EXHIBIT 10.1

 

NI HOLDINGS, INC.

2020 STOCK AND INCENTIVE PLAN

Section 1.       Purpose

The purpose of the Plan is to promote the interests of the Company and its
shareholders by aiding the Company in attracting and retaining employees,
officers, consultants, independent contractors, advisors and non-employee
Directors capable of assuring the future success of the Company, to offer such
persons incentives to put forth maximum efforts for the success of the Company’s
business and to afford such persons an opportunity to acquire an ownership
interest in the Company, thereby aligning the interests of such persons with the
Company’s shareholders.

Section 2.       Definitions

As used in the Plan, the following terms shall have the meanings set forth
below:

(a)       “Affiliate” shall mean any entity that, directly or indirectly through
one or more intermediaries, is controlled by the Company.

(b)       “Award” shall mean any Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit, Dividend Equivalent or Other Stock-Based Award
granted under the Plan.

(c)       “Award Agreement” shall mean any written agreement, contract or other
instrument or document evidencing an Award granted under the Plan (including a
document in an electronic medium) executed in accordance with the requirements
of Section 9(b).

(d)       “Board” shall mean the Board of Directors of the Company.

(e)       “Code” shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any regulations promulgated thereunder.

(f)       “Committee” shall mean the Compensation Committee of the Board or such
other committee designated by the Board to administer the Plan. The Committee
shall be comprised of not less than such number of Directors as shall be
required to permit Awards granted under the Plan to qualify under Rule 16b-3.

(g)       “Company” shall mean NI Holdings, Inc. and any successor corporation.

(h)       “Director” shall mean a member of the Board.

(i)       “Dividend Equivalent” shall mean any right granted under Section 6(e)
of the Plan.

(j)       “Eligible Person” shall mean any employee, officer, non-employee
Director, consultant, independent contractor, or advisor providing services to
the Company or any Affiliate, or any such person to whom an offer of employment
or engagement with the Company or any Affiliate is extended. An Eligible Person
must be a natural person.

(k)       “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended.

 

 

(l)       “Fair Market Value” with respect to one Share as of any date shall
mean (a) if the Share is listed on any established stock exchange, the price of
one Share at the close of the regular trading session of such market or exchange
on such date, as reported by The Wall Street Journal or a comparable reporting
service, or, if no sale of Shares shall have occurred on such date, on the next
preceding date on which there was a sale of Shares; (b) if the Shares are not so
listed on any established stock exchange, the average of the closing “bid” and
“asked” prices quoted by the OTC Bulletin Board, the National Quotation Bureau,
or any comparable reporting service on such date or, if there are no quoted
“bid” and “asked” prices on such date, on the next preceding date for which
there are such quotes for a Share; or (c) if the Shares are not publicly traded
as of such date, the per share value of a Share, as determined by the Board, or
any duly authorized Committee of the Board, in its sole discretion, by applying
principles of valuation with respect thereto.

(m)       “Incentive Stock Option” shall mean an option granted under
Section 6(a) of the Plan that is intended to meet the requirements of
Section 422 of the Code or any successor provision.

(n)       “Non-Qualified Stock Option” shall mean an option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.

(o)       “Option” shall mean an Incentive Stock Option or a Non-Qualified Stock
Option to purchase shares of the Company.

(p)       “Other Stock-Based Award” shall mean any right granted under
Section 6(e) of the Plan.

(q)       “Participant” shall mean an Eligible Person designated to be granted
an Award under the Plan.

(r)       “Plan” shall mean the NI Holdings, Inc. 2020 Stock and Incentive Plan,
as amended from time to time.

(s)       “Prior Plan” shall mean the NI Holdings, Inc. 2017 Stock and Incentive
Plan.

(t)       “Restricted Stock” shall mean any Share granted under Section 6(c) of
the Plan.

(u)       “Restricted Stock Unit” shall mean any unit granted under Section 6(c)
of the Plan evidencing the right to receive a Share (or a cash payment equal to
the Fair Market Value of a Share) at some future date.

(v)       “Rule 16b-3” shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, or
any successor rule or regulation.

(w)       “Section 409A” shall mean Section 409A of the Code, or any successor
provision, and applicable Treasury Regulations and other applicable guidance
thereunder.

(x)       “Securities Act” shall mean the Securities Act of 1933, as amended.

 

 

(y)       “Share” or “Shares” shall mean common shares with $0.01 par value in
the capital of the Company (or such other securities or property as may become
subject to Awards pursuant to an adjustment made under Section 4(c) of the
Plan).

(z)       “Specified Employee” shall mean a specified employee as defined in
Section 409A(a)(2)(B) of the Code or applicable proposed or final regulations
under Section 409A, determined in accordance with procedures established by the
Company and applied uniformly with respect to all plans maintained by the
Company that are subject to Section 409A.

(aa)       “Stock Appreciation Right” shall mean any right granted under
Section 6(b) of the Plan.

