EXHIBIT 10.1
EQUITY INCENTIVE PLAN
AMERICAN MEDICAL SECURITY GROUP, INC.
FEBRUARY 1993
(Amended and Restated as of February 18, 2004)
AMERICAN MEDICAL SECURITY GROUP, INC.
EQUITY INCENTIVE PLAN
(Amended and Restated as of February 18, 2004)
TABLE OF CONTENTS
PAGE
ARTICLE 1. ESTABLISHMENT, PURPOSE AND DURATION...............................1
1.1 Establishment of the Plan...................................1
1.2 Purpose of the Plan.........................................1
1.3 Duration of the Plan........................................1
ARTICLE 2. DEFINITIONS.......................................................2
ARTICLE 3. ADMINISTRATION....................................................7
3.1 The Committee...............................................7
3.2 Authority of the Committee..................................7
3.3 Decisions Binding...........................................8
ARTICLE 4. SHARES SUBJECT TO THE PLAN........................................8
4.1 Number of Shares............................................8
4.2 Lapsed Awards...............................................9
4.3 Adjustments in Authorized Shares............................9
ARTICLE 5. ELIGIBILITY AND PARTICIPATION.....................................10
5.1 Eligibility.................................................10
5.2 Actual Participation........................................10
ARTICLE 6. STOCK OPTIONS.....................................................10
6.1 Grant of Options............................................10
6.2 Option Award Agreement......................................11
6.3 Option Price................................................11
6.4 Duration of Options.........................................11
6.5 Exercise of Options.........................................11
6.6 Payment.....................................................11
6.7 Restrictions on Share Transferability.......................12
6.8 Termination of Employment Due to Death,
Disability or Retirement..............................12
6.9 Termination of Employment for Other Reasons.................13
6.10 Exercise of Options With Respect to Directors...............14
6.11 Restrictions on Transferability.............................14
ARTICLE 7. STOCK APPRECIATION RIGHTS.........................................14
7.1 Grant of SARs...............................................14
7.2 Exercise of Tandem SARs.....................................15
7.3 Exercise of Affiliated SARs.................................15
7.4 Exercise of Freestanding SARs...............................15
7.5 SAR Agreement...............................................15
7.6 Term of SARs................................................15
7.7 Payment of SAR Amount.......................................15
7.8 Rule 16b-3 Requirements.....................................16
7.9 Termination of Employment Due to Death,
Disability, or Retirement.............................16
7.10 Termination of Employment for Other Reasons.................17
7.11 Exercise of SARs With Respect to Directors..................17
7.12 Non-transferability of SARs.................................18
ARTICLE 8. RESTRICTED STOCK AND RESTRICTED STOCK UNITS.......................18
8.1 Grant of Restricted Stock and Restricted Stock Units........18
8.2 Restricted Stock and Restricted Stock Unit Agreement........18
8.3 Transferability.............................................18
8.4 Other Restrictions..........................................19
8.5 Certificate Legend..........................................19
8.6 Removal of Restrictions.....................................20
8.7 Voting Rights...............................................20
8.8 Dividends and Other Distributions...........................20
8.9 Form and Timing of Payment of Restricted Stock Units........20
8.10 Termination of Employment Due to Death,
Disability or Retirement..............................21
8.11 Termination of Employment for Other Reasons.................21
8.12 Restricted Stock and Restricted Stock Units
Granted to Directors..................................22
ARTICLE 9. PERFORMANCE UNITS AND PERFORMANCE SHARES..........................22
9.1 Grant of Performance Units/Shares...........................22
9.2 Value of Performance Units/Shares...........................22
9.3 Earning of Performance Units/Shares.........................22
9.4 Form and Timing of Payment of Performance Units/Shares......23
9.5 Termination of Employment Due to Death, Disability,
Retirement, or Involuntary Termination
(Without Cause).......................................23
9.6 Termination of Employment for Other Reasons.................23
9.7 Performance Units/Shares Granted to Directors...............24
9.8 Non-transferability.........................................24
ARTICLE 10. BENEFICIARY DESIGNATION..........................................24
ARTICLE 11. DEFERRALS........................................................25
ARTICLE 12. RIGHTS OF EMPLOYEES..............................................25
12.1 Employment..................................................25
12.2 Participation...............................................25
ARTICLE 13. CHANGE IN CONTROL................................................25
ARTICLE 14. AMENDMENT, MODIFICATION, AND TERMINATION.........................26
14.1 Amendment, Modification and Termination.....................26
14.2 Awards Previously Granted...................................26
ARTICLE 15. WITHHOLDING......................................................26
15.1 Tax Withholding.............................................26
15.2 Share Withholding...........................................27
ARTICLE 16. INDEMNIFICATION..................................................27
ARTICLE 17. SUCCESSORS.......................................................28
ARTICLE 18. LEGAL CONSTRUCTION...............................................28
18.1 Gender and Number...........................................28
18.2 Severability................................................28
18.3 Requirements of Law.........................................28
18.4 Securities Law Compliance...................................28
18.5 Governing Law...............................................28
AMERICAN MEDICAL SECURITY GROUP, INC.
EQUITY INCENTIVE PLAN
(Amended and Restated as of February 18, 2004)
ARTICLE 1. ESTABLISHMENT, PURPOSE AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. American Medical Security Group, Inc., a
Wisconsin corporation formerly known as United Wisconsin Services, Inc. (the
"Company"), established this incentive compensation plan known as the "American
Medical Security Group, Inc. Equity Incentive Plan" (herein referred to as the
"Plan") effective as of February 24, 1993 (the "Effective Date") upon approval
by its Board of Directors, and ratification by an affirmative vote of a majority
of Shares at an annual shareholders' meeting of the Company. (The validity of
any awards granted prior to shareholder ratification of the Plan were contingent
upon such ratification.)
The Plan, as set forth in this document, remains in effect as provided
in Section 1.3 herein and permits the grant of Non-qualified Stock Options
("NQSOs"), Incentive Stock Options ("ISOs"), SARs, Restricted Stock, Restricted
Stock Units, Performance Units, and Performance Shares.
1.2 PURPOSE OF THE PLAN. The purpose of the Plan is to promote the
success, and enhance the value, of the Company by linking the personal interests
of Participants to those of Company shareholders, and by providing Participants
with an incentive for outstanding performance.
