Exhibit 10.39
UNITED WISCONSIN SERVICES, INC.
VOLUNTARY DEFERRED COMPENSATION PLAN
UNITED WISCONSIN SERVICES, INC.
VOLUNTARY DEFERRED COMPENSATION PLAN
Section Page
Article I. Purpose, Definitions and Construction
1.1 Purpose 1
1.2 Definitions 2
(a) Administration Committee 2
(b) Administrative Delegate 2
(c) Adoption Agreement 2
(d) Beneficiary 2
(e) Company 3
(f) Deferral Account 3
(g) Deferral Contributions 3
(h) Deferral Form 3
(i) Disability 3
(j) Distribution Date 3
(k) Effective Date 4
(l) Insolvency 4
(m) Participant 4
(n) Plan 4
(o) Plan Year 4
(p) Trust 4
(q) Trust Agreement 5
(r) Trustee 5
1.3 Gender and Number 5
1.4 Headings 5
1.5 Plan Provisions Controlling 5
1.6 Severability 5
1.7 Applicable Law 6
(i)
Article II. Deferral Elections, Contributions and Accounting Procedures
2.1 Availability of Deferral Election 6
2.2 Maintenance of Separate Deferral Accounts 6
2.3 Treatment of Amounts Deferred 6
2.4 Irrevocability and Nonassignability of Deferrals 7
2.5 Accounting Procedure 7
2.6 Assumption of Prior Plan Liabilities 8
Article III. Deferred Compensation Payments
3.1 Eligibility for Deferred Compensation 8
(a) Retirement or Termination 8
(b) Disability 8
(c) Death 9
3.2 Amount and Method of Payment of Deferred Compensation 9
Article IV. Trust Fund
4.1 Establishment of Trust 11
Article V. Administration
5.1 Committee to Administer Plan 12
5.2 Claims Procedure 12
Article VI. Miscellaneous
6.1 Employment Rights 13
6.2 Absence of Liability 13
6.3 Amendment and Termination 13
6.4 Company Not an Advisor 14
(ii)
UNITED WISCONSIN SERVICES, INC.
VOLUNTARY DEFERRED COMPENSATION PLAN
Article I. Purpose, Definitions and Construction
Section 1.1 Purpose - United Wisconsin Services, Inc., formerly
Newco/UWS, Inc. (the "Company"), acting for itself and on behalf of its
subsidiaries, hereby adopts this Voluntary Deferred Compensation Plan (the
"Plan") and separate Trust to permit certain salaried employees selected by the
Company to defer a portion of their anticipated salary and to have such deferred
salary amounts held in the separate Trust.
The Plan is being created in connection with the distribution by the
corporation formerly known as United Wisconsin Services, Inc. (currently
American Medical Security Group, Inc.), of shares in the Company in connection
with the spin-off of the managed care and specialty products business to the
Company and the assumption by the Company of the United Wisconsin Services, Inc.
name. The Company is assuming certain of the Adoption Agreements, Deferral Forms
and Beneficiary Designation Forms in effect on the Distribution Date. Further,
the Company is assuming certain obligations of the corporation formerly known as
United Wisconsin Services, Inc. (currently American Medical Security Group,
Inc.) under the United Wisconsin Services, Inc. Voluntary Deferred Compensation
Plan dated December 1, 1995 (the "Prior Plan").
It is intended that the Plan and the Trust shall constitute, and shall
be construed and administered as, an unfunded plan of deferred compensation
within the meaning of the Employee Retirement Income Security Act of 1974 as
amended ("ERISA") and the Internal
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Revenue Code of 1986, as amended (the "Code"). The Plan and Trust are not
intended to be qualified under Section 401(a) of the Code.
Section 1.2 Definitions - For purposes of this Plan, the following
words and phrases shall have the meanings set forth below unless a different
meaning is plainly required by the context.
(a) Administration Committee - means the Company's Employee
Benefits Committee -- herein called the "Committee". Each member of the
Committee shall serve without remuneration, but shall be reimbursed for expenses
incurred in the performance of his duties.
(b) Administrative Delegate - means one or more persons or
institutions to whom the Administrative Committee has delegated certain
administrative functions pursuant to a written agreement.