Section 3.       Administration

(a)       Power and Authority of the Committee. The Plan shall be administered
by the Committee. Subject to the express provisions of the Plan and to
applicable law, the Committee shall have full power and authority to:
(i) designate Participants; (ii) determine the type or types of Awards to be
granted to each Participant under the Plan; (iii) determine the number of Shares
to be covered by (or the method by which payments or other rights are to be
calculated in connection with) each Award; (iv) determine the terms and
conditions of any Award or Award Agreement, including any terms relating to the
forfeiture of any Award and the forfeiture, recapture or disgorgement of any
cash, Shares or other amounts payable with respect to any Award; (v) amend the
terms and conditions of any Award or Award Agreement, subject to the limitations
under Sections 6 and 7; (vi) accelerate the exercisability of any Award or the
lapse of any restrictions relating to any Award, subject to the limitations of
Sections 6 and 7; (vii) determine whether, to what extent and under what
circumstances Awards may be exercised or settled in cash, Shares or a
combination thereof, or canceled, forfeited or suspended; (viii) determine
whether, to what extent and under what circumstances amounts payable with
respect to an Award under the Plan shall be deferred either automatically or at
the election of the holder thereof or the Committee, subject to the requirements
of Section 409A; (ix) interpret and administer the Plan and any instrument or
agreement, including an Award Agreement, relating to the Plan; (x) establish,
amend, suspend or waive such rules and regulations and appoint such agents as it
shall deem appropriate for the proper administration of the Plan; (xi) make any
other determination and take any other action that the Committee deems necessary
or desirable for the administration of the Plan; and (xii) adopt such
modifications, rules, procedures and sub-plans as may be necessary or desirable
to comply with provisions of the laws of non-U.S. jurisdictions in which the
Company or an Affiliate may operate, including, without limitation, establishing
any special rules for Affiliates, Eligible Persons or Participants located in
any particular country, in order to meet the objectives of the Plan and to
ensure the viability of the intended benefits of Awards granted to Participants
located in such non-U.S. jurisdictions. Unless otherwise expressly provided in
the Plan, all designations, determinations, interpretations and other decisions
under or with respect to the Plan or any Award or Award Agreement shall be
within the sole discretion of the Committee, may be made at any time and shall
be final, conclusive and binding upon any Participant, any holder or beneficiary
of any Award or Award Agreement, and any employee of the Company or any
Affiliate.

 

 

(b)       Delegation. The Committee may delegate to one or more officers or
Directors of the Company, subject to such terms, conditions and limitations as
the Committee may establish in its sole discretion, the authority to grant
Awards; provided, however, that the Committee shall not delegate such authority
(i) with regard to grants of Awards to be made to officers of the Company or any
Affiliate who are subject to Section 16 of the Exchange Act or (ii) in such a
manner as would cause the Plan not to comply with the requirements of applicable
exchange rules or applicable law.

(c)       Power and Authority of the Board. Notwithstanding anything to the
contrary contained herein, (i) the Board may, at any time and from time to time,
without any further action of the Committee, exercise the powers and duties of
the Committee under the Plan, unless the exercise of such powers and duties by
the Board would cause the Plan not to comply with the requirements of Rule
16b-3; and (ii) only the Committee (or another committee of the Board comprised
of directors who qualify as independent directors within the meaning of the
independence rules of any applicable securities exchange where the Shares are
then listed) may grant Awards to Directors who are not also employees of the
Company or an Affiliate.

(d)       Indemnification. To the full extent permitted by law, (i) no member of
the Board, the Committee or any person to whom the Committee delegates authority
under the Plan shall be liable for any action or determination taken or made in
good faith with respect to the Plan or any Award made under the Plan, and
(ii) the members of the Board, the Committee and each person to whom the
Committee delegates authority under the Plan shall be entitled to
indemnification by the Company with regard to such actions and determinations.
The provisions of this paragraph shall be in addition to such other rights of
indemnification as a member of the Board, the Committee or any other person may
have by virtue of such person’s position with the Company.

Section 4.       Shares Available for Awards

(a)       Shares Available.

(i)Subject to adjustment as provided in Section 4(c) of the Plan, the aggregate
number of Shares that may be issued under all Awards under the Plan shall equal
1,000,000 (the authorized net increase of Shares in connection with the adoption
of the Plan), plus any Shares subject to any outstanding award under the Prior
Plan that, after May 27, 2020, are not purchased or are forfeited or reacquired
by the Company, or otherwise not delivered to the Participant due to termination
or cancellation of such award, subject to the share counting provisions of
Section 4(b) below.

(ii)On and after stockholder approval of this Plan, no awards shall be granted
under the Prior Plan, but all outstanding awards previously granted under the
Prior Plan shall remain outstanding and subject to the terms of the Prior Plan.

The aggregate number of Shares that may be issued under all Awards under the
Plan shall be reduced by Shares subject to Awards issued under the Plan in
accordance with the Share counting rules described in Section 4(b) below. When
determining the Shares added to and subtracted from the aggregate reserve above,
the number of Shares added or subtracted shall be also determined in accordance
with the Share counting rules described in Section 4(b) below.

 

 

(b)       Counting Shares. Except as set forth in this Section 4(b) below, if an
Award entitles the holder thereof to receive or purchase Shares, the number of
Shares covered by such Award or to which such Award relates shall be counted on
the date of grant of such Award against the aggregate number of Shares available
for granting Awards under the Plan.

