UICI SUCCESS BONUS AWARD
PLAN
(Effective
, 2005)
1.
Purpose . UICI (the “Company”) recognizes that
the Participants will be involved in evaluating and/or negotiating
offers, proposals or other transactions which could result in a
Change of Control and, recognizing the fiduciary obligations of
certain executives, believes that it is in the best interests of
the Company and the shareholders to provide additional assurance
that the Participants are better positioned to objectively assess
and aggressively pursue the interests of the Company and the
stockholders. The Company also desires to reward Participants for
maximizing the total value of the Company in a Change of Control by
providing meaningful cash-based compensation incentives to such
individuals in such an event.
(a)
“Award” means a success bonus award granted to a
Participant pursuant to this Plan.
(b)
“Award Notice” has the meaning set forth in
Section 3.
(c)
“Board” means the Board of Directors of the
Company.
(d)
“Change of Control” means the completion, prior to the
Cut-Off Date, of any (1) stock purchase (whether by tender
offer or otherwise), merger, consolidation, recapitalization or
other transaction immediately after which the Company’s
shareholders immediately prior thereto do not beneficially own at
least 70% of the then-outstanding Voting Stock or (2) other
event designated as a change of control for purposes of this Plan
by the Board.
(e)
“CEO” means the Company’s Chief Executive
Officer.
(f)
“Code” means the Internal Revenue Code of 1986, as
amended.
(g)
“Committee” means the Executive Compensation Committee
of the Board. The Committee may delegate any of its powers and
duties and any of its discretionary authorities under the Plan to
any officer.
(h)
“Cut-Off Date” means June 30, 2006.
(i)
“Designated Beneficiary” means the beneficiary or
beneficiaries designated in accordance with Section 10 to
receive the amount, if any, payable under the Plan upon the
Participant’s death.
(j)
“Disability” or “Disabled” means permanent
and total disability as a result of bodily injury, disease or
mental disorder which has resulted in the Participant’s
becoming eligible for long-term disability benefits under the
Company’s long-term disability plan as then in
effect.
(k)
“Exchange Act” means the Securities Exchange Act of
1934, as amended.
(l)
“Guidance” has the meaning set forth in
Section 19.
(m)
“Incumbent Board” means the individuals who, as of the
date hereof, are members of the Board and any individual becoming a
member of the Board subsequent to the date hereof whose election,
nomination for election or appointment was approved by a vote of at
least two-thirds of the then-incumbent directors (either by a
specific vote or by approval of the proxy statement of the Company
in which such person is named as a nominee for director, without
objection to such nomination), except that an individual will not
be an incumbent director if his/her election or appointment to the
Board occurs as a result of an actual or threatened election
contest (as described in Rule 14a-12(c) of the Exchange Act)
with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board.
(n)
“Participant” means any key employee of the Company
designated by the Committee to participate in the Plan.
(o)
“Plan” means this UICI Success Bonus Award
Plan.
(p)
“Prorating Event” means a Participant’s
termination of employment due to the Participant’s death or
Disability.
(q)
“Subsidiary” means an entity the results of operations
of which are included in the Company’s consolidated results
of operations prepared in accordance with generally accepted
accounting principles.
(r)
“Success Bonus Pool” means the “Total Pool
Amount” calculated in accordance with Annex I.
(s)
“Voting Stock” means stock of the Company generally
entitled to vote on election of directors of the
Company.
3.
Eligibility . Participants in the Plan (other than the
Company’s President and Chief Executive Officer (the
“CEO”)) will be designated by the CEO and the amount of
Award to be made to such participant shall be determined by the
CEO, subject to review and approval by the Committee. The amount of
any Award to be made to the CEO shall be determined by the
Committee. Each Participant so designated shall be advised that he
or she has been designated as a Participant by an instrument in
writing signed or specifically authorized to be signed by the
chairman of the Committee (such instrument, an “Award
Notice”). Each Award Notice shall (a) so advise the
recipient that he or she has been designated as a Participant in
the Plan eligible to receive an Award and (b) designate the
amount of the Award to be received by the Participant, which Award
may be expressed as a fixed dollar amount or as a percentage of the
Success Bonus Pool as calculated in accordance with Annex I hereto;
except that in no event shall the aggregate of all Awards to be
made hereunder to all Participants hereunder exceed the amount of
the Success Bonus Pool calculated in accordance with Annex I
hereto. No employee will at any time have the right to be selected
as a Participant. Awards made under the Plan are not in lieu of any
other benefits a Participant may be entitled to receive from the
Company. Awards will not be considered compensation for purposes of
the Company’s pension and welfare benefit plans, programs and
arrangements.
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(a) The
Plan will be administered by the Committee. Except as otherwise
expressly provided herein, full power and authority to construe,
interpret and administer the Plan will be vested in the Committee,
including the power to amend or terminate the Plan as further
described in Section 13.
(b) Any
determination by the Committee hereunder will
