Exhibit 10.1

 

First Amended and Restated

State National Companies, Inc.
2014 Long-Term Incentive Plan

 

1.                                      PURPOSE

 

The Plan is intended to foster and promote the long-term financial success of
State National Companies, Inc. and its Affiliates (collectively, the “Company
Group”); to reward performance and to increase stockholder value by providing
Participants appropriate incentives and rewards; to enable the Company Group to
attract and retain the services of outstanding individuals upon whose judgment,
interest and dedication the successful conduct of the Company Group’s businesses
are largely dependent; to encourage Participants’ ownership interest in State
National Companies, Inc.; and to align the interests of management and directors
with that of the Company’s stockholders.

 

2.                                      DEFINITIONS

 

(a)                                 “Affiliate” means any entity (whether a
corporation, partnership, joint venture or other form of entity) that directly,
or indirectly through one or more intermediaries, controls, or is controlled by
or is under common control with, the Company, except solely with respect to the
issuance of Incentive Stock Options, the term “Affiliate” shall be limited to
any “parent corporation” or “subsidiary corporation” of the Company, as such
terms are defined in Code sections 424(e) and 424(f) respectively.

 

(b)                                 “Award” means, individually or collectively,
a grant under the Plan of Options, Restricted Stock, Restricted Stock Units,
Stock Appreciation Rights, Stock Awards and/or Cash Units.

 

(c)                                  “Award Agreement” means a written or
electronic agreement evidencing and setting forth the terms of an Award.

 

(d)                                 “Board of Directors” means the board of
directors of the Company.

 

(e)                                  “Cash Unit” means a dollar denominated unit
awarded to a Participant pursuant to Section 11 of the Plan and comprised of
Service Units, Performance Units or any combination thereof.

 

(f)                                   “Cause” means, with respect to the
termination of a Participant by the Company or another member of the Company
Group, that such termination is for “Cause” as such term (or word of like
import) is expressly defined in the then-effective written employment or other
agreement, or to the extent the Award is subject to Code section 409A such
written agreement that is in effect as of the Date of Grant, between the
Participant and the Company or such other member of the Company Group.  In the
absence of such written agreement and definition, “Cause” means, unless
otherwise specified in the applicable Award Agreement, with respect to a
Participant:

 

1

--------------------------------------------------------------------------------

 

(i)                                                       a material breach by
the Participant of the Participant’s duties and obligations that remains uncured
following 30 days’ prior written notice from the Company to the Participant
identifying in reasonable detail the nature of any such material breach,
including but not limited to gross negligence in the performance of his or her
duties and responsibilities;

 

(ii)                                                    willful misconduct by
the Participant that in the reasonable determination of the Board of Directors
or Committee has caused or is likely to cause material injury to the reputation
or business of any member of the Company Group;

 

(iii)                                                 any act of fraud, material
misappropriation or other dishonesty by the Participant; or

 

(iv)                                                Participant’s conviction or
plea of nolo contendere for any felony or Participant’s conviction or plea of
nolo contendere for a misdemeanor involving moral turpitude.

 

A Participant shall be considered to have been discharged for Cause if the
Company determines within 30 days after his or her resignation or discharge that
discharge for Cause was warranted.

 

(g)                                  “Change of Control” means the first to
occur of any of the following events:

 

(i)                                                       any “Person” (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act), except for any of
the Company’s employee benefit plans, or any entity holding the Company’s voting
securities for, or pursuant to, the terms of any such plan (or any trust forming
a part thereof) (the “Benefit Plan(s)”), is or becomes the beneficial owner,
directly or indirectly, of (Y) the Company’s securities representing 25% or more
of the combined voting power of the Company’s then outstanding securities or
(Z) 90% or more of the Company’s operating assets, other than pursuant to a
transaction excepted in Clause (ii);

 

(ii)                                                    the consummation of a
merger, consolidation, or other reorganization of the Company, unless:

 

1.                                under the terms of the agreement providing for
such merger, consolidation, or reorganization, the stockholders of the Company
immediately before such merger, consolidation, or reorganization, shall own,
directly or indirectly immediately following such merger, consolidation, or
reorganization, at least 51% of the combined voting power of the outstanding
voting securities of the entity resulting from such merger, consolidation, or
reorganization (the “Surviving Company”) in substantially the same proportion as
their ownership of the voting securities immediately before such merger,
consolidation, or reorganization;

 

2

--------------------------------------------------------------------------------

 

