Exhibit 10.2

 

HORACE MANN EDUCATORS CORPORATION

 

Amended and Restated 2002 Incentive Compensation Plan

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HORACE MANN EDUCATORS CORPORATION

 

Amended and Restated 2002 Incentive Compensation Plan

 

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1.    Purpose    1 2.    Definitions    1 3.    Administration    4 4.    Stock
Subject to Plan    5 5.    Eligibility; Per-Person Award Limitations    6 6.   
Specific Terms of Awards    7 7.    Performance Awards, Including Annual
Incentive Awards    11 8.    Certain Provisions Applicable to Awards    14 9.   
Change of Control    15 10.    Additional Award Forfeiture Provisions    16 11.
   General Provisions    16

 

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HORACE MANN EDUCATORS CORPORATION

 

Amended and Restated 2002 Incentive Compensation Plan

 

1. Purpose. The purpose of this 2002 Incentive Compensation Plan, as amended and
restated (the “Plan”), is to aid Horace Mann Educators Corporation, a Delaware
corporation (the “Company”), in attracting, retaining, motivating and rewarding
employees, non-employee directors, and other persons who provide substantial
services to the Company or its subsidiaries or affiliates, to provide for
equitable and competitive compensation opportunities, to encourage long-term
service, to recognize individual contributions and reward achievement of Company
goals, and promote the creation of long-term value for shareholders by closely
aligning the interests of Participants with those of shareholders. The Plan
authorizes stock-based and cash-based incentives for Participants.

 

2. Definitions. In addition to the terms defined in Section 1 above and
elsewhere in the Plan, the following capitalized terms used in the Plan have the
respective meanings set forth in this Section:

 

(a) “Annual Incentive Award” means a type of Performance Award granted to a
Participant under Section 7(c) representing a conditional right to receive cash,
Stock or other Awards or payments, as determined by the Committee, based on
performance in a performance period of one fiscal year or a portion thereof.

 

(b) “Award” means any Option, SAR, Restricted Stock, Deferred Stock, Stock
granted as a bonus or in lieu of another award, Dividend Equivalent, Other Stock
Based Award, Performance Award or Annual Incentive Award, together with any
related right or interest, granted to a Participant under the Plan.

 

(c) “Beneficiary” means the individual or entity designated by the Participant
to receive the benefits specified under the Participant’s Award upon such
Participant’s death. If no such designation is made, or if the designated
individual predeceases the Participant or the entity no longer exists, then the
Beneficiary shall be the Participant’s estate.

 

(d) “Beneficial Owner” has the meaning specified in Rule 13d-3 under the
Exchange Act.

 

(e) “Board” means the Company’s Board of Directors.

 

(f) “Change of Control” means, unless otherwise defined in an Award Agreement,
any one or more of the following:

 

(i) Approval by the shareholders of the Company of a merger, reorganization,
consolidation, or similar transaction, in which the Company is not the
continuing or the surviving corporation, or pursuant to which Shares would be
converted into cash, securities or other property, other than a merger of the
Company in which no

 

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Company shareholder’s ownership percentage in the surviving corporation
immediately after the merger is less than such shareholder’s ownership
percentage in the Company immediately prior to such merger by ten percent (10%)
or more (unless such change results from elimination of an odd lot that
represented less than 0.1% of the outstanding of Stock); or (2) any sale, lease
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company; or

 

(ii) The shareholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company which is part of a sale of assets,
merger, or reorganization of the Company or other similar transaction; or

 

(iii) Any “person”, as such term is defined in Sections 13(d) and 14(d) of the
Exchange Act, is or becomes, directly or indirectly, the “beneficial owner” as
defined in Rule 13d-3 under the Exchange Act, of securities of the Company that
represent more than 50% of the combined voting power of the Company’s then
outstanding securities entitled to vote generally in the election of directors;
or

 

(iv) The Incumbent Directors (determined using the Effective Date as the
baseline date) cease for any reason to constitute at least a majority of the
directors of the Company then serving.

 

(g) “Code” means the Internal Revenue Code of 1986, as amended. References to
any provision of the Code or regulation thereunder shall include any successor
provisions and regulations, proposed regulations and other applicable guidance
or pronouncement of the Department of the Treasury and Internal Revenue Service.

 

(h) “Committee” means the Compensation Committee of the Board of Directors, the
composition and governance of which is established in the Committee’s Charter as
approved from time to time by the Board and subject to Section 303A.05 of the
Listed Company Manual of the New York Stock Exchange, and other corporate
governance documents of the Company. No action of the Committee shall be void or
deemed to be without authority due to the failure of any member, at the time the
action was taken, to meet any qualification standard set forth in the Committee
Charter or this Plan. The full Board may perform any function of the Committee
hereunder except to the extent limited under Section 303A.05 of the Listed
Company Manual, in which case the term “Committee” shall refer to the Board.

 

(i) “Covered Employee” means an Eligible Person who is a Covered Employee as
specified in Section 11(j).

 

(j) “Deferred Stock” means a right, granted to a Participant under Section 6(e),
to receive Stock or other Awards or a combination thereof at the end of a
specified deferral period.

 

(k) “Dividend Equivalent” means a right, granted to a Participant under Section
6(g), to receive cash, Stock, other Awards or other property equal in value to
all or a specified portion of the dividends paid with respect to a specified
number of shares of Stock.

 

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(l) “Effective Date” means the effective date specified in Section 11(r).

 

(m) “Eligible Person” has the meaning specified in Section 5.

 

(n) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
References to any provision of the Exchange Act or rule (including a proposed
rule) thereunder shall include any successor provisions and rules.

 

(o) “Fair Market Value” means the fair market value of Stock, Awards or other
property as determined in good faith by the Committee or under such methods or
procedures as shall be established from time to time by the Committee. Unless
otherwise determined by the Committee, the Fair Market Value of Stock as of any
date shall be (A) the mean between the highest and lowest trading prices of the
Stock on such date on the New York Stock Exchange Composite Transactions Tape
(or, if no sale of Stock was reported for such date, on the next preceding date
on which a sale of Stock was reported) or (B) if the Stock is not listed on the
New York Stock Exchange, the mean of the highest and lowest trading prices of
Stock on such other national exchange on which the Stock is principally traded
or as reported by the National Market System, or other similar organization; or
(C) in the event that there shall be no public market for the Stock, the fair
market value of the Stock as determined by the Committee. Fair Market Value
relating to the exercise price or grant price of any Non-409A Option or SAR
shall conform to requirements under Code Section 409A.

 

(p) “409A Awards” means Awards that constitute a deferral of compensation under
Code Section 409A and regulations thereunder. “Non-409A Awards” means Awards
other than 409A Awards; an Award granted before January 1, 2005 which is
eligible for “grandfathering” under Code Section 409A (generally such an Award
must be vested before January 1, 2005 in order to be grandfathered) constitutes
a Non-409A Award unless the Committee instead designates it as a 409A Award.
Although the Committee retains authority under the Plan to grant Options, SARs
and Restricted Stock on terms that will qualify those Awards as 409A Awards,
Options, SARs exercisable for Stock, and Restricted Stock will be Non-409A
Awards (with conforming terms, as provided in Section 11(k)) unless otherwise
expressly specified by the Committee.

 

(q) “Incentive Stock Option” or “ISO” means any Option designated as an
incentive stock option within the meaning of Code Section 422 or any successor
provision thereto and qualifying thereunder.

 

(r) “Incumbent Directors” means, as of any specified baseline date, individuals
then serving as members of the Board who were members of the Board as of the
date immediately preceding such baseline date; provided that any
subsequently-appointed or elected member of the Board whose election, or
nomination for election by shareholders of the Company or the Surviving
Corporation, as applicable, was approved by a vote or written consent of a
majority of the directors then comprising the Incumbent Directors shall also
thereafter be considered an Incumbent Director, unless the initial assumption of
office of such subsequently-elected or appointed director was in connection with
(i) an actual or threatened election contest, including a consent solicitation,
relating to the election or removal of one or more members of the Board, (ii)

 

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a “tender offer” (as such term is used in Section 14(d) of the Exchange Act), or
(iii) a proposed reorganization transaction.

 

(s) “Option” means a right, granted to a Participant under Section 6(b), to
purchase Stock or other Awards at a specified price during specified time
periods.

 

(t) “Other Stock-Based Awards” means Awards granted to a Participant under
Section 6(h).

 

(u) “Participant” means a person who has been granted an Award under the Plan
which remains outstanding, including a person who is no longer an Eligible
Person.

 

(v) “Performance Award” means a conditional right, granted to a Participant
under Sections 6(i) and 7, to receive cash, Stock or other Awards or payments,
as determined by the Committee, based upon performance criteria specified by the
Committee.

 

(w) “Preexisting Plans” mean the Company’s 2001 Stock Incentive Plan and 1991
Stock Incentive Plan.

 

(x) “Restricted Stock” means Stock granted to a Participant under Section 6(d)
which is subject to certain restrictions and to a risk of forfeiture.

 

(y) “Rule 16b3” means Rule 16b-3, as from time to time in effect and applicable
to Participants, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act.

 

(z) “Stock” means the Company’s Common Stock, and any other equity securities of
the Company that may be substituted or resubstituted for Stock pursuant to
Section 11(c).

 

(aa) “Stock Appreciation Rights” or “SAR” means a right granted to a Participant
under Section 6(c).

 

3. Administration.

 

(a) Authority of the Committee. The Plan shall be administered by the Committee,
which shall have full and final authority, in each case subject to and
consistent with the provisions of the Plan, to select Eligible Persons to become
Participants; to grant Awards; to determine the type and number of Awards, the
dates on which Awards may be exercised and on which the risk of forfeiture or
deferral period relating to Awards shall lapse or terminate, the acceleration of
any such dates, the expiration date of any Award, whether, to what extent, and
under what circumstances an Award may be settled, or the exercise price of an
Award may be paid, in cash, Stock, other Awards, or other property, and other
terms and conditions of, and all other matters relating to, Awards; to prescribe
documents evidencing or setting terms of Awards (such Award documents need not
be identical for each Participant), amendments thereto, and rules and
regulations for the administration of the Plan and amendments thereto; to
construe and interpret the Plan and Award documents and correct defects, supply
omissions or reconcile inconsistencies therein; and to make all other decisions
and determinations as the Committee

 

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may deem necessary or advisable for the administration of the Plan. Decisions of
the Committee with respect to the administration and interpretation of the Plan
shall be final, conclusive, and binding upon all persons interested in the Plan,
including Participants, Beneficiaries, transferees under Section 11(b) and other
persons claiming rights from or through a Participant, and shareholders. The
foregoing notwithstanding, the Board shall perform the functions of the
Committee for purposes of granting Awards under the Plan to non-employee
directors (authority with respect to other aspects of non-employee director
awards is not exclusive to the Board, however).

 

(b) Manner of Exercise of Committee Authority. The Committee may act through
subcommittees, including for purposes of perfecting exemptions under Rule 16b-3
or qualifying Awards under Code Section 162(m) as performance-based
compensation, in which case the subcommittee shall be subject to and have
authority under the charter applicable to the Committee, and the acts of the
subcommittee shall be deemed to be acts of the Committee hereunder. The express
grant of any specific power to the Committee, and the taking of any action by
the Committee, shall not be construed as limiting any power or authority of the
Committee. The Committee may delegate to officers or managers of the Company or
any subsidiary or affiliate, or committees thereof, the authority, subject to
such terms as the Committee shall determine, to perform such functions,
including administrative functions, as the Committee may determine, to the
fullest extent permitted under Section 157 and other applicable provisions of
the Delaware General Corporation Law.

 

(c) Limitation of Liability. The Committee and each member thereof, and any
person acting pursuant to authority delegated by the Committee, shall be
entitled, in good faith, to rely or act upon any report or other information
furnished by any executive officer, other officer or employee of the Company or
a subsidiary or affiliate, the Company’s independent auditors, consultants or
any other agents assisting in the administration of the Plan. Members of the
Committee, any person acting pursuant to authority delegated by the Committee,
and any officer or employee of the Company or a subsidiary or affiliate acting
at the direction or on behalf of the Committee or a delegee shall not be
personally liable for any action or determination taken or made in good faith
with respect to the Plan, and shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action or
determination.

 

4. Stock Subject to Plan.

 

(a) Overall Number of Shares Available for Delivery. Subject to adjustment as
provided in Section 11(c), the total number of shares of Stock reserved and
available for delivery in connection with Awards under the Plan shall be (i) the
number of shares that, immediately prior to the Effective Date, remain available
for issuance under the Preexisting Plans plus (ii) the number of shares subject
to awards under the Preexisting Plans which become available in accordance with
Section 4(b) after the Effective Date; provided, however, that the total number
of shares with respect to which ISOs may be granted shall not exceed the number
specified under clauses (i) above. Of these shares, 100% may be delivered in
connection with “full-value Awards,” meaning Awards other than Options, SARs, or
Awards for which the Participant pays the intrinsic value directly or by
foregoing a right to receive a cash payment from the Company. Any

 

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shares of Stock delivered under the Plan shall consist of authorized and
unissued shares or treasury shares.

 

(b) Share Counting Rules. The Committee may adopt reasonable counting procedures
to ensure appropriate counting, avoid double counting (as, for example, in the
case of tandem or substitute awards) and make adjustments if the number of
shares of Stock actually delivered differs from the number of shares previously
counted in connection with an Award. Shares subject to an Award or an award
under a Preexisting Plan that is canceled, expired, forfeited, settled in cash
or otherwise terminated or settled without delivery of the full number of shares
subject to such Award to the Participant will again be available for Awards, and
shares withheld in payment of the exercise price or taxes relating to an Award
or Preexisting Plan award and shares equal to the number surrendered in payment
of any exercise price or taxes relating to an Award or Preexisting Plan award
shall be deemed to constitute shares not delivered to the Participant and shall
be deemed to again be available for Awards under the Plan; provided, however,
that shares shall not become available under this Section 4(b) in an event that
would constitute a “material revision” of the Plan subject to shareholder
approval under then applicable rules of the New York Stock Exchange. In
addition, in the case of any Award granted in substitution for an award of a
company or business acquired by the Company or a subsidiary or affiliate, shares
issued or issuable in connection with such substitute Award shall not be counted
against the number of shares reserved under the Plan, but shall be available
under the Plan by virtue of the Company’s assumption of the plan or arrangement
of the acquired company or business. This Section 4(b) shall apply to the number
of shares reserved and available for ISOs only to the extent consistent with
applicable regulations relating to ISOs under the Code. Because shares will
count against the number reserved in Section 4(a) upon delivery (or later
vesting) and subject to the share counting rules under this Section 4(b), the
Committee may determine that Awards may be outstanding that relate to more
shares than the aggregate remaining available under the Plan, so long as Awards
will not result in delivery and vesting of shares in excess of the number then
available under the Plan.

 

5. Eligibility; Per Person Award Limitations. Awards may be granted under the
Plan only to Eligible Persons. For purposes of the Plan, an “Eligible Person”
means an employee of the Company or any subsidiary or affiliate, including any
executive officer, a non-employee director of the Company, a consultant or other
person who provides substantial services to the Company or a subsidiary or
affiliate, and any person who has been offered employment by the Company or a
subsidiary or affiliate, provided that such prospective employee may not receive
any payment or exercise any right relating to an Award until such person has
commenced employment with the Company or a subsidiary or affiliate. An employee
on leave of absence, including for a disability that has not resulted in
termination of employment, may be considered as still in the employ of the
Company or a subsidiary or affiliate for purposes of eligibility for
participation in the Plan. For purposes of the Plan, a joint venture in which
the Company or a subsidiary has a substantial direct or indirect equity
investment shall be deemed an affiliate, if so determined by the Committee. In
each calendar year during any part of which the Plan is in effect, an Eligible
Person may be granted Awards intended to qualify as “performance-based
compensation” under Code Section 162(m) under Section 6 relating to up to his or
her Annual Limit. A Participant’s Annual Limit, in any year during any part of
which the Participant is then eligible under the Plan, shall equal 500,000
shares plus the amount of the Participant’s unused Annual Limit relating to the
same type

 

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of Award as of the close of the previous year, subject to adjustment as provided
in Section 11(c). In the case of a cash-denominated Award for which the
limitation set forth in the preceding sentence would not operate as an effective
limitation satisfying Treasury Regulation 1.162-27(e)(4) (including a cash
Performance Award under Section 7), an Eligible Person may not be granted Awards
authorizing the earning during any calendar year of an amount that exceeds the
Participant’s Annual Limit, which for this purpose shall equal $2.5 million plus
the amount of the Participant’s unused cash Annual Limit as of the close of the
previous year (this limitation is separate and not affected by the number of
Awards granted during such calendar year subject to the limitation in the
preceding sentence). For this purpose, (i) “earning” means satisfying
performance conditions so that an amount becomes payable, without regard to
whether it is to be paid currently or on a deferred basis or continues to be
subject to any service requirement or other non-performance condition, and (ii)
a Participant’s Annual Limit is used to the extent a cash amount or number of
shares may be potentially earned or paid under an Award, regardless of whether
such amount or shares are in fact earned or paid.

 

6. Specific Terms of Awards.

 

(a) General. Awards may be granted on the terms and conditions set forth in this
Section 6. In addition, the Committee may impose on any Award or the exercise
thereof, at the date of grant or thereafter (subject to Section 11(e) and
11(k)), such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine, including terms
requiring forfeiture of Awards in the event of termination of employment or
service by the Participant and terms permitting a Participant to make elections
relating to his or her Award. The Committee shall retain full power and
discretion with respect to any term or condition of an Award that is not
mandatory under the Plan. The Committee shall require the payment of lawful
consideration for an Award to the extent necessary to satisfy the requirements
of the Delaware General Corporation Law, and may otherwise require payment of
consideration for an Award except as limited by the Plan.

 

(b) Options. The Committee is authorized to grant Options to Participants on the
following terms and conditions:

 

(i) Exercise Price. The exercise price per share of Stock purchasable under an
Option (including both ISOs and non-qualified Options) shall be determined by
the Committee, provided that such exercise price shall be not less than the Fair
Market Value of a share of Stock on the date of grant of such Option, subject to
Sections 6(f) and 8(a).

 

(ii) Option Term; Time and Method of Exercise. The Committee shall determine the
term of each Option, which in no event shall exceed a period of ten years from
the date of grant. The Committee shall determine the time or times at which or
the circumstances under which an Option may be exercised in whole or in part
(including based on achievement of performance goals and/or future service
requirements), the methods by which such exercise price may be paid or deemed to
be paid and the form of such payment (subject to Sections 11(k) and (l)),
including, without limitation, cash, Stock (including Stock deliverable upon
exercise, if such

 

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withholding will not result in additional accounting expense to the Company),
other Awards or awards granted under other plans of the Company or any
subsidiary or affiliate, or other property (including through “cashless
exercise” arrangements, to the extent permitted by applicable law), and the
methods by or forms in which Stock will be delivered or deemed to be delivered
in satisfaction of Options to Participants (including in the case of 409A Awards
deferred delivery of shares subject to the Option as mandated by the Committee,
with such deferred shares subject to any vesting, forfeiture or other terms as
the Committee may specify).

 

(iii) ISOs. The terms of any ISO granted under the Plan shall comply in all
respects with the provisions of Code Section 422.

 

(c) Stock Appreciation Rights. The Committee is authorized to grant SAR’s to
Participants on the following terms and conditions:

 

(i) Right to Payment. An SAR shall confer on the Participant to whom it is
granted a right to receive, upon exercise thereof, the excess of (A) the Fair
Market Value of one share of Stock on the date of exercise (or, in the case of a
“Limited SAR,” the Fair Market Value determined by reference to the Change of
Control price or value, as defined in the applicable Award agreement) over (B)
the grant price of the SAR as determined by the Committee, which grant price
shall be not less than the Fair Market Value of a share of Stock on the date of
grant of such SAR.

 

(ii) Other Terms. The Committee shall determine the term of each SAR, provided
that in no event shall the term of an SAR exceed a period of ten years from the
date of grant. The Committee shall determine at the date of grant or thereafter,
the time or times at which and the circumstances under which an SAR may be
exercised in whole or in part (including based on achievement of performance
goals and/or future service requirements), the method of exercise, method of
settlement, form of consideration payable in settlement, method by or forms in
which Stock will be delivered or deemed to be delivered to Participants, whether
or not an SAR shall be free-standing or in tandem or combination with any other
Award, and whether or not the SAR will be a 409A Award or Non-409A Award (cash
SARs will in all cases be 409A Awards). Limited SARs that may only be exercised
in connection with a Change of Control, termination of service following a
Change in Control or other event as specified by the Committee may be granted on
such terms, not inconsistent with this Section 6(c), as the Committee may
determine. The Committee may require that an outstanding Option be exchanged for
an SAR exercisable for Stock having vesting, expiration, and other terms
substantially the same as the Option, so long as such exchange will not result
in additional accounting expense to the Company.

 

(d) Restricted Stock. The Committee is authorized to grant Restricted Stock to
Participants on the following terms and conditions:

 

(i) Grant and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability, risk of forfeiture and other restrictions, if
any, as the

 

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Committee may impose, which restrictions may lapse separately or in combination
at such times, under such circumstances (including based on achievement of
performance goals and/or future service requirements), in such installments or
otherwise and under such other circumstances as the Committee may determine at
the date of grant or thereafter. Except to the extent restricted under the terms
of the Plan and any Award document relating to the Restricted Stock, a
Participant granted Restricted Stock shall have all of the rights of a
shareholder, including the right to vote the Restricted Stock and the right to
receive dividends thereon (subject to any mandatory reinvestment or other
requirement imposed by the Committee).

 

(ii) Forfeiture. Except as otherwise determined by the Committee, upon
termination of employment or service during the applicable restriction period,
Restricted Stock that is at that time subject to restrictions shall be forfeited
and reacquired by the Company; provided that the Committee may provide, by rule
or regulation or in any Award document, or may determine in any individual case,
that restrictions or forfeiture conditions relating to Restricted Stock will
lapse in whole or in part, including in the event of terminations resulting from
specified causes.

 

(iii) Certificates for Stock. Restricted Stock granted under the Plan may be
evidenced in such manner as the Committee shall determine. If certificates
representing Restricted Stock are registered in the name of the Participant, the
Committee may require that such certificates bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such
Restricted Stock, that the Company retain physical possession of the
certificates, and that the Participant deliver a stock power to the Company,
endorsed in blank, relating to the Restricted Stock.

 

(iv) Dividends and Splits. As a condition to the grant of an Award of Restricted
Stock, the Committee may require that any dividends paid on a share of
Restricted Stock shall be either (A) paid with respect to such Restricted Stock
at the dividend payment date in cash, in kind, or in a number of shares of
unrestricted Stock having a Fair Market Value equal to the amount of such
dividends, or (B) automatically reinvested in additional Restricted Stock or
held in kind, which shall be subject to the same terms as applied to the
original Restricted Stock to which it relates, or (C) deferred as to payment,
either as a cash deferral or with the amount or value thereof automatically
deemed reinvested in shares of Deferred Stock, other Awards or other investment
vehicles, subject to such terms as the Committee shall determine or permit a
Participant to elect. Unless otherwise determined by the Committee, Stock
distributed in connection with a Stock split or Stock dividend, and other
property distributed as a dividend, shall be subject to restrictions and a risk
of forfeiture to the same extent as the Restricted Stock with respect to which
such Stock or other property has been distributed.

 

(e) Deferred Stock. The Committee is authorized to grant Deferred Stock to
Participants, which are rights to receive Stock, other Awards, or a combination
thereof at the end of a specified deferral period, subject to the following
terms and conditions:

 

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(i) Award and Restrictions. Issuance of Stock will occur upon expiration of the
deferral period specified for an Award of Deferred Stock by the Committee (or,
if permitted by the Committee, as elected by the Participant). In addition,
Deferred Stock shall be subject to such restrictions on transferability, risk of
forfeiture and other restrictions, if any, as the Committee may impose, which
restrictions may lapse at the expiration of the deferral period or at earlier
specified times (including based on achievement of performance goals and/or
future service requirements), separately or in combination, in installments or
otherwise, and under such other circumstances as the Committee may determine at
the date of grant or thereafter. Deferred Stock may be satisfied by delivery of
Stock, other Awards, or a combination thereof (subject to Section 11(l)), as
determined by the Committee at the date of grant or thereafter.

 

(ii) Forfeiture. Except as otherwise determined by the Committee, upon
termination of employment or service during the applicable deferral period or
portion thereof to which forfeiture conditions apply (as provided in the Award
document evidencing the Deferred Stock), all Deferred Stock that is at that time
subject to such forfeiture conditions shall be forfeited; provided that the
Committee may provide, by rule or regulation or in any Award document, or may
determine in any individual case, that restrictions or forfeiture conditions
relating to Deferred Stock will lapse in whole or in part, including in the
event of terminations resulting from specified causes. Deferred Stock subject to
a risk of forfeiture may be called “restricted stock units” or otherwise
designated by the Committee.

 

(iii) Dividend Equivalents. Unless otherwise determined by the Committee,
Dividend Equivalents on the specified number of shares of Stock covered by an
Award of Deferred Stock shall be either (A) paid with respect to such Deferred
Stock at the dividend payment date in cash or in shares of unrestricted Stock
having a Fair Market Value equal to the amount of such dividends, or (B)
deferred with respect to such Deferred Stock, either as a cash deferral or with
the amount or value thereof automatically deemed reinvested in additional
Deferred Stock, other Awards or other investment vehicles having a Fair Market
Value equal to the amount of such dividends, as the Committee shall determine or
permit a Participant to elect.

 

(f) Bonus Stock and Awards in Lieu of Obligations. The Committee is authorized
to grant Stock as a bonus, or to grant Stock or other Awards in lieu of
obligations of the Company or a subsidiary or affiliate to pay cash or deliver
other property under the Plan or under other plans or compensatory arrangements,
subject to such terms as shall be determined by the Committee.

 

(g) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to a Participant, entitling the Participant to receive cash, Stock,
other Awards, or other property equivalent to all or a portion of the dividends
paid with respect to a specified number of shares of Stock. Dividend Equivalents
may be awarded on a freestanding basis or in connection with another Award. The
Committee may provide that Dividend Equivalents shall be paid or distributed
when accrued or shall be deemed to have been reinvested in additional Stock,
Awards, or other investment vehicles, and subject to restrictions on
transferability, risks of forfeiture and such other terms as the Committee may
specify.

 

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(h) Other Stock Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Stock or factors that may influence
the value of Stock, including, without limitation, convertible or exchangeable
debt securities, other rights convertible or exchangeable into Stock, purchase
rights for Stock, Awards with value and payment contingent upon performance of
the Company or business units thereof or any other factors designated by the
Committee, and Awards valued by reference to the book value of Stock or the
value of securities of or the performance of specified subsidiaries or
affiliates or other business units. The Committee shall determine the terms and
conditions of such Awards. Stock delivered pursuant to an Award in the nature of
a purchase right granted under this Section 6(h) shall be purchased for such
consideration, paid for at such times, by such methods, and in such forms,
including, without limitation, cash, Stock, other Awards, or other property, as
the Committee shall determine. Cash awards, as an element of or supplement to
any other Award under the Plan, may also be granted pursuant to this Section
6(h).

 

(i) Performance Awards. Performance Awards, denominated in cash or in Stock or
other Awards, may be granted by the Committee in accordance with Section 7.

 

7. Performance Awards, Including Annual Incentive Awards.

 

(a) Performance Awards Generally. The Committee is authorized to grant
Performance Awards on the terms and conditions specified in this Section 7.
Performance Awards may be denominated as a cash amount, number of shares of
Stock, or specified number of other Awards (or a combination) which may be
earned upon achievement or satisfaction of performance conditions specified by
the Committee. In addition, the Committee may specify that any other Award shall
constitute a Performance Award by conditioning the right of a Participant to
exercise the Award or have it settled, and the timing thereof, upon achievement
or satisfaction of such performance conditions as may be specified by the
Committee. The Committee may use such business criteria and other measures of
performance as it may deem appropriate in establishing any performance
conditions, and may exercise its discretion to reduce or increase the amounts
payable under any Award subject to performance conditions, except as limited
under Sections 7(b) and 7(c) in the case of a Performance Award intended to
qualify as “performance-based compensation” under Code Section 162(m).

 

(b) Performance Awards Granted to Covered Employees. If the Committee determines
that a Performance Award to be granted to an Eligible Person who is designated
by the Committee as likely to be a Covered Employee should qualify as
“performance-based compensation” for purposes of Code Section 162(m), the grant,
exercise and/or settlement of such Performance Award shall be contingent upon
achievement of a preestablished performance goal and other terms set forth in
this Section 7(b).

 

(i) Performance Goal Generally. The performance goal for such Performance Awards
shall consist of one or more business criteria and a targeted level or levels of
performance with respect to each of such criteria, as specified by the Committee
consistent with this Section 7(b). The performance goal shall be objective and
shall otherwise meet the requirements of Code Section 162(m) and regulations
thereunder (including Regulation 1.16227 and successor regulations thereto),
including the requirement that the level or

 

11

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levels of performance targeted by the Committee result in the achievement of
performance goals being “substantially uncertain.” The Committee may determine
that such Performance Awards shall be granted, exercised and/or settled upon
achievement of any one performance goal or that two or more of the performance
goals must be achieved as a condition to grant, exercise and/or settlement of
such Performance Awards. Performance goals may differ for Performance Awards
granted to any one Participant or to different Participants.

 

(ii) Business Criteria. One or more of the following business criteria for the
Company, on a consolidated basis, and/or for specified subsidiaries or
affiliates, other business units, or lines of business of the Company shall be
used by the Committee in establishing performance goals for such Performance
Awards: (1) insurance premiums written, contract deposits, contract charges
earned, or contracts in force; (2) income before realized investment gains and
losses (operating income), before or after taxes, and income before or after
interest, depreciation, amortization, or extraordinary or special items; (3)
income before realized investment gains and losses (operating income) per common
share (basic or diluted), and income before realized investment gains and losses
(operating income) from continuing operations per common share (basic or
diluted); (4) return on equity, return on assets (gross or net), return on
investment, or return on capital; (5) cash flow, free cash flow, cash flow
return on investment (discounted or otherwise), net cash provided by operations,
or cash flow in excess of cost of capital; (6) net interest margin; (7) annuity
accumulated value and annuity accumulated value persistency; (8) net investment
income and realized investment gains or losses (including on a per share basis);
(9) economic value created; (10) operating margin or profit margin; (11) expense
ratios; (12) stock price or total shareholder return; (13) dividends, including
as a percentage of net income; and (14) strategic business criteria, consisting
of one or more objectives based on meeting specified market penetration or
geographic business expansion goals, cost targets, customer satisfaction,
employee satisfaction, management of employment practices and employee benefits,
sales units, agent growth and goals relating to acquisitions, divestitures or
joint ventures. The targeted level or levels of performance with respect to such
business criteria may be established at such levels and in such terms as the
Committee may determine, in its discretion, including in absolute terms, as a
goal relative to performance in prior periods, or as a goal compared to the
performance of one or more comparable companies or an index covering multiple
companies.

 

(iii) Performance Period; Timing for Establishing Performance Goals; Per-Person
Limit. Achievement of performance goals in respect of such Performance Awards
shall be measured over a performance period of up to one year or more than one
year, as specified by the Committee. A performance goal shall be established not
later than the earlier of (A) 90 days after the beginning of any performance
period applicable to such Performance Award or (B) the time 25% of such
performance period has elapsed. In all cases, the maximum Performance Award of
any Participant shall be subject to the limitation set forth in Section 5.

 

(iv) Performance Award Pool. The Committee may establish a Performance Award
pool, which shall be an unfunded pool, for purposes of measuring

 

12

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performance of the Company in connection with Performance Awards. The amount of
such Performance Award pool shall be based upon the achievement of a performance
goal or goals based on one or more of the business criteria set forth in Section
7(b)(ii) during the given performance period, as specified by the Committee in
accordance with Section 7(b)(iv). The Committee may specify the amount of the
Performance Award pool as a percentage of any of such business criteria, a
percentage thereof in excess of a threshold amount, or as another amount which
need not bear a strictly mathematical relationship to such business criteria.

 

(v) Settlement of Performance Awards; Other Terms. Settlement of such
Performance Awards shall be in cash, Stock, other Awards or other property, in
the discretion of the Committee. The Committee may, in its discretion, increase
or reduce the amount of a settlement otherwise to be made in connection with
such Performance Awards, but may not exercise discretion to increase any such
amount payable to a Covered Employee in respect of a Performance Award subject
to this Section 7(b). Any settlement which changes the form of payment from that
originally specified shall be implemented in a manner such that the Performance
Award and other related Awards do not, solely for that reason, fail to qualify
as “performance-based compensation” for purposes of Code Section 162(m). The
Committee shall specify the circumstances in which such Performance Awards shall
be paid or forfeited in the event of termination of employment by the
Participant or other event (including a Change of Control) prior to the end of a
performance period or settlement of such Performance Awards.

 

(c) Annual Incentive Awards Granted to Designated Covered Employees. The
Committee may grant an Annual Incentive Award to an Eligible Person who is
designated by the Committee as likely to be a Covered Employee. Such Annual
Incentive Award will be intended to qualify as “performance-based compensation”
for purposes of Code Section 162(m), and therefore its grant, exercise and/or
settlement shall be contingent upon achievement of preestablished performance
goals and other terms set forth in this Section 7(c).

 

(i) Grant of Annual Incentive Awards. Not later than the earlier of 90 days
after the beginning of any performance period applicable to such Annual
Incentive Award or the time 25% of such performance period has elapsed, the
Committee shall determine the Covered Employees who will potentially receive
Annual Incentive Awards, and the amount(s) potentially payable thereunder, for
that performance period. The amount(s) potentially payable shall be based upon
the achievement of a performance goal or goals based on one or more of the
business criteria set forth in Section 7(b)(ii) in the given performance period,
as specified by the Committee. The Committee may designate an annual incentive
award pool as the means by which Annual Incentive Awards will be measured, which
pool shall conform to the provisions of Section 7(b)(iv). In such case, the
portion of the Annual Incentive Award pool potentially payable to each Covered
Employee shall be preestablished by the Committee. In all cases, the maximum
Annual Incentive Award of any Participant shall be subject to the limitation set
forth in Section 5.

 

13

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(ii) Payout of Annual Incentive Awards. After the end of each performance
period, the Committee shall determine the amount, if any, of the Annual
Incentive Award for that performance period payable to each Participant. The
Committee may, in its discretion, determine that the amount payable to any
Participant as a final Annual Incentive Award shall be reduced from the amount
of his or her potential Annual Incentive Award, including a determination to
make no final Award whatsoever, but may not exercise discretion to increase any
such amount. The Committee shall specify the circumstances in which an Annual
Incentive Award shall be paid or forfeited in the event of termination of
employment by the Participant or other event (including a Change of Control)
prior to the end of a performance period or settlement of such Annual Incentive
Award.

 

(d) Written Determinations. Determinations by the Committee as to the
establishment of performance goals, the amount potentially payable in respect of
Performance Awards and Annual Incentive Awards, the level of actual achievement
of the specified performance goals relating to Performance Awards and Annual
Incentive Awards, and the amount of any final Performance Award and Annual
Incentive Award shall be recorded in writing in the case of Performance Awards
intended to qualify under Section 162(m). Specifically, the Committee shall
certify in writing, in a manner conforming to applicable regulations under
Section 162(m), prior to settlement of each such Award granted to a Covered
Employee, that the performance objective relating to the Performance Award and
other material terms of the Award upon which settlement of the Award was
conditioned have been satisfied.

 

8. Certain Provisions Applicable to Awards.

 

(a) Stand Alone, Additional, Tandem, and Substitute Awards. Awards granted under
the Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution or exchange for, any other Award
or any award granted under another plan of the Company, any subsidiary or
affiliate, or any business entity to be acquired by the Company or a subsidiary
or affiliate, or any other right of a Participant to receive payment from the
Company or any subsidiary or affiliate; provided, however, that a 409A Award may
not be granted in tandem with a Non-409A Award. Awards granted in addition to or
in tandem with other Awards or awards may be granted either as of the same time
as or a different time from the grant of such other Awards or awards. Subject to
Sections 11(k) and (l), the Committee may determine that, in granting a new
Award, the in-the-money or fair value of any surrendered Award or award may be
applied to reduce the exercise price of any Option, grant price of any SAR, or
purchase price of any other Award.

 

(b) Term of Awards. The term of each Award shall be for such period as may be
determined by the Committee, subject to the express limitations set forth in
Sections 6(b)(ii) and 6(c)(ii).

 

(c) Form and Timing of Payment under Awards; Deferrals. Subject to the terms of
the Plan (including Sections 11(k) and (l)) and any applicable Award document,
payments to be made by the Company or a subsidiary or affiliate upon the
exercise of an Option or other Award or settlement of an Award may be made in
such forms as the Committee shall determine, including, without limitation,
cash, Stock, other Awards or other property, and may be made in a single

 

14

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payment or transfer, in installments, or on a deferred basis. The settlement of
any Award may be accelerated, and cash paid in lieu of Stock in connection with
such settlement, in the discretion of the Committee or upon occurrence of one or
more specified events (subject to Sections 11(k) and (l)). Installment or
deferred payments may be required by the Committee (subject to Section 11(e)) or
permitted at the election of the Participant on terms and conditions established
by the Committee. Payments may include, without limitation, provisions for the
payment or crediting of reasonable interest on installment or deferred payments
or the grant or crediting of Dividend Equivalents or other amounts in respect of
installment or deferred payments denominated in Stock. In the case of any 409A
Award that is vested and no longer subject to a risk of forfeiture (within the
meaning of Code Section 83), such Award will be distributed to the Participant,
upon application of the Participant, if the Participant has had an unforeseeable
emergency within the meaning of Code Sections 409A(a)(2)(A)(vi) and
409A(a)(2)(B)(ii), in accordance with Section 409A(a)(2)(B)(ii).

 

(d) Exemptions from Section 16(b) Liability. With respect to a Participant who
is then subject to the reporting requirements of Section 16(a) of the Exchange
Act in respect of the Company, the Committee shall implement transactions under
the Plan and administer the Plan in a manner that will ensure that each
transaction with respect to such a Participant is exempt from liability under
Rule 16b-3 or otherwise not subject to liability under Section 16(b)), except
that this provision shall not limit sales by such a Participant, and such a
Participant may engage in other non-exempt transactions under the Plan. The
Committee may authorize the Company to repurchase any Award or shares of Stock
deliverable or delivered in connection with any Award (subject to Section 11(l))
in order to avoid a Participant who is subject to Section 16 of the Exchange Act
incurring liability under Section 16(b). Unless otherwise specified by the
Participant, equity securities or derivative securities acquired under the Plan
which are disposed of by a Participant shall be deemed to be disposed of in the
order acquired by the Participant.

 

9. Change of Control.

 

(a) Effect of “Change of Control” on Non-Performance Based Awards. In the event
of a “Change of Control,” the provisions of this Section 9(a) shall apply to
non-performance based Awards, including Awards as to which performance
conditions previously have been satisfied or are deemed satisfied under Section
9(b) and the applicable terms of the Award agreement, unless otherwise provided
by the Committee in the Award agreement. In such case, if a Participant has a
termination of employment or service during the period commencing immediately
prior to the Change of Control and ending on the first anniversary of the Change
of Control (“Change of Control Period”), which termination is initiated by the
Company or a subsidiary other than for Cause (as defined below), then:

 

(i) Any Award subject to forfeiture based on failure to satisfy a condition
requiring continued employment or service shall thereupon become nonforfeitable;

 

(ii) Any Award (other than an Award the exercise of which is within the control
of the Participant without penalty, including under subparagraph (iii) hereof)
subject to deferral of settlement shall be settled as promptly as practicable
upon such termination, provided that, in the case of a 409A Award, such
settlement shall be

 

15

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subject to Section 11(k) (including any requirement for a six month delay in
settlement in the case of a key employee; and

 

(iii) Any unexercised Option or SAR or other Award potentially exercisable by
the Participant, whether or not exercisable by its terms on the date of such
termination, shall thereupon be fully exercisable and may be exercised, in whole
or in part for the greater of three (3) months following such termination or
such longer period as may be provided under the applicable Option agreement (but
only during the stated term of the Option), except, in the case of a 409A Award,
to the extent such settlement would not be permitted under Code Section 409A.

 

(b) Effect of “Change of Control” on Performance-Based Awards. In the event of a
“Change of Control,” with respect to an outstanding Award subject to achievement
of performance goals and conditions, such performance goals and conditions shall
be deemed to be met or exceeded if and to the extent so provided by the
Committee in the Award document governing such Award or other agreement with the
Participant.

 

(c) “Cause.” For purposes of this Section 9, the term “Cause” shall mean, unless
otherwise defined in an Award agreement or employment or Change-of-Control
agreement between the Company or a subsidiary and the Participant then in
effect:

 

(i) A Participant’s conviction of any felony under federal law or the law of the
state in which the act occurred;

 

(ii) Dishonesty by the Participant in the course of fulfilling his or her
employment duties or service duties to the Company or a subsidiary; or

 

(iii) Willful and deliberate failure on the part of the Participant to perform
his or her employment or service duties to the Company or a subsidiary in any
material respect, after reasonable notice of the non-performance and opportunity
to correct it.

 

10. Additional Award Forfeiture Provisions. The Committee may condition a
Participant’s right to receive a grant of an Award, to exercise the Award, to
retain Stock acquired in connection with an Award, or to retain the profit or
gain realized by a Participant in connection with an Award, including cash
received upon sale of Stock acquired in connection with an Award, upon
compliance by the Participant with specified conditions relating to
non-competition, confidentiality of information relating to the Company,
non-solicitation of customers, suppliers, and employees of the Company,
cooperation in litigation, non-disparagement of the Company and its officers,
directors and affiliates, and other requirements applicable to the Participant,
including during specified periods following termination of employment or
service to the Company.

 

11. General Provisions.

 

(a) Compliance with Legal and Other Requirements. The Company may, to the extent
deemed necessary or advisable by the Committee and subject to Section 11(k),
postpone the issuance or

 

16

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delivery of Stock or payment of other benefits under any Award until completion
of such registration or qualification of such Stock or other required action
under any federal or state law, rule or regulation, listing or other required
action with respect to any stock exchange or automated quotation system upon
which the Stock or other securities of the Company are listed or quoted, or
compliance with any other obligation of the Company, as the Committee may
consider appropriate, and may require any Participant to make such
representations, furnish such information and comply with or be subject to such
other conditions as it may consider appropriate in connection with the issuance
or delivery of Stock or payment of other benefits in compliance with applicable
laws, rules, and regulations, listing requirements, or other obligations. The
foregoing notwithstanding, in connection with a Change of Control, the Company
shall take or cause to be taken no action, and shall undertake or permit to
arise no legal or contractual obligation, that results or would result in any
postponement of the issuance or delivery of Stock or payment of benefits under
any Award or the imposition of any other conditions on such issuance, delivery
or payment, to the extent that such postponement or other condition would
represent a greater burden on a Participant than existed on the 90th day
preceding the Change of Control.

 

(b) Limits on Transferability; Beneficiaries. No Award or other right or
interest of a Participant under the Plan shall be pledged, hypothecated or
otherwise encumbered or subject to any lien, obligation or liability of such
Participant to any party (other than the Company or a subsidiary or affiliate
thereof), or assigned or transferred by such Participant otherwise than by will
or the laws of descent and distribution or to a Beneficiary upon the death of a
Participant, and such Awards or rights that may be exercisable shall be
exercised during the lifetime of the Participant only by the Participant or his
or her guardian or legal representative, except that Awards and other rights
(other than ISOs and SARs in tandem therewith) may be transferred to one or more
transferees during the lifetime of the Participant, and may be exercised by such
transferees in accordance with the terms of such Award, but only if and to the
extent such transfers are permitted by the Committee, subject to any terms and
conditions which the Committee may impose thereon (which may include limitations
the Committee may deem appropriate in order that offers and sales under the Plan
will meet applicable requirements of registration forms under the Securities Act
of 1933 specified by the Securities and Exchange Commission). A Beneficiary,
transferee, or other person claiming any rights under the Plan from or through
any Participant shall be subject to all terms and conditions of the Plan and any
Award document applicable to such Participant, except as otherwise determined by
the Committee, and to any additional terms and conditions deemed necessary or
appropriate by the Committee.

 

(c) Adjustments. In the event that any large, special and non-recurring dividend
or other distribution (whether in the form of cash or property other than
Stock), recapitalization, forward or reverse split, Stock dividend,
reorganization, merger, consolidation, spinoff, combination, repurchase, share
exchange, liquidation, dissolution or other similar corporate transaction or
event affects the Stock such that an adjustment is determined by the Committee
to be appropriate or, in the case of any outstanding Award, necessary in order
to prevent dilution or enlargement of the rights of the Participant, then the
Committee shall, in an equitable manner as determined by the Committee, adjust
any or all of (i) the number and kind of shares of Stock which may be delivered
in connection with Awards granted thereafter, (ii) the number and kind of shares
of Stock by which annual per person Award limitations are measured under Section
5, (iii) the

 

17

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number and kind of shares of Stock subject to or deliverable in respect of
outstanding Awards and (iv) the exercise price, grant price or purchase price
relating to any Award or, if deemed appropriate, the Committee may make
provision for a payment of cash or property to the holder of an outstanding
Option (subject to Section 11(l)). In addition, the Committee is authorized to
make adjustments in the terms and conditions of, and the criteria included in,
Awards (including Performance Awards and performance goals and any hypothetical
funding pool relating thereto) in recognition of unusual or nonrecurring events
(including, without limitation, events described in the preceding sentence, as
well as acquisitions and dispositions of businesses and assets) affecting the
Company, any subsidiary or affiliate or other business unit, or the financial
statements of the Company or any subsidiary or affiliate, or in response to
changes in applicable laws, regulations, accounting principles, tax rates and
regulations or business conditions or in view of the Committee’s assessment of
the business strategy of the Company, any subsidiary or affiliate or business
unit thereof, performance of comparable organizations, economic and business
conditions, personal performance of a Participant, and any other circumstances
deemed relevant; provided that no such adjustment shall be authorized or made if
and to the extent that the existence of such authority (i) would cause Options,
SARs, or Performance Awards granted under Section 8 to Participants designated
by the Committee as Covered Employees and intended to qualify as
“performance-based compensation” under Code Section 162(m) and regulations
thereunder to otherwise fail to qualify as “performance-based compensation”
under Code Section 162(m) and regulations thereunder, or (ii) would cause the
Committee to be deemed to have authority to change the targets, within the
meaning of Treasury Regulation 1.162-27(e)(4)(vi), under the performance goals
relating to Options or SARs granted to Covered Employees and intended to qualify
as “performance-based compensation” under Code Section 162(m) and regulations
thereunder; and provided further, that adjustments to Non-409A Awards will be
made only to the extent permitted under 409A.

 

(d) Tax Provisions.

 

(i) Withholding. The Company and any subsidiary or affiliate is authorized to
withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Stock, or any payroll or other payment to
a Participant, amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company and
Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant’s withholding
obligations, either on a mandatory or elective basis in the discretion of the
Committee, or in satisfaction of other tax obligations if such withholding will
not result in additional accounting expense to the Company. Other provisions of
the Plan notwithstanding, only the minimum amount of Stock deliverable in
connection with an Award necessary to satisfy statutory withholding requirements
will be withheld, unless withholding of any additional amount of Stock will not
result in additional accounting expense to the Company.

 

(ii) Required Consent to and Notification of Code Section 83(b) Election. No
election under Section 83(b) of the Code (to include in gross income in the year
of transfer

 

18

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the amounts specified in Code Section 83(b)) or under a similar provision of the
laws of a jurisdiction outside the United States may be made unless expressly
permitted by the terms of the Award document or by action of the Committee in
writing prior to the making of such election. In any case in which a Participant
is permitted to make such an election in connection with an Award, the
Participant shall notify the Company of such election within ten days of filing
notice of the election with the Internal Revenue Service or other governmental
authority, in addition to any filing and notification required pursuant to
regulations issued under Code Section 83(b) or other applicable provision.

 

(iii) Requirement of Notification Upon Disqualifying Disposition Under Code
Section 421(b). If any Participant shall make any disposition of shares of Stock
delivered pursuant to the exercise of an ISO under the circumstances described
in Code Section 421(b) (relating to certain disqualifying dispositions), such
Participant shall notify the Company of such disposition within ten days
thereof.

 

(e) Changes to the Plan. The Board may amend, suspend or terminate the Plan or
the Committee’s authority to grant Awards under the Plan without the consent of
shareholders or Participants; provided, however, that any amendment to the Plan
shall be submitted to the Company’s shareholders for approval not later than the
earliest annual meeting for which the record date is at or after the date of
such Board action if the Board determines that such shareholder approval is
required by any federal or state law or regulation or the rules of the New York
Stock Exchange or any other stock exchange or automated quotation system on
which the Stock may then be listed or quoted, and the Board may otherwise, in
its discretion, determine to submit other amendments to the Plan to shareholders
for approval; and provided further, that, without the consent of an affected
Participant, no such Board action may materially and adversely affect the rights
of such Participant under any outstanding Award (for this purpose, actions that
alter the timing of federal income taxation of a Participant will not be deemed
material unless such action results in an income tax penalty on the
Participant). Without the approval of shareholders, the Committee will not amend
or replace previously granted Options in a transaction that constitutes a
“repricing,” as such term is used in Section 303A.08 of the Listed Company
Manual of the New York Stock Exchange. With regard to other terms of Awards, the
Committee shall have no authority to waive or modify any such Award term after
the Award has been granted to the extent the waived or modified term would be
mandatory under the Plan for any Award newly granted at the date of the waiver
or modification.

 

(f) Right of Setoff. The Company or any subsidiary or affiliate may, to the
extent permitted by applicable law, deduct from and set off against any amounts
the Company or a subsidiary or affiliate may owe to the Participant from time to
time, including amounts payable in connection with any Award, owed as wages,
fringe benefits, or other compensation owed to the Participant, such amounts as
may be owed by the Participant to the Company, including but not limited to
amounts owed under Section 10, although the Participant shall remain liable for
any part of the Participant’s payment obligation not satisfied through such
deduction and setoff. By accepting any Award granted hereunder, the Participant
agrees to any deduction or setoff under this Section 11(f).

 

(g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended to
constitute an “unfunded” plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant or obligation to deliver
Stock pursuant to an Award, nothing contained in the Plan or

 

19

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any Award shall give any such Participant any rights that are greater than those
of a general creditor of the Company; provided that the Committee may authorize
the creation of trusts and deposit therein cash, Stock, other Awards or other
property, or make other arrangements to meet the Company’s obligations under the
Plan. Such trusts or other arrangements shall be consistent with the “unfunded”
status of the Plan unless the Committee otherwise determines with the consent of
each affected Participant.

 

(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board
nor its submission to the shareholders of the Company for approval shall be
construed as creating any limitations on the power of the Board or a committee
thereof to adopt such other incentive arrangements, apart from the Plan, as it
may deem desirable, including incentive arrangements and awards which do not
qualify under Code Section 162(m), and such other arrangements may be either
applicable generally or only in specific cases.

 

(i) Payments in the Event of Forfeitures; Fractional Shares. Unless otherwise
determined by the Committee, in the event of a forfeiture of an Award with
respect to which a Participant paid cash consideration, the Participant shall be
repaid the amount of such cash consideration. No fractional shares of Stock
shall be issued or delivered pursuant to the Plan or any Award. The Committee
shall determine whether cash, other Awards or other property shall be issued or
paid in lieu of such fractional shares or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.

 

(j) Compliance with Code Section 162(m). It is the intent of the Company that
Options and SARs granted to Covered Employees and other Awards designated as
Awards to Covered Employees subject to Section 7 shall constitute qualified
“performance-based compensation” within the meaning of Code Section 162(m) and
regulations thereunder, unless otherwise determined by the Committee at the time
of allocation of an Award. Accordingly, the terms of Sections 7(b), (c), and
(d), including the definitions of Covered Employee and other terms used therein,
shall be interpreted in a manner consistent with Code Section 162(m) and
regulations thereunder. The foregoing notwithstanding, because the Committee
cannot determine with certainty whether a given Participant will be a Covered
Employee with respect to a fiscal year that has not yet been completed, the term
Covered Employee as used herein shall mean only a person designated by the
Committee as likely to be a Covered Employee with respect to a specified fiscal
year. If any provision of the Plan or any Award document relating to a
Performance Award that is designated as intended to comply with Code Section
162(m) does not comply or is inconsistent with the requirements of Code Section
162(m) or regulations thereunder, such provision shall be construed or deemed
amended to the extent necessary to conform to such requirements, and no
provision shall be deemed to confer upon the Committee or any other person
discretion to increase the amount of compensation otherwise payable in
connection with any such Award upon attainment of the applicable performance
objectives.

 

(k) Certain Limitations on Awards to Ensure Compliance with Section 409A. For
purposes of this Plan, references to an Award term or event (including any
authority or right of the Company or a Participant) being “permitted” under
Section 409A mean, for a 409A Award, that the term or event will not cause the
Participant to be liable for payment of interest or a tax penalty under Section
409A and, for a Non-409A Award, that the term or event will not cause the Award
to be treated as subject to Section 409A. Other provisions of the Plan
notwithstanding, the terms of

 

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any 409A Award and any Non-409A Award, including any authority of the Company
and rights of the Participant with respect to the Award, shall be limited to
those terms permitted under Section 409A, and any terms not permitted under
Section 409A shall be automatically modified and limited to the extent necessary
to conform with Section 409A. For this purpose, other provisions of the Plan
notwithstanding, the Company shall have no authority to accelerate distributions
relating to 409A Awards in excess of the authority permitted under Section 409A,
any distribution subject to Section 409A(a)(2)(A)(i) (separation from service)
to a “key employee” as defined under Section 409A(a)(2)(B)(i), shall not occur
earlier than the earliest time permitted under Section 409A(a)(2)(B)(i), and any
authorization of payment of cash to settle a Non-409A Award shall apply only to
the extent permitted under Section 409A for such Award. Non-409A Awards that are
“grandfathered” under Section 409A and that, but for such grandfathered status,
would be deemed 409A Awards shall be subject to the terms and conditions of the
Plan as amended and restated at May 26, 2005 other than Sections 6(b)(ii) and
6(c)(ii), provided that if any provision adopted by amendment to the Plan or an
Award Agreement after October 3, 2004, would constitute a material modification
of a grandfathered Non-409A Award, such provision will not be effective as to
such Award unless so stated by the Committee in writing with specific reference
to this last sentence of Section 11(k).

 

(l) Certain Limitations Relating to Accounting Treatment of Awards. The Company
intends that stock-denominated Awards (other than SARs) will qualify for fixed
accounting under Accounting Principles Board Opinion 25 (“APB 25”), with the
compensation measurement date for accounting purposes to occur at the date of
grant or the date performance conditions are met if an Award is fully contingent
on achievement of performance goals, unless the Committee specifically
determines otherwise. Therefore, other provisions of the Plan notwithstanding,
in order to preserve this fundamental objective of the Plan, if any authority
granted to the Committee hereunder or any provision of the Plan or an Award
agreement would result, under APB 25, in “variable” accounting or a measurement
date other than the date of grant or the date such performance conditions are
met, if the Committee was not specifically aware of such accounting consequence
at the time such Award was granted or provision otherwise became effective, such
authority shall be limited and such provision shall be automatically modified
and reformed to the extent necessary to preserve the accounting treatment of the
award intended by the Committee, subject to Section 11(e) of the Plan. This
provision shall cease to be effective if and at such time as the Company elects
to no longer account for equity compensation under APB 25.

 

(m) Governing Law. The validity, construction, and effect of the Plan, any rules
and regulations relating to the Plan and any Award document shall be determined
in accordance with the laws of the State of Delaware, without giving effect to
principles of conflicts of laws, and applicable provisions of federal law.

 

(n) Awards to Participants Outside the United States. The Committee may modify
the terms of any Award under the Plan made to or held by a Participant who is
then resident or primarily employed outside of the United States in any manner
deemed by the Committee to be necessary or appropriate in order that such Award
shall conform to laws, regulations, and customs of the country in which the
Participant is then resident or primarily employed, or so that the value and
other benefits of the Award to the Participant, as affected by foreign tax laws
and other restrictions applicable as a result of the Participant’s residence or
employment abroad shall be comparable to the value of such an Award to a

 

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Participant who is resident or primarily employed in the United States. An Award
may be modified under this Section 11(n) in a manner that is inconsistent with
the express terms of the Plan, so long as such modifications will not contravene
any applicable law or regulation or result in actual liability under Section
16(b) for the Participant whose Award is modified.

 

(o) Limitation on Rights Conferred under Plan. Neither the Plan nor any action
taken hereunder shall be construed as (i) giving any Eligible Person or
Participant the right to continue as an Eligible Person or Participant or in the
employ or service of the Company or a subsidiary or affiliate, (ii) interfering
in any way with the right of the Company or a subsidiary or affiliate to
terminate any Eligible Person’s or Participant’s employment or service at any
time, (iii) giving an Eligible Person or Participant any claim to be granted any
Award under the Plan or to be treated uniformly with other Participants and
employees, or (iv) conferring on a Participant any of the rights of a
shareholder of the Company unless and until the Participant is duly issued or
transferred shares of Stock in accordance with the terms of an Award or an
Option is duly exercised. Except as expressly provided in the Plan and an Award
document, neither the Plan nor any Award document shall confer on any person
other than the Company and the Participant any rights or remedies thereunder.

 

(p) Severability; Entire Agreement. If any of the provisions of this Plan or any
Award document is finally held to be invalid, illegal or unenforceable (whether
in whole or in part), such provision shall be deemed modified to the extent, but
only to the extent, of such invalidity, illegality or unenforceability, and the
remaining provisions shall not be affected thereby; provided, that, if any of
such provisions is finally held to be invalid, illegal, or unenforceable because
it exceeds the maximum scope determined to be acceptable to permit such
provision to be enforceable, such provision shall be deemed to be modified to
the minimum extent necessary to modify such scope in order to make such
provision enforceable hereunder. The Plan and any Award documents contain the
entire agreement of the parties with respect to the subject matter thereof and
supersede all prior agreements, promises, covenants, arrangements,
communications, representations and warranties between them, whether written or
oral with respect to the subject matter thereof.

 

(q) Preexisting Plans. Upon shareholder approval of the Plan as provided under
Section 11(r), no further grants of Awards will be made under any Preexisting
Plan.

 

(r) Plan Effective Date and Termination. The Plan became effective at March 6,
2002, and was approved by shareholders on May 14, 2002. The amendment and
restatement of the Plan was approved by shareholders on May 26, 2005. Unless
earlier terminated by action of the Board of Directors, the Plan will remain in
effect until such time as no Stock remains available for delivery under the Plan
and the Company has no further rights or obligations under the Plan with respect
to outstanding Awards under the Plan.

 

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