8-K

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): January 31, 2006

UnitedHealth Group Incorporated
__________________________________________
(Exact name of registrant as specified in its charter)

Minnesota	0-10864	41-1321939
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)
UnitedHealth Group Center, 9900 Bren Road East , Minnetonka, Minnesota		55343
_________________________________ (Address of principal executive offices)		___________ (Zip Code)

Registrant’s telephone number, including area code: 952-936-1300

Not Applicable
______________________________________________
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On January 31, 2006, the Compensation and Human Resources Committee (the "Committee") of the Board of Directors of UnitedHealth Group Incorporated (the "Company") designated certain participants, including all executive officers of the Company, eligible to receive long term performance awards for the 2006-2008 performance period under the Company’s ongoing Executive Incentive Plan. Pursuant to the terms of the Executive Incentive Plan, the Committee also approved target performance awards, maximum performance awards and objective performance goals for the 2005-2007 performance period based on achievement of certain earnings per share amounts. These awards are subject to adjustment based on additional financial and non-financial objectives, such as growth in revenues and operating income, operating cash flows, operating margin, return on equity, quality, integrity and compliance, and timely progress on strategic initiatives.

The Committee also approved revised forms of stock option agreements a nd restricted stock agreements and approved forms of SAR agreement for officers and directors under the Company’s 2002 Stock Incentive Plan, each of which is attached as an exhibit to this Form 8-K and incorporated herein by reference. The Committee also approved providing substantially all holders of outstanding stock options of the Company the ability to elect to exercise those stock options using a net cashless exercise feature as permitted by the Company’s 2002 Stock Incentive Plan.

Commencing in 2006 and subsequent years, the Board of Directors of the Company authorized a reduction in the quarterly grants of non-qualified stock options to non-employee directors from 10,000 shares to 8,000 shares and reduced the initial one-time grant of non-qualified stock options to new directors from 72,000 shares to 58,000 shares.

Item 9.01 Financial Statements and Exhibits.

Exhibits

The following are filed as exhibits to this report:

10.1 Form of Agreement for Stock Option Award to Officers under the Company's 2002 Stock Incentive Plan, as amended
10.2 Form of Restricted Stock Award Agreement to Officers under the Company's 2002 Stock Incentive Plan, as amended
10.3 Form of Stock Appreciation Rights Award Agreement to Officers under the Company's 2002 Stock Incentive Plan, as amended
10.4 Form of Stock Appreciation Rights Award Agreement to Non-Employee Directors under the Company's 2002 Stock Incentive Plan, as amended

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	UnitedHealth Group Incorporated
January 31, 2006	By:	David J. Lubben
		Name: David J. Lubben
		Title: Secretary & General Counsel

Exhibit Index

Exhibit No.	Description
10.1	Form of Agreement for Stock Option Award to Officers under the Company's 2002 Stock Incentive Plan, as amended
10.2	Form of Restricted Stock Award Agreement to Officers under the Company's 2002 Stock Incentive Plan, as amended
10.3	Form of Stock Appreciation Rights Award Agreement to Officers under the Company's 2002 Stock Incentive Plan, as amended
10.4	Form of Stock Appreciation Rights Award Agreement to Non-Employee Directors under the Company's 2002 Stock Incentive Plan, as amended

EX-10.1

UNITEDHEALTH GROUP

Grant Number:      

Grant Date Option Shares Exercise Price
$ Expiration Date

THIS CERTIFIES THAT UnitedHealth Group Incorporated (the “Company”) has on the Grant Date specified
above granted to

(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 Certificate represents will expire on the Expiration Date, unless it is terminated prior to that time in accordance with this Certificate.

The Option Shares represented by this Certificate shall become exercisable as to 25% of the Option Shares on each anniversary of the Grant Date, commencing with the first anniversary, unless this Option shall have terminated or the vesting shall have accelerated as provided in this Certificate. 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 Certificate.

By accepting this Option, the holder acknowledges that the holder of this Option will not have any of the rights of a shareholder with respect to the Option Shares until the holder has duly exercised the Option and paid the Exercise Price and applicable withholding taxes in accordance with this Certificate. The holder further acknowledges and agrees that the Company may deliver, by electronic mail, the use of the Internet or Company intranet web pages or otherwise, any information concerning the Company, this Option, the UnitedHealth Group Incorporated 2002 Stock Incentive Plan (the “Plan”), pursuant to which the Company granted this Option, 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 Certificate, the terms of the Plan shall govern. Any terms not defined herein shall have the meaning set forth in the Plan.

* * * * *

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.