The Plan is further intended to provide flexibility to the Company in
its ability to motivate, attract, and retain the services of Participants upon
whose judgment, interest, and special effort the successful conduct of its
operation is dependent.
1.3 DURATION OF THE PLAN. Subject to approval by the Board of Directors
of the Company and ratification by the shareholders of the Company, the Plan
commenced on the Effective Date, as described in Section 1.1 herein, and shall
remain in effect, subject to the right of the Board of Directors of the Company
to terminate the Plan at any time pursuant to Article 14
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herein, until all Shares subject to it shall have been purchased or acquired
according to the Plan's provisions. However, to the extent required by the
Internal Revenue Code, no ISO may be granted under the Plan on a date that is
more than ten years from the date the Plan is adopted, or, if earlier, the date
the Plan is approved by shareholders.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings
set forth below and when the meaning is intended, the initial letter of the word
is capitalized:
(a) "AFFILIATE" - a company closely related to American Medical
Security Group, Inc. which is designated as an Affiliate by the Board.
For purposes of this Plan, United Wisconsin Services, Inc. (f/k/a
Newco/UWS, Inc.) and Blue Cross & Blue Shield United of Wisconsin shall
each be considered an Affiliate only with respect to Stock Options
issued prior to September 11, 1998.
(b) "AFFILIATED SAR" means an SAR that is granted in connection
with a related Option, and which will be deemed to automatically be
exercised simultaneous with the exercise of the related Option.
(c) "AWARD" means, individually or collectively, a grant under
this Plan of Non-qualified Stock Options, Incentive Stock Options, SARs,
Restricted Stock, Restricted Stock Units, Performance Units, or
Performance Shares.
(d) "AWARD AGREEMENT" means an agreement entered into by each
Participant and the Company, setting forth the terms and provisions
applicable to Awards granted to Participants under this Plan.
(e) "BENEFICIAL OWNER" shall have the meaning ascribed to such
term in Rule 13d-3 of the General Rules and Regulations under the
Exchange Act.
(f) "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors
of the Company.
(g) "CAUSE" means:
(i) willful and gross misconduct on the part of a
Participant that is materially and demonstrably detrimental to
the Company; or
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(ii) the commission by a Participant of one or more acts
which constitute an indictable crime under United States
Federal, state, or local law. "Cause" under either (i) or (ii)
shall be determined in good faith by the Committee.
(h) "CHANGE IN CONTROL" of the Company in connection with any
Award Agreement entered into before March 15, 1999 shall mean a "Change
in Control" as defined in the Plan prior to its amendment and
restatement on March 15, 1999. "Change in Control" of the Company in
connection with any Award Agreement entered into between March 15, 1999
and November 28, 2001, inclusive, shall mean a "Change of Control" as
defined in the Plan as amended and restated as of March 15, 1999.
"Change of Control of the Company in connection with any Award
Agreement entered into on or after November 29, 2001 shall be deemed to
have occurred as of the date that:
(i) any "person", as such term is used in Section
13(d)(3) of the Securities Exchange Act of 1934, becomes,
directly or indirectly, the beneficial owner of securities of
the Company, or any subsidiary of the Company, representing
forty percent (40%) or more of the combined voting power of the
then outstanding securities of the Company that may be cast for
the election of Directors of the Company; or
(ii) there is consummated a merger, consolidation or
reorganization of the Company with or into any other entity
after which the voting securities of the Company outstanding
immediately preceding such merger, consolidation or
reorganization represent or are converted into, less than 60% of
the voting securities of the surviving entity outstanding
immediately after such merger, consolidation or reorganization;
or
(iii) during any consecutive two year period,
individuals who, at the beginning of such period constitute
the "Incumbent Board" (as hereinafter defined), cease to
constitute a majority of the Board of Directors of the company
as a result of an actual or threatened contest for election of
directors (for purposes of this Section (h)(iii) of this Article
2, the term "Incumbent Board" means all of the members of the
Board of the Directors of the Company as of November 29, 2001
and any successors thereto who are elected or named thereto
other than as a result of an actual or threatened contest for
election of directors); or
(iv) there is consummated an agreement (or series of
related agreements) for the sale or disposition of all or
substantially all of the assets of the Company; or
(v) the shareholders of the Company approve a plan of
liquidation or dissolution of the Company.
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Provided, however, that no Change of Control shall be deemed to have
occurred with respect to any Participant until there is also a "Qualifying
Separation" with respect to such Participant.
(i) "CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
(j) "COMMITTEE" means the Compensation Committee of American
Medical Security Group, Inc., as appointed by the Board to administer
the Plan, or such other committee as may be appointed by the Board
consistent with Section 3.1.
(k) "COMPANY" means American Medical Security Group, Inc., a
Wisconsin corporation or any successor thereto as provided in Article 17
herein.
(l) "COVERED EMPLOYEE" means a Participant designated prior to
the grant of an award of Restricted Stock, Restricted Stock Units,
Performance Units, or Performance Shares by the Committee who is or may
be a "covered employee" within the meaning of Section 162(m)(3) of the
Internal Revenue Code in the year in which such Restricted Stock,
Restricted Stock Units, Performance Units or Performance Awards are
taxable to such Participant.
(m) "DIRECTOR" means any individual who is a member of the Board
of Directors of the Company or any Subsidiary or Affiliate.
(n) "DISABILITY" means with respect to any ISOs, a permanent and
total disability within the meaning of Code Section 22(e)(3), and with
respect to all other Awards under the Plan, a medically determinable
mental or physical impairment which renders a Participant totally and
presumably permanently unable to continue in employment with the Company
and all Affiliates. The determination of disability shall be made by the
Committee in good faith, upon receipt of sufficient competent medical
advice from one or more individuals, selected by the Committee, who are
qualified to give professional medical advice.
(o) "EMPLOYEE" means any full-time employee of the Company or of
the Company's Subsidiaries or Affiliates.
(p) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor Act thereto.
(q) "FAIR MARKET VALUE" means the closing price for Shares on
the relevant date, or (if there were no sales on such date) the average
of closing prices on the nearest day before and the nearest day after
the relevant date, on a stock exchange or over the counter, as
determined by the Committee.
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(r) "FREESTANDING SAR" means an SAR that is granted
independently of any Options.