(i)Shares Added Back to Reserve. Subject to the limitations in Section 4(b)(ii)
below, if any Shares covered by an Award or to which an Award relates are not
purchased or are forfeited or are reacquired by the Company, or if an Award
otherwise terminates or is cancelled without delivery of any Shares, then the
number of Shares counted against the aggregate number of Shares available under
the Plan with respect to such Award, to the extent of any such forfeiture,
reacquisition by the Company, termination or cancellation, shall again be
available for granting Awards under the Plan.

(ii)Shares Not Added Back to Reserve. Notwithstanding anything to the contrary
in Section 4(b)(i) above, the following Shares will not again become available
for issuance under the Plan: (A) any Shares which would have been issued upon
any exercise of an Option but for the fact that the exercise price was paid by a
“net exercise” pursuant to Section 6(a)(iii)(B) or any Shares tendered in
payment of the exercise price of an Option; (B) any Shares withheld by the
Company or Shares tendered to satisfy any tax withholding obligation with
respect to an Award; (C) Shares covered by a stock settled Stock Appreciation
Right issued under the Plan that are not issued in connection with settlement in
Shares upon exercise; or (D) Shares that are repurchased by the Company using
Option exercise proceeds.

(iii)Cash-Only Awards. Awards that do not entitle the holder thereof to receive
or purchase Shares shall not be counted against the aggregate number of Shares
available for Awards under the Plan.

(iv)Substitute Awards Relating to Acquired Entities. Shares issued under Awards
granted in substitution for awards previously granted by an entity that is
acquired by or merged with the Company or an Affiliate shall not be counted
against the aggregate number of Shares available for Awards under the Plan.

(c)       Adjustments. In the event that any dividend (other than a regular cash
dividend) or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of Shares or other securities of the Company, issuance of
warrants or other rights to purchase Shares or other securities of the Company
or other similar corporate transaction or event affects the Shares such that an
adjustment is necessary in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan,
then the Committee shall, in such manner as it may deem equitable, adjust any or
all of (i) the number and type of Shares (or other securities or other property)
that thereafter may be made the subject of Awards, (ii) the number and type of
Shares (or other securities or other property) subject to outstanding Awards,
(iii) the purchase price or exercise price with respect to any Award and
(iv) the limitations contained in Section 4(d)(i) below; provided, however, that
the number of Shares covered by any Award or to which such Award relates shall
always be a whole number. Such adjustment shall be made by the Committee or the
Board, whose determination in that respect shall be final, binding and
conclusive.

 

 

(d)       Award Limitations Under the Plan.

(i)Annual Limitations for Awards Granted to Eligible Persons Other Than
Non-Employee Directors. No Eligible Person who is an employee, officer,
consultant, independent contractor or advisor may be granted any Award or Awards
for more than 100,000 Shares (subject to adjustment as provided for in
Section 4(c) of the Plan), in the aggregate in any calendar year.

(ii)Limitation for Awards Granted to Non-Employee Directors. No Director who is
not also an employee of the Company or an Affiliate may be granted any Award or
Awards denominated in Shares that exceed in the aggregate $150,000 (such value
computed as of the date of grant in accordance with applicable financial
accounting rules) in any calendar year. The foregoing limit shall not apply to
any Award made pursuant to any election by the Director to receive an Award in
lieu of all or a portion of annual and committee retainers and annual meeting
fees.

Section 5.       Eligibility

Any Eligible Person shall be eligible to be designated as a Participant. In
determining which Eligible Persons shall receive an Award and the terms of any
Award, the Committee may take into account the nature of the services rendered
by the respective Eligible Persons, their present and potential contributions to
the success of the Company or such other factors as the Committee, in its
discretion, shall deem relevant. Notwithstanding the foregoing, an Incentive
Stock Option may only be granted to full-time or part-time employees (which term
as used herein includes, without limitation, officers and Directors who are also
employees), and an Incentive Stock Option shall not be granted to an employee of
an Affiliate unless such Affiliate is also a “subsidiary corporation” of the
Company within the meaning of Section 424(f) of the Code or any successor
provision.

Section 6.       Awards

(a)       Options. The Committee is hereby authorized to grant Options to
Eligible Persons with the following terms and conditions and with such
additional terms and conditions not inconsistent with the provisions of the Plan
as the Committee shall determine:

(i)Exercise Price. The purchase price per Share purchasable under an Option
shall be determined by the Committee and shall not be less than one hundred
percent (100%) of the Fair Market Value of a Share on the date of grant of such
Option; provided, however, that the Committee may designate a purchase price
below Fair Market Value on the date of grant if the Option is granted in
substitution for a stock option previously granted by an entity that is acquired
by or merged with the Company or an Affiliate.

 

 

(ii)Option Term. The term of each Option shall be fixed by the Committee at the
date of grant but shall not be longer than 10 years from the date of grant.
Notwithstanding the foregoing, the Committee may provide in the terms of an
Option (either at grant or by subsequent modification) that, to the extent
consistent with Section 409A, in the event that on the last business day of the
term of an Option (other than an Incentive Stock Option) (i) the exercise of the
Option is prohibited by applicable law or (ii) Shares may not be purchased or
sold by certain employees or directors of the Company due to the “black-out
period” of a Company policy or a “lock-up” agreement undertaken in connection
with an issuance of securities by the Company, the term of the Option shall be
extended for a period of not more than thirty (30) days following the end of the
legal prohibition, black-out period or lock-up agreement.