2.                                the individuals who were members of the Board
of Directors immediately prior to the execution of the definitive agreement for
such merger, consolidation or other reorganization constitute at least a
majority of the members of the board of directors of the Surviving Company after
such merger, consolidation, or reorganization; and

 

3.                                no Person (other than (A) the Company or any
subsidiary of the Company, (B) any Benefit Plan, (C) the Surviving Company or
any subsidiary of the Surviving Company, (D) the Ledbetter Group or any member
of the Ledbetter Group; or (E) any Person who, immediately prior to such merger,
consolidation, or reorganization had beneficial ownership of 51% or more of the
then outstanding voting securities) shall have beneficial ownership of 51% or
more of the combined voting power of the Surviving Company’s then outstanding
voting securities;

 

(iii)                                                 during any period of two
consecutive years, individuals, who at the beginning of such period, constituted
the Board of Directors cease for any reason to constitute at least a majority of
the Board of Directors unless the election, or the nomination for election by
the Company’s stockholders, of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at the
beginning of the period.

 

Notwithstanding Clause (i), a Change of Control shall not be deemed to have
occurred if a Person becomes the beneficial owner, directly or indirectly, of
the Company’s securities representing 51% or more of the combined voting power
of the Company’s then outstanding securities solely as a result of an
acquisition by the Company of its voting securities which, by reducing the
number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 51% or more of the combined voting power of
the Company’s then outstanding securities; provided, however, that if a Person
becomes a beneficial owner of 51% or more of the combined voting power of the
Company’s then outstanding securities by reason of share purchases by the
Company and shall, after such share purchases by the Company, become the
beneficial owner, directly or indirectly, of any additional voting securities of
the Company (other than as a result of a stock split, stock dividend or similar
transaction), then a Change of Control of the Company shall be deemed to have
occurred with respect to such Person under Clause (i).  In no event shall a
Change of Control of the Company be deemed to occur by virtue of: (A) the
acquisition of the Company’s securities by one or more Benefit Plans and/or
members of the Ledbetter Group; (B) the Company’s Rule 144 offering completed in
2014; (iii) the Company’s initial public offering completed in 2014; or
(C) listing, or approval for listing upon notice of issuance, of Common Stock on
any securities exchange.

 

Notwithstanding the foregoing, however, in any circumstance or transaction in
which compensation resulting from or in respect of an Award would result in the
imposition of an additional tax under Code section 409A if the foregoing
definition of “Change of Control” were to apply, then “Change of Control” shall
mean a “change in control event” within the meaning of Treasury Regulation §
1.409A-3(i)(5).

 

3

--------------------------------------------------------------------------------

 

(h)                                 “Code” means the Internal Revenue Code of
1986, as amended.  References to particular sections of the Code shall include
all applicable regulations and other guidance issued thereunder (including
successor laws, regulations and other guidance thereto).

 

(i)                                     “Committee” means the committee
designated by the Board of Directors pursuant to Section 3 of the Plan to
administer the Plan.

 

(j)                                    “Common Stock” means the common stock of
the Company, par value $.001 per share.

 

(k)                                 “Company” means State National
Companies, Inc., a corporation organized under the laws of Delaware, and its
successors.

 

(l)                                     “Consultant” means a person other than
an Employee or Outside Director providing bona fide services to the Company or
an Affiliate as a consultant or advisor, as applicable, provided that such
person is a natural person and that such services are not in connection with the
offer or sale of securities in a capital-raising transaction and do not directly
or indirectly promote or maintain a market for any securities of the Company.

 

(m)                             “Covered Employee” means an Employee who is, or
is determined by the Committee may become, a “covered employee” within the
meaning of Code section 162(m).

 

(n)                                 “Date of Grant” means the date when the
Company completes the corporate action necessary to create the legally binding
right constituting an Award, and, when applicable, upon the satisfaction of any
contingent events expressly connected to the effectiveness of the Award or as
otherwise provided in Code section 409A.

 

(o)                                 “Disability” means an individual is unable
to perform substantially all of his or her duties as an Employee, Consultant or
Outside Director for a continuous period of 180 days, by reason of physical or
mental illness or accident, in the Company’s reasonable discretion. 
Notwithstanding the foregoing, however, in any circumstance or transaction in
which compensation resulting from or in respect of an Award would result in the
imposition of an additional tax under Code section 409A if the foregoing
definition of “Disability” were to apply, then “Disability” shall mean
“disabled” within the meaning of Code section 409A.

 

(p)                                 “Effective Date” means the date in 2017 at
which time the Plan is approved by the stockholders of the Company.