Termination of Option. The Option shall terminate on the Expiration Date. The Option shall terminate prior to such date if the Optionee ceases to be employed by the Company or its subsidiaries, except that:

(a) General: If the Optionee’s employment terminates for any reason (voluntary or involuntary) other than death or permanent long-term disability, 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 Permanent Long-Term Disability: If the Optionee dies while employed by the Company or its subsidiaries, or if the Optionee’s employment by the Company or its subsidiaries is terminated due to the Optionee’s failure to return to work as the result of a permanent 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, then (i) all unvested Option Shares hereunder shall immediately vest, 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, at any time within a period of five years after the Optionee’s death or termination of employment due to the Optionee’s failure to return to work as the result of a permanent long-term disability, or for such other longer period established at the discretion of the Committee or the Chief Executive Officer of the Company, exercise the Option to the extent of the full number of Option Shares which are exercisable following such vesting; and

(c) Severance: If the Optionee is entitled to severance under the Company’s severance pay plan as in effect on the date hereof, then vesting of the Option shall continue for the period of such severance. If Optionee is entitled to severance under an employment agreement entered into with the Company, then vesting of the Option shall continue 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 (i) the period 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) the period 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.

For the purposes of this Option, “Exercise Period” shall mean the greater of (i) a period of three months after the date of termination of the Optionee’s employment, (ii) if Optionee receives severance or separation pay, a period of three months after vesting ceases as provided in (c), above, or (iii) such other longer period established at the discretion of the Committee or the Chief Executive Officer of the Company. This Option shall in no event be exercisable after the Expiration Date.

Forfeiture of Option. If the Optionee violates: (i) any provision of the Restrictive Covenants of this Certificate, or (ii) any provision of the Company’s Principles of Integrity and Compliance, then all unvested portions of the Option Shares, together with any portions of the Option Shares which vested within one year prior to the termination of the Optionee’s employment with the Company or at any time after such termination (the “Forfeited Shares”), shall become null and void and the Optionee shall pay to the Company, upon demand, an amount equal to the difference between the proceeds the Optionee has received from any sales of Forfeited Shares over the Exercise Price for such stock; and if the Optionee still holds all or any part of the Forfeited Shares at the time such Company demand is made, the Optionee shall pay over to the Company an amount equal to the difference between the aggregate Fair Market Value of such Forfeited Shares on the date the Option was exercised and the aggregate Exercise Price with respect to such Forfeited Shares. This paragraph does not constitute the Company’s exclusive remedy for the Optionee’s violation of the Restrictive Covenants. The Company may seek any additional legal or equitable remedy, including injunctive relief, for any such violation.

Restrictive Covenants. In consideration of the terms of this Option and the Optionee’s access to Confidential Information, 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 its subsidiaries 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 information. The Optionee agrees not to disclose or use Confidential Information, either during 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) Engage in any business competitive with any Company business with any person or entity who: (a) was a Company provider or customer within the 12 months before the Optionee’s employment termination and, (b) with whom the Optionee had contact to further the Company’s business or for whom the Optionee performed services, or supervised the provision of services for, during the Optionee’s employment.

(ii) Hire, employ, recruit or solicit any Company employee or consultant.

(iii) Induce or influence any Company employee, consultant, customer or provider to terminate his, her or its employment or other relationship with UnitedHealth Group.

(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:

(i) Engage or participate in, or in any way render services or assistance to, any business that competes, directly or indirectly, with any Company product or service that the Optionee participated in, engaged in, or had Confidential Information regarding, during the Optionee’s employment.

(ii) Assist anyone in any of the activities listed above.

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.

Manner of Exercise. On the terms set forth herein, the Option may be exercised in whole or in part from time to time by delivering notice of exercise to the Company, 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 or (iii) by delivery of a combination of cash and such shares; 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.

No Guarantee of Employment. This Option does not confer on the Optionee any right with respect to the continuance of any relationship with the Company or its subsidiaries, nor will it interfere in any way with the right of the Company to terminate such relationship at any time.

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 qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act or the rules promulgated thereunder, to the extent provided in clause (b) under the section above entitled “Termination of Option.” Any attempt to otherwise transfer the Option shall be void.

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 (i) the number and type of shares (or other securities or other property) subject to the Option and (ii) 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 Certificate 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.

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 on the effective date of a Change in Control. For purposes of this Option, 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.

Narrowed Enforcement and Severability. If a court or arbitrator decides that any provision of this Certificate 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 Certificate should be unaffected.

Injunctive Relief. The Optionee agrees that (a) legal remedies (money damages) for any breach of the Restrictive Covenants in this Certificate 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.

Survival. The Restrictive Covenants in this Certificate shall survive the termination of the Option.

Other. An original record of this Certificate 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 certificate 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.

