EXHIBIT 10.3
AMERICAN MEDICAL SECURITY GROUP, INC.
EQUITY INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AWARD AGREEMENT
You have been selected to be a Participant in the American Medical Security
Group, Inc. Equity Incentive Plan (the "Plan"), as specified below:
PARTICIPANT: _________________________
DATE OF GRANT: _______________________
DATE OF EXPIRATION: __________________
NUMBER OF SHARES COVERED BY THIS OPTION: _____________ Shares
OPTION PRICE: _________________ per Share
THIS AGREEMENT, effective as of the Date of Grant set forth above, is
between American Medical Security Group, Inc., a Wisconsin corporation (the
"Company") and the Participant named above pursuant to the provisions of the
Plan. Unless otherwise indicated, capitalized terms used herein shall have the
meanings assigned to such terms under the Plan, a copy of which is attached
hereto and incorporated herein. In consideration of the foregoing, the parties
hereto agree as follows:
1. GRANT OF STOCK OPTION. The Company hereby grants to Participant the
option (the "Option(s)") to purchase the number of Shares of common stock of the
Company set forth above at the above-stated Option Price, which is one hundred
percent (100%) of the Fair Market Value on the Date of Grant, subject to the
terms and conditions of the Plan and this Agreement. This award is intended to
be a Nonqualified Stock Option, and therefore is not subject to Section 422 of
the Code.
2. VESTING OF STOCK OPTION.Except as hereinafter provided, with respect to
the Options granted hereunder, vesting shall occur at a rate of thirty-three and
one third percent (33-1/3%) per year beginning on the first anniversary of the
Date of Xxxxx and each subsequent anniversary date thereafter, provided the
Participant remains a Director of the Company.
3. EXERCISABILITY OF OPTION. The Options are exercisable at any time after
six months following the Date of Grant, in whole or in part, but only if all of
the following conditions are met at the time of exercise:
(a) The Options to be exercised are vested as described in Section 2
above;
(b) The date of exercise is on or before the Date of Expiration set
forth above;
(c) The Options to be exercised are exercised only in compliance with
the Company's then current Xxxxxxx Xxxxxxx Policy; and
(d) Participant is a Director of the Company or any present or future
parent, subsidiary or Affiliate of the Company; or, if he or she is no
longer a Director, the date of exercise is in accordance with the
provisions of this Agreement and the Plan.
4. TERMINATION OF DIRECTORSHIP BY DEATH. In the event the Participant's
tenure as a Director is terminated by reason of death, all outstanding Options
granted pursuant to this Agreement shall immediately vest one hundred percent
(100%), and shall remain exercisable for a period ending on the earlier of (i)
the Date of Expiration identified above, or (ii) one (1) year after the date of
the Participant's death.
5. TERMINATION OF DIRECTORSHIP BY DISABILITY. In the event the
Participant's tenure as a Director is terminated by reason of Disability, all
outstanding Options granted pursuant to this Agreement shall immediately vest
one hundred percent (100%) as of the date the Compensation Committee (the
"Committee") determines the definition of Disability to have been satisfied, and
shall remain exercisable for a period ending on the earlier of (i) the Date of
Expiration identified above, or (ii) one (1) year after the date the Committee
determines the definition of Disability to have been satisfied.
6. TERMINATION OF DIRECTORSHIP BY RETIREMENT. In the event the
Participant's tenure as a Director is terminated by reason of Retirement (as
hereinafter defined), all outstanding Options granted pursuant to this Agreement
shall immediately vest one hundred percent (100%), and shall remain exercisable
for a period ending on the earlier of (i) the Date of Expiration identified
above, or (ii) the end of the third (3rd) year following the date of termination
of the Participant's tenure as a Director by reason of Retirement. Retirement
shall mean (a) a Director's determination after serving a full three-year term
not to stand for reelection to the Board of Directors at the next annual meeting
of the Board, (b) the inability of the Director to stand for reelection to the
Board due to age guidelines adopted by the Board, or (c) a Director's
resignation from the Board after reaching seventy (70) years of age.
7. DIRECTORSHIP TERMINATION FOLLOWED BY DEATH. In the event the
Participant's tenure as a Director 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
termination as a Director.
8. TERMINATION OF DIRECTORSHIP FOR OTHER REASONS. If the Participant's
tenure as a Director shall terminate for any reason other than death,
Disability, or Retirement (and other than for Cause), all Options held by the
Participant which are not vested as of the effective date of termination as a
Director immediately shall be forfeited to the Company. 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 termination as a
Director may be exercised by the Participant within the period beginning on the
effective date of termination as a Director, and ending on the earlier of (i)
the Date of Expiration identified above, or (ii) six (6) months after the date
of termination as a Director.
If the Participant's tenure as a Director 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 Options.
9. CHANGE IN CONTROL. In the event of a Change in Control (as defined in
the Plan) which occurs prior to the Participant's termination as a Director,
Participant's right to exercise the Options shall vest fully as of the first
date that the definition of Change in Control has been fulfilled, and shall
become immediately exercisable in accordance with the terms of this Agreement
and the Plan, without regard to the six month wait under Section 3 hereof.
10. RESTRICTIONS ON TRANSFER. The Options may not 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 during
Participant's lifetime only by Participant or Participant's legal
representative, except that the Options may be transferred by the Participant to
the Participant's spouse, children or grandchildren or a trust for the benefit
of such spouse, children or grandchildren. In the event the Options are
transferred, they shall remain subject to this Agreement and the Plan.