 

(q)                                 “Employee” means any person employed by the
Company or an Affiliate.  Directors who are employed by the Company or an
Affiliate shall be considered Employees under the Plan.

 

(r)                                    “Exchange Act” means the Securities
Exchange Act of 1934, as amended.

 

(s)                                   “Exercise Price” means the price at which
a Participant may purchase a share of Common Stock pursuant to an Option, or, in
the case of Stock Appreciation Rights, the base price of the Stock Appreciation
Right, in each case, upon the Date of Grant.

 

4

--------------------------------------------------------------------------------

 

(t)                                    “Fair Market Value” on any date means the
market price of Common Stock, determined by the Committee as follows:

 

(i)                                                       if the Common Stock is
listed on one or more established stock exchanges or national market systems,
including without limitation The NASDAQ Global Select Market, The NASDAQ Global
Market or The NASDAQ Capital Market of The NASDAQ Stock Market LLC, its Fair
Market Value shall be the closing sales price for such stock as quoted on the
principal exchange or system on which the Common Stock is listed (as determined
by the Committee) on the date of determination (or, if no sales were reported on
that date, on the last trading date such closing sales price was reported), as
reported in The Wall Street Journal or reported such other source as the
Committee deems reliable;

 

(ii)                                                    if the Common Stock is
regularly quoted on an automated quotation system (including the OTC Bulletin
Board) or by a recognized securities dealer, its Fair Market Value shall be the
closing sale price for such stock as quoted on such system or by such securities
dealer on the date of determination, but if no such price was reported on that
date, on the last date such price was reported), as reported in The Wall Street
Journal or such other source as the Committee deems reliable; or

 

(iii)                                                 in the absence of an
established market for the Common Stock of the type described in Clauses (i) and
(ii), above, the Fair Market Value thereof shall be determined by the Committee
in good faith and in compliance with Code section 409A and any other applicable
law, as applicable.

 

The Committee’s determination of Fair Market Value shall be conclusive and
binding on all persons.

 

(u)                                 “Good Reason” means with respect to an
individual the occurrence of any of the following events, except for the
occurrence of such an event in connection with the termination or reassignment
of Employee by the Company for Cause: (i) a material reduction by the Company of
Employee’s base salary; (ii) a material reduction in Employee’s authority,
duties and responsibilities; (iii) the Company’s requiring Employee to be based
anywhere other than within 50 miles of Employee’s current office location except
for requirements of reasonably required travel on the Company’s business; or
(iv) a material breach by the Company of any of its obligations, duties or
agreements under the Plan.  Participant’s termination shall not be considered to
be on account of Good Reason unless (A) within 60 days after the date on which
Participant knows, or should reasonably be expected to know, that one of the
events set forth above has occurred, Participant provides written notice to the
Board of Directors of the applicable facts and circumstances, (B) the Company
does not remedy, cure or rectify the event within 30 days from the date on which
written notice is received from the Participant, and (C) Participant terminates
his or her employment within 30 days after the end of the cure period described
in Clause (B).

 

5

--------------------------------------------------------------------------------

 

(v)                                 “Incentive Stock Option” means a stock
option granted to a Participant pursuant to Section 6 of the Plan that is
intended to meet the requirements of Code section 422.

 

(w)                               “Ledbetter Group” (individually, a “member of
the Ledbetter Group”) means and includes Lonnie Ledbetter, Terry Ledbetter,
their respective spouses and descendants (including adopted children) and/or
entities controlled by any of such individuals, spouses or descendants
(including adopted children) that are the primary beneficiaries or owners (e.g.,
corporation, limited liability companies, partnerships or trusts).

 

(x)                                 “Non-Statutory Stock Option” means a stock
option granted to a Participant pursuant to Section 6 of the Plan that is not
intended to qualify, or does not qualify, as an Incentive Stock Option.

 

(y)                                 “Option” means an Incentive Stock Option or
a Non-Statutory Stock Option.

 

(z)                                  “Outside Director” means a member of the
Board of Directors of the Company or an Affiliate who is not also an Employee of
the Company or an Affiliate.

 

(aa)                          “Participant” means any person who holds an
outstanding Award.

