Exhibit 10.1

 

RLI CORP.
2015 LONG-TERM INCENTIVE PLAN

 

1.                                      Purpose. The purpose of the RLI Corp.
2015 Long-Term Incentive Plan (the “Plan”) is to promote the interests of the
Company and its shareholders by providing key personnel of the Company and its
Affiliates with an opportunity to acquire a proprietary interest in the Company
and reward them for achieving a high level of corporate performance and thereby
develop a strong incentive to put forth maximum effort for the continued success
and growth of the Company and its Affiliates.  In addition, the opportunity to
acquire a proprietary interest in the Company will aid in attracting and
retaining key personnel of outstanding ability.  The Plan is also intended to
provide Outside Directors with an opportunity to acquire a proprietary interest
in the Company, to compensate Outside Directors for their contribution to the
Company and to aid in attracting and retaining Outside Directors.  No further
awards shall be made under the Company’s Omnibus Stock Plan or the 2010
Long-Term Incentive Plan after the Effective Date of this Plan.

 

2.                                      Definitions, Gender and Number.

 

2.1.                            Definitions.  The capitalized terms used
elsewhere in the Plan have the meanings set forth below.

 

a.                                      “Affiliate” means any entity that is an
“eligible issuer” of Company Stock within the meaning of Code Section 409A.

 

b.                                      “Agreement” means a written contract
(i) consistent with the terms of the Plan entered into between the Company or an
Affiliate and a Participant and (ii) containing the terms and conditions of an
Award in such form and not inconsistent with the Plan as the Committee shall
approve from time to time, together with all amendments thereto, which
amendments may be unilaterally made by the Company (with the approval of the
Committee) unless such amendments are deemed by the Committee to be materially
adverse to the Participant and not required as a matter of law.

 

c.                                       “Award” or “Awards” means a grant made
under the Plan in the form of Restricted Stock, Restricted Stock Units, Options,
Stock Appreciation Rights or Performance Units.

 

d.                                      “Board” means the Board of Directors of
the Company.

 

e.                                       “Cause” means the Participant’s: 
(i) failure to comply with any material policies and procedures of the Company
or Affiliate; (ii) conduct reflecting dishonesty or disloyalty to the Company or
Affiliate, or which may have a negative impact on the reputation of the Company
or Affiliate; (iii) commission of a felony, theft or fraud, or violations of law
involving moral turpitude; (iv) failure to perform the

 

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material duties of his or her employment; (v) excessive absenteeism;
(vi) unethical behavior; or (vii) violation of a material policy of the
Company.  If a Participant’s employment is terminated for “Cause,” the date on
which the Participant’s employment is considered to be terminated, for purposes
hereof, shall be the time at which such Participant is instructed or notified to
cease performing job responsibilities for the Company or any Affiliate, whether
or not for other reasons, such as payroll, benefits or compliance with legal
procedures or requirements, he or she may still have other attributes of an
employee.

 

f.                                        “Change in Control” shall mean and
include each of the following:

 

i.                                          The date any “Person,” within the
meaning of Section 13(d) or 14(d) under the Exchange Act, including any group
(within the meaning of Section 13(d)(3) under the Exchange Act), becomes the
“Beneficial Owner,” as such term is defined in Rule 13d-3 promulgated under the
Exchange Act, of 30% or more of the combined voting power of the Company’s
outstanding shares, other than beneficial ownership by (A) the Company or any
subsidiary of the Company, (B) any employee benefit plan of the Company or any
subsidiary of the Company or (C) any entity of the Company for or pursuant to
the terms of any such plan.

 

Notwithstanding the foregoing, a Change in Control shall not occur as the result
of an acquisition of outstanding shares of the Company by the Company which, by
reducing the number of shares outstanding, increases the proportionate number of
shares beneficially owned by a Person to 30% or more of the shares of the
Company then outstanding; provided, however, that if a Person becomes the
Beneficial Owner of 30% or more of the shares of the Company then outstanding by
reason of share purchases by the Company and shall, after such share purchases
by the Company, become the Beneficial Owner of any additional shares of the
Company, then a Change in Control shall be deemed to have occurred; or

 

ii.                                       The date the Company consummates a
merger or consolidation with another entity, or engages in a reorganization with
or a statutory share exchange or an exchange offer for the Company’s outstanding
voting stock of any class with another entity or acquires another entity by
means of a statutory share exchange or an exchange offer, or engages in a
similar transaction; provided that no Change in Control shall have occurred by
reason of this paragraph unless either:

 

(A)                               the stockholders of the Company immediately
prior to the consummation of the transaction would not, immediately after such
consummation, as a result of their beneficial ownership of voting stock of the
Company immediately prior to such consummation

 

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(I)                                   be the Beneficial Owners, directly or
indirectly, of securities of the resulting or acquiring entity entitled to elect
a majority of the members of the board of directors or other governing body of
the resulting or acquiring entity; and

 

(II)                              be the Beneficial Owners of the resulting or
acquiring entity in substantially the same proportion as their beneficial
ownership of the voting stock of the Company immediately prior to such
transaction; or

 

(B)                               those persons who were directors of the
Company immediately prior to the consummation of the proposed transaction would
not, immediately after such consummation, constitute a majority of the directors
of the resulting entity.

 

iii.                                    The date of the sale or disposition, in
one or a series of related transactions, of all or substantially all of the
assets of the Company to any Person (as defined in paragraph (i) above) other
than an Affiliate; or

 

iv.                                   The date the number of duly elected and
qualified directors of the Company who were not either elected by the Company’s
Board or nominated by the Board or its nominating/governance committee for
election by the shareholders shall constitute a majority of the total number of
directors of the Company as fixed by its Bylaws.

 

The Committee shall have full and final authority, which shall be exercised in
its discretion, to determine conclusively whether a Change in Control of the
Company has occurred pursuant to the above definition, and the date of the
occurrence of such Change in Control and any incidental matters relating
thereto.

 

In addition, if a Change in Control constitutes a payment event with respect to
any Award which provides for the deferral of compensation and is subject to Code
Section 409A, the transaction or event described in paragraph (i), (ii),
(iii) or (iv) with respect to such Award must also constitute a “change in
control event,” as defined in Treasury Regulation Section 1.409A-3(i)(5) to the
extent required by Section 409A.

 

g.                                       “Committee” means the Executive
Resources Committee of the Board, or any other committee of the Board comprised
solely of two or more Non-Employee Directors designated by the Board to
administer the Plan under Plan Section 3.1 and constituted so as to permit
grants thereby to comply with Exchange Act Rule 16b-3 and Code Section 162(m).

 

h.                                      “Company” means RLI Corp., an Illinois
corporation, or any successor to all or substantially all of its businesses by
merger, consolidation, purchase of assets or otherwise.

 

i.                                          “Covered Employee,” as of a
particular date, means a “covered employee” of the Company as of that date
within the meaning of Code Section 162(m)(3), or any

 

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subsequent authority, or any individual whom the Committee in its judgment
determines as of that date is likely to become a “covered employee” under Code
Section 162(m)(3).

 

j.                                         “Disabled” or “Disability,” with
respect to a Participant, means that the Participant satisfies the requirements
to receive long-term disability benefits under the Company-sponsored group
long-term disability plan in which the Participant participates without regard
to any waiting periods, or that the Participant has been determined by the
Social Security Administration to be eligible to receive Social Security
disability benefits.  In addition, if Disability constitutes a payment event
with respect to any Award which provides for the deferral of compensation and is
subject to Code Section 409A, the disability described in the preceding
sentences of this Section 2(j) must be a “disability” within the meaning of
Treasury Regulation Section 1.409A-3(i)(4).  A Participant shall not be
considered to be “Disabled” unless the Participant furnishes proof of the
Disability to the Company in such form and manner as the Company may require.

 

k.                                      “Effective Date” means the date
specified in Section 12.

 

l.                                          “Employee” means an employee
(including an officer or director who is also an employee) of the Company or an
Affiliate.

 

m.                                  “Exchange Act” means the Securities Exchange
Act of 1934, as amended and in effect from time to time or any successor
statute.

 

n.                                      “Exchange Act Rule 16b-3” means
Rule 16b-3 promulgated by the Securities and Exchange Commission under the
Exchange Act, as in force and in effect from time to time or any successor
regulation.

 

o.                                      “Fair Market Value” as of any date
means, unless otherwise expressly provided in the Plan:

 

i.                                          the closing sale price of a Share on
such date, or on the next business day, if such date is not a business day, as
reflected on the NYSE or any other national securities exchange registered under
the Exchange Act on which the Shares are traded, or

 

ii.                                       if clause (i) is inapplicable, the
mean between the closing “bid” and the closing “asked” quotation of a Share on
the date immediately preceding that date, or, if no closing bid or asked
quotation is made on that date, on the next preceding day on which a closing bid
and asked quotation is made, on the over-the-counter market or any other
quotation system then in use, or

 

iii.                                    if clauses (i) and (ii) are
inapplicable, what the Committee determines in good faith to be 100% of the fair
market value of a Share on that date,

 

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using such criteria as it shall determine, in its sole discretion, to be
appropriate for valuation.

 

The determination of Fair Market Value shall be subject to adjustment as
provided in Plan Section 16.

 

p.                                      “Full Value Award” means an Award in the
form of Restricted Stock, Restricted Stock Units or Performance Units.

 

q.                                      “Fundamental Change” means a dissolution
or liquidation of the Company, a sale of substantially all of the assets of the
Company, a merger or consolidation of the Company with or into any other
corporation, regardless of whether the Company is the surviving corporation, or
a statutory share exchange involving capital stock of the Company.

 

r.                                         “Good Reason” means any of the
following conditions arising without the consent of the Participant: (i) a
material diminution in base salary or in the opportunity for any bonus or
incentive compensation; (ii) a material diminution in the Participant’s
authority, duties or responsibilities; (iii) a material diminution in the
authority, duties or responsibilities of the supervisor to whom the Participant
is required to report, including a requirement that the Participant report to an
officer or employee instead of directly to the Board; (iv) a material diminution
in the budget over which the Participant retains authority; (v) a material
change in the geographic location at which the Participant must perform
services; or (vi) any action or inaction that results in a material breach in
the terms of an applicable employment agreement.  A termination will only be
considered to have been made for Good Reason if the Participant provides notice
of the existence of such condition to the Company or any successor employer
within 90 days of the existence of such condition.

 

s.                                        “Insider,” as of a particular date,
means any person who, as of that date is an officer of the Company as defined
under Exchange Act Rule 16a-1(f) or its successor provision.

 

t.                                         “Option” means a right to purchase
Stock.  Only options that are non-statutory options (i.e. options that do not
qualify for special tax treatment under Code Section 422) may be issued under
the Plan.

 

u.                                      “Outside Director” means a member of the
Board who is considered a non-employee director within the meaning of Exchange
Act Rule 16b-3(b)(3) or its successor provision and an outside director for
purposes of Code Section 162(m).

 

v.                                      “Participant” means a person or entity
to whom an Award is or has been made in accordance with the Plan.

 

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w.                                    “Performance Cycle” means the period of
time specified in an Agreement over which Performance Units are to be earned.

 

x.                                      “Performance Goals” means the
performance goals established by the Committee in connection with the grant of
an Award.  In the case of a grant of an Award other than an Option Award or
Stock Appreciation Right, to a Covered Employee (i) the Performance Goals shall
be based on specified levels of one or more of the following measures with
respect to the performance of the Company or a group, unit, Affiliate or an
individual:  specified levels of the Company’s stock price, book value,
comprehensive earnings, market share, sales, revenue, premiums, underwriting
profit, market value potential, earnings per share, return on equity, return on
capital, costs, cash flow, dividends paid, operating income, return on assets,
expense ratios, loss ratios or combined ratios, and (ii) shall be set by the
Committee within the time period prescribed by Code Section 162(m) and related
regulations.

 

y.                                      “Performance Unit” means an Award made
pursuant to Plan Section 11.

 

z.                                       “Plan” means this RLI Corp. 2015
Long-Term Incentive Plan, as may be amended and in effect from time to time.

 

aa.                               “Qualifying Termination” means an involuntary
Separation from Service or Separation from Service for Good Reason that occurs
within 2 years following a Change in Control.  In addition, if the Participant’s
Separation from Service occurs prior to a Change in Control and it is determined
that such termination (A) was at the request of a third party who has indicated
an intention or taken steps reasonably calculated to effect a Change in Control
and who subsequently effectuates a Change in Control or (B) otherwise occurred
in connection with, or in anticipation of, a Change in Control which actually
occurs, for purposes of this definition, the date of a Change in Control with
respect to the Participant shall mean the date immediately prior to the date of
Participant’s Termination of Employment.

 

bb.                               “Restricted Stock” means an Award of Stock
granted under Plan Section 7 so long as such Stock remains subject to the
restrictions described in Section 7  or the Agreement.

 

cc.                                 “Restricted Stock Unit” means the right to
receive a Share in the future granted under Section 8 of the Plan provided that
the requisite restrictions and conditions for payment of the Share are
satisfied, as set forth in the Agreement.

 

dd.                               “Retirement” or “Retires” means a
Participant’s Separation from Service on or after the date when the
Participant’s age plus years of service equal at least 75.

 

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ee.                                 “Section 16” or “Section 16(b)” means
Section 16 or Section 16(b), respectively, of the Exchange Act or any successor
statute and the rules and regulations promulgated thereunder as in effect and as
amended from time to time.

 

ff.                                   “Separation from Service,” of a
Participant,” has the meaning set forth in Code Section 409A(a)(2)(A)(i).

 

gg.                                 “Share” means a share of Stock.

 

hh.                               “Stock” means the common stock, par value
$1.00 per share, of the Company.

 

ii.                                       “Stock Appreciation Right” means a
right, the value of which is determined in relation to the appreciation in value
of Shares pursuant to an Award granted under Plan Section 10.

 

jj.                                     “Term” means the period during which an
Option Award or Stock Appreciation Right may be exercised or the period during
which the restrictions or terms and conditions placed on Restricted Stock,
Restricted Stock Units or any other Award are in effect.

 

2.2.                            Gender and Number.  Except when otherwise
indicated by the context, reference to the masculine gender shall include, when
used, the feminine gender and any term used in the singular shall also include
the plural.

 

3.                                      Administration and Indemnification

 

3.1.                            Administration

 

a.                                      The Committee shall administer the
Plan.  The Committee shall have exclusive power to (i) make Awards,
(ii) determine when and to whom Awards will be granted, the form of each Award,
the amount of each Award, and any other terms or conditions of each Award
consistent with the Plan, and (iii) determine whether, to what extent and under
what circumstances, Awards may be settled, paid or exercised in cash, Shares or
other Awards, or other property or canceled, forfeited or suspended.  Each Award
shall be subject to an Agreement authorized by the Committee.  A majority of the
members of the Committee shall constitute a quorum for any meeting of the
Committee, and acts of a majority of the members present at any meeting at which
a quorum is present or the acts unanimously approved in writing by all members
of the Committee shall be the acts of the Committee.  Notwithstanding the
foregoing, the Board shall have the sole and exclusive power to administer the
Plan with respect to Awards granted to Outside Directors.

 

b.                                      To the extent within its sole discretion
and subject to Plan Sections 15 and 16, other than price, the Committee may
amend the terms and conditions of any outstanding Award.

 

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c.                                       It is the intent that the Plan and all
Awards granted pursuant to it shall be administered by the Committee so as to
permit the Plan and Awards to comply with Exchange Act Rule 16b-3, except in
such instances as the Committee, in its discretion, may so provide.  If any
provision of the Plan or of any Award would otherwise frustrate or conflict with
the intent expressed in this Section 3.1(c), that provision to the extent
possible shall be interpreted and deemed amended in the manner determined by the
Committee so as to avoid the conflict.  To the extent of any remaining
irreconcilable conflict with this intent, the provision shall be deemed void as
applicable to Insiders to the extent permitted by law and in the manner deemed
advisable by the Committee.

 

d.                                      The Committee’s interpretation of the
Plan and of any Award or Agreement made under the Plan and all related decisions
or resolutions of the Board or Committee shall be final and binding on all
parties with an interest therein.  Consistent with its terms, the Committee
shall have the power to establish, amend or waive regulations to administer the
Plan.  In carrying out any of its responsibilities, the Committee shall have
discretionary authority to construe the terms of the Plan and any Award or
Agreement made under the Plan.

 

3.2.                            Indemnification.  Each person who is or shall
have been a member of the Committee, or of the Board, and any other person to
whom the Committee delegates authority under the Plan, shall be indemnified and
held harmless by the Company, to the extent permitted by law, against and from
any loss, cost, liability or expense that may be imposed upon or reasonably
incurred by such person in connection with or resulting from any claim, action,
suit or proceeding to which such person may be a party or in which such person
may be involved by reason of any action taken or failure to act, made in good
faith, under the Plan and against and from any and all amounts paid by such
person in settlement thereof, with the Company’s approval, or paid by such
person in satisfaction of any judgment in any such action, suit or proceeding
against such person, provided such person shall give the Company an opportunity,
at the Company’s expense, to handle and defend the same before such person
undertakes to handle and defend it on such person’s own behalf.  The foregoing
right of indemnification shall not be exclusive of any other rights of
indemnification to which such person or persons may be entitled under the
Company’s Articles of Incorporation or Bylaws, as a matter of law, or otherwise,
or any power that the Company may have to indemnify them or hold them harmless.

 

4.                                      Shares Available Under the Plan; Other
Plan Maximums

 

4.1.                            Share Counting Rules

 

a.                                      The number of Shares available for
distribution under the Plan shall not exceed 4,000,000 (subject to adjustment
pursuant to Plan Section 16).

 

b.                                      Any Shares subject to the terms and
conditions of an Award under the Plan that are not used because the terms and
conditions of the Award are not met may again be used for an Award under the
Plan.

 

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c.                                       Any unexercised or undistributed
portion of any terminated, expired, exchanged, or forfeited Award, or any Award
settled in cash in lieu of Shares shall be available for further Awards.

 

d.                                      For the purposes of computing the total
number of Shares granted under the Plan, the following rules shall apply to
Awards payable in Shares where appropriate:

 

i.                                          each Share that is subject to a Full
Value Award shall be counted as 2.5 Shares;

 

ii.                                       each Option Award shall be deemed to
be the equivalent of the maximum number of Shares that may be issued upon
exercise of the particular Option;

 

iii.                                    each Stock Appreciation Right shall be
deemed to be equivalent to the gross number of Shares with respect to which the
Stock Appreciation Right may be exercised;

 

iv.                                   an Award (other than an Option) payable in
some other security shall be deemed to be equal to the number of Shares to which
it relates;

 

v.                                      where the number of Shares available
under the Award is variable on the date it is granted, the number of Shares
shall be deemed to be the maximum number of Shares that could be received under
that particular Award;

 

vi.                                   where two or more types of Awards (all of
which are payable in Shares) are granted to a Participant in tandem with each
other, such that the exercise of one type of Award with respect to a number of
Shares cancels at least an equal number of Shares of the other, each such joint
Award shall be deemed to be the equivalent of the maximum number of Shares
available under the largest single Award; and

 

vii.                                the following Shares shall not again be made
available for issuance as Awards under the Plan: (A) Shares that are exchanged
by a Participant or withheld by the Company as full or partial payment in
connection with any Award under the Plan; (B) any Shares withheld by the Company
or tendered by a Participant to satisfy the tax withholding obligations related
to any Award under the Plan; (C) Shares not issued or delivered as a result of
the net settlement of an outstanding Award; and (D) Shares purchased on the open
market with any cash proceeds from the exercise of Stock Options.

 

Additional rules for determining the number of Shares granted under the Plan may
be made by the Committee as it deems necessary or desirable.

 

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e.                                       No fractional Shares may be issued
under the Plan; however, cash shall be paid in lieu of any fractional Share in
settlement of an Award.

 

4.2.                            Other Plan Maximums

 

a.                                      The maximum number of Shares that may be
awarded to a Participant in any fiscal year in the form of Options is 500,000
and the maximum number of Shares that may be awarded to a Participant in any
fiscal year in the form of Stock Appreciation Rights is 500,000.

 

b.                                      The maximum number of Shares that may be
awarded to a Participant in any fiscal year in the form of a Full Value Awards
is 250,000.

 

c.                                       Notwithstanding anything in (a) and
(b), above, to the contrary, the maximum number of Shares that may be awarded to
a Participant who is an Outside Director in any fiscal year is 30,000.

 

5.                                      Eligibility.  Participation in the Plan
shall be limited to Employees and to certain other individuals or entities who
are not Employees but who provide services to the Company or an Affiliate, such
as services provided in the capacity of a director.  The granting of Awards is
solely at the discretion of the Committee.  References herein to “employed,”
“employment” or similar terms (except “Employee”) shall include the providing of
services as a director.

 

6.                                      General Terms of Awards

 

6.1.                            Amount and Conditions of Award.  Each Agreement
shall set forth the Participant’s number of Shares of Restricted Stock,
Restricted Stock Units, and Performance Units subject to the Agreement, or the
number of Shares to which the Option Award subject to the Agreement applies or
with respect to which payment upon the exercise of the Stock Appreciation Right
subject to the Agreement is to be determined, as the case may be, together with
such other terms and conditions applicable to the Award as determined by the
Committee acting in its sole discretion, which may include conditions on Options
or Stock Appreciation Rights becoming exercisable.

 

6.2.                            Term.  Each Agreement, other than those relating
solely to Awards of Shares without restrictions, shall set forth the Term of the
Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, or
the Performance Cycle for the Performance Units, as the case may be.  The
maximum Term for Options and Stock Appreciation Rights shall be ten years.

 

6.3.                            Vesting.  All time-vested Awards under the Plan
shall have a minimum vesting period of at least one year; provided, however,
that Awards may provide for acceleration of vesting upon such terms and
conditions as shall be set forth in the Agreement, which may include
acceleration of vesting in the event of the Participant’s death, Disability or
Retirement.  Acceleration of the Performance Cycle of Performance Units shall be
subject to Plan Section 11.6

 

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6.4.                            Transferability.  Except as set forth in this
Section 6.4 or as may be required by law or court order, during the lifetime of
a Participant to whom an Award is granted, only that Participant (or that
Participant’s legal representative) may exercise an Option or Stock Appreciation
Right, or receive payment with respect to any other Award.  No Award of
Restricted Stock (before the expiration of the restrictions), Restricted Stock
Units, Options, Stock Appreciation Rights or Performance Units may be sold,
assigned, transferred, exchanged or otherwise encumbered other than to a
beneficiary in the event of a Participant’s death.  Any attempted transfer in
violation of this Section 6.4 shall be void and of no effect.

 

Notwithstanding the foregoing, the Committee, in its sole discretion, may
determine to permit a Participant to transfer an Award to any one or more
Permitted Transferees, subject to the following terms and conditions:  (i) an
Award transferred to a Permitted Transferee shall not be assignable or
transferable by the Permitted Transferee other than by will or the laws of
descent and distribution; (ii) an Award transferred to a Permitted Transferee
shall continue to be subject to all the terms and conditions of the Award as
applicable to the original Participant (other than the ability to further
transfer the Award);  (iii) the Participant and the Permitted Transferee shall
execute any and all documents requested by the Company, including, without
limitation documents to (A) confirm the status of the transferee as a Permitted
Transferee, (B) satisfy any requirements for an exemption for the transfer under
applicable federal, state and foreign securities laws and (C) evidence the
transfer; and (iv) be permitted under applicable law, including Code
Section 409A.  For purposes of this subsection, Permitted Transferee shall mean:
with respect to a Participant, any “family member” of the Participant, as
defined under the instructions to use the Form S-8 Registration Statement under
the Securities Act, after taking into account any state, federal, local or
foreign tax and securities laws applicable to transferable Awards.

 

6.5.                            Rights as Shareholder.  Subject to Section 7.4,
each Agreement shall provide that a Participant shall have no rights as a
shareholder with respect to any securities covered by an Award unless and until
the date the Participant becomes the holder of record of the Stock, if any, to
which the Award relates.

 

7.                                      Restricted Stock Awards

 

7.1.                            Nature of Award.  An Award of Restricted Stock
under the Plan shall consist of Shares subject to restrictions on transfer and
conditions of forfeiture, which restrictions and conditions shall be included in
the applicable Agreement.  The Committee may provide for the lapse or waiver of
any such restriction or condition based on such factors or criteria as the
Committee, in its sole discretion, may determine.

 

7.2.                            Restrictions on Stock Certificate.  Except as
otherwise provided in the applicable Agreement, each Stock certificate issued
with respect to an Award of Restricted Stock shall either be deposited with the
Company or its designee, together with an assignment separate from the
certificate, in blank, signed by the Participant, or bear such legends with
respect to the

 

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restricted nature of the Restricted Stock evidenced thereby as shall be provided
for in the applicable Agreement.

 

7.3.                            Terms and Conditions of Award.  The Agreement
shall describe the terms and conditions by which the restrictions and conditions
of forfeiture upon awarded Restricted Stock shall lapse.  Upon the lapse of the
restrictions and conditions, Shares free of restrictive legends, if any,
relating to such restrictions shall be issued to the Participant or a
beneficiary.

 

7.4.                            Rights of a Shareholder.  Unless otherwise
provided in the Agreement, a Participant with a Restricted Stock Award shall
have all the rights of a shareholder including, but not limited to, the right to
receive dividends and the right to vote the Shares of Restricted Stock.

 

7.5.                            Separation from Service.  A Participant must
satisfy all of the terms and conditions of a Restricted Stock Award in order for
the restrictions on the Shares subject to the Award to lapse.  If a Participant
Separates from Service before satisfaction of these terms and conditions, the
Participant will immediately forfeit the Award.  However, unless otherwise
provided in the Agreement, if a Participant has a Separation from Service during
the Term of a Restricted Stock Award because of the Participant’s death or
Disability all restrictions shall lapse with respect to a number of Shares of
Restricted Stock under the Award that has been prorated for the portion of the
Term of the Award prior to the Participant’s Separation from Service.  The
Agreement may provide for other circumstances, including, but without
limitation, the Participant’s Retirement, under which the Participant may
receive a prorated Award.  Any Shares of Restricted Stock as to which
restrictions do not lapse under the preceding sentences or under the Agreement
shall terminate at the date of the Participant’s Separation from Service and
such Shares of Restricted Stock shall be forfeited to the Company.

 

8.                                      Restricted Stock Unit Awards

 

8.1.                            Nature of Award.  An Award of Restricted Stock
Units shall consist of the right to receive Shares in the future provided that
certain restrictions or conditions are satisfied.  The Committee may provide for
the lapse or waiver of any such restriction or condition based on such factors
or criteria as the Committee, in its sole discretion, may determine.

 

8.2.                            Terms and Conditions of Award.  The Agreement
shall describe the terms and conditions required to be satisfied in order for
the Participant to be entitled to payment of the Shares subject to the Award.

 

8.3.                            No Rights of a Shareholder.  Shares shall not be
issued to the Participant until and unless the restrictions and conditions
described in Section 8.2 are satisfied, or at such later date as may be provided
in the Agreement or other document.

 

8.4.                            Separation from Service.  A Participant must
satisfy all of the terms and conditions of a Restricted Stock Unit Award in
order to be entitled to receive the Shares subject to the Award.  If a
Participant Separates from Service before satisfaction of these terms and
conditions, the Participant will immediately forfeit the Award.  However, unless
otherwise

 

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provided in the Agreement, if a Participant has a Separation from Service during
the Term of a Restricted Stock Unit Award because of the Participant’s death or
Disability all restrictions shall lapse with respect to a number of Shares under
the Award that has been prorated for the portion of the Term of the Award prior
to the Participant’s Separation from Service.  The Agreement may provide for
other circumstances, including, but without limitation, the Participant’s
Retirement, under which the Participant may receive a prorated Award.  Any
Restricted Stock Units as to which restrictions do not lapse under the preceding
sentences or under the Agreement shall terminate at the date of the
Participant’s Separation from Service and such Restricted Stock Units shall be
forfeited to the Company.

 

8.5.                            Cash Distributions.  The Committee, in its
discretion, may elect to settle Restricted Stock Units in the form of cash
rather than Shares.

 

9.                                      Stock Options

 

9.1.                            Terms of All Options

 

a.                                      All Option Awards shall be granted
pursuant to an Agreement.  The purchase price of each Share subject to an Option
Award shall be determined by the Committee and set forth in the Agreement, but
shall not be less than 100% of the Fair Market Value of a Share as of the date
the Option Award is granted (except as provided in Plan Section 16).

 

b.                                      The purchase price of the Shares with
respect to which Options are exercised shall be payable in full at the time of
exercise, provided that to the extent permitted by law and as may be permitted
by the Committee, the Agreement may permit some or all Participants to
simultaneously exercise Options and sell the Shares thereby acquired pursuant to
a brokerage or similar relationship and use the proceeds from the sale as
payment of the purchase price of the Shares, or exercise the Option Award in a
“net exercise,” by which the number of Shares subject to the Option Award that
would otherwise have been distributed to the Participant is reduced by the
aggregate purchase price of the Shares being exercised divided by the then Fair
Market Value of a Share.  “Net exercise” may also be used in conjunction with a
reduction in the number of shares subject to the Option Award to meet tax
withholding obligations, as provided in Section 14. The purchase price may also
be payable in cash or by delivery or tender of Shares (by actual delivery or
attestation) having a Fair Market Value as of the date the Option Award is
exercised equal to the purchase price of the Shares being purchased pursuant to
the Option, or a combination thereof, as determined by the Committee, but no
fractional Shares will be issued or accepted.  Notwithstanding anything in this
Section 9.1(b) to the contrary, a Participant exercising an Option Award shall
not be permitted to pay any portion of the purchase price with Shares if, in the
opinion of the Committee, payment in such manner could have adverse financial
accounting consequences for the Company.

 

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c.                                       Each Option Award shall be exercisable
in whole or in part on the terms provided in the Agreement.  In no event shall
any Option Award be exercisable at any time after the expiration of its Term. 
When an Option Award is no longer exercisable, it shall be deemed to have lapsed
or terminated.

 

d.                                      Upon receipt of notice of exercise, the
Committee may elect to pay cash in lieu of delivering the Shares for which an
Option Award is being exercised by paying the Participant an amount equal to the
excess of the Fair Market Value of the Shares over the aggregate purchase price
for the Shares for which the Option Award is being exercised on the effective
date of such exercise.

 

9.2.                            Separation from Service.  Unless otherwise
provided in the Agreement:

 

a.                                      If a Participant has a Separation from
Service because of the Participant’s death, then any Option Award that has not
expired or been terminated shall become exercisable in full and may be exercised
by the Participant’s beneficiary at any time, or from time to time, within one
year after the date of the Participant’s death.

 

b.                                      If a Participant has a Separation from
Service due to Disability, then any Option Award that has not expired or been
terminated shall become exercisable in full, and the Participant or the
Participant’s beneficiary may exercise such Option Award at any time, or from
time to time, within three years after the Participant’s Separation from
Service.

 

c.                                       If a Participant Retires, then any
Option Award that has not expired or been terminated shall remain exercisable
for three years after the Participant’s Separation from Service, but, unless
otherwise provided in the Agreement, only to the extent that such Option Award
was exercisable immediately prior to such Participant’s Separation from Service.

 

d.                                      If a Participant has a Separation from
Service (that is not a Qualifying Termination) for any reason other than death,
Retirement or other than following his or her Disability, then any Option Award
that has not expired or been terminated shall, unless the Committee shall
otherwise provide in the Agreement, remain exercisable for three months after
Separation from Service, but only to the extent that such Option Award was
exercisable immediately prior to the Separation from Service.

 

e.                                       Notwithstanding Sections 9.2 (d) and
unless otherwise provided in the Agreement, if the Participant experiences a
Qualifying Termination, the Option Award shall remain exercisable until the
expiration of the Term.

 

f.                                        Notwithstanding Sections
9.2(a)-(e) and unless otherwise provided in the Agreement, if the Participant is
an Outside Director, the Option Award shall remain exercisable until the
expiration of the Term, even after the director’s

 

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termination of services as a director, but only to the extent that such Option
Award was exercisable immediately prior to such Outside Director ceasing to be a
director.

 

g.                                       Notwithstanding the Plan Section 9.2
(a)-(f), in no event shall an Option Award be exercisable if the Participant’s
employment (or service as a director) is terminated due to “Cause.”

 

10.                               Stock Appreciation Rights

 

10.1.                     Nature of Award.  An Award of a Stock Appreciation
Right shall entitle the Participant (or a beneficiary), subject to terms and
conditions determined by the Committee to receive upon exercise of the Stock
Appreciation Right, all or a portion of the excess of the Fair Market Value of a
specified number of Shares as of the date of exercise of the Stock Appreciation
Right over a specified price that shall not be less than 100% of the Fair Market
Value of such Shares as of the date of grant of the Stock Appreciation Right.

 

10.2.                     Connection with Other Awards. A Stock Appreciation
Right may be granted in connection with part or all of, in addition to, or
completely independent of an Option Award or any other Award under the Plan.  If
issued in connection with a previously or contemporaneously granted Option, the
Committee may impose a condition that exercise of a Stock Appreciation Right
cancels a pro rata portion of the Option Award with which it is connected and
vice versa.

 

10.3.                     Terms of Award.  Each Stock Appreciation Right may be
exercisable in whole or in part on the terms provided in the Agreement.  No
Stock Appreciation Right shall be exercisable at any time after the expiration
of its Term.  When a Stock Appreciation Right is no longer exercisable, it shall
be deemed to have lapsed or terminated.

 

10.4.                     Payment.  Upon exercise of a Stock Appreciation Right,
payment to the Participant or a beneficiary shall be made in a lump sum. 
Payment shall be made in the form of Shares.  The Agreement may provide for a
limitation upon the amount or percentage of the total appreciation on which
payment may be made.

 

10.5.                     Separation from Service.  Unless otherwise provided in
the Agreement:

 

a.                                      If a Participant has a Separation from
Service because of the Participant’s death, then any Stock Appreciation Right
that has not expired or been terminated shall become exercisable in full and may
be exercised by the Participant’s beneficiary at any time, or from time to time,
within one year after the date of the Participant’s death.

 

b.                                      If a Participant has a Separation from
Service due to Disability, then any Stock Appreciation Right that has not
expired or been terminated shall become exercisable in full, and the Participant
or the Participant’s beneficiary may exercise such Stock Appreciation Right at
any time, or from time to time, within three years after the Participant’s
Separation from Service.

 

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c.                                       If a Participant Retires, then any
Stock Appreciation Right that has not expired or been terminated shall remain
exercisable for three years after the Participant’s Separation from Service,
but, unless otherwise provided in the Agreement, only to the extent that such
Stock Appreciation Right was exercisable immediately prior to such Participant’s
Separation from Service.

 

d.                                      If a Participant has a Separation from
Service (that is not a Qualifying Termination) for any reason other than death
or other than following his or her Disability or Retirement, then any Stock
Appreciation Right that has not expired or been terminated shall, unless the
Committee shall otherwise provide in the Agreement, remain exercisable for three
months after Separation from Service, but only to the extent that such Stock
Appreciation Right was exercisable immediately prior to the Separation from
Service.

 

e.                                       Notwithstanding Sections 10.2 (d) and
unless otherwise provided in the Agreement, if the Participant experiences a
Qualifying Termination, the Option Award shall remain exercisable until the
expiration of the Term.

 

f.                                        Notwithstanding Sections 10.5(a)-(e),
and unless otherwise provided in the Agreement, if the Participant is an Outside
Director, the Stock Appreciation Right shall remain exercisable until the
expiration of the Term even after such Outside Director ceases to be a director
of the Company, but only to the extent that such Stock Appreciation Right was
exercisable immediately prior to such Outside Director ceasing to be a director.

 

g.                                       Notwithstanding Sections 10.5(a)-(f),
in no event shall a Stock Appreciation Right be exercisable if the Participant’s
employment (or service as a director) is terminated due to “Cause.”

 

11.                               Performance Units

 

11.1.                     Nature of Award.  An Award of Performance Units shall
consist of the right to receive cash or Shares in the future provided that
certain Performance Goals are satisfied during a Performance Cycle.

 

11.2.                     Terms and Conditions of Award.  The Agreement shall
describe the terms and conditions required to be satisfied in order for the
Participant to be entitled to payment of the Shares subject to the Award,
including the Performance Goals (and their target levels) to be satisfied as a
condition of receiving the Award.  In the case of Covered Employees, the
requirements of Code Section 162(m) and other provisions of the Plan addressing
Covered Employees, must be satisfied.  The Agreement shall also describe when
delivery of the Shares or cash subject to the Performance Units will occur
should the Performance Goals be attained.

 

11.3.                     Determination of Award.  Following the conclusion of
each Performance Cycle, the Committee shall determine the extent to which
(a) Performance Goals have been attained, and (b) the number of Shares or cash
payable with respect to the Award.

 

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11.4.                     No Rights of a Shareholder.  Shares shall not be
issued to the Participant until provided in the Agreement (or other document
deferring receipt of the Shares, as may be permitted by the Committee).

 

11.5.                     Separation from Service.  A Participant must satisfy
all of the terms and conditions of a Performance Unit Award in order to be
entitled to receive the Shares subject to the Award.  If a Participant Separates
from Service before satisfaction of these terms and conditions, the Participant
will immediately forfeit the Award.  However, unless otherwise provided in the
Agreement, if a Participant has a Separation from Service during the Performance
Cycle because of the Participant’s death or Disability all restrictions shall
lapse with respect to a number of Shares under the Award that has been prorated
for the portion of the Term of the Award prior to the Participant’s Separation
from Service.  The Agreement may provide for other circumstances, including, but
without limitation, the Participant’s Retirement, under which the Participant
may receive a prorated Award.  Any Performance Units as to which restrictions do
not lapse under the preceding sentences or under the Agreement shall terminate
at the date of the Participant’s Separation from Service and such Performance
Units shall be forfeited to the Company.

 

11.6.                     Adjustments to Awards.  The Agreement may permit an
acceleration of the Performance Cycle and an adjustment of performance targets
and payments with respect to some or all of the Performance Units awarded to a
Participant, upon the occurrence of certain events, which may, but need not
include, without limitation, a change in the accounting practices of the
Company; a change in the Participant’s title or employment responsibilities; the
Participant’s death, Disability or Retirement; or, with respect to payments in
Shares, an event specified in Plan Section 16.  The Agreement also may provide
for a limitation on the value of an Award of Performance Units that a
Participant may receive.  In no event, however, shall a Performance Cycle be
accelerated with respect to a Covered Employee unless the acceleration is a
permitted acceleration under Code Section 162(m).

 

12.                               Effective Date and Duration of the Plan

 

a.                                      Effective Date.  The Plan shall become
effective as of May 7, 2015, if the Plan is approved by the requisite vote of
shareholders at the 2015 Annual Meeting of Shareholders or any adjournment
thereof.

 

b.                                      Duration of the Plan.  The Plan shall
remain in effect until all Stock subject to it shall be distributed, all Awards
have expired or lapsed, the Plan is terminated pursuant to Plan Section 15, or
May 7, 2025 (the “Termination Date”); provided, however, that Awards made before
the Termination Date may be exercised, vested or otherwise effectuated beyond
the Termination Date unless limited in the Agreement or otherwise.  The date and
time of approval by the Committee of the granting of an Award shall be
considered the date and time at which the Award is made or granted.

 

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13.                               Plan Does Not Affect Employment Status

 

a.                                      Status as an eligible Employee shall not
be construed as a commitment that any Award will be made under the Plan to that
eligible Employee or to eligible Employees generally.

 

b.                                      Nothing in the Plan or in any Agreement
or related documents shall confer upon any Employee or Participant any right to
continue in the employment of the Company or any Affiliate or constitute any
contract of employment or affect any right that the Company or any Affiliate may
have to change such person’s compensation, other benefits, job responsibilities,
or title, or to terminate the employment of such person with or without Cause.

 

14.                               Tax Withholding.  The Company shall have the
right to require a Participant or other person receiving Shares under the Plan
to pay the Company a cash amount sufficient to cover any required withholding
taxes before actual receipt of those Shares.  In lieu of all or any part of a
cash payment from a person receiving Shares under the Plan, the Committee may,
in its discretion, require that the individual cover all or any part of the
required withholdings through a reduction of the number of Shares delivered or
delivery or tender return to the Company of Shares held by the Participant or
other person, in each case valued in the same manner as used in computing the
withholding taxes under the applicable laws; provided, however, that in the case
of Share withholding the amount withheld may not exceed the amount determined by
applying the Participant’s or beneficiary’s minimum statutory withholding rate.

 

15.                               Amendment, Modification and Termination of the
Plan

 

15.1.                     In General.  The Board may at any time and from time
to time amend, suspend or terminate the Plan.  Except as limited in Section 15.2
below, the Committee may at any time alter or amend any or all Award Agreements
under the Plan to the extent permitted by law.

 

15.2.                     Exceptions.  No amendment, suspension or termination
of the Plan will materially and adversely affect any right acquired by any
Participant or beneficiary under an Award granted before the date of amendment,
suspension or termination, unless otherwise agreed to by the Participant in the
Agreement or otherwise, or required as a matter of law; but it will be
conclusively presumed that any adjustment for the changes described in Plan
Sections 11.6 or 16 does not adversely affect these rights.

 

16.                               Adjustment for Changes in Capitalization. In
connection with a (i) Fundamental Change, (ii) recapitalization,
(iii) reclassification, (iv) cash or stock dividend or other distribution (other
than ordinary cash dividends), (v) stock split, (vi) stock combination,
(vii) stock exchange, or (viii) any other similar corporate transaction
(individually and collectively, the “Event”)—which would otherwise impact or
affect (a) the aggregate number or type of Shares available for Awards under the
Plan, including any adjustment in the manner in which the maximum number of
Shares or types of Awards available under the Plan are determined and counted;
(b) the maximum number of Shares permitted to be issued to an individual
Participant in any fiscal year; (c) the number or type of Shares and amount of
cash subject to outstanding Awards; (d) the grant, exercise price or value of
outstanding Awards; and/or (e) the terms and conditions of any outstanding Award
(including, without limitation, any applicable performance targets or criteria
with respect to any Performance Units) — the Committee

 

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shall make such adjustments in Awards as it deems equitable and appropriate, in
its sole discretion, to reflect such Event.  In making any such adjustments, the
Committee shall round fractional Shares to the nearest whole Share.

 

17.                               Change in Control.  In the event of a Change
in Control, the Committee shall take one of the actions described in Sections
17.1 or 17.2.

 

17.1.                     Substitution.  If the Change in Control is a merger,
consolidation or statutory share exchange, make appropriate provision for the
replacement of the outstanding Awards by the substitution of equity-based awards
of the corporation surviving any merger or consolidation with substantially
similar terms and conditions (or, if appropriate, equity-based awards of the
parent corporation of the Company or such surviving corporation), provided such
equity-based awards preserve the full economic value of the outstanding Awards
(to the extent permitted under Code Section 409A, or, if applicable, the stock
rights exemption from Code Section 409A) and provide for full vesting of the
Award in the event the Participant experiences a Qualifying Termination.

 

17.2.                     Acceleration of Vesting and Payment of Awards.

 

a.                                      Options and Stock Appreciation Rights. 
In the case of Awards of Options and Stock Appreciation Rights, at least ten
days before the occurrence of the Change in Control, declare, and provide
written notice to each holder of the Option Award or Stock Appreciation Right of
the declaration that each outstanding Option Award and Stock Appreciation Right,
whether or not then exercisable, shall be cancelled at the time of, or
immediately before the occurrence of, the Change in Control in exchange for
payment to each holder of an Option Award or Stock Appreciation Right, within
ten (10) days after the Change in Control of cash equal to (a) for each Share
covered by the canceled Option, the amount, if any, by which the Fair Market
Value per Share exceeds the purchase price per Share covered by such Option, or
(b) for each Stock Appreciation Right, the price determined pursuant to
Section 10.  At the time of the declaration provided for in the immediately
preceding sentence, each Stock Appreciation Right and each Option Award shall
immediately become exercisable in full and each person holding an Option Award
or a Stock Appreciation Right shall have the right, during the period preceding
the time of cancellation of the Option Award or Stock Appreciation Right, to
exercise the Option Award as to all or any part of the Shares covered thereby or
the Stock Appreciation Right in whole or in part, as the case may be.  In the
event of a declaration pursuant to this Section 17.2(a), each outstanding Option
Award and Stock Appreciation Right granted pursuant to the Plan that shall not
have been exercised before the Change in Control shall be cancelled at the time
of, or immediately before, the Change in Control, as provided in the
declaration.  Notwithstanding the foregoing, no person holding an Option Award
or a Stock Appreciation Right shall be entitled to the payment provided for in
this Section 17.2(a) if such Option Award or Stock Appreciation Right shall have
terminated, expired or been cancelled.

 

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b.                                      Full Value Awards.  In the case of Full
Value Awards that are time-based vested, provide for either full vesting or
pro-rated vesting (based on the number of months that have expired since the
Award was granted) and payout of cash or Shares under the Award; and in the case
of Full Value Awards that are performance-based, provide for full vesting and
payout of cash or Shares based on the assumption that the performance
goal(s) for the Award were met at target.

 

18.                               Forfeitures and Clawback

 

18.1.                     Forfeiture.  An Agreement may provide that if a
Participant has received or been entitled to delivery of Shares pursuant to an
Award within six months before the Participant’s Separation from Service with
the Company, the Committee, in its sole discretion, may require the Participant
to return or forfeit the Shares or cash received with respect to the Award (or
its economic value as of:  (a) the date of the exercise of Options or Stock
Appreciation Rights, (b) the date of, and immediately following, the lapse of
restrictions on Restricted Stock, Restricted Stock Units, or the receipt of
Shares without restrictions, or (c) the date on which the right of the
Participant to payment with respect to Performance Units vests, as the case may
be), in the event of certain occurrences specified in the Agreement.  The
Committee’s right to require forfeiture must be exercised within any period
required by law.  The occurrences may, but need not, include termination for
“Cause,” competition with the Company, unauthorized disclosure of material
proprietary information of the Company, a violation of applicable business
ethics policies of the Company, a violations of applicable law, or any other
occurrence specified in the Agreement within the period or periods of time
specified in the Agreement.

 

18.2.                     Required Clawback.  The Company reserves the right to
require a Participant to forfeit or return to the Company any cash or Shares
received under an Award under the Plan to the extent required by law, under any
applicable exchange listing standard or under any applicable policy adopted by
the Company that is designed to meet any legal obligations or obligations under
any applicable exchange listing standard.

 

19.                               Beneficiary Upon Death.  In the event that any
interest in Stock is or becomes distributable under the Plan at the time of the
Participant’s death, such interest shall be distributed to the beneficiary or
beneficiaries designated by the Participant.  Such interest shall be distributed
according to the terms of the Plan and the Agreement.  In order for a
beneficiary designation to be valid for purposes of the Plan, it must be
completed and filed with the Company according to the rules established by the
Company.  If the Participant has not completed a beneficiary designation, or all
such beneficiaries have predeceased the Participant, then any amount that
becomes payable under the Plan by reason of the Participant’s death shall be
paid to the Participant’s estate.  If there is any question as to the legal
right of any person to receive a distribution under the Plan by reason of the
Participant’s death, the amount in question may, at the discretion of the
Committee, be paid to the Participant’s estate, in which event the Company shall
have no further liability or responsibility to anyone with respect to such
amount.  This Section 19 shall apply to all Awards granted under the Plan.

 

20.                               Corporate Mergers, Acquisitions, Etc.  The
Committee may also grant Options, Stock Appreciation Rights, Restricted Stock or
other Awards under the Plan in substitution for, or in

 

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connection with the assumption of, existing options, stock appreciation rights,
restricted stock or other award granted, awarded or issued by another
corporation and assumed or otherwise agreed to be provided for by the Company
pursuant to or by reason of a transaction involving a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation to which the Company or an Affiliate is a party.  The terms and
conditions of the substitute Awards may vary from the terms and conditions set
forth in the Plan to the extent the Board at the time of the grant may deem
appropriate to conform, in whole or in part, to the provisions of the awards in
substitution for which they are granted.

 

21.                               Unfunded Plan.  Except with respect to Awards
of Restricted Stock, the Plan shall be unfunded and the Company shall not be
required to segregate any assets that may at any time be represented by Awards
under the Plan.  Neither the Company, the Committee, nor the Board shall be
deemed to be a trustee of any amounts to be paid under the Plan nor shall
anything contained in the Plan or any action taken pursuant to its provisions
create or be construed to create a fiduciary relationship between the Company
and a Participant or beneficiary.  Except with respect to Awards of Restricted
Stock, to the extent any person acquires a right to receive an Award under the
Plan, this right shall be no greater than the right of an unsecured general
creditor of the Company.

 

22.                               Limits of Liability

 

a.                                      Any liability of the Company to any
Participant with respect to an Award shall be based solely upon contractual
obligations created by the Plan and the Award Agreement.

 

b.                                      Except as may be required by law,
neither the Company nor any member of the Board or of the Committee, nor any
other person participating in any determination of any question under the Plan,
or in the interpretation, administration or application of the Plan, shall have
any liability to any party for any action taken, or not taken, in good faith
under the Plan.

 

23.                               Compliance with Applicable Legal
Requirements.  No certificate for Shares distributable pursuant to the Plan
shall be issued and delivered unless the issuance of the certificate complies
with all applicable legal requirements including, without limitation, compliance
with the provisions of applicable state securities laws, the Securities Act of
1933, as amended and in effect from time to time or any successor statute, the
Exchange Act and the requirements of the exchanges on which the Company’s Shares
may, at the time, be listed.

 

24.                               Deferrals and Settlements.  The Committee may
require or permit Participants to elect to defer the issuance of Shares under
such rules and procedures as it may establish under the Plan.  It may also
provide that deferred settlements include the payment or crediting of interest
on the deferral amounts.

 

25.                               Other Benefit and Compensation Programs. 
Payments and other benefits received by a Participant under an Award made
pursuant to the Plan shall not be deemed a part of a Participant’s regular,
recurring compensation for purposes of the termination, indemnity or severance
pay laws of any country and shall not be included in, nor have any effect on,
the determination of benefits under

 

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any other employee benefit plan, contract or similar arrangement provided by the
Company or an Affiliate unless expressly so provided by such other plan,
contract or arrangement, or unless the Committee expressly determines that an
Award or portion of an Award should be included to accurately reflect
competitive compensation practices or to recognize that an Award has been made
in lieu of a portion of competitive cash compensation.

 

26.                               Requirements of Law

 

a.                                      To the extent that federal laws do not
otherwise control, the Plan and all determinations made and actions taken
pursuant to the Plan shall be governed by the laws of the State of Illinois
without regard to its conflicts-of-law principles and shall be construed
accordingly.

 

b.                                      If any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.

 

27.                               Repricing; Shareholder Approval.  Except as
provided in Plan Section 16, neither the Board nor any committee thereof shall
cause the Company to take any of the following actions without receiving the
prior approval of the shareholders of the Company:

 

a.                                      adjusting or amending the exercise price
of any outstanding Award, whether through amendment, replacement grant, exchange
or other means;

 

b.                                      providing for the cancellation of an
Option Award in exchange for cash or another Award when the Option’s exercise
price per Share exceeds the Fair Market Value of a Share; or

 

c.                                       providing for the cancellation of a
Stock Appreciation Right in exchange for cash or another Award when the Stock
Appreciation Right’s base price per Share exceeds the Fair Market Value of a
Share.

 

28.                               Compliance with Code Section 409A. Any benefit
under the Plan that is or becomes subject to Code Section 409A is intended to
comply with the requirements of Code Section 409A, and the benefit will be
administered, and any Plan term governing such benefit will be interpreted,
accordingly.  Notwithstanding any other provision in the Plan or any Agreement
to the contrary, if at the time of the Participant’s Separation from Service,
the Participant is a “specified employee” within the meaning of Code
Section 409A(a)(2)(B)(i), distributions made on account of the Participant’s
Separation from Service that are subject to Code Section 409A may not be made
before the date that is six months after Participant’s Separation from Service. 
In such instance, and notwithstanding the payment terms under an individual
Agreement, distributions will commence on the first day of the seventh month
following the Separation from Service and the first monthly distribution shall
include the aggregate payments (if any) that were delayed pursuant to this
paragraph.  For purposes of this Plan, any series of installment payments to
which a Participant may be entitled under any Award subject to 409A shall be
treated as a right to a series of separate payments under Section 409A.

 

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29.                               Compliance with Code Section 162(m).  The Plan
is intended to comply with the requirements of Code Section 162(m) and will be
interpreted accordingly.

 

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