THIS CERTIFICATE REPRESENTS AN OPTION TO PURCHASE SHARES OF COMMON STOCK AND DOES NOT CONSTITUTE OR REPRESENT SHARES OF COMMON STOCK

NON-NEGOTIABLE

UNITEDHEALTH GROUP

RESTRICTED STOCK AWARD

Award Number:      

Award Date Number of Shares Final Vesting Date

THIS CERTIFIES THAT UnitedHealth Group Incorporated (the “Company”) has on the Award Date specified above granted to

(“Participant”) an award (the “Award”) of that number of shares (the “Shares”) of UnitedHealth Group Incorporated Common Stock, $.01 par value per share (the “Common Stock”), indicated above in the box labeled “Number of Shares,” subject to certain restrictions and on the terms and conditions contained in this Award and the UnitedHealth Group Incorporated 2002 Stock Incentive Plan (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. Rights of the Participant with Respect to the Shares. With respect to the Shares, on and after the Award Date and until the date or dates on which the Shares vest and the restrictions with respect to the Shares lapse in accordance with Section 2, 3 or 4, Participant shall have all of the rights of a shareholder of the Common Stock, including the right to vote the Shares and the right to receive dividends thereon, unless and until the Shares are forfeited pursuant to Section 4 or 6. The rights of Participant with respect to the Shares shall remain forfeitable at all times prior to the date or dates on which such rights become vested, and the restrictions with respect to the Shares lapse, in accordance with Section 2, 3 or 4. Subject to the restrictions and terms of this Award, after the Shares vest pursuant to Section 2, 3 or 4, Participant shall have all of the rights of a shareholder of the Common Stock with respect to the Shares (including, without limitation, the right to vote the Shares and to receive cash dividends).

2. Vesting. Subject to the terms and conditions of this Award, 25% of the Shares shall vest, and the restrictions with respect to the Shares shall lapse, on each of the first, second, third and fourth anniversaries of the Award Date if Participant remains continuously employed by the Company or continues to serve on the Board of Directors of the Company until the respective vesting dates.

3. Early Vesting Upon Change in Control. Notwithstanding the other vesting provisions contained in Section 2, but subject to the other terms and conditions set forth herein, upon the effective date of a Change in Control, all of the Shares shall become immediately and unconditionally vested and exercisable, and the restrictions with respect to all of the Shares shall lapse. 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.

4. Forfeiture or Early Vesting Upon Termination of Employment.

(a) Termination of Employment Generally. If, prior to vesting of the Shares pursuant to Section 2 or 3, Participant ceases to be an employee of the Company, or ceases to serve on the Board of Directors of the Company, for any reason (voluntary or involuntary) other than death, permanent long-term disability or a termination of employment that results in severance or separation pay being paid to Participant, then Participant’s rights to all of the unvested Shares shall be immediately and irrevocably forfeited.

(b) Death or Permanent Long-Term Disability. If Participant dies while employed by the Company or its subsidiaries, or if Participant’s employment by the Company or its subsidiaries is terminated due to Participant’s failure to return to work as the result of a permanent long-term disability that renders Participant incapable of performing his or her duties as determined under the provisions of the Company’s long-term disability insurance program applicable to Participant, then all unvested Shares shall become immediately vested, and the restrictions with respect to all of the Shares shall lapse, as of the date of such long-term disability or death. No transfer by will or the applicable laws of descent and distribution of any Shares that vest by reason of Participant’s death shall be effective to bind the Company unless the Committee shall have been furnished with written notice of such transfer and a copy of the will or such other evidence as the committee of the Board of Directors administering the Plan (the “Committee”) may deem necessary to establish the validity of the transfer.

(c) Severance. If Participant is entitled to severance under the Company’s severance pay plan as in effect on the date hereof, then the Shares shall continue to vest, and the restrictions with respect to the Shares shall continue to lapse, for the period of such severance. If Participant is entitled to severance under an employment agreement entered into with the Company, then the Shares will continue to vest, and the restrictions with respect to the Shares shall continue to lapse for the period of such severance that Participant is eligible to receive as of the date hereof. If Participant is entitled to separation pay other than under the Company’s severance pay plan or an employment agreement, then vesting of the Shares, and lapsing of their restrictions, shall continue for the lesser of (i) the period Participant would have received payments under the severance pay plan as in effect on the date hereof, had Participant been eligible for such payments; or (ii) the period of separation pay. In either case, should Participant be paid in a lump sum versus bi-weekly payments, the Shares shall continue to vest for the time in which severance or separation pay would have been paid had it been paid bi-weekly.

5. Restriction on Transfer. Until the Shares vest pursuant to Section 2, 3 or 4, the Shares may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered, and no attempt to transfer unvested Shares, whether voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or right in or with respect to the Shares. Notwithstanding the foregoing, Participant may, in the manner established by the Committee, designate a beneficiary or beneficiaries to exercise the rights of Participant and receive any property distributable with respect to the Shares upon the death of Participant.