(s) "INCENTIVE STOCK OPTION" or "ISO" means an option to
purchase Shares, granted under Article 6 herein, which is designated as
an Incentive Stock Option and is intended to meet the requirements of
Section 422 of the Code.
(t) "INSIDER" shall mean an Employee or Participant who is, on
the relevant date, an officer, director of the Company, as defined in
Rule 16 under the Exchange Act.
(u) "NON-QUALIFIED STOCK OPTION" or "NQSO" means an option to
purchase Shares, granted under Article 6 herein, which is not intended
to be an Incentive Stock Option.
(v) "OPTION" means an Incentive Stock Option or a Non-qualified
Stock Option.
(w) "OPTION PRICE" means the price at which a Share may be
purchased by a Participant pursuant to an Option, as determined by the
Committee.
(x) "PARTICIPANT" means a person who has outstanding an Award
granted under the Plan.
(y) "PERFORMANCE GOALS" means the performance goals established
by the Committee prior to the grant of any Award of Restricted Stock,
Restricted Stock Units, Performance Units, or Performance Shares that
are based on the attainment of goals relating to one or more of the
following business criteria, measured on an absolute basis or in terms
of growth or reduction: net income (pre-tax or after-tax and with
adjustments as stipulated); earnings per share; return measures
(including, but not limited to, return on assets, equity, capital,
investment or tangible book value); operating income; earnings before
interest, taxes, depreciation and amortization; loss ratio; expense
ratio; stock price; total shareholder return; economic value added;
operating cash flow; gross or specified levels of revenue; and increased
sales (which may be based upon the number of memberships or issued lives
or other sales measures). With respect to Covered Employees, all
Performance Goals shall be objective performance goals satisfying the
requirements for "performance-based compensation" within the meaning of
Section 162(m)(4) of the Internal Revenue Code and shall be established
by the Committee within the time prescribed by Section 162(m) of such
Code and related regulations. With respect to Participants who are not
Covered Employees, the Committee may establish other subjective or
objective performance goals, including individual goals, which it deems
appropriate.
(z) "PERFORMANCE UNIT" means an Award granted to a Participant,
as described in Article 9 herein.
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(aa) "PERFORMANCE SHARE" means an Award granted to a
Participant, as described in Article 9 herein.
(bb) "PERIOD OF RESTRICTION" means the period during which the
transfer of Shares of Restricted Stock is limited in some way (based on
the passage of time, the achievement of Performance Goals, or upon the
occurrence of other events as determined by the Committee, at its
discretion), and the Shares are subject to a substantial risk of
forfeiture, as provided in Article 8 herein.
(cc) "PERSON" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d).
(dd) "QUALIFYING SEPARATION" means
(i) with respect to members of the Board of Directors of
the Company who are Participants under this Plan, (A) the
removal of such Director from the Board as the result of an
actual or contested election of directors, or (B) termination of
such Director's position on the Board of Directors of the
Company for any reason within six months after a Change of
Control;
(ii) with respect to Participants in the American
Medical Security Group, Inc. Change of Control Severance Plan, a
"Qualifying Separation" as such term is used in that plan; and
(iii) with respect to other Participants hereunder, the
involuntary termination of such Participant's employment by the
Company within one year after a Change of Control.
(ee) "RESTRICTED STOCK" means an Award of restricted Shares
granted to a Participant pursuant to Article 8 herein.
(ff) "RESTRICTED STOCK UNITS" means an Award of restricted stock
units (which involves an unfunded promise to distribute Shares at some
future date) granted to a Participant pursuant to Article 8 herein.
(gg) "RETIREMENT" shall have the meaning ascribed to it under
the Company's tax qualified retirement plan.
(hh) "SHARES" means the shares of common stock of the Company.
(ii) "SUBSIDIARY" means any corporation in which the Company
owns directly, or indirectly through subsidiaries, at least fifty
percent (50%) of the total combined voting
6
power of all classes of stock, or any other entity (including, but not
limited to, partnerships and joint ventures) in which the Company owns
at least fifty percent (50%) of the combined equity thereof.
(jj) "STOCK APPRECIATION RIGHT" or "SAR" means an Award, granted
alone or in connection with a related Option, designated as an SAR,
pursuant to the terms of Article 7 herein.
(kk) "TANDEM SAR" means an SAR that is granted in connection
with a related Option, the exercise of which shall require forfeiture
of the right to purchase a Share under the related Option (and when a
Share is purchased under the Option, an SAR shall similarly be
canceled).
(ll) "WINDOW PERIOD" means a window period of time as defined in
the Company's then current insider trading policy.
ARTICLE 3. ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered by the Compensation
Committee of the Board of American Medical Security Group, Inc., or by any other
Committee appointed by the Board consisting of not less than two (2) Directors
who are not Employees. The members of the Committee shall be appointed from time
to time by, and shall serve at the discretion of, the Board of Directors.
It is intended that at all times, the Committee shall be comprised
solely of Directors who are both: (i) Non-Employee Directors, as defined in Rule
16b-3 under the Exchange Act; and (ii) Outside Directors, as defined in Treas.
Reg. 1.162-27. However, the failure to so comply with Rule 16b-3 and/or Treas.
Reg. 1.162-27 shall not affect the validity of any Awards made by the Committee
in accordance with the provisions of the Plan.
3.2 AUTHORITY OF THE COMMITTEE. The Committee shall have full power
except as limited by law or by the Articles of Incorporation or By-laws of the
Company, and subject to the provisions herein, to determine the size and types
of Awards; to determine the terms and conditions of such Awards in a manner
consistent with the Plan; to construe and interpret the
7
Plan and any agreement or instrument entered into under the Plan; to establish,
amend, or waive rules and regulations for the Plan's administration; and
(subject to the provisions of Article 14 herein) to amend the terms and
conditions of any outstanding Award to the extent such terms and conditions are
within the discretion of the Committee as provided in the Plan. Further, the
Committee shall make all other determinations which may be necessary or
advisable for the administration of the Plan. As permitted by law, the Committee
may delegate its authority as identified hereunder.
3.3 DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders or
resolutions of the Board of Directors shall be final, conclusive, and binding on
all Persons, including the Company, its stockholders, Employees, Participants,
and their estates and beneficiaries.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. Subject to adjustment as provided in Section 4.3
herein, the total number of Shares available for grant under the Plan may not
exceed 4,000,000. These 4,000,000 Shares may be either authorized but unissued
or reacquired Shares.