11. RECAPITALIZATION. In the event there is any change in the Shares of the
Company through the declaration of stock dividends or through recapitalization
resulting in stock split-ups or through merger, consolidation, exchange of
shares, or otherwise, the number and class of Shares subject to the Options,
and/or the Option Price, shall be adjusted as may be determined to be
appropriate and equitable by the Committee, in its sole discretion, to prevent
dilution or enlargement of rights.
12. PROCEDURE FOR EXERCISE OF OPTIONS. The Options may be exercised by
giving written notice to the Company at its executive offices, addressed to the
attention of its Secretary. Such notice is to be received by the Secretary on or
before the date on which the Options are to be exercised. Such notice (a) shall
be signed by the Participant or his or her legal representative; (b) shall
specify the number of full Shares then elected to be purchased with respect to
the Option and the total purchase price; and (c) shall be accompanied by payment
in full of the Option Price of the Shares to be purchased.
The Option Price upon exercise of the Options shall be payable to the
Company in full either (a) in cash or its equivalent (acceptable cash
equivalents shall be determined at the sole discretion of the Committee); (b) by
tendering previously acquired Shares (held at least six months) having an
aggregate Fair Market Value at the time of exercise equal to the total price of
the Shares for which the Option is being exercised; (c) unless otherwise
determined by the Committee, through a "cashless exercise" procedure under which
there is delivery to a securities broker of an irrevocable direction to sell
Shares and to deliver all or part of the sales proceeds to the Company, pursuant
to the terms and conditions specified in the Plan; or (d) by a combination of
(a), (b) and (c).
As promptly as practicable after receipt of such notice and payment, the
Company shall cause to be issued and delivered to the Participant or his or her
legal representative, as the case may be, certificates for the Shares so
purchased, which may, if appropriate, be endorsed with appropriate restrictive
legends. The Company shall maintain a record of all information pertaining to
Participant's rights under this Agreement, including the number of Shares for
which the Option is exercisable. If the Option shall have been exercised in
full, this Agreement shall be returned to the Company and canceled.
Notwithstanding the foregoing, the Company need not issue or deliver such
Shares unless and until, in the opinion of the Company's counsel, all applicable
requirements of law, including registration of such Shares under the Securities
Act of 1933 pertaining to the sale and issuance of such Shares and all
applicable listing requirements of any national securities exchange on which the
Shares are listed, have been complied with.
13. RIGHTS AS A STOCKHOLDER. Participant shall have no rights as a
stockholder of the Company with respect to the Shares subject to this Option
Agreement until such time as the purchase price has been paid and the Shares
have been issued and delivered to him or her.
14. TENURE AS A DIRECTOR. This Agreement shall not confer upon Participant
any right to continuance of tenure as a Director of the Company, nor shall this
Agreement interfere in any way with the Company's right to terminate his or her
tenure at any time.
15. MISCELLANEOUS.
(a) This Agreement and the rights of Participant hereunder are subject
to all the terms and conditions of the Plan, as the same may be amended
from time to time, as well as to such rules and regulations as the
Compensation Committee may adopt for administration of the Plan. The
Committee shall have the right to impose such restrictions on any Share
acquired pursuant to the exercise of the Options, 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.
It is expressly understood that the Committee is authorized to
administer, construe, and make all determinations necessary or appropriate
to the administration of the Plan and this Agreement, all of which shall be
binding upon Participant. Any inconsistency between this Agreement and the
Plan shall be resolved in favor of the Plan.
(b) With the approval of the Board of Directors of the Company, the
Committee may terminate, amend, or modify the Plan; provided, however, that
no such termination, amendment, or modification of the Plan may in any
material way adversely affect Participant's vested rights with respect to
Options granted under this Agreement.
(c) This Agreement may be amended by written agreement of the
Participant and the Company at any time.
(d) In the event federal, state, or local taxes become required by law
to be withheld with respect to any exercise of Participant's rights under
this Agreement, the Company shall have the authority, without the
Participant's written consent, to deduct or withhold, or require the
Participant to remit to the Company, an amount sufficient to satisfy such
taxes.
Participant may elect, unless otherwise determined by the Committee in
its sole discretion, to satisfy the withholding requirement, in whole or in
part, by having the Company withhold Shares having an aggregate Fair Market
Value, on the date the tax is to be determined, equal to the minimum amount
required to be withheld. All elections shall be irrevocable and in writing,
and shall be signed by Participant, and shall be made in accordance with
rules set forth in Section 15.2 of the Plan.
(e) Participant agrees to take all steps necessary to comply with all
applicable provisions of federal and state securities law in exercising
Participant's rights under this Agreement.
(f) The Plan and this Agreement are not intended to qualify for
treatment under the provisions of the Employee Retirement Income Security
Act of 1974, as amended, ("ERISA").
(g) This Agreement 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.
(h) To the extent not preempted by federal law, this Agreement shall
be governed by, and construed in accordance with the laws of the State of
Wisconsin without regard to principles of conflicts of law.
IN WITNESS WHEREOF, the parties have caused this Option Agreement to be
executed as of the Date of Xxxxx.
AMERICAN MEDICAL SECURITY GROUP, INC.
By:__________________________________
Xxxx X. Xxxxx
Vice President, Human Resources
_____________________________________
Participant