6. Restrictive Covenants. In consideration of the terms of this Award and Participant’s access to Confidential Information, Participant agrees to the Restrictive Covenants set forth below. For purposes of these Restrictive Covenants, the “Company” means UnitedHealth Group Incorporated and all of its subsidiaries and other affiliates. If Participant violates: (i) any provision of the Restrictive Covenants of this Certificate, or (ii) any provision of the Company’s Principles of Integrity and Compliance, then (i) all unvested portions of the Shares, together with any portions of the Shares that vested within one year prior to the termination of Participant’s employment with the Company or at any time after such termination (the “Forfeited Shares”), shall become null and void and (ii) Participant shall pay to the Company, upon demand, an amount equal to (A) the proceeds Participant has received from any sales of Forfeited Shares, and (B) if Participant still holds all or any part of the Forfeited Shares at the time such Company demand is made, the aggregate Fair Market Value of such Forfeited Shares as of the date of vesting of such Forfeited Shares. Furthermore, the Company may seek any other legal or equitable remedy, including injunctive relief, if Participant violates any of the following Restrictive Covenants. By accepting this Award, Participant agrees that the restrictions and agreements contained in this Section 6 are reasonable and necessary to protect the legitimate interests of the Company.

(a) Confidential Information. Participant will be given access to and provided with sensitive, confidential, proprietary and trade secret information (“Confidential Information”) in the course of Participant’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 information. Participant agrees not to disclose or use Confidential Information, either during or after Participant’s employment with the Company, except as necessary to perform Participant’s duties or as the Company may consent in writing.

(b) Non-Solicitation. During Participant’s employment and for two years after the termination of Participant’s employment for any reason whatsoever, Participant may not, without the Company’s prior written consent, directly or indirectly, for Participant 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) Engage in any business competitive with any Company business with any person or entity who: (a) was a Company provider or customer within the 12 months before Participant’s employment termination and, (b) with whom Participant had contact to further the Company’s business or for whom Participant performed services, or supervised the provision of services for, during Participant’s employment.

(ii) Hire, employ, recruit or solicit any Company employee or consultant.

(iii) Induce or influence any Company employee, consultant, customer or provider to terminate his, her or its employment or other relationship with UnitedHealth Group.

(iv) Assist anyone in any of the activities listed above.

(c) Non-Competition. During Participant’s employment and for one year after the termination of Participant’s employment for any reason whatsoever, Participant may not, without the Company’s prior written consent, directly or indirectly, for Participant 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) Engage or participate in, or in any way render services or assistance to, any business that competes, directly or indirectly, with any Company product or service that Participant participated in, engaged in, or had Confidential Information regarding, during Participant’s employment.

(ii) Assist anyone in any of the activities listed above.

7. Issuance of Shares.

(a) Effective as of the Award Date, the Company shall cause the Shares to be issued in book-entry form, registered in Participant’s name. The Shares shall be subject to an appropriate stop-transfer order.

(b) After any of the Shares vest pursuant to Section 2, 3 or 4 and following payment of the applicable withholding taxes pursuant to Section 9, the Company promptly shall cause the stop-transfer order to be removed with respect to such vested Shares.

8. Adjustments to Shares.

(a) 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 Common Stock or other securities of the Company or other similar corporate transaction or event affecting the Common Stocks 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 Award (including, without limitation, the benefits or potential benefits of provisions relating to the vesting of the Shares), 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, make adjustments to the Award, including adjustments in the number and type of Shares Participant would have received; provided, however, that the number of shares covered by the Award shall always be a whole number.

(b) Any additional shares of Common Stock, any other securities of the Company and any other property (except for cash dividends or other cash distributions) distributed with respect to the Shares prior to the date or dates the Shares vest shall be subject to the same restrictions, terms and conditions as the Shares and shall be promptly deposited with the Secretary of the Company or a custodian designated by the Secretary.

(c) Any cash dividends or other cash distributions payable with respect to the Shares shall be distributed at the same time cash dividends or other cash distributions are distributed to shareholders of the Company generally.

9. Income Tax Matters.

(a) In order to comply with all applicable federal or state income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal or state payroll, withholding, income or other taxes, which are the sole and absolute responsibility of Participant, are withheld or collected from Participant.

(b) In accordance with the terms of the Plan, and such rules as may be adopted by the Committee under the Plan, Participant may elect to satisfy Participant’s federal and state income tax withholding obligations arising from the receipt of, or the lapse of restrictions relating to, the Shares, by (i) delivering cash, check (bank check, certified check or personal check) or money order payable to the Company, (ii) having the Company withhold a portion of the Shares otherwise to be delivered having a Fair Market Value equal to the amount of such taxes, or (iii) delivering to the Company shares of Common Stock already owned by Participant having a Fair Market Value equal to the amount of such taxes. Any  shares already owned by Participant referred to in the preceding sentence must have been owned by Participant for no less than six months prior to the date delivered to the Company if such shares were acquired upon the exercise of an option or upon the vesting of restricted stock units or other restricted stock. The Company will not deliver any fractional Share but will pay, in lieu thereof, the Fair Market Value of such fractional Share. Participant’s election must be made on or before the date that the amount of tax to be withheld is determined.