(c) Adoption Agreement (or Agreement) - means the separate
Adoption Agreement between a Participant and the Company, which forms a part of
the Plan, under which the Company has agreed to allow the Participant to
participate in the Plan and under which the Participant has agreed to his
participation in the Plan on the terms set forth herein.
(d) Beneficiary - means the person or persons designated by a
Participant in his most recent Beneficiary Designation Form to receive payments
under the Plan in the event of the Participant's death; provided that if the
Participant has failed to designate a Beneficiary, or if all designated
Beneficiaries predecease the Participant, any remaining distribution due under
the Plan shall be payable to the Participant's surviving spouse or,
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if none, to his surviving issue per stirpes or, if none, then to his estate.
(e) Company - means United Wisconsin Services, Inc., a
Wisconsin corporation until the Effective Date (as defined below) formerly known
as Newco/UWS, Inc., a Wisconsin corporation, acting for itself and on behalf of
its subsidiaries, and any successor thereto which assumes the rights and
obligations of the Company under the Plan and Trust Agreement.
(f) Deferral Account - means the account maintained for a
Participant to record the total of his deferred compensation under the Plan and
any adjustments relating thereto.
(g) Deferral Contributions - means contributions to the Trust
which are made by the Company pursuant to this Plan and the then current
Deferral Form.
(h) Deferral Form - means a Participant's then current
Deferral Election Form, if any, to be executed by the Participant prior to the
start of each Plan Year specifying the percentage or dollar amount of salary
elected to be deferred during the upcoming Plan Year. The Deferral Form shall
remain in effect until the end of the Plan Year for which it is executed unless
earlier revoked or amended to reduce the percentage or dollar amount of the
deferral for amounts not yet earned during such year.
(i) Disability - means such total and permanent physical or
mental disability as, in the Committee's sole and absolute discretion, would
prevent the Participant from engaging in substantially gainful employment.
(j) Distribution Date - means the date on which the
distribution, by the corporation formerly known as United Wisconsin Services,
Inc., of shares in the Company
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occurs in connection with the spin-off of the managed care and specialty
products business to the Company and the assumption by the Company of the United
Wisconsin Services, Inc. name.
(k) Effective Date - means the Distribution Date.
(l) Insolvency - means (i) the Company is unable to pay its
debts as they become due, or (ii) the Company is subject to a pending proceeding
as a debtor under the United States Bankruptcy Code, or (iii) the Company is
determined to be insolvent by the Wisconsin Commissioner of Insurance.
(m) Participant - means a person who is one of the
Company-selected salaried employees who, by having executed an Adoption
Agreement with the Company, is participating in the Plan. Such person shall
cease to be a Participant after his employment with the Company terminates, or
the balance in his Deferral Account is reduced to zero ($0), whichever is later.
(n) Plan - means the United Wisconsin Services, Inc. Voluntary
Deferred Compensation Plan as set forth herein.
(o) Plan Year - means the twelve (12) month period adopted
under this Plan for reporting purposes, which is the period commencing on
January 1 and ending on December 31.
(p) Trust - means the United Wisconsin Services, Inc.
Voluntary Deferred Compensation Trust and the entire Trust estate as it may,
from time to time, be constituted, including but not limited to Deferral
Contributions, investments, income from any and all investments and any and all
other assets, property or money received by or held by the
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Trustee for the uses and purposes of the Trust.
(q) Trust Agreement - means the separate agreement between the
Company and the Trustee under which the Trust is established and maintained.
(r) Trustee - means the individual or individuals or entity or
entities appointed by the Committee to administer the Trust; provided that an
individual who is a Participant, a member of the Board of Directors of the
Company or the Chief Executive Officer of the Company may not be a Trustee.
Section 1.3 Gender and Number - Except when otherwise indicated by the
context, any masculine terminology used herein shall also include the feminine
and the definition of any term herein in the singular shall also include the
plural.
Section 1.4 Headings - The headings of the various Articles, Sections
and Subsections are inserted for convenience of reference and are not to be
regarded as part of this Plan or as indicating or controlling the meaning or
construction of any provision.
Section 1.5 Plan Provisions Controlling - In the event the terms or
provisions of the Trust Agreement or of any summary or description of the Plan
or of any other instrument, agreement, or document are in any construction
interpreted as being in conflict with the provisions of the Plan as herein set
forth, the provisions of the Plan shall be controlling.