The following rules will apply for purposes of the determination of the
number of Shares available for grant under the Plan:
(a) While an Award is outstanding, it shall be counted against
the authorized pool of Shares, regardless of its vested status.
(b) The grant of an Option or Restricted Stock or Restricted
Stock Units shall reduce the Shares available for grant under the Plan
by the number of Shares subject to such Award.
(c) The grant of a Tandem SAR shall reduce the number of Shares
available for grant by the number of Shares subject to the related
Option (i.e., there is no double counting of Options and their related
Tandem SARs).
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(d) The grant of an Affiliated SAR shall reduce the number of
Shares available for grant by the number of Shares subject to the SAR,
in addition to the number of Shares subject to the related Option.
(e) The grant of a Freestanding SAR shall reduce the number of
Shares available for grant by the number of Freestanding SARs granted.
(f) The Committee shall in each case determine the appropriate
number of Shares to deduct from the authorized pool in connection with
the grant of Performance Units and/or Performance Shares.
(g) To the extent that an Award is settled in cash rather than
in Shares, the authorized Share pool shall be credited with the
appropriate number of Shares represented by the cash settlement of the
Award, as determined at the sole discretion of the Committee (subject to
the limitation set forth in Section 4.2 herein).
The maximum number of Shares with respect to which Awards may be made to
any Participant annually (in any one calendar year) shall not exceed 250,000
shares. Notwithstanding the foregoing, if the Participant receives the Award
prior to March 31, 1997 in connection with the Employee's initial employment by
the Company or in connection with a merger or acquisition by the Company, the
maximum number of Shares with respect to which Awards may be made during the
three (3) year period ended March 31, 1997 shall be 850,000 Shares. No
Participant may be granted Performance Units in any one calendar year that when
payable would exceed $3,000,000.
4.2 LAPSED AWARDS. If any Award granted under this Plan is canceled,
terminates, expires, or lapses for any reason (with the exception of the
termination of a Tandem SAR upon exercise of the related Option, or the
termination of a related Option upon exercise of the corresponding Tandem SAR),
any Shares subject to such Award again shall be available for the grant of an
Award under the Plan.
4.3 ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, stock
dividend, split-up, Share combination, or other change in the corporate
structure of the Company affecting the Shares,
9
such adjustment shall be made in the number of class of Shares which may be
delivered under the Plan, and in the number and class of and/or price of Shares
subject to outstanding Options, SARs, and Restricted Stock and Restricted
Stock Units granted under the Plan, as may be determined to be appropriate and
equitable by the Committee, in its sole discretion, to prevent dilution or
enlargement of rights; and provided that the number of Shares subject to any
Award shall always be a whole number.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 ELIGIBILITY. Persons eligible to participate in this Plan include
all Directors and all full-time, active Employees of the Company, its
Subsidiaries and Affiliates, as determined by the Committee.
5.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible Participants, those
to whom Awards shall be granted and shall determine the nature and amount of
each award.
ARTICLE 6. STOCK OPTIONS
6.1 GRANT OF OPTIONS. Subject to the terms and provisions of the Plan,
Options may be granted to Participants at any time and from time to time as
shall be determined by the Committee. The Committee shall have discretion in
determining the number of Shares subject to Options granted to each Participant.
The Committee may grant ISOs, NQSOs, or a combination thereof.
If required by applicable tax rules regarding a particular grant of
ISOs, to the extent that the aggregate fair market value (determined as of the
date an ISO is granted) of Shares with respect to which ISOs are exercisable for
the first time by a Participant during any calendar year exceeds $100,000 (or
such other limit as prescribed by the Code) such option grant shall be treated
as a grant of NQSOs rather than ISOs.
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6.2 OPTION AWARD AGREEMENT. Each Option grant shall be evidenced by an
Option Award Agreement that shall specify the Option Price, the duration of the
Option, the number of Shares to which the Option pertains, and such other
provisions as the Committee shall determine. The Option Award Agreement also
shall specify whether the Option is intended to be an ISO within the meaning of
Section 422 of the Code, or an NQSO whose grant is intended not to fall under
the Code provisions of Section 422.
6.3 OPTION PRICE. The Option Price for each grant of an Option shall be
determined by the Committee; provided that the Option Price shall not be less
than one hundred percent (100%) of the Fair Market Value of a Share on the date
the Option is granted.
6.4 DURATION OF OPTIONS. Each Option shall expire at such time as the
Committee shall determine at the time of grant; provided, however, that no ISO
shall be exercisable later than the tenth (10th) anniversary date of its grant,
and no NQSO shall be exercisable later than the twelfth (12th) anniversary date
of its grant.
6.5 EXERCISE OF OPTIONS. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for
each grant or for each Participant. However, in no event may any Option granted
under this Plan become exercisable prior to six (6) months following the date of
its grant.
6.6 PAYMENT. Options shall be exercised by the delivery of a written
notice of exercise to the Secretary of the Company, setting forth the number of
Shares with respect to which the Option is to be exercised, accompanied by
payment in full of the Option Price.
The Option Price upon exercise of any Option shall be payable to the
Company in full either: (a) in cash or its equivalent, or (b) by tendering
previously acquired Shares having an aggregate Fair Market Value at the time of
exercise equal to the total Option Price (provided that
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the Shares which are tendered must have been held by the Participant for at
least six (6) months prior to their tender to satisfy the Option Price), or (c)
by a combination of (a) and (b).
The Committee also may allow cashless exercise as permitted under
Federal Reserve Board's Regulation T, subject to applicable securities law
restrictions, or by any other means which the Committee determines to be
consistent with the Plan's purpose and applicable law.
As soon as practicable after receipt of a written notification of
exercise and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option(s).
6.7 RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option under
the Plan, as it may deem advisable, including, without limitation, restrictions
under applicable Federal securities laws, under the requirements of any Stock
exchange or market upon which such Shares are then listed and/or traded, and
under any Blue Sky or state securities laws applicable to such Shares.
6.8 TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY OR RETIREMENT.
(a) TERMINATION BY DEATH. In the event the employment of a
Participant is terminated by reason of death, all outstanding Options
granted to that Participant shall immediately vest one hundred percent
(100%), and shall remain exercisable at any time prior to their
expiration date, or for one (1) year after the date of death, whichever
period is shorter, by such person or persons as shall have been named as
the Participant's beneficiary, or by such persons that have acquired the
Participant's rights under the Option by will or by the laws of descent
and distribution.