10. Miscellaneous.

(a) This Award does not confer on Participant any right with respect to the continuance of any relationship with the Company or its subsidiaries, nor will it interfere in any way with the right of the Company to terminate such relationship at any time.

(b) Neither the Plan nor this Award 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 Participant 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 Award, such right shall be no greater than the right of any unsecured creditor of the Company or any Affiliate.

(c) The Company shall not be required to deliver any Shares until the requirements of any federal or state securities laws, rules or regulations or other laws or rules (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.

(d) An original record of this Award and all the terms hereof, executed by the Company, 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.

(e) If a court or arbitrator decides that any provision of this Certificate is invalid or overbroad, Participant 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 Certificate should be unaffected.

(f) Participant agrees that (i) legal remedies (money damages) for any breach of the Restrictive Covenants in this Certificate will be inadequate, (ii) the Company will suffer immediate and irreparable harm from any such breach, and (iii) the Company will be entitled to injunctive relief from a court in addition to any legal remedies the Company may seek in arbitration.

(g) The Restrictive Covenants in this Certificate shall survive forfeiture of the Shares.

UNITEDHEALTH GROUP

STOCK APPRECIATION RIGHTS AWARD
(STOCK SETTLED)

Award Number:

Award Date Number of Shares Grant Price Expiration Date

THIS CERTIFIES THAT UnitedHealth Group Incorporated (the “Company”) has on the Award Date specified above granted to

«Name»

(“Participant”) stock appreciation rights (the “Stock Appreciation Rights”) with respect to the number of shares of UnitedHealth Group Incorporated Common Stock, $.01 par value per share (the “Common Stock”), indicated above in the box labeled “Number of Shares” (the “Shares”). The initial value of each Share is indicated above in the box labeled “Grant Price.” This Award represents the right to receive shares of Common Stock (the “Issued Shares”) only when, and with respect to the number of Shares as to which, the Award has vested (the “Vested Shares”). This Award is subject to the terms and conditions set forth below and in the UnitedHealth Group Incorporated 2002 Stock Incentive Plan (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. Rights of the Participant with Respect to the Stock Appreciation Rights.

(a) No Shareholder Rights. The Stock Appreciation Rights granted pursuant to this Award do not and shall not entitle Participant to any rights of a shareholder of Common Stock prior to the exercise of the Stock Appreciation Rights and the receipt of the Issued Shares in accordance with this Award. The rights of Participant with respect to this Award shall remain forfeitable at all times prior to the date on which such rights become vested in accordance with Section 2, 3 or 4 hereof.

(b) Exercise of Stock Appreciation Rights; Issuance of Common Stock. No shares of Common Stock shall be issued to Participant prior to the date on which the Stock Appreciation Rights are vested in accordance with Sections 2, 3, or 4, and exercised in accordance with Section 5. Upon exercise of the Stock Appreciation Rights, Participant shall be entitled to receive a number of Issued Shares for each Vested Share with respect to which the Stock Appreciation Rights are exercised equal to (i) the excess of the Fair Market Value of one Share on the date of exercise over the Grant Price, divided by (ii) the Fair Market Value of one Share on the date of exercise. The Issued Shares shall be issued in book-entry form, registered in Participant’s name or in the name of Participant’s legal representatives, beneficiaries or heirs, as the case may be. The Company will not deliver any fractional share of Common Stock but will pay, in lieu thereof, cash equal to the Fair Market Value of such fractional share.

2. Vesting. Subject to the terms and conditions of this Award, the Stock Appreciation Rights shall vest and may be exercised by Participant with respect to 25% of the Shares on each of the first, second, third and fourth anniversaries of the Award Date if Participant remains continuously employed by the Company until the respective vesting dates.

3. Early Vesting Upon Change in Control. Notwithstanding the other vesting provisions contained in Section 2, but subject to the other terms and conditions set forth herein, upon the effective date of a Change in Control the Stock Appreciation Rights with respect to all of the Shares shall become immediately and unconditionally vested and exercisable. 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.

4. Forfeiture or Early Vesting Upon Termination of Employment.

(a) Termination of Employment Generally. If Participant ceases to be an employee of the Company for any reason (voluntary or involuntary) other than death or permanent long-term disability, then Participant may at any time within the Exercise Period (as defined below) exercise the Stock Appreciation Rights with respect to the Vested Shares on the date of the termination. Participant’s Stock Appreciation Rights with respect to any unvested Shares shall be immediately and irrevocably forfeited on the date of termination.