Section 1.6 Severability - In the event any provision of the Plan shall
be held illegal or invalid for any reason, this illegality or invalidity shall
not affect the remaining provisions of the Plan, and such remaining provisions
shall be fully severable and the Plan shall, to the extent practicable, be
construed and enforced as if the illegal or invalid provision had never been
inserted therein.
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Section 1.7 Applicable Law - Subject to the intent that the Plan and
Trust be unfunded and non-qualified as provided in Section 1.1, the provisions
of the Plan shall be construed in accordance with the laws of the State of
Wisconsin, except to the extent, if any, preempted by federal law.
Article II. Deferral Elections, Contributions and Accounting Procedures
Section 2.1 Availability of Deferral Election - The Company shall make
available, in December of each Plan Year, to each Participant who is then an
employee, a Deferral Form which may be used by the Participant to designate for
deferral a portion of the salary he anticipates earning from the Company in the
upcoming Plan Year. All amounts elected to be deferred by a Participant shall be
subject to the terms and conditions of this Plan and shall be subject to FICA
taxes. No requested deferral shall be effective for any Plan Year unless the
appropriate Deferral Form is completed and filed with the Committee prior to
January 1 of the Plan Year for which the deferral is elected.
Section 2.2 Maintenance of Separate Deferral Accounts - If not done by
the Company, the Trustee shall create and maintain adequate records to disclose
the interest in the Trust of all Participants. Such records shall be in the form
of separate, individual Deferral Accounts, and credits and charges shall be made
thereto in the manner described in this Plan. The maintenance of individual
Deferral Accounts for Participants is only for accounting purposes and a
segregation of the assets of the Trust Fund to each account shall not be
required. Distribution made from an account shall be charged to that account as
of the date paid.
Section 2.3 Treatment of Amounts Deferred - Upon execution and filing
by the
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Participant of an effective Deferral Form, the Company shall make a Deferral
Contribution to such Participant's Deferral Account to be deposited in the Trust
no later than ten (10) days after the end of the payroll period(s) during which
the Participant would have otherwise been entitled to receive the amount to be
contributed by the Company except for the Participant's election pursuant to
this Plan and the Deferral Form.
Section 2.4 Irrevocability and Nonassignability of Deferrals - All
amounts credited to a Participant's Deferral Account shall be treated as having
been irrevocably deferred and no payment based on such amounts may be received
except in accordance with the eligibility requirements, terms and conditions of
this Plan. Neither the Participant nor any Beneficiary shall have any right or
ability to alienate, sell, transfer, assign, pledge, encumber or submit to
garnishment, execution or levy, either voluntarily or involuntarily, any amount
due or expected to become due under this Plan. Amounts due under this Plan shall
be paid, transferred, delivered or otherwise conveyed only to the Participant or
his Beneficiary, subject to the limitations of Section 4.1.
Notwithstanding the foregoing, a Deferral Form election may be
cancelled, or amended not more than once annually to reduce the percentage or
dollar amount of the deferral during a Plan Year for amounts not yet earned
during such year, provided that once the Deferral Form election is cancelled no
further amounts may be deferred under this Plan for such year.
Section 2.5 Accounting Procedure - Subject to the provisions hereof
relative to separate accounts, the respective Deferral Accounts of Participants
shall be adjusted as soon as is practicable after, but as of, the close of each
quarter of a Plan Year (and as of any other date if the Committee determines it
advisable for any reason) to reflect the
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deferrals to, distributions and withdrawals from, and net income or loss of the
Trust for the period then completed as deemed reasonable by the Trustee, subject
to the approval of the Committee.
In the administration of the accounts of Participants and the
allocation of Trust income or loss, appropriate adjustment shall be made in the
case of any Participant whose account, or any portion thereof, is invested in
investments held for his separate benefit.
Section 2.6 Assumption of Prior Plan Liabilities - The Company assumes,
as of the Distribution Date, the liability to pay deferred compensation to all
Prior Plan participants other than ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇. The Deferral Account
balance of each such Prior Plan participant under this Plan as of the
Distribution Date shall be equal to the balance in his Deferral Account under
the Prior Plan immediately prior to the Distribution Date. The liability to pay
deferred compensation to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall remain with the Prior Plan.