(iii)Time and Method of Exercise. The Committee shall determine the time or
times at which an Option may be exercised within the Option term, either in
whole or in part, and the method of exercise, except that any exercise price
tendered shall be in either cash, Shares having a Fair Market Value on the
exercise date equal to the applicable exercise price or a combination thereof,
as determined by the Committee.

(A)Promissory Notes. For avoidance of doubt, the Committee may not accept a
promissory note as consideration.

(B)Net Exercises. The terms of any Option may be written to permit the Option to
be exercised by delivering to the Participant a number of Shares having an
aggregate Fair Market Value (determined as of the date of exercise) equal to the
excess, if any, of the Fair Market Value of the Shares underlying the Option
being exercised, on the date of exercise, over the exercise price of the Option
for such Shares.

(iv)       Incentive Stock Options. Notwithstanding anything in the Plan to the
contrary, the following additional provisions shall apply to the grant of stock
options which are intended to qualify as Incentive Stock Options:

(A)The aggregate number of Shares that may be issued under all Incentive Stock
Options under the Plan shall be 1,000,000 Shares.

(B)The Committee will not grant Incentive Stock Options in which the aggregate
Fair Market Value (determined as of the time the Option is granted) of the
Shares with respect to which Incentive Stock Options are exercisable for the
first time by any Participant during any calendar year (under this Plan and all
other plans of the Company and its Affiliates) shall exceed $100,000.

(C)All Incentive Stock Options must be granted within ten (10) years from the
earlier of the date on which this Plan was adopted by the Board or the date this
Plan was approved by the shareholders of the Company.

(D)Unless sooner exercised, all Incentive Stock Options shall expire and no
longer be exercisable no later than ten (10) years after the date of grant;
provided, however, that in the case of a grant of an Incentive Stock Option to a
Participant who, at the time such Option is granted, owns (within the meaning of
Section 422 of the Code) stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of its
Affiliates, such Incentive Stock Option shall expire and no longer be
exercisable no later than five (5) years from the date of grant.

(E)The purchase price per Share for an Incentive Stock Option shall be not less
than one hundred percent (100%) of the Fair Market Value of a Share on the date
of grant of the Incentive Stock Option; provided, however, that, in the case of
the grant of an Incentive Stock Option to a Participant who, at the time such
Option is granted, owns (within the meaning of Section 422 of the Code) stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or of its Affiliates, the purchase price per
Share purchasable under an Incentive Stock Option shall be not less than one
hundred ten percent (110%) of the Fair Market Value of a Share on the date of
grant of the Incentive Stock Option.

(F)Any Incentive Stock Option authorized under the Plan shall contain such other
provisions as the Committee shall deem advisable, but shall in all events be
consistent with and contain all provisions required in order to qualify the
Option as an Incentive Stock Option.

(b)       Stock Appreciation Rights. The Committee is hereby authorized to grant
Stock Appreciation Rights to Eligible Persons subject to the terms of the Plan
and any applicable Award Agreement. A Stock Appreciation Right granted under the
Plan shall confer on the holder thereof a right to receive upon exercise thereof
the excess of (i) the Fair Market Value of one Share on the date of exercise
over (ii) the grant price of the Stock Appreciation Right as specified by the
Committee, which price shall not be less than one hundred percent (100%) of the
Fair Market Value of one Share on the date of grant of the Stock Appreciation
Right; provided, however, that the Committee may designate a grant price below
Fair Market Value on the date of grant if the Stock Appreciation Right is
granted in substitution for a stock appreciation right previously granted by an
entity that is acquired by or merged with the Company or an Affiliate. Subject
to the terms of the Plan and any applicable Award Agreement, the grant price,
term, methods of exercise, dates of exercise, methods of settlement and any
other terms and conditions of any Stock Appreciation Right shall be as
determined by the Committee (except that the term of each Stock Appreciation
Right shall be subject to the term limitation in Section 6(a)(ii) applicable to
Options). The Committee may impose such conditions or restrictions on the
exercise of any Stock Appreciation Right as it may deem appropriate.

 

 

(c)       Restricted Stock and Restricted Stock Units. The Committee is hereby
authorized to grant an Award of Restricted Stock and Restricted Stock Units to
Eligible Persons with the following terms and conditions and with such
additional terms and conditions not inconsistent with the provisions of the Plan
as the Committee shall determine:

(i)Restrictions. Shares of Restricted Stock and Restricted Stock Units shall be
subject to such restrictions as the Committee may impose when granting Awards
(including, without limitation, any limitation on the right to vote a Share of
Restricted Stock or the right to receive any dividend or other right or property
with respect thereto), which restrictions may lapse separately or in combination
at such time or times, in such installments or otherwise as the Committee may
deem appropriate. (Notwithstanding the foregoing, rights to dividend or Dividend
Equivalent payments shall be subject to the limitations described in Section
6(d)). For purposes of clarity and without limiting the Committee’s general
authority under Section 3(a), vesting of such Awards may, at the Committee’s
discretion, be conditioned upon the Participant’s completion of a specified
period of service with the Company or an Affiliate, or upon the achievement of
one or more performance goals established by the Committee, or upon any
combination of service-based and performance-based conditions (subject to the
minimum requirements in Section 6).