(b) Death or Permanent Long-Term Disability. If Participant dies while employed by the Company or its subsidiaries, or if Participant’s employment by the Company or its subsidiaries is terminated due to Participant’s failure to return to work as the result of a permanent long-term disability which renders Participant incapable of performing his or her duties as determined under the provisions of the Company’s long-term disability insurance program applicable to Participant, then (i) the Stock Appreciation Rights with respect to any unvested Shares shall immediately vest, and (ii) Participant (or Participant’s personal representatives, administrators or guardians, as applicable, or any person or persons to whom the Stock Appreciation Rights are transferred by will or the applicable laws of descent and distribution) may, at any time within a period of five years after the Participant’s death or termination of employment due to the Participant’s failure to return to work as the result of a permanent long-term disability, or for such other longer period established at the discretion of the Committee or the Chief Executive Officer of the Company, exercise the Stock Appreciation Rights to the extent of the full number of Vested Shares.

(c) Severance. If Participant is entitled to severance under the Company’s severance pay plan as in effect on the date hereof, then the Stock Appreciation Rights shall continue to vest for the period of such severance that Participant is eligible to receive. If Participant is entitled to severance under an employment agreement entered into with the Company, then vesting of the Stock Appreciation Rights shall continue for the period of such severance that Participant is entitled to receive as of the date hereof. If Participant is entitled to separation pay other than under the Company’s severance pay plan or an employment agreement, then vesting of the Stock Appreciation Rights shall continue for the lesser of (i) the period Participant would have received payments under the severance pay plan as in effect on the date hereof, had Participant been eligible for such payments or (ii) the period of separation pay. In either case, should Participant be paid in a lump sum versus bi-weekly payments, the Stock Appreciation Rights shall continue to vest for the period of time in which severance or separation pay would have been paid had it been paid bi-weekly.

(d) For purposes of this Award, “Exercise Period” means the greater of (i) a period of three months after the date of termination of Participant’s employment, (ii) if Participant is entitled to severance or separation pay, a period of three months after vesting ceases as provided in (c) above, or (iii) such other longer period established at the discretion of the Committee or the Chief Executive Officer of the Company. Notwithstanding any other provision of this Agreement, the Stock Appreciation Rights shall in no event be exercisable to any extent or by any Person after the Expiration Date.

5. Method of Exercise. The Stock Appreciation Rights may be exercised with respect to Vested Shares by delivery to the Company of a written notice which shall state that Participant elects to exercise the Stock Appreciation Rights as to the number of Vested Shares specified in the notice as of the date specified in the notice.

6. Restriction on Transfer. During Participant’s lifetime, the Stock Appreciation Rights shall be exercisable only by Participant. Participant may not transfer the Stock Appreciation Rights except by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act or the rules promulgated thereunder. Any attempt to otherwise transfer the Stock Appreciation Rights shall be void.

7. Termination. The Stock Appreciation Rights granted pursuant to this Award shall terminate on the earlier to occur of (a) the date indicated above in the box labeled “Expiration Date” or (b) as provided in Section 4 above.

8. Forfeiture of Stock Appreciation Right. If Participant violates: (a) any provision of the Restrictive Covenants of this Certificate, or (b) any provision of the Company’s Principles of Integrity and Compliance, then all unvested portions of the Stock Appreciation Rights, together with any portions of the Stock Appreciation Rights which vested within one year prior to the termination of Participant’s employment with the Company or at any time after such termination (the “Forfeited Shares”), shall become null and void and Participant shall pay to the Company, upon demand, an amount equal to the difference between the proceeds Participant has received from any sales of Forfeited Shares; and if Participant still holds all or any part of the Forfeited Shares at the time such Company demand is made, the aggregate Fair Market Value of such Forfeited Shares as of the date of vesting of the Forfeited Rights. The paragraph does not constitute the Company’s exclusive remedy for Participant’s violation of the Restrictive Covenants. The Company may seek any additional legal or equitable remedy, including injunctive relief, for any such violation.

9. Restrictive Covenants. In consideration of the terms of this Award and Participant’s access to Confidential Information, Participant agrees to the Restrictive Covenants set forth below. For purposes of the Restrictive Covenants, the “Company” means UnitedHealth Group and all of its subsidiaries and other affiliates.

(a) Confidential Information. Participant has or will be given access to and provided with sensitive, confidential, proprietary and/or trade secret information (collectively, “Confidential Information”) in the course of Participant’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 data bases, analytical models, customer lists and information, and supplier and vendor lists and information. Participant agrees not to disclose or use Confidential Information, either during or after Participant’s employment with the Company, except as necessary to perform Participant’s duties or as the Company may consent in writing.

(b) Non-Solicitation. During Participant’s employment and for the greater of two years after the termination of Participant’s employment for any reason whatsoever or the period of time for which the Stock Appreciation Rights remain exercisable, Participant may not, without the Company’s prior written consent, directly or indirectly, for Participant 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) Engage in any business competitive with any Company business with any person or entity who: (a) was a Company provider or customer within the 12 months before Participant’s employment termination and, (b) with whom Participant had contact to further the Company’s business or for whom Participant performed services, or supervised the provision of services for, during Participant’s employment.

