EXHIBIT 10.3
DEFERRED STOCK AGREEMENT
BETWEEN
AMERICAN MEDICAL SECURITY GROUP, INC.
AND
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
THIS AGREEMENT, effective as of November 17, 1998 (the "Effective Date"),
is by and between American Medical Security Group, Inc., a Wisconsin corporation
("AMSG") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Executive"), parties to this Agreement.
RECITALS
The Executive is a key employee performing valuable services for AMSG, and
AMSG desires to retain the Executive in its service.
It is to the mutual benefit of the parties to this Agreement that the
relationship continue and that the Executive continue to contribute to the
operations of AMSG.
AMSG desires to reward Executive for his past service, loyalty and counsel,
and wishes to provide an inducement to encourage Executive's continued efforts
on behalf of AMSG.
AMSG desires to provide such reward and inducement by promising to issue
shares of AMSG common stock to the Executive upon the Executive's termination of
employment after the satisfaction of certain vesting requirements.
AGREEMENT
NOW THEREFORE, AMSG and the Executive agree, in consideration of the mutual
promises set forth in this Agreement, as follows:
1. AMSG DEFERRED STOCK. As of the Effective Date, AMSG shall
recognize an obligation to issue to the Executive, in accordance
with Section 2 of the Agreement, 73,506 shares of AMSG common
stock (the "Deferred Stock"), provided that the Executive
acquires a vested interest in such Deferred Stock pursuant to the
provisions of Section 3 of the Agreement.
2. ISSUANCE OF DEFERRED STOCK. Subject to the Executive's
satisfaction of the vesting requirements set forth in Section 3
of the Agreement, upon the Executive's termination of employment
for any reason, AMSG shall issue to the Executive the Deferred
Stock promised under Section 1 of the Agreement. The issuance of
such Deferred Stock to the Executive (or to the Executive's
designated beneficiary in the event of the Executive's death
before such Deferred Stock is issued) shall occur in a single
issuance of shares of AMSG common stock on January 2nd of the
year following the calendar year during which the Executive
terminates employment with AMSG.
At AMSG's option, the shares of Deferred Stock to be issued to
the Executive under the Agreement shall be authorized but as yet
unissued shares, treasury shares or shares of AMSG common stock
acquired on the open market.
3. VESTING IN DEFERRED STOCK. The Executive shall have a
nonforfeitable and vested interest in the Deferred Stock promised
under Section 1 of the Agreement on the earliest of the
following:
(a) November 17, 2002, provided that the Executive remains
continuously employed with AMSG through November 17, 2002;
(b) the Executive's death while employed by AMSG;
(c) the Executive's Disability while employed by AMSG;
(d) the occurrence of a Change in Control while the Executive is
employed by AMSG;
(e) AMSG's termination of the Executive for any reason other
than Cause if the Fair Market Value of a share of AMSG's
common stock exceeds $12.00 on the date of the Executive's
termination.
If the Executive terminates employment prior to the occurrence of
one of the events specified in (a) through (e) above, the
Executive shall have no vested interest in any Deferred Stock
hereunder and no shares of AMSG common stock shall be issued to
the Executive under this Agreement.
For purposes of this Agreement, the terms "Cause," "Disability,"
"Change in Control" and "Fair Market Value" shall have the same
meanings as provided in the American Medical Security Group, Inc.
Equity Incentive Plan, as amended as of the date of this
Agreement.
4. NO TRUST CREATED. Nothing in this Agreement, and no action taken
pursuant to the provisions of this Agreement, shall create or be
construed to create a trust of any kind, or a fiduciary
relationship between AMSG and the Executive, his designated
beneficiary or any other person. The right of any person to
receive Deferred Stock under the provisions of this Agreement
shall be an unsecured claim against AMSG, and no person shall by
virtue of the provisions of this Agreement have any interest in
such Deferred Stock. To the extent that any person acquires a
right to receive Deferred Stock under this Agreement, such right
shall be no greater than the right of any unsecured general
creditor of AMSG.
5. DESIGNATED BENEFICIARY. The Executive shall designate one or more
beneficiaries to receive any Deferred Stock issued under this
Agreement in the event of the Executive's death prior to such
issuance. The Executive may change the designated beneficiary at
any time by filing a new beneficiary designation with AMSG in a
form as prescribed by AMSG. The beneficiary designation form on
file with AMSG at the Executive's death shall be controlling. If
the Executive fails to validly designate a beneficiary, any
Deferred Stock to be issued after the death of the Executive
shall be issued to the Executive's estate.
6. ASSIGNMENT PROHIBITED. The Deferred Stock promised hereunder may
not be sold transferred, pledged, assigned or otherwise alienated
or hypothecated, other than by will or by the laws of descent and
distribution.
7. DIVIDENDS, OTHER DISTRIBUTIONS. Prior to the issuance of Deferred
Stock hereunder, the Executive shall not be entitled to receive
any dividend equivalents or other distributions which may be paid
with respect to AMSG's common stock, except as provided in
Section 11.