(ii)Issuance and Delivery of Shares. Any Restricted Stock granted under the Plan
shall be issued at the time such Awards are granted and may be evidenced in such
manner as the Committee may deem appropriate, including book-entry registration
or issuance of a stock certificate or certificates, which certificate or
certificates shall be held by the Company or held in nominee name by the stock
transfer agent or brokerage service selected by the Company to provide such
services for the Plan. Shares representing Restricted Stock that are no longer
subject to restrictions shall be delivered (including by updating the book-entry
registration) to the Participant promptly after the applicable restrictions
lapse or are waived. In the case of Restricted Stock Units, no Shares shall be
issued at the time such Awards are granted. Upon the lapse or waiver of
restrictions and the restricted period relating to Restricted Stock Units
evidencing the right to receive Shares, such Shares shall be issued and
delivered to the holder of the Restricted Stock Units.

(d)       Dividends and Dividend Equivalents. The Committee is hereby authorized
to grant Dividend Equivalents to Eligible Persons under which the Participant
shall be entitled to receive payments (in cash, Shares, other securities, other
Awards or other property as determined in the discretion of the Committee)
equivalent to the amount of cash dividends paid by the Company to holders of
Shares with respect to a number of Shares determined by the Committee. Subject
to the terms of the Plan and any applicable Award Agreement, such Dividend
Equivalents may have such terms and conditions as the Committee shall determine.
Notwithstanding the foregoing, (i) the Committee may not grant Dividend
Equivalents to Eligible Persons in connection with grants of Options, Stock
Appreciation Rights or other Awards the value of which is based solely on an
increase in the value of the Shares after the grant of such Award, and
(ii) dividend and Dividend Equivalent amounts with respect to any Share
underlying any other Award may be accrued but not paid to a Participant until
all conditions or restrictions relating to such Share have been satisfied,
waived or lapsed.

(e)       Other Stock-Based Awards. The Committee is hereby authorized to grant
to Eligible Persons such other Awards that are denominated or payable in, valued
in whole or in part by reference to, or otherwise based on or related to, Shares
(including, without limitation, securities convertible into Shares), as are
deemed by the Committee to be consistent with the purpose of the Plan. The
Committee shall determine the terms and conditions of such Awards, subject to
the terms of the Plan and any applicable Award Agreement. No Award issued under
this Section 6(f) shall contain a purchase right or an option-like exercise
feature.

(f)       General.

(i)Consideration for Awards. Awards may be granted for no cash consideration or
for any cash or other consideration as may be determined by the Committee or
required by applicable law.

(ii)Awards May Be Granted Separately or Together. Awards may, in the discretion
of the Committee, be granted either alone or in addition to, in tandem with or
in substitution for any other Award or any award granted under any other plan of
the Company or any Affiliate. Awards granted in addition to or in tandem with
other Awards or in addition to or in tandem with awards granted under any other
plan of the Company or any Affiliate may be granted either at the same time as
or at a different time from the grant of such other Awards or awards.

(iii)Limits on Transfer of Awards. No Award (other than fully vested and
unrestricted Shares issued pursuant to any Award) and no right under any such
Award shall be transferable by a Participant other than by will or by the laws
of descent and distribution, and no Award (other than fully vested and
unrestricted Shares issued pursuant to any Award) or right under any such Award
may be pledged, alienated, attached or otherwise encumbered, and any purported
pledge, alienation, attachment or encumbrance thereof shall be void and
unenforceable against the Company or any Affiliate. Notwithstanding the
foregoing, the Committee may permit the transfer of an Award to family members
if such transfer is for no value and in accordance with the rules of Form S-8.
The Committee may also establish procedures as it deems appropriate for a
Participant to designate a person or persons, as beneficiary or beneficiaries,
to exercise the rights of the Participant and receive any property distributable
with respect to any Award in the event of the Participant’s death.

 

 

(iv)Restrictions; Securities Exchange Listing. All Shares or other securities
delivered under the Plan pursuant to any Award or the exercise thereof shall be
subject to such restrictions as the Committee may deem advisable under the Plan,
applicable federal or state securities laws and regulatory requirements, and the
Committee may cause appropriate entries to be made with respect to, or legends
to be placed on the certificates for, such Shares or other securities to reflect
such restrictions. The Company shall not be required to deliver any Shares or
other securities covered by an Award unless and until the requirements of any
federal or state securities or other laws, rules or regulations (including the
rules of any securities exchange) as may be determined by the Company to be
applicable are satisfied.

(v)Prohibition on Option and Stock Appreciation Right Repricing. Except as
provided in Section 4(c) hereof, the Committee may not, without prior approval
of the Company’s shareholders, seek to effect any re-pricing of any previously
granted, “underwater” Option or Stock Appreciation Right by: (i) amending or
modifying the terms of the Option or Stock Appreciation Right to lower the
exercise price; (ii) canceling the underwater Option or Stock Appreciation Right
and granting either (A) replacement Options or Stock Appreciation Rights having
a lower exercise price; or (B) Restricted Stock, Restricted Stock Units or Other
Stock-Based Award in exchange; or (iii) cancelling or repurchasing the
underwater Option or Stock Appreciation Right for cash or other securities. An
Option or Stock Appreciation Right will be deemed to be “underwater” at any time
when the Fair Market Value of the Shares covered by such Option or Stock
Appreciation Right is less than the exercise price.