(ii) Hire, employ, recruit or solicit any Company employee or consultant.

(iii) Induce or influence any Company employee, consultant, customer or provider to terminate his, her or its employment or other relationship with UnitedHealth Group.

(iv) Assist anyone in any of the activities listed above.

(c) Non-Competition. During Participant’s employment and for the greater of one year after the termination of Participant’s employment for any reason whatsoever or the period of time for which the which the Stock Appreciation Rights remain exercisable, Participant may not, without the Company’s prior written consent, directly or indirectly, for Participant 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) Engage or participate in, or in any way render services or assistance to, any business that competes, directly or indirectly, with any Company product or service that Participant participated in, engaged in, or had Confidential Information regarding, during Participant’s employment.

(ii) Assist anyone in any of the activities listed above.

By accepting this Stock Appreciate Right, Participant agrees that the provisions of this Restrictive Covenants section are reasonable and necessary to protect the legitimate interests of the Company.

9. Adjustments to Stock Appreciation Rights. 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 Common Stock or other securities of the Company or other similar corporate transaction or event affecting the Common Stock 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 Award (including, without limitation, the benefits or potential benefits of provisions relating to the term, vesting or exercisability of the Stock Appreciation Rights), 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, make adjustments to the Award, including adjustments in the number and type of Shares subject to the Stock Appreciation Rights; provided, however, that the number of shares of Common Stock into which the Stock Appreciation Rights may be exercised shall always be a whole number.

10. Income Tax Matters.

(a) In order to comply with all applicable federal or state income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal or state payroll, withholding, income or other taxes, which are the sole and absolute responsibility of Participant, are withheld or collected from Participant.

(b) In accordance with the terms of the Plan, and such rules as may be adopted by the Committee under the Plan, Participant may elect to satisfy Participant’s federal and state income tax withholding obligations arising from the receipt of Issued Shares by (i) delivering cash, check (bank check, certified check or personal check) or money order payable to the Company, (ii) having the Company withhold a portion of the Issued Shares otherwise to be delivered having a Fair Market Value equal to the amount of such taxes, or (iii) delivering to the Company shares of Common Stock already owned by Participant having a Fair Market Value equal to the amount of such taxes. Any shares already owned by Participant referred to in the preceding sentence must have been owned by Participant for no less than six months prior to the date delivered to the Company if such shares were acquired upon the exercise of an option or stock appreciation right or upon the vesting of restricted stock or other restricted stock units. The Company will not deliver any fractional share of Common Stock but will pay, in lieu thereof, cash equal to the Fair Market Value of such fractional share. Participant’s election must be made on or before the date that the amount of tax to be withheld is determined.

11. Miscellaneous.

(a) This Award does not confer on Participant any right with respect to the continuance of any relationship with the Company or its subsidiaries, nor will it interfere in any way with the right of the Company to terminate such relationship at any time.

(b) Neither the Plan nor this Award 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 Participant 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 Award, such right shall be no greater than the right of any unsecured creditor of the Company or any Affiliate.

(c) The Company shall not be required to deliver any shares of Common Stock upon exercise of any Stock Appreciation Rights until the requirements of any federal or state securities laws, rules or regulations or other laws or rules (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.

(d) An original record of this Award and all the terms hereof, executed by the Company, 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.

(e) If a court or arbitrator decides that any provision of this Certificate is invalid or overbroad, Participant 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 Certificate should be unaffected.

(f) Participant agrees that (i) legal remedies (money damages) for any breach of the Restrictive Covenants in this Certificate will be inadequate, (ii) the Company will suffer immediate and irreparable harm from any such breach, and (iii) the Company will be entitled to injunctive relief from a court in addition to any legal remedies the Company may seek in arbitration.

(g) The Restrictive Covenants in this Certificate shall survive termination of the Stock Appreciation Rights.

UNITEDHEALTH GROUP

STOCK APPRECIATION RIGHTS AWARD
(STOCK SETTLED)

Award Number:

Award Date Number of Shares Grant Price Expiration Date

THIS CERTIFIES THAT UnitedHealth Group Incorporated (the “Company”) has on the Award Date specified above granted to

«Name»

(“Participant”) stock appreciation rights (the “Stock Appreciation Rights”) with respect to the number of shares of UnitedHealth Group Incorporated Common Stock, $.01 par value per share (the “Common Stock”), indicated above in the box labeled “Number of Shares” (the “Shares”). The initial value of each Share is indicated above in the box labeled “Grant Price.” The Stock Appreciation Rights that this Certificate represents are fully exercisable from the Award Date set forth above until the Expiration Date. This Award is subject to the terms and conditions set forth below and in the UnitedHealth Group Incorporated 2002 Stock Incentive Plan (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. Rights of the Participant with Respect to the Stock Appreciation Rights.

