized officer of the
Company.

                6. Option Exercise.

                    (a)

Procedure. The Option may be exercised in whole or in any part, and may be
exercised in part from time to time, all subject to the limitations on exercise
set forth in Section 4. Exercise shall be accomplished by delivery to the
Company of a timely written notice of election to exercise, in a form reasonably
acceptable to the Committee delivered to the principal office of the Company and
addressed to the attention of the Committee.

                    (b) Payment of the Exercise Price.

At the time of exercise, the exercise price of the Shares as to which this
Option is exercised shall be tendered to the Company. The exercise price of such
shares shall be paid in cash or by check, except that the Committee may, in its
discretion, allow such payment to be by surrender to the Company of unrestricted
shares of stock (valued at their Fair Market Value on the date of exercise) or
by a combination of cash, check, and surrender of unrestricted shares.

                    (c) Other Methods of Exercise and Payment of Exercise Price.

In addition to the method of exercise and payment set forth in Section 6(a) and
(b), the Option may be exercised and payment to the Company made in accordance
with any other procedures made available from time to time by the Company's
Human Resources/Benefits Department.

                7. Adjustments.

The Option shall be subject to adjustment upon the occurrence of a corporate
transaction or event affecting Stock in accordance with Section 4(c) of the
Plan.

                8. Nontransferability; Beneficiaries.

Except to the extent as may be otherwise permitted in accordance with Section
10(b) of the Plan, no right or interest of the Optionee in the Option shall be
pledged, encumbered, or hypothecated to or in favor of any third party or shall
be subject to any lien, obligation, or liability of the Optionee to any third
party, the Option shall not be transferable to any third party by the Optionee
otherwise than by will or the laws of descent and distribution, and the Option
shall be exercisable, during the lifetime of the Optionee, only by the Optionee.
The foregoing notwithstanding, the Optionee will be entitled to designate a
beneficiary to exercise his rights under the Option upon the death of the
Optionee, in the manner and to the extent permitted by the Committee under rules
and regulations then in effect under the Plan.

                9. Tax Withholding.

Whenever Shares are to be delivered upon exercise of the Option, the Company
shall be entitled to require as a condition of delivery that the Optionee remit
an amount sufficient to satisfy all federal, state, and local withholding tax
requirements relating thereto. Subject to the approval of the Committee, the
Optionee will be entitled to elect to have the Company withhold from the Shares
to be delivered upon the exercise of the Option, or to elect to deliver to the
Company from shares of the Company's Stock owned separately by the Optionee, a
sufficient number of such Shares or shares to satisfy the Optionee's federal,
state, and local tax obligations relating to the Option exercise (and the
Company's withholding obligations), to the extent, if any, permitted under rules
and regulations adopted by the Committee and in effect at the time of the
exercise of the Option. In such case, the Shares withheld or the shares
surrendered will be valued at such their Fair Market Value at the date of
exercise, and such amount shall be remitted to the Optionee's employer or other
entity responsible for transmitting withholding amounts to the tax authorities.

               10. Miscellaneous.

                    (a) Binding Agreement.

This Agreement shall be binding upon the heirs, executors, administrators, and
successors of the parties. In particular, the Optionee's heirs, executors,
administrators and successors shall be subject to the terms and conditions of
the Plan and this Agreement, and the Committee may require any such person to
execute an agreement or other documents acknowledging and agreeing to such terms
and conditions as a condition precedent to any transfer of the Option or any
Shares purchased upon exercise of the Option into the name of any such person.
This Agreement constitutes the entire agreement between the parties with respect
to the Option and the Shares, and supersedes any prior agreements or documents
with respect thereto.

                    (b) Amendments to Agreement.

This Agreement may be amended, but no amendment, alteration, suspension,
discontinuation, or termination of this Agreement which may impose any
additional obligation upon the Company or impair the rights of the Optionee with
respect to the Option shall be valid unless in each instance such amendment,
alteration, suspension, discontinuation, or termination is expressed in a
written instrument duly executed in the name and on behalf of the Company and by
the Optionee.

                    (c) No Other Rights Created.

Neither this Agreement nor the Option shall be deemed to create a condition of
employment, a right to continued employment, or a right to continue as a
director of or consultant to the Company or any subsidiary of the Company or as
an employee of or independent contractor for any other entity in which capacity
Optionee provides services to the Company or any subsidiary or affiliate of the
Company, or any right of such entity to continue to provide services to the
Company or any subsidiary or affiliate of the Company. The Optionee shall remain
subject to termination of such employment or service to the same extent as
though this Agreement did not exist.

                    (d) Notices.

Any notice hereunder to the Company shall be addressed to it as P.O. Box 15645,
Las Vegas, Nevada 89114-5645, Attention: Stock Plan Committee. Any notice
hereunder to the Optionee shall be addressed to him/her at the address set forth
below, subject to the right of either party to designate at any time hereafter
in writing a different address.

                    (e) Counterparts.

This Agreement has been executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same Agreement.

                    (f) Intended Accounting Treatment; Reform of Contract

. The Company intends that this Option shall qualify for fixed accounting under
APB 25, with the compensation measurement date for accounting purposes to occur
at the date of grant, unless the Committee specifically determines otherwise.
Therefore, other provisions of this Agreement notwithstanding, in order to
preserve this fundamental objective of the Option, if any provision of this
Option would result in "variable" accounting or a measurement date other than
the date of grant, if the Committee was not specifically aware of such
accounting consequence at the time such provision became effective, such
provision shall be modified and reformed to the extent necessary to preserve the
accounting treatment of the award intended by the Committee, subject to Section
9 of the Plan.

 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer and the Optionee has executed this Agreement as of the
day and year first above written.

 SIERRA HEALTH SERVICES, INC.

 

By:__________________________

Date:________________________

 

Optionee:_____________________

Signature:_____________________

Address of Optionee:_________________________________

_________________________________________________

_________________________________________________