(vi)Section 409A Provisions. Notwithstanding anything in the Plan or any Award
Agreement to the contrary, to the extent that any amount or benefit that
constitutes “deferred compensation” to a Participant under Section 409A and
applicable guidance thereunder is otherwise payable or distributable to a
Participant under the Plan or any Award Agreement solely by reason of the
occurrence of a change in control or due to the Participant’s disability or
“separation from service” (as such term is defined under Section 409A), such
amount or benefit will not be payable or distributable to the Participant by
reason of such circumstance unless the Committee determines in good faith that
(i) the circumstances giving rise to such change in control event, disability or
separation from service meet the definition of a change in control event,
disability, or separation from service, as the case may be, in
Section 409A(a)(2)(A) of the Code and applicable proposed or final regulations,
or (ii) the payment or distribution of such amount or benefit would be exempt
from the application of Section 409A by reason of the short-term deferral
exemption or otherwise. Any payment or distribution that otherwise would be made
to a Participant who is a Specified Employee (as determined by the Committee in
good faith) on account of separation from service may not be made before the
date which is six months after the date of the Specified Employee’s separation
from service (or if earlier, upon the Specified Employee’s death) unless the
payment or distribution is exempt from the application of Section 409A by reason
of the short-term deferral exemption or otherwise.

 

 

(vii)Minimum Vesting. Except as provided below, in the case of any Award granted
to an Eligible Person other than a non-employee Director, no Award shall be
granted with terms providing for any right of exercise or lapse of any vesting
obligations earlier than a date that is at least one year following the date of
grant (or, in the case of vesting based upon performance based objectives,
exercise and vesting restrictions cannot lapse earlier than the one-year
anniversary measured from the commencement of the period over which performance
is evaluated). In the case of any Award granted to a non-employee Director, no
Award shall be granted with terms providing for any right of exercise or lapse
of any vesting obligations earlier than the date of the Company’s next annual
shareholder meeting. Notwithstanding the foregoing, the following Awards that do
not comply with the foregoing minimum exercise and vesting requirements may be
issued:

(A)substitute Awards granted in connection with awards that are assumed,
converted or substituted pursuant to a merger, acquisition or similar
transaction entered into by the Company or any of its subsidiaries;

 

(B)shares delivered in lieu of fully vested cash Awards or any cash incentive
compensation earned by a Participant, provided that the performance period for
such incentive compensation was at least one fiscal year; and

 

(C)any additional Awards the Committee may grant, up to a maximum of five
percent (5%) of the aggregate number of Shares available for issuance under this
Plan. For purposes of counting Shares against the five percent (5%) limitation,
the Share counting rules under Section 4 of the Plan apply.

Nothing in this Section 6 shall limit the authority of the Committee to provide
for the acceleration of the exercisability of any Award or the lapse of any
restrictions relating to any Award except where expressly limited in
Section 6(f)(viii).

 

 

(viii)Acceleration of Vesting or Exercisability. No Award Agreement shall
accelerate the exercisability of any Award or the lapse of restrictions relating
to any Award in connection with a change-in-control event unless such
acceleration occurs upon the consummation of (or effective immediately prior to
the consummation of, provided that the consummation subsequently occurs) such
change-in-control event.

Section 7.       Amendment and Termination; Corrections

(a)       Amendments to the Plan and Awards. The Board may from time to time
amend, suspend or terminate this Plan, and the Committee may amend the terms of
any previously granted Award, provided that no amendment to the terms of any
previously granted Award may (except as expressly provided in the Plan)
materially and adversely alter or impair the terms or conditions of the Award
previously granted to a Participant under this Plan without the written consent
of the Participant or holder thereof. Any amendment to this Plan, or to the
terms of any Award previously granted, is subject to compliance with all
applicable laws, rules, regulations and policies of any applicable governmental
entity or securities exchange, including receipt of any required approval from
the governmental entity or stock exchange. For greater certainty and without
limiting the foregoing, the Board may amend, suspend, terminate or discontinue
the Plan, and the Committee may amend or alter any previously granted Award, as
applicable, without obtaining the approval of shareholders of the Company in
order to:

(i)amend the eligibility for, and limitations or conditions imposed upon,
participation in the Plan;

(ii)subject to the limitations in Section 6, amend any terms relating to the
granting or exercise of Awards, including but not limited to terms relating to
the amount and payment of the exercise price, or the vesting, expiry, assignment
or adjustment of Awards, or otherwise waive any conditions of or rights of the
Company under any outstanding Award, prospectively or retroactively;

(iii)make changes that are necessary or desirable to comply with applicable
laws, rules, regulations and policies of any applicable governmental entity or
stock exchange (including amendments to Awards necessary or desirable to
maximize any available tax deduction or to avoid any adverse tax results, and no
action taken to comply with such laws, rules, regulations and policies shall be
deemed to impair or otherwise adversely alter or impair the rights of any holder
of an Award or beneficiary thereof); or

(iv)amend any terms relating to the administration of the Plan, including the
terms of any administrative guidelines or other rules related to the Plan.

For greater certainty and except as provided in Section 4(c), prior approval of
the shareholders of the Company shall be required for any amendment to the Plan
or an Award that would:

 

 

(I)require shareholder approval under the rules or regulations of the Securities
and Exchange Commission, the NASDAQ or any other securities exchange that are
applicable to the Company;

(II)increase the number of shares authorized under the Plan as specified in
Section 4(a) of the Plan;

(III)permit repricing of Options or Stock Appreciation Rights, which is
currently prohibited by Section 6 of the Plan;

(IV)permit the award of Options or Stock Appreciation Rights at a price less
than one hundred percent (100%) of the Fair Market Value of a Share on the date
of grant of such Option or Stock Appreciation Right, contrary to the provisions
of Section 6(a) and Section 6(b) of the Plan;

(V)increase the maximum term permitted for Options and Stock Appreciation Rights
as specified in Section 6(a) and Section 6(b); or

(VI)increase the number of shares subject to the annual limitations contained in
Section 4(d) of the Plan.

(b)       Corporate Transactions. In the event of any reorganization, merger,
consolidation, split-up, spin-off, combination, plan of arrangement, take-over
bid or tender offer, repurchase or exchange of Shares or other securities of the
Company or any other similar corporate transaction or event involving the
Company (or the Company shall enter into a written agreement to undergo such a
transaction or event), the Committee or the Board may, in its sole discretion
but subject to the limitations in Section 6 (e.g., limitations on re-pricing and
waiver of vesting restrictions), provide for any of the following to be
effective upon the consummation of the event (or effective immediately prior to
the consummation of the event, provided that the consummation of the event
subsequently occurs), and no action taken under this Section 7(b) shall be
deemed to impair or otherwise adversely alter or impair the rights of any holder
of an Award or beneficiary thereof:

(i)either (A) termination of any Award, whether or not vested, in exchange for
an amount of cash and/or other property, if any, equal to the amount that would
have been attained upon the exercise of the vested portion of the Award or
realization of the Participant’s vested rights (and, for the avoidance of doubt,
if, as of the date of the occurrence of the transaction or event described in
this Section 7(b)(i)(A), the Committee or the Board determines in good faith
that no amount would have been attained upon the exercise of the Award or
realization of the Participant’s rights, then the Award may be terminated by the
Company without any payment) or (B) the replacement of the Award with other
rights or property selected by the Committee or the Board, in its sole
discretion;

(ii)that the Award be assumed by the successor or survivor corporation, or a
parent or subsidiary thereof, or shall be substituted for by similar options,
rights or awards covering the stock of the successor or survivor corporation, or
a parent or subsidiary thereof, with appropriate adjustments as to the number
and kind of shares and prices;

 

 

(iii)that the Award shall be exercisable or payable or fully vested with respect
to all Shares covered thereby, notwithstanding anything to the contrary in the
applicable Award Agreement; or

(iv)that the Award cannot vest, be exercised or become payable after a date
certain in the future, which may be the effective date of the event.

(c)       Correction of Defects, Omissions and Inconsistencies. The Committee
may, without prior approval of the shareholders of the Company, correct any
defect, supply any omission or reconcile any inconsistency in the Plan or in any
Award or Award Agreement in the manner and to the extent it shall deem desirable
to implement or maintain the effectiveness of the Plan.

Section 8.       Income Tax Withholding

In order to comply with all applicable federal, state, local or foreign income
tax laws or regulations, the Company may take such action as it deems
appropriate to ensure that all applicable federal, state, local or foreign
payroll, withholding, income or other taxes, which are the sole and absolute
responsibility of a Participant, are withheld or collected from such
Participant. Without limiting the foregoing, for avoidance of doubt, the
Committee, in its discretion and subject to such additional terms and conditions
as it may adopt, may permit the Participant to satisfy such tax obligation by
(a) electing to have the Company withhold a portion of the Shares otherwise to
be delivered upon exercise or receipt of (or the lapse of restrictions relating
to) such Award with a Fair Market Value equal to the amount of such taxes
(subject to any limitations required by ASC Topic 718 to avoid adverse
accounting treatment); (b) delivering to the Company Shares other than Shares
issuable upon exercise or receipt of (or the lapse of restrictions relating to)
such Award with a Fair Market Value equal to the amount of such taxes or (c) by
any other means set forth in the applicable Award Agreement.

Section 9.       General Provisions

(a)       No Rights to Awards. No Eligible Person, Participant or other person
shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Eligible Persons, Participants or
holders or beneficiaries of Awards under the Plan. The terms and conditions of
Awards need not be the same with respect to any Participant or with respect to
different Participants.

(b)       Award Agreements. No Participant shall have rights under an Award
granted to such Participant unless and until an Award Agreement shall have been
signed by the Participant (if requested by the Company), or until such Award
Agreement is delivered and accepted through an electronic medium in accordance
with procedures established by the Company. An Award Agreement need not be
signed by a representative of the Company unless required by the Committee. Each
Award Agreement shall be subject to the applicable terms and conditions of the
Plan and any other terms and conditions (not inconsistent with the Plan)
determined by the Committee.

 

 

(c)       Plan Provisions Control. In the event that any provision of an Award
Agreement conflicts with or is inconsistent in any respect with the terms of the
Plan as set forth herein or subsequently amended, the terms of the Plan shall
control.

(d)       No Rights of Shareholders. Except with respect to Shares issued under
Awards (and subject to such conditions as the Committee may impose on such
Awards), neither a Participant nor the Participant’s legal representative shall
be, or have any of the rights and privileges of, a shareholder of the Company
with respect to any Shares issuable upon the exercise or payment of any Award,
in whole or in part, unless and until such Shares have been issued.

(e)       No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company or any Affiliate from adopting or continuing in
effect other or additional compensation plans or arrangements, and such plans or
arrangements may be either generally applicable or applicable only in specific
cases.

(f)       No Right to Employment or Directorship. The grant of an Award shall
not be construed as giving a Participant the right to be retained as an employee
of the Company or any Affiliate, or the right to be retained as a Director, nor
will it affect in any way the right of the Company or an Affiliate to terminate
a Participant’s employment at any time, with or without cause, or remove a
Director in accordance with applicable law. In addition, the Company or an
Affiliate may at any time dismiss a Participant from employment, or remove a
Director who is a Participant, free from any liability or any claim under the
Plan or any Award, unless otherwise expressly provided in the Plan or in any
Award Agreement. Nothing in this Plan shall confer on any person any legal or
equitable right against the Company or any Affiliate, directly or indirectly, or
give rise to any cause of action at law or in equity against the Company or an
Affiliate. Under no circumstances shall any person ceasing to be an employee or
Director of the Company or any Affiliate be entitled to any compensation for any
loss of any right or benefit under the Plan which such employee or Director
might otherwise have enjoyed but for termination of employment or directorship,
whether such compensation is claimed by way of damages for wrongful or unfair
dismissal, breach of contract or otherwise. By participating in the Plan, each
Participant shall be deemed to have accepted all the conditions of the Plan and
the terms and conditions of any rules and regulations adopted by the Committee
and shall be fully bound thereby.

(g)       Governing Law. The internal law, and not the law of conflicts, of the
State of North Dakota shall govern all questions concerning the validity,
construction and effect of the Plan or any Award, and any rules and regulations
relating to the Plan or any Award.

(h)       Severability. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal or unenforceable in any jurisdiction or
would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the Committee, materially altering the purpose or intent of
the Plan or the Award, such provision shall be stricken as to such jurisdiction
or Award, and the remainder of the Plan or any such Award shall remain in full
force and effect.

 

 

(i)       No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
person. To the extent that any person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
Affiliate.

(j)       Other Benefits. No compensation or benefit awarded to or realized by
any Participant under the Plan shall be included for the purpose of computing
such Participant’s compensation or benefits under any pension, retirement,
savings, profit sharing, group insurance, disability, severance, termination
pay, welfare or other benefit plan of the Company, unless required by law or
otherwise provided by such other plan.

(k)       No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash shall be paid in lieu of any fractional Share or whether such
fractional Share or any rights thereto shall be canceled, terminated or
otherwise eliminated.

(l)       Headings. Headings are given to the sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.

Section 10.       Clawback or Recoupment

All Awards under this Plan shall be subject to recovery or other penalties
pursuant to (i) any Company clawback policy, as may be adopted or amended from
time to time, or (ii) any applicable law, rule or regulation or applicable stock
exchange rule, including, without limitation, Section 304 of the Sarbanes-Oxley
Act of 2002, Section 954 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act and any applicable stock exchange listing rule adopted pursuant
thereto.

Section 11.       Effective Date of the Plan

The Plan was adopted by the Board at the NI Holdings, Inc. Board meeting on
February 25, 2020. The Plan shall be subject to approval by the shareholders of
the Company at the annual meeting of shareholders of the Company to be held on
May 27, 2020, and the Plan shall be effective as of the date of such shareholder
approval. On and after shareholder approval of the Plan, no awards shall be
granted under the Prior Plan, but all outstanding awards previously granted
under the Prior Plan shall remain outstanding and subject to the terms of the
Prior Plan.

Section 12.       Term of the Plan

No Award shall be granted under the Plan, and the Plan shall terminate on
February 25, 2030 or any earlier date of discontinuation or termination
established pursuant to Section 7(a) of the Plan. Unless otherwise expressly
provided in the Plan or in an applicable Award Agreement, any Award theretofore
granted may extend beyond such dates, and the authority of the Committee
provided for hereunder with respect to the Plan and any Awards, and the
authority of the Board to amend the Plan, shall extend beyond the termination of
the Plan.

 

 

 

The foregoing is hereby acknowledged as being the NI Holdings, Inc. 2020 Stock
and Incentive Plan as adopted by the Board of Directors on February 25, 2020 and
by the shareholders on May 27, 2020.

 

  NI Holdings, Inc.           By: /s/ Michael J. Alexander     Michael J.
Alexander     President and Chief Executive Officer