(a) No Shareholder Rights. The Stock Appreciation Rights granted pursuant to this Award do not and shall not entitle Participant to any rights of a shareholder of Common Stock prior to the exercise of the Stock Appreciation Rights and the receipt of shares of Common Stock (the “Issued Shares”) in accordance with this Award.

(b) Exercise of Stock Appreciation Rights; Issuance of Common Stock. No shares of Common Stock shall be issued to Participant prior to the date on which the Stock Appreciation Rights are exercised in accordance with Section 2. Upon exercise of the Stock Appreciation Rights, Participant shall be entitled to receive a number of Issued Shares for each share with respect to which the Stock Appreciation Rights are exercised equal to (i) the excess of the Fair Market Value of one share on the date of exercise over the Grant Price, divided by (ii) the Fair Market Value of one share on the date of exercise. The Issued Shares shall be issued in book-entry form, registered in Participant’s name or in the name of Participant’s legal representatives, beneficiaries or heirs, as the case may be. The Company will not deliver any fractional share of Common Stock but will pay, in lieu thereof, cash equal to the Fair Market Value of such fractional share.

2. Method of Exercise. The Stock Appreciation Rights may be exercised by delivery to the Company of a written notice which shall state that Participant elects to exercise the Stock Appreciation Rights as to the number of shares specified in the notice as of the date specified in the notice.

3. Transfer. During Participant’s lifetime, only the Participant or a transferee pursuant to clause (ii) of the following sentence can exercise the Stock Appreciation Rights. Participant may not transfer the Stock Appreciation Rights except (i) by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act or the rules promulgated thereunder or (ii) by give to a “family member,” as such term is defined in the General Instructions to Form S-8 under the Securities Act of 1933 (or any successor form), of the Participant. Following a transfer pursuant to clause (ii), no subsequent transfers pursuant to clause (ii) shall be permitted. Any attempt to otherwise transfer the Stock Appreciation Rights shall be void.

4. Termination. The Stock Appreciation Rights granted pursuant to this Award shall terminate on the date indicated above in the box labeled “Expiration Date.”

5. Departure of Participant from the Board. If Participant departs from the Board of Directors of the Company for any reason, all Stock Appreciation Rights shall remain exercisable until the Expiration Date. If Participant dies while in office as a director or following his or her departure from the Board of Directors, Participant’s personal representatives or administrators or any person or persons to whom the Stock Appreciation Rights are transferred by will or the applicable laws of descent and distribution may exercise the Stock Appreciation Rights in accordance with the terms of this Award and the Plan.

6. Adjustments to Stock Appreciation Rights. 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 Common Stock or other securities of the Company or other similar corporate transaction or event affecting the Common Stock 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 Award (including, without limitation, the benefits or potential benefits of provisions relating to the term or exercisability of the Stock Appreciation Rights), 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, make adjustments to the Award, including adjustments in the number and type of Shares subject to the Stock Appreciation Rights; provided, however, that the number of shares of Common Stock into which the Stock Appreciation Rights may be exercised shall always be a whole number.

7. Income Tax Matters.

(a) In order to comply with all applicable federal or state income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal or state payroll, withholding, income or other taxes, which are the sole and absolute responsibility of Participant, are withheld or collected from Participant.

(b) In accordance with the terms of the Plan, and such rules as may be adopted by the Committee under the Plan, Participant may elect to satisfy Participant’s federal and state income tax withholding obligations arising from the receipt of Issued Shares by (i) delivering cash, check (bank check, certified check or personal check) or money order payable to the Company, (ii) having the Company withhold a portion of the Issued Shares otherwise to be delivered having a Fair Market Value equal to the amount of such taxes, or (iii) delivering to the Company shares of Common Stock already owned by Participant having a Fair Market Value equal to the amount of such taxes. Any shares already owned by Participant referred to in the preceding sentence must have been owned by Participant for no less than six months prior to the date delivered to the Company if such shares were acquired upon the exercise of an option or stock appreciation right or upon the vesting of restricted stock or other restricted stock units. The Company will not deliver any fractional share of Common Stock but will pay, in lieu thereof, cash equal to the Fair Market Value of such fractional share. Participant’s election must be made on or before the date that the amount of tax to be withheld is determined.

8. Miscellaneous.

(a) This Award does not confer on Participant any right to continue as a director, nor will it interfere in any way with the right of the Company to terminate such directorship at any time.

(b) Neither the Plan nor this Award 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 Participant or any other Person. To the extent that any Person acquires a right to receive payments form the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured creditor of the Company or any Affiliate.

(c) The Company shall not be required to deliver any shares of Common Stock upon exercise of any Stock Appreciation Rights until the requirements of any federal or state securities laws, rules or regulations or other laws or rules (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.

(d) An original record of this Award and all the terms hereof, executed by the Company, 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.