 

(bb)                          “Performance Criteria” means the criteria the
Committee selects for purposes of establishing the Performance Goal or
Performance Goals for a Participant for a Performance Period.  The Performance
Criteria that shall be used to establish Performance Goals are limited to the
following:

 

(i)                                                       appreciation in and/or
maintenance of share price;

 

(ii)                                                    assets;

 

(iii)                                                 book value;

 

(iv)                                                book value per share;

 

(v)                                                   business expansion goals;

 

(vi)                                                business retention goals;

 

(vii)                                             cash flow or cash flow per
share (before or after dividends);

 

(viii)                                          cash flow return on investment;
improvement in or attainment of expense levels or working capital levels;

 

(ix)                                                combined ratio;

 

(x)                                                   credit ratings;

 

6

--------------------------------------------------------------------------------

 

(xi)                                                customer/client
satisfaction;

 

(xii)                                             debt reductions;

 

(xiii)                                          earnings (including net
earnings, earnings before taxes, earnings before interest and taxes or earnings
before interest, taxes, depreciation and amortization);

 

(xiv)                                         earnings per share;

 

(xv)                                            economic value-added models or
equivalent metrics;

 

(xvi)                                         employee satisfaction;

 

(xvii)                                      goals related to acquisitions or
divestitures;

 

(xviii)                                   goals related to information
technology;

 

(xix)                                         goals related to supervision of
litigation;

 

(xx)                                            implementation, completion or
attainment of measurable objectives with respect to research, development,
products or projects, or recruiting or maintaining personnel;

 

(xxi)                                         investment income;

 

(xxii)                                      market capitalization;

 

(xxiii)                                   market penetration or market share;

 

(xxiv)                                  net sales;

 

(xxv)                                     net and gross underwriting results;

 

(xxvi)                                  net income (before or after taxes);

 

(xxvii)                               new annualized premiums;

 

(xxviii)                            operating income (before or after taxes);

 

(xxix)                                  operating margins, gross margins or cash
margin;

 

(xxx)                                     pre- or after-tax income (before or
after allocation of corporate overhead and bonus);

 

(xxxi)                                  premiums collected;

 

(xxxii)                               profits (gross or net);

 

7

--------------------------------------------------------------------------------

 

(xxxiii)                            reductions in costs;

 

(xxxiv)                           regulatory achievements;

 

(xxxv)                              return on assets or net assets;

 

(xxxvi)                           return on capital or equity;

 

(xxxvii)                        revenue;

 

(xxxviii)                     revenue growth or product revenue growth;

 

(xxxix)                           stockholder equity;

 

(xl)                                                statutory earnings;

 

(xli)                                             total stockholder return;

 

(xlii)                                          underwriting margin; or

 

(xliii)                                       year-end cash.

 

(cc)                            “Performance Goals” means the goals established
in writing by the Committee for the Performance Period based upon the
Performance Criteria.  Depending on the Performance Criteria used to establish
such Performance Goals, the Performance Goals may be: (i) expressed on a
corporate-wide basis or with respect to one or more Affiliates, business units,
divisions, subsidiaries or business segments or any combination thereof; (ii) in
either absolute terms or relative to the performance of one or more comparable
companies or an index covering multiple companies; (iii) be absolute or based on
change in the Performance Criteria over a specified period of time and such
change may be measured based on an arithmetic change over a specified period
(e.g., cumulative change or average change), or percentage change over a
specified period (e.g., cumulative percentage change, average percentage change
or compounded percentage change), (v) be based on calculations that may or may
not conform with generally accepted accounting principles; or (vi) any
combination of the foregoing.  The Committee shall establish Performance Goals
for each Performance Period prior to, or as soon as practicable after, the
commencement of such Performance Period.  The Committee, in its discretion, may,
subject to Code section 162(m) when applicable, adjust or modify the calculation
of Performance Goals for such Performance Period in order to prevent the
dilution or enlargement of the rights of Participants (i) in the event of, or in
anticipation of, any unusual or extraordinary corporate item, transaction,
event, or development, or (ii) in recognition of, or in anticipation of, any
other unusual or nonrecurring events affecting the Company, or the financial
statements of the Company, or in response to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business conditions.  In
interpreting Plan provisions applicable to Performance Goals with respect to any
Qualified Performance-Based Award, it is the intent of the Plan to conform with
the standards of Code section 162(m) and Treasury Regulation §
1.162-27(e)(2)(i), and the Committee in establishing such goals and interpreting
the Plan shall be guided by those provisions.  Prior to the payment of any
compensation based on the achievement of Performance Goals, the Committee must
certify in writing that the applicable Performance Goals were, in fact,
satisfied.

 

8

--------------------------------------------------------------------------------

 

(dd)                          “Performance Period” means the designated period
during which the Performance Goals must be satisfied with respect to an Award to
which any Performance Goals relate.