(b) TERMINATION BY DISABILITY. In the event the employment of a
Participant is terminated by reason of Disability, all outstanding
Options granted to that Participant shall immediately vest one hundred
percent (100%) as of the date the Committee determines the definition of
Disability to have been satisfied, and shall remain exercisable at any
time prior to their expiration date, or for one (1) year after the date
that the Committee determines the definition of Disability to have been
satisfied, whichever period is shorter.
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(c) TERMINATION BY RETIREMENT. In the event the employment of a
Participant is terminated by reason of Retirement, the Committee shall
retain discretion over the treatment of Options.
(d) EMPLOYMENT TERMINATION FOLLOWED BY DEATH. In the event that
a Participant's employment terminates by reason of Disability or
Retirement, and within the exercise period allowed by the Committee
following such termination the Participant dies, then the remaining
exercise period under outstanding Options shall equal the longer of:
(i) one (1) year following death; or (ii) the remaining portion of the
exercise period which was triggered by the employment termination. Such
Options shall be exercisable by such person or persons who shall have
been named as the Participant's beneficiary, or by such persons who have
acquired the Participant's rights under the Option by will or by the
laws of descent and distribution.
(e) EXERCISE LIMITATIONS ON ISOS. In the case of ISOs, the tax
treatment prescribed under Section 422 of the Internal Revenue Code of
1986, as amended, may not be available if the Options are not
exercised within the Section 422 prescribed time periods after each of
the various types of employment termination.
6.9 TERMINATION OF EMPLOYMENT FOR OTHER REASONS. If the employment of a
Participant shall terminate for any reason other than the reasons set forth in
Section 6.8 (and other than for Cause), all Options held by the Participant
which are not vested as of the effective date of employment termination
immediately shall be forfeited to the Company (and shall once again become
available for grant under the Plan). However, the Committee, in its sole
discretion, shall have the right to immediately vest all or any portion of such
Options, subject to such terms as the Committee, in its sole discretion, deems
appropriate.
Options which are vested as of the effective date of employment
termination may be exercised by the Participant for a period of up to six (6)
months following termination, or for such longer period up to one (1) year as
the Committee determines with respect to a particular Participant.
If the employment of a Participant shall be terminated by the Company
for Cause, all outstanding options held by the Participant immediately shall be
forfeited to the Company and no additional exercise period shall be allowed,
regardless of the vested status of the Option.
For purposes of this Section and Section 6.8, a termination of
employment shall occur only after the Employee ceases to be an Employee of the
Company and all Subsidiaries or Affiliates.
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6.10 EXERCISE OF OPTIONS WITH RESPECT TO DIRECTORS. Options granted to
Directors shall be exercisable at such times and be subject to such restrictions
and conditions as the Committee shall in each instance approve, which need not
be the same for each grant or for each such Participant. However, in no event
may any such Option become exercisable prior to six (6) months following the
date of its grant.
6.11 RESTRICTIONS ON TRANSFERABILITY. No Option granted under the Plan
may be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution, and
shall be exercisable by a Participant during his or her lifetime only by the
Participant except that NQSOs may be transferred by a Participant to the
Participant's spouse, children or grandchildren or to a trust for the benefit of
such spouse, children or grandchildren.
ARTICLE 7. STOCK APPRECIATION RIGHTS
7.1 GRANT OF SARS. Subject to the terms and conditions of the Plan, an
SAR may be granted to a Participant at any time and from time to time as shall
be determined by the Committee. The Committee may grant Affiliated SARs,
Freestanding SARs, Tandem SARs, or any combination of these forms of SAR.
The Committee shall have complete discretion in determining the number
of SARs granted to each Participant (subject to Article 4 herein) and consistent
with the provisions of the Plan, in determining the terms and conditions
pertaining to such SARs. However, the grant price of a Freestanding SAR shall be
at least equal to one hundred percent (100%) of the Fair Market Value of a Share
on the date of grant of the SAR. The grant price of Tandem SARs or Affiliated
SARs shall equal the Option Price of the related Option. In no event shall any
SAR granted hereunder become exercisable within the first six (6) months of its
grant.
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7.2 EXERCISE OF TANDEM SARS. Tandem SARs may be exercised for all or
part of the Shares subject to the related Option upon the surrender of the right
to exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.
Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (ii) the value
of the payout with respect to the Tandem SAR may be for no more than one hundred
percent (100%) of the difference between the Option Price of the underlying ISO
and the Fair Market Value of the Shares subject to the underlying ISO at the
time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only
when the Fair Market Value of the Shares subject to the ISO exceeds the Option
Price of the ISO.
7.3 EXERCISE OF AFFILIATED SARS. Affiliated SARs shall be deemed to be
exercised upon the exercise of the related Options. The deemed exercise of
Affiliated SARs shall not necessitate a reduction in the number of related
Options.
7.4 EXERCISE OF FREESTANDING SARS. Freestanding SARs may be exercised
upon whatever terms and conditions the Committee, in its sole discretion,
imposes upon them.
7.5 SAR AGREEMENT. Each SAR grant shall be evidenced by an Award
Agreement that shall specify the grant price, the term of the SAR, and such
other provisions as the Committee shall determine.
7.6 TERM OF SARS. The term of an SAR granted under the Plan shall be
determined by the Committee, in its sole discretion; provided, however, that
such term shall not exceed twelve (12) years.
7.7 PAYMENT OF SAR AMOUNT. Upon exercise of an SAR, a Participant shall
be entitled to receive payment from the Company in an amount determined by
multiplying:
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(a) The difference between the Fair Market Value of a Share on
the date of exercise over the grant price; by
(b) The number of Shares with respect to which the SAR is
exercised.
At the discretion of the Committee, the payment upon the exercise of an
SAR may be in cash, in Shares of equivalent value, or in some combination
thereof.
7.8 RULE 16B-3 REQUIREMENTS. Notwithstanding any other provision of the
Plan, the Committee may impose such conditions on exercise of an SAR (including,
without limitation, the right of the Committee to limit the time of exercise to
specified periods) as may be required to satisfy the requirements of Section 16
(or any successor rule) of the Exchange Act.
Further, unless the Committee determines otherwise, if the Participant
is an Insider, the ability of the Participant to exercise SARs for cash may be
limited to the Window Period or otherwise as provided in the Company's then
current insider trading policy.
7.9 TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, OR RETIREMENT.
(a) TERMINATION BY DEATH. In the event the employment of a
Participant is terminated by reason of death, all outstanding SARs
granted to that Participant shall immediately vest one hundred percent
(100%), and shall remain exercisable at any time prior to their
expiration date, or for one (1) year after the date of death, whichever
period is shorter, by such person or persons as shall have been named as
the Participant's beneficiary, or by such persons that have acquired the
Participant's rights under the SAR by will or by the laws of descent and
distribution.
(b) TERMINATION BY DISABILITY. In the event the employment of a
Participant is terminated by reason of Disability, all outstanding SARs
granted to that Participant shall immediately vest one hundred percent
(100%) as of the date the Committee determines the definition of
Disability to have been satisfied, and shall remain exercisable at any
time prior to their expiration date, or for one (1) year after the date
that the Committee determines the definition of Disability to have been
satisfied, whichever period is shorter.
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(c) TERMINATION BY RETIREMENT. In the event the employment of a
Participant is terminated by reason of Retirement, the Committee shall
retain discretion over the treatment of SARs.
(d) EMPLOYMENT TERMINATION FOLLOWED BY DEATH. In the event that
a Participant's employment terminates by reason of Disability or
Retirement, and within the exercise period allowed by the Committee
following such termination, the Participant dies, then the remaining
exercise period under outstanding SARs shall equal the longer of: (i)
one (1) year following death; or (ii) the remaining portion of the
exercise period which was triggered by the employment termination. Such
SARs shall be exercisable by such person or persons who shall have been
named as the Participant's beneficiary, or by such persons who have
acquired the Participant's rights under the SAR by will or by the laws
of descent and distribution.
7.10 TERMINATION OF EMPLOYMENT FOR OTHER REASONS. If the employment of a
Participant shall terminate for any reason other than the reasons set forth in
Section 7.9 (and other than for Cause), all SARs held by the Participant which
are not vested as of the effective date of employment termination immediately
shall be forfeited to the Company (and shall once again become available for
grant under the Plan). However, the Committee, in its sole discretion, shall
have the right to immediately vest all or any portion of such SARs, subject to
such terms as the Committee, in its sole discretion, deems appropriate.
SARs which are vested as of the effective date of employment termination
may be exercised by the Participant within the period beginning on the effective
date of employment termination, and ending six (6) months after such date.
If the employment of a Participant shall be terminated by the Company
for Cause, all outstanding SARs held by the Participant immediately shall be
forfeited to the Company and no additional exercise period shall be allowed,
regardless of the vested status of the SARs.
7.11 EXERCISE OF SARS WITH RESPECT TO DIRECTORS. SARs granted to
Directors may be exercised upon whatever terms and conditions the Committee, in
its sole discretion, imposes on them.
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7.12 NON-TRANSFERABILITY OF SARS. No SAR granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further, all SARs
granted to a Participant under the Plan shall be exercisable during his or her
lifetime only by such Participant.
ARTICLE 8. RESTRICTED STOCK AND RESTRICTED STOCK UNITS
8.1 GRANT OF RESTRICTED STOCK AND RESTRICTED STOCK UNITS. Subject to
the terms and provisions of the Plan, the Committee, at any time and from time
to time, may grant Shares of Restricted Stock and/or Restricted Stock Units to
eligible Participants in such amounts as the Committee shall determine.
8.2 RESTRICTED STOCK AND RESTRICTED STOCK UNIT AGREEMENTS. Each grant of
Restricted Stock shall be evidenced by a Restricted Stock Agreement that shall
specify the Period(s) of Restriction, the number of Restricted Stock Shares
granted, and such other provisions as the Committee shall determine. Each grant
of Restricted Stock Units shall be evidenced by a Restricted Stock Unit
Agreement that shall specify the number of Restricted Stock Units granted, the
vesting requirements (which may include the passage of time, the achievement of
certain Performance Goals, or other restrictions, contingencies or events as the
Committee may determine), any other restrictions applicable to such Restricted
Stock Units, and such other provisions as the Committee shall determine.
8.3 TRANSFERABILITY. Except as provided in this Article 8, the
Restricted Stock Units and the Shares of Restricted Stock granted herein may not
be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated
until the end of the applicable vesting period or Period of Restriction
established by the Committee and specified in the Restricted Stock Unit
Agreement, or Restricted Stock Agreement, whichever is applicable, or upon
earlier satisfaction of any other
18
conditions, as specified by the Committee in its sole discretion and set forth
in the Restricted Stock Unit Agreement or Restricted Stock Agreement. However,
in no event may any Restricted Stock Units or Restricted Stock granted under the
Plan become vested in a Participant prior to six (6) months following the date
of the grant. All rights with respect to the Restricted Stock Units and/or
Restricted Stock granted to a Participant under the Plan shall be available
during his or her lifetime only to such Participant.
8.4 OTHER RESTRICTIONS. The Committee shall in the case of Covered
Employees, and may in the case of other Participants, condition the vesting of
Shares of Restricted Stock and Restricted Stock Units upon the attainment of
Performance Goals established before or at the time of the grant. The Committee
may impose such other restrictions on any Restricted Stock Units and any Shares
of Restricted Stock granted pursuant to the Plan as it may deem advisable,
including restrictions under applicable Federal or state securities laws; and
may legend the certificates representing Restricted Stock to give appropriate
notice of such restrictions. The provisions of Restricted Stock Unit Awards and
Restricted Stock Awards need not be the same with respect to each Participant.
8.5 CERTIFICATE LEGEND. In addition to any legends placed on
certificates pursuant to Section 8.4 herein, each certificate representing
Shares of Restricted Stock granted pursuant to the Plan shall bear the following
legend:
"The sale or other transfer of the Shares of stock represented by this
certificate, whether voluntary, involuntary, or by operation of law, is subject
to certain restrictions on transfer as set forth in the American Medical
Security Group, Inc. Equity Incentive Plan, and in a Restricted
19
Stock Agreement. A copy of the Plan and such Restricted Stock Agreement may be
obtained from the Secretary of American Medical Security Group, Inc."
8.6 REMOVAL OF RESTRICTIONS. Except as otherwise provided in this
Article 8, Shares of Restricted Stock covered by each Restricted Stock grant
made under the Plan shall become freely transferable by the Participant after
the last day of the Period of Restriction. Once the Shares are released from the
restrictions, the Participant shall be entitled to have the legend required by
Section 8.5 removed from his or her Share certificate.
8.7 VOTING RIGHTS. During the Period of Restriction, Participants
holding Shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those Shares. Voting rights shall not exist with respect
to Restricted Stock Units granted hereunder.
8.8 DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder shall be
entitled to receive all dividends and other distributions paid with respect to
those Shares while they are so held. If any such dividends or distributions are
paid in Shares, the Shares shall be subject to the same restrictions on
transferability and forfeitability as the Shares of Restricted Stock with
respect to which they were paid. Participants granted Restricted Stock Unit
Awards hereunder shall have no dividend equivalent rights with respect to any
dividends or other distributions paid in connection with Shares.
8.9 FORM AND TIMING OF PAYMENT OF RESTRICTED STOCK UNITS. The timing of
payment of vested Restricted Stock Units shall be made as determined by the
Committee and set forth in the Restricted Stock Agreement. Vested Restricted
Stock Units shall be paid in the form of Shares equal to the number of
Restricted Stock Units in which the Participant becomes vested.
20
The Committee may allow Participants to defer the receipt of Restricted Stock
Unit payouts upon such terms and at such times as the Committee deems
appropriate.
8.10 TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, OR RETIREMENT.
In the event the employment of a Participant is terminated by reason of death or
Disability, all outstanding Restricted Stock Units and Shares of Restricted
Stock shall immediately vest one hundred percent (100%) as of the date of
employment termination (in the case of Disability, the date employment
terminates shall be deemed to be the date that the Committee determines the
definition of Disability to have been satisfied). The Committee retains
discretion over the treatment of Restricted Stock Units and Restricted Stock
upon Retirement. In the event of full vesting, the holder of the certificates of
Restricted Stock shall be entitled to have any non-transferability legends
required under Sections 8.4 and 8.5 of this Plan removed from the Share
certificates.
The timing of payment of vested Restricted Stock Units shall be
determined by the Committee in its sole discretion.
8.11 TERMINATION OF EMPLOYMENT FOR OTHER REASONS. If the employment of a
Participant shall terminate for any reason other than those specifically set
forth in Section 8.10 herein, then as of the effective date of employment
termination all Shares of Restricted Stock held by the Participant which are not
vested and all Restricted Stock Units granted to the Participant which are not
vested shall be immediately forfeited and returned to the Company (and, subject
to Section 4.2 herein, shall once again become available for grant under the
Plan).
With the exception of a termination of employment for Cause, the
Committee, in its sole discretion, shall have the right to provide for lapsing
of the restrictions on Restricted Stock and
21
Restricted Stock Units following employment termination, upon such terms and
provisions as it deems proper.
8.12 RESTRICTED STOCK AND RESTRICTED STOCK UNITS GRANTED TO DIRECTORS.
Restricted Stock and Restricted Stock Units granted to Directors shall be
subject to all of the provisions in this Article 8 other than Sections 8.10 and
8.11. The Committee, in its sole discretion, shall have the right to provide for
the lapsing of the restrictions on the Restricted Stock and Restricted Stock
Units following the Director's cessation of service as a director, upon such
terms and provisions as it deems proper.
ARTICLE 9. PERFORMANCE UNITS AND PERFORMANCE SHARES
9.1 GRANT OF PERFORMANCE UNITS/SHARES. Subject to the terms of the Plan,
Performance Units and Performance Shares may be granted to eligible Participants
at any time and from time to time, as shall be determined by the Committee.
Subject to Section 4.1, the Committee shall have complete discretion in
determining the number of Performance Units and Performance Shares granted to
each Participant.
9.2 VALUE OF PERFORMANCE UNITS/SHARES. Each Performance Unit shall have
an initial value that is established by the Committee at the time of grant. Each
Performance Share shall have an initial value equal to the Fair Market Value of
a Share on the date of grant. The Committee shall set Performance Goals in its
discretion which, depending on the extent to which they are met, will determine
the number and/or value of Performance Units/Shares that will be paid out to the
Participants. The time period during which the Performance Goals must be met
shall be called a "Performance Period." Performance Periods shall, in all cases,
exceed six (6) months in length.
9.3 EARNING OF PERFORMANCE UNITS/SHARES. After the applicable
Performance Period has ended, the holder of Performance Units/Shares shall be
entitled to receive payout on the
22
number of Performance Units/Shares earned by the Participant over the
Performance Period, to be determined as a function of the extent to which the
corresponding Performance Goals have been achieved.
9.4 FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES. Payment of
earned Performance Units/Shares shall be made in a single lump sum, within
forty-five (45) calendar days following the close of the applicable Performance
Period. The Committee, in its sole discretion, may pay earned Performance Units/
Shares in the form of cash or in Shares (or in a combination thereof), which
have an aggregate Fair Market Value equal to the value of the earned Performance
Units/Shares at the close of the applicable Performance Period.
Prior to the beginning of each Performance Period, Participants may
elect to defer the receipt of Performance Unit/Share payout upon such terms as
the Committee deems appropriate.
9.5 TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, RETIREMENT, OR
INVOLUNTARY TERMINATION (WITHOUT CAUSE). In the event the employment of a
Participant is terminated by reason of death or Disability or involuntary
termination without Cause during a Performance Period, the Participant shall
receive a prorated payout of the Performance Units/Shares. The Committee retains
discretion over the treatment of Performance Units/Shares upon Retirement. Any
prorated payout shall be determined by the Committee, in its sole discretion,
and shall be based upon the length of time that the Participant held the
Performance Units/Shares during the Performance Period, and shall further be
adjusted based on the achievement of the pre-established Performance Goals.
Timing of payment of earned Performance Units/Shares shall be determined
by the Committee at its sole discretion.
9.6 TERMINATION OF EMPLOYMENT FOR OTHER REASONS. In the event that a
Participant's employment terminates for any reason other than those reasons set
forth in Section 9.5 herein, all Performance Units/Shares shall be forfeited by
the Participant to the Company, and shall once again be available for grant
under the Plan.
23
9.7 PERFORMANCE UNITS/SHARES GRANTED TO DIRECTORS. Performance Units and
Performance Shares granted to Directors shall be subject to all provisions of
this Article 9 other than Sections 9.5 and 9.6. The Committee, in is sole
discretion, shall have the right to provide for the treatment of Performance
Units/Shares following the Director's cessation of services as a director, upon
such terms and conditions as it deems proper.
9.8 NON-TRANSFERABILITY. Performance Units/Shares may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further a Participant's
rights under the Plan shall be exercisable during the Participant's lifetime
only by the Participant or the Participant's legal representative.
ARTICLE 10. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death before
he or she receives any or all of such benefit and who is eligible to exercise
vested Options and SARs in the event of the Participant's death prior to such
exercise. Each such designation shall revoke all prior designations by the same
Participant, shall be in the form prescribed by the Company and will be
effective only when any necessary spousal consent is obtained and filed by the
Participant in writing with the Secretary of the Company during the
Participant's lifetime. In the absence of any such designation, benefits
remaining unpaid at the Participant's death shall be paid to the Participant's
estate and any vested Options and/or SARs not previously exercised prior to the
Participant's death may be exercised by the administrator of the Participant's
estate.
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ARTICLE 11. DEFERRALS
The Committee may permit a Participant to defer such Participant's
receipt of the payment of cash or the delivery of Shares that would otherwise be
due to such Participant by virtue of the exercise of the Option or SAR, the
lapse or waiver of restrictions with respect to Restricted Stock, the vesting of
Restricted Stock Units, or the satisfaction of any requirements or goals with
respect to Performance Units/Shares. If any such deferral election is required
or permitted, the Committee shall, in its sole discretion, establish rules and
procedures for such payment deferrals.
ARTICLE 12. RIGHTS OF EMPLOYEES
12.1 EMPLOYMENT. Nothing in the Plan shall interfere with or limit in
any way the right of the Company to terminate any Participant's employment at
any time, nor confer upon any Participant any right to continue in the employ of
the Company.
For purposes of the Plan, transfer of employment of a Participant
between the Company and any one of its Subsidiaries or Affiliates (or between
Subsidiaries and/or Affiliates) shall not be deemed a termination of employment.
12.2 PARTICIPATION. No Employee shall have the right to be selected to
receive an Award under this Plan, or having been so selected, to be selected to
receive a future Award.
ARTICLE 13. CHANGE IN CONTROL
Upon the occurrence of a Change in Control, unless otherwise
specifically prohibited by the terms of Section 18, herein:
(a) Any and all Options and SARs granted hereunder shall become
immediately exercisable;
25
(b) Any restriction periods and restrictions imposed on
Restricted Shares shall lapse, and within ten (10) business days after
the occurrence of a Change in Control, the stock certificates
representing Shares of Restricted Stock, without any restrictions or
legend thereon, shall be delivered to the applicable Participants;
(c) Any vesting requirements or other restrictions applicable to
Restricted Stock Units shall be deemed satisfied as of the effective
date of a Change in Control, and Shares equivalent to the number of
Restricted Stock Units granted shall be paid to such Participant within
30 days following the effective date of the Change in Control."
(d) The target value attainable under all Performance Units and
Performance Shares shall be deemed to have been fully earned for the
entire Performance Period as of the effective date of the Change in
Control, and shall be paid out in cash to Participants within thirty
(30) days following the effective date of the Change in Control;
provided, however, that there shall not be an accelerated payout with
respect to Performance Units or Performance Shares which were granted
less than six (6) months prior to the effective date of the Change in
Control;
(e) Subject to Article 14 herein, the Committee shall have the
authority to make any modifications to the Awards as determined by the
Committee to be appropriate before the effective date of the Change in
Control.
ARTICLE 14. AMENDMENT, MODIFICATION, AND TERMINATION
14.1 AMENDMENT, MODIFICATION AND TERMINATION. With the approval of the
Board, at any time and from time to time, the Committee may terminate, amend or
modify the Plan.
14.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or
modification of the Plan shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the affected
Participant (or if the Participant is not then living, the affected
beneficiary); provided that adjustments pursuant to Section 4.3 shall not be
subject to the foregoing limitations of this Section 14.2.
ARTICLE 15. WITHHOLDING
15.1 TAX WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy
26
Federal, state, and local taxes (including the Participant's FICA obligation)
required by law to be withheld with respect to any taxable event arising or as a
result of this Plan.
15.2 Share Withholding. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock,
upon the payment of Restricted Stock Units, or upon any other taxable event
hereunder, Participants may elect, subject to the approval of the Committee, to
satisfy the withholding requirement, in whole or in part, by having the Company
withhold Shares having a Fair Market Value on the date the tax is to be
determined equal to the minimum statutory total tax which could be imposed on
the transaction. All elections shall be irrevocable, made in writing and signed
by the Participant, and elections by Insiders shall additionally comply with any
applicable requirements of Rule 16b-3 of the Exchange Act.
ARTICLE 16. INDEMNIFICATION
Each person who is or shall have been a member of the Committee, or of
the Board, shall be indemnified and held harmless by the Company against and
from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him or her in connection with or resulting from any
claim, action, suit, or proceeding to which he or she may be a party or in
which he or she may be involved by reason of any action taken or failure to act
under the Plan and against and from any and all amounts paid by him or her in
settlement thereof, with the Company's approval, or paid by him or her in
satisfaction of any judgment in any such action, suit, or proceeding against him
or her, provided he or she shall give the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend it on his or her own behalf. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled under the Company's Articles of Incorporation or By-laws, as a
matter of law, or otherwise, or any power that the Company may have to indemnify
them or hold them harmless.
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ARTICLE 17. SUCCESSORS
All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
ARTICLE 18. LEGAL CONSTRUCTION
18.1 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
18.2 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
18.3 Requirements of Law. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
18.4 Securities Law Compliance. Transactions under this Plan are
intended to comply with all applicable conditions or Rule 16b-3 or its
successors under the Exchange Act. To the extent any provision of the plan or
action by the Committee fails to so comply, it shall be deemed null and void, to
the extent permitted by law and deemed advisable by the Committee.
18.5 Governing Law. To the extent not preempted by Federal law, the
Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Wisconsin.
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