8. BINDING AGREEMENT. This Agreement constitutes the entire
agreement between the parties, may be amended only in writing
with the consent of both parties, and shall be binding upon the
parties hereto, their heirs, executors, administrators,
successors and assigns, including any successor of AMSG resulting
from a direct or indirect purchase, merger, consolidation, or
otherwise, of all or substantially all of the business and/or
assets of AMSG.
9. WITHHOLDING.
(a) AMSG shall have the power and the right to deduct or
withhold, or require the Executive to remit to AMSG, an
amount sufficient to satisfy federal, state and local taxes
(including the Executive's FICA obligations) required by law
to be withheld with respect to any taxable event occurring
in connection with the issuance of Deferred Stock hereunder.
(b) With respect to any withholding required upon the issuance
of Deferred Stock, the Executive may elect, subject to the
approval of AMSG, to satisfy the withholding requirement, in
whole or in part, by having AMSG withhold shares of Deferred
Stock having a Fair Market Value on the date the tax is to
be determined equal to the minimum statutory tax liability
which could be imposed on the transaction. Any election
shall be irrevocable, made in writing, and signed by the
Executive.
10. AMSG AFFILIATES. For purposes of the Agreement (including the
issuance and vesting provisions in Sections 2 and 3 of the
Agreement, respectively), employment with AMSG shall include
employment with any AMSG Affiliate (as such term is defined in
the American Medical Security Group, Inc. Equity Incentive Plan),
and a transfer of the Executive's employment among AMSG and any
of its Affiliates shall not be deemed a termination of the
Executive's employment.
11. ADJUSTMENTS IN DEFERRED STOCK SHARES. In the event of any merger,
reorganization, consolidation, recapitalization, separation,
liquidation, partial liquidation, stock dividend, extra-ordinary
dividend, split-up, spin-off, share combination, or other change
in the corporate structure of AMSG which affects the AMSG common
stock, an appropriate and equitable adjustment shall be made in
the number of shares of Deferred Stock, to prevent dilution or
enlargement of rights and to preserve the benefit of the
Agreement to AMSG and the Executive.
12. IMPACT ON OTHER AMSG BENEFITS. Neither the promise to issue
Deferred Stock, nor the issuance of such Deferred Stock under
this Agreement, shall be taken into account in determining the
Executive's benefits under any other pension, profit sharing,
deferred compensation or welfare benefit plan maintained by AMSG,
unless specifically provided to the contrary in such other plan.
13. EXECUTIVE'S EMPLOYMENT. Nothing in this Agreement shall interfere
with or limit in any way the right of AMSG to terminate the
Executive's employment at any time, nor confer upon the Executive
any right to continue in the employ of the AMSG for any given
period or upon any specific terms or conditions.
14. GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the internal laws of the State of Wisconsin
to the extent not preempted by federal law.
15. REQUIREMENTS OF LAW. The issuance of Deferred Stock under this
Agreement shall be subject to all applicable laws, rules, and
regulations, and to any approvals by governmental agencies or
national securities exchanges as may be required, and the parties
shall make a good faith effort to implement this Agreement in
compliance with such applicable laws, rules, regulations and
approvals.
16. ACCOUNTING TREATMENT. The parties intend that the issuance of
Deferred Stock under this Agreement result in fixed, rather than
variable, accounting treatment to AMSG and shall implement this
Agreement in a manner consistent with such intent.
IN WITNESS WHEREOF, the parties have executed this Agreement on this _____
day of _______________, 1999, with an Effective Date of November 17, 1998.
AMERICAN MEDICAL SECURITY GROUP, INC.
By:
----------------------------------
Title:
-------------------------------
EXECUTIVE:
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
2
BENEFICIARY DESIGNATION FORM
DEFERRED STOCK AGREEMENT
BETWEEN
AMERICAN MEDICAL SECURITY GROUP, INC.
AND
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Pursuant to the terms of the November 17, 1998 Deferred Stock Agreement
Between American Medical Security Group, Inc. ("AMSG") and myself (the
"Agreement"), I hereby revoke any prior beneficiary designation I may have made
and designate the following person(s) as my beneficiary(ies) for any Deferred
Stock which may be issued under the Agreement after my death:
Name:
Soc. Sec. No.:
Address:
Relationship:
[If more than one beneficiary is named, attach a separate sheet and
identify the percentage to go to each beneficiary.]
I reserve the right to revoke or change my beneficiary designation by
filing a new Beneficiary Designation Form with AMSG.
I understand that if I am married and a Wisconsin resident, my spouse may
have an interest in any Deferred Stock issued under the Agreement after my death
pursuant to Wisconsin marital property law and that such interest may impact
upon my beneficiary designation. I further understand that if I fail to validly
designate a beneficiary or leave no designated beneficiary surviving me, any
Deferred Stock issued under the Agreement after my death will be issued to my
estate.
Dated:
------------------------- --------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Received on behalf of American Medical
Security Group, Inc.:
Dated: By:
------------------------- ----------------------------
Signature