 

(ee)                            “Performance Unit” means a Cash Unit, or portion
thereof, under which payment is primarily based on the attainment of one or more
Performance Goals over the relevant Performance Period.

 

(ff)                              “Permitted Transferees” means with respect to
a Participant, any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
including adoptive relationships, any person sharing the Participant’s household
(other than a tenant or employee), a trust in which these persons have more than
50% of the beneficial interest, a foundation in which these persons (or the
Participant) control the management of assets, and any other entity in which
these persons (or the Participant) own more than 50% of the voting interests.

 

(gg)                            “Plan” means this First Amended and Restated
State National Companies, Inc. 2014 Long-Term Incentive Plan, as amended and/or
restated from time to time (formerly known as the State National Companies, Inc.
2014 Long-Term Incentive Plan).

 

(hh)                          “Prior Plan” means the State National
Companies, Inc. 2014 Long-Term Incentive Plan as in effect prior to its
amendment and restatement set forth herein.  Awards granted prior to the
Effective Date pursuant to the Prior Plan shall continue to be administered in
accordance with the terms of the Prior Plan.

 

(ii)                                  “Qualified Performance-Based Award” means
an Award that is intended to qualify as “qualified performance-based
compensation” within the meaning of Code section 162(m) and is designated as a
Qualified Performance-Based Award pursuant to Section 12 hereof.

 

(jj)                                “Restricted Stock” means Common Stock
awarded to a Participant pursuant to Section 8 of the Plan.

 

(kk)                          “Restricted Stock Unit” means the grant of a right
to receive Shares or the cash equivalent value in the future pursuant to
Section 9 of the Plan.

 

(ll)                                  “Service Unit” means a Cash Unit, or
portion thereof, under which payment is primarily based on the Participant’s
continued service with the Company or an Affiliate thereof during a specified
service period.

 

(mm)                  “Share” means a share of Common Stock.

 

(nn)                          “Stock Appreciation Right” means a right granted
to a Participant pursuant to Section 10 of the Plan.

 

(oo)                          “Stock Award” means the Common Stock granted to a
Participant pursuant to Section 8 of the Plan that is otherwise immediately
vested as of the time of grant to such Participant.

 

9

--------------------------------------------------------------------------------

 

(pp)                          “Termination of Service” means the termination of
employment of an Employee by the Company and all Affiliates, the termination of
service by an Outside Director as a member of the Board of Directors of the
Company and all Affiliates, or the termination of all services performed by a
Consultant with respect to the Company and all Affiliates.  A Participant’s
service shall not be deemed to have terminated because of a change in the entity
for which the Participant renders such service, provided that there is no
interruption or termination of the service so rendered by such Participant. 
Furthermore, a Participant’s service with the Company Group shall not be deemed
to have terminated, when applicable, if the Participant takes any military
leave, sick leave, or other bona fide leave of absence approved by the Company
or an Affiliate;  provided, however, that if any such leave exceeds 90 days, on
the 91st day of such leave the Participant’s service shall be deemed to have
terminated unless the Participant’s right to return to service with the Company
Group is guaranteed by statute or contract.  Unless such Participant’s leave of
absence is approved by the Committee, a Participant’s service shall be deemed to
have terminated upon the entity for which the Participant performs service
ceasing to be an Affiliate (or any successor).  Subject to the foregoing, the
Company, in its discretion, shall determine whether a Participant’s service has
terminated and the effective date of such termination. Notwithstanding the
foregoing, in any circumstance or transaction in which compensation resulting
from or in respect of an Award would result in the imposition of an additional
tax under Code section 409A if the foregoing definition of “Termination of
Service” were to apply, then “Termination of Service” shall mean a “separation
from service” within the meaning of Code section 409A(a)(2)(A)(i).

 

3.                                      ADMINISTRATION

 

The Committee shall administer the Plan.  The Committee shall consist of two or
more disinterested directors of the Company, who shall be appointed by the Board
of Directors.  A member of the Board of Directors shall be deemed to be
“disinterested” only if he or she satisfies (1) such requirements as the
Securities and Exchange Commission may establish for non-employee directors
administering plans intended to qualify for exemption under Rule 16b-3 (or its
successor) under the Exchange Act; and (2) such requirements as the Internal
Revenue Service may establish for outside directors acting under plans intended
to qualify for exemption under Code section 162(m)(4)(C).  The Board of
Directors may also appoint one or more separate committees of the Board of
Directors, each composed of one or more directors of the Company or an Affiliate
who need not be disinterested, that may grant Awