EXHIBIT 10
AMERICAN MEDICAL SECURITY GROUP, INC.
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT, dated as of July 9, 2001 (the
"Agreement"), is made by and between American Medical Security Group, Inc., a
Wisconsin corporation ("AMSG" or the "Company"), and Xxxxxx X. Xxxxxx (the
"Executive").
RECITALS
WHEREAS, AMSG believes it to be in the best interests of AMSG and its
shareholders to provide an incentive for certain of its key employees to work
for and manage the affairs of AMSG in such a way that its shares become more
valuable; and
WHEREAS, the Executive is a key employee of the Company performing valuable
services for AMSG; and
WHEREAS, the Executive has agreed to surrender for cancellation the
nonqualified stock options granted to him on December 6, 1995, representing the
right to purchase 198,019 shares of common stock of AMSG, and on December 17,
1996, representing the right to purchase 245,838 shares of the common stock of
AMSG under the Company's Equity Incentive Plan (the "Stock Options"); and
WHEREAS, the Company has consulted with outside experts concerning the
value of the Stock Options and the "Restricted Stock" (as defined below) as of
the date hereof; and
WHEREAS, it is in the best interests of AMSG and its shareholders to
recognize the Executive's willingness to surrender the Stock Options, thereby
increasing the number of shares of common stock available for grant under the
American Medical Security Group, Inc. Equity Incentive Plan (the "Equity
Incentive Plan"), and to reward the Executive for his past service, loyalty and
counsel and to provide an inducement to encourage the Executive's continued
efforts to increase shareholder value on behalf of AMSG.
NOW, THEREFORE, in consideration of these premises and the services to be
performed by the Executive, AMSG hereby grants the Restricted Stock to the
Executive on the terms and conditions hereinafter set forth.
1. GRANT. AMSG hereby grants and issues to the Executive, as of July 9,
2001 (the "Grant Date"), from the Company's treasury stock, 25,000 shares of
AMSG common stock, no par value, subject to the rights, restrictions,
obligations and limitations set forth herein (the "Restricted Stock"). The
Restricted Stock grant covered by this Agreement is not made under Equity
Incentive Plan.
2. CONSIDERATION. In return for the Company's grant of the Restricted
Stock, the Executive agrees to, and by execution of this Agreement does, as of
the Grant Date, surrender the Stock Options for cancellation.
3. RESTRICTIONS. The Restricted Stock shall be forfeitable as described
below until the shares become vested upon the first to occur of the following
events:
(a) Five (5) years from the Grant Date, provided that the Executive
remains continuously employed by AMSG through such date.
(b) The date on which shares of AMSG common stock have traded at a price
equal to or exceeding $10.25 per share for ten (10) consecutive
trading days on the New York Stock Exchange or such other securities
exchange or market on which AMSG's shares may then be traded, provided
that the Executive remains continuously employed by AMSG through such
date.
(c) The termination of the Executive's employment with the Company or a
subsidiary by reason of total Disability or death, provided that the
Executive remains continuously employed by AMSG through such date.
(d) The occurrence of a Change of Control of AMSG while the Executive is
employed by AMSG.
(e) The Executive's involuntary termination by the Company other than for
Cause, provided that the Executive remains continuously employed by
AMSG through such date.
The period of time during which the shares covered by this Restricted Stock
grant are forfeitable is referred to as the "Restricted Period." If the
Executive's employment with AMSG or one of its subsidiaries terminates during
the Restricted Period for any reason other than as specified in subsection (c)
or (e) above, the Restricted Stock shall be forfeited to AMSG on the date of
such termination, without any further obligations of AMSG to the Executive and
all rights of the Executive with respect to the Restricted Stock shall
terminate. AMSG may, in its sole discretion, choose to accelerate the vesting of
the Restricted Stock upon termination of the Executive's employment or
otherwise.
For purposes of this Agreement, the terms "Cause," "Disability," "Change of
Control" shall have the same meanings as provided in that certain Employment
Agreement between American Medical Security Group, Inc. and Xxxxxx X. Xxxxxx,
effective as of September 28, 2000.
4. RIGHTS DURING RESTRICTED PERIOD. During the Restricted Period, the
Executive shall have the right to vote the Restricted Stock and to receive cash
dividends. If any stock dividend is declared upon the Restricted Stock, or there
is any stock split, stock distribution, or other change in the corporate
structure of the Company with respect to the Restricted Stock, the aggregate
number and kind of shares covered by this Restricted Stock grant shall be
proportionately and appropriately adjusted (subject to the same restrictions
applicable to the original shares of Restricted Stock) and the price per share
in Section 3(b) above shall be proportionately and appropriately adjusted. The
Restricted Stock may not be sold, assigned, transferred, pledged, encumbered or
otherwise disposed of prior to vesting, except by will or the laws of descent
and distribution.
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5. CUSTODY. The Restricted Stock issued the Employee hereunder shall be
held, along with any stock dividends and other non-cash distributions relating
thereto, in custody by AMSG or an agent for AMSG until the applicable
restrictions have expired. Certificates representing shares of Restricted Stock
and any such stock dividends or distributions during the Restricted Period shall
bear an appropriate legend as determined by AMSG referring to the applicable
terms, conditions and restrictions and the Executive shall deliver a signed,
blank stock power to AMSG relating thereto.
6. TAX WITHHOLDING. The Executive may satisfy any tax withholding
obligations arising as a result of vesting of the Restricted Stock in whole or
in part by tendering a check to AMSG for any required amount, by election to
have a portion of the shares withheld to satisfy all or a portion of any
applicable taxes, or by election to have AMSG or its subsidiaries withhold the
required amounts from other compensation payable to the Executive.
7. REGISTRATION RIGHT. Unless the Executive is otherwise eligible to sell
the shares under Rule 144 of the Securities Act of 1933, as amended, the
Executive may request that the Company register the shares covered by this
Restricted Stock Agreement at any time after the applicable restrictions have
lapsed. As soon as practicable following Executive's request, the Company shall
take all steps reasonably necessary to register the shares, or, at the Company's
option, shall repurchase the shares from the Executive at the average of the
closing prices of AMSG common stock on the five consecutive trading days
immediately preceding the date of the Executive's request.
8. IMPACT OF OTHER BENEFITS. The value of the Restricted Stock granted
hereunder, either on the Grant Date or at the time such shares become vested,
shall not be included as compensation or earnings for purposes of any other
benefit plan or program offered by AMSG or its subsidiaries.
9. ENTIRE 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.
10. AMSG AFFILIATES. For purposes of the Agreement (including the vesting
provisions in Section 3 of the Agreement), employment with AMSG shall include
employment with any AMSG Affiliate (as such term is defined in the 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. 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
AMSG for any given period or upon any specific terms or conditions.
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12. 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.
13. REQUIREMENTS OF LAW. The issuance of Restricted 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.
14. ACCOUNTING TREATMENT. The parties intend that the issuance of
Restricted 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.
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IN WITNESS WHEREOF, this Restricted Stock Agreement is executed by the
parties as of the date set forth above.
AMERICAN MEDICAL SECURITY
GROUP, INC.
By: /s/ Xxxx X. Xxxxxxxxxx
Title: Executive Vice President & CFO
EXECUTIVE
/s/ Xxx X. Xxxxxx
Xxxxxx X. Xxxxxx
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