Article III. Deferred Compensation Payments
Section 3.1 Eligibility for Deferred Compensation - Subject to any
limiting conditions set forth in this Plan, the Participant, or in the event of
Participant's death his Beneficiary, will become eligible for receipt of
deferred compensation under this Plan as follows:
(a) Retirement or Termination - Upon retirement or other
termination of regular employment with the Company, the Participant shall become
eligible for deferred compensation payments under this Plan.
(b) Disability - Upon cessation of active employment with the
Company as a result of Disability, Participant shall become eligible for
deferred compensation payments under this Plan.
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(c) Death - In the event of Participant's death prior to the
Participant's receipt of deferred compensation payments under the Plan reducing
Participant's Deferral Account balance to zero ($0), the Participant's
Beneficiary shall be eligible for deferred compensation payments under the Plan.
Section 3.2 Amount and Method of Payment of Deferred Compensation - The
total deferred compensation to be paid to a Participant shall be distributed to
the Participant and, upon the Participant's death, to his Beneficiary, in one of
the following modes of distribution selected by the Participant: (i) lump sum
payment; or (ii) annual installments over a period not to exceed the life
expectancy of the Participant (as determined by the Committee as of the date
payment is to commence) or 15 years, whichever is greater. Each Participant
shall notify the Company in writing of the mode of distribution he has selected
prior to the commencement of the first Plan year for which such Participant has
made a deferral election hereunder; provided, however, that if a Participant
fails to notify the Company of a mode of distribution before the deadline
prescribed by this section, he shall be deemed to have selected the installment
mode of distribution described in (ii) above. Once the mode of distribution is
determined, it shall remain in force until the Participant's account balance is
reduced to zero, except that if the Participant has an unforeseeable emergency,
as hereunder defined, or if the Participant has died and his Beneficiary has an
unforeseeable emergency, the Committee may direct that any or all of the
remaining account balance be distributed at any time as the Committee may deem
advisable and proper, but only to the extent reasonably needed to satisfy the
emergency need. "Unforeseeable emergency" means a severe financial hardship
resulting from a
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sudden and unexpected illness or accident to the Participant, the Beneficiary or
a dependent (as defined in Section 152(a) of the Code), loss of the
Participant's or Beneficiary's property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant or the Beneficiary.
If a lump sum mode of distribution is used, the total deferred
compensation to be paid to a Participant or Beneficiary shall be an amount equal
to the Participant's Deferral Account balance as of the close of the Plan Year
which coincides with or follows his retirement, termination, disability or
death. A lump sum payment of deferred compensation under this Plan shall be made
within sixty (60) days following the close of the Plan Year during which the
Participant retired, died, terminated or became disabled, or, if later, within a
reasonable time after the Participant's interest is determined pursuant to the
preceding sentence.
If an installment mode of distribution is used, the first installment
payment of deferred compensation under the Plan shall be made within sixty (60)
days following the close of the Plan Year during which the Participant retired,
died, terminated or became disabled, and each annual installment payable
thereafter shall be distributed within sixty (60) days after the close of
subsequent Plan Years. The installment amount to be distributed within sixty
(60) days after the close of any Plan Year shall equal the balance of the
Participant's Deferral Account determined at the beginning of such Plan Year,
divided by the number of years remaining in the payment period over which
payment of benefits is being made.
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Article IV. Trust Fund
Section 4.1 Establishment of Trust - All Deferral Contributions under
this Plan shall be paid to the Trustee and deposited in the Trust Fund, and
shall be subject to the provisions of the Trust Agreement. Participants and
Beneficiaries have only an unsecured interest in the Trust assets in the event
of the Company's Insolvency (as defined in Section 1.2). The Company makes only
an unsecured promise to pay any deferred amounts plus income thereon in the
event of the Company's Insolvency. Subject to the foregoing limitations, all
assets of the Trust Fund, including investment income, shall be retained for the
exclusive benefit of Participants and Beneficiaries (but the Company's general
creditors shall have access to Trust assets in the event of the Company's
Insolvency and shall be used to pay benefits to such persons and to pay
administrative expenses and taxes of the Trust Fund as provided in Section 8 of
the Trust Agreement to the extent not paid by the Company and shall not revert
to or accrue to the benefit of the Company, except to the extent that
contributions made by the Company by a mistake of fact shall revert and be paid
back to the Company provided the Company has made a timely demand therefor).
The Trustee shall be required to hold the Trust assets and income for
the benefit of the Company's general creditors in the event of the Company's
Insolvency and in such case no Participant or Beneficiary shall have a preferred
claim on the Trust assets. The Committee and the Chief Executive Officer of the
Company shall have the duty to inform the Trustee in writing of the Company's
Insolvency within three (3) days of such event. When so informed, the Trustee
shall suspend payments to all Participants and Beneficiaries, and shall hold
Trust assets for the benefit of the Company's general
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creditors. In the case of the Trustee's actual knowledge of the Company's
Insolvency, the Trustee will deliver Trust assets to satisfy claims of the
Company's general creditors as directed by a court of competent jurisdiction.
Article V. Administration
Section 5.1 Committee to Administer Plan - The Committee, except as
otherwise provided in the Plan, shall administer the Plan. The Committee shall
also have the authority and discretion to engage an Administrative Delegate who
shall perform, without discretionary authority or control, day-to-day
administrative functions within the framework of policies, interpretations,
rules, practices, and procedures made by the Committee. Any action made or taken
by the Administrative Delegate may be appealed by an affected Participant to the
Committee in accordance with the claims review procedures provided in Section
5.2. Any decisions which call for interpretations of Plan provisions not
previously made by the Committee shall be made only by the Committee.
The Committee shall have the authority to direct the Trustee to invest
all or a portion of the Trust Fund through any common or collective trust fund
or pooled investment fund, including collective investment funds maintained by
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Trust Company or its successor, for the collective investment
of funds held by it in a fiduciary capacity.
Section 5.2 Claims Procedure - The Committee shall consider all claims
by the Participant or any Beneficiary for payments under this Plan and shall
promptly notify the claimant of its action on any such claim. In the event of
any question regarding handling of the claim, the Committee shall meet with the
claimant at the Company's offices to discuss such question and to attempt to
resolve any areas of possible disagreement. If the
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claimant's concerns remain unresolved after such meeting with the Committee, the
claimant may request the Company's Board of Directors to review the matter in
dispute.
Article VI. Miscellaneous
Section 6.1 Employment Rights - Any payment under this Plan shall be
independent of, and in addition to, payments made under any other agreement or
under any qualified retirement plan which may be in force between the Company
and any Participant or Beneficiary, or any other compensation payable to
Participant or his Beneficiary by the Company. Neither this Plan nor any
Deferral Form executed in connection herewith shall be construed as (i)
constituting or creating a contract of employment, (ii) restricting either the
Company's right to discharge Participant with or without cause or Participant's
right to terminate his employment, or (iii) creating any guarantee or
representation as to the amount of compensation to be paid to Participant by the
Company during any period of regular employment.
Section 6.2 Absence of Liability - Any and all liability created to
administer this Plan and the Trust or to provide any Participant or Beneficiary
with benefits under this Plan shall be exclusively and solely that of the
Company. No member of the Committee, officer, director or employee, past,
present or future, of the Company shall have any liability to any Participant or
Beneficiary, or to any other person or entity, to provide or pay such benefits,
such liability hereby being expressly and unconditionally denied.
Section 6.3 Amendment and Termination - This Plan may be altered,
amended, or revoked by the Company, provided that no such action shall be taken
that is not allowed by Section 12 of the Trust Agreement, and provided further
that if any amendment to the
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Plan or the adoption of the Plan by the Participant would constitute a
subsequent Participant deferral election that would cause a Participant or
Beneficiary to be in constructive receipt of past deferred amounts, then such
amendment or adoption will only be applicable with respect to future deferrals.
No amendment to, or termination of, the Plan shall reduce a Participant's
Deferral Account balance. Notwithstanding the foregoing, the Company may
unilaterally amend the Plan to provide that no future deferrals may be made by
Participants and to conform the Plan to ERISA and Code requirements with respect
to unfunded plans of deferred compensation.
The Plan may not be amended or terminated during the period immediately
preceding the Company's Insolvency if the intended result would be to accelerate
the payment of benefits to Participants or Beneficiaries so that the Trust
assets would be unavailable to the Company's general creditors.
Section 6.4 Company Not An Advisor - The Company offers this Plan to
Participants without assuming any responsibility or liability as an advisor or
consultant relative to tax or other aspects of this Plan and the Trust or the
payment of benefits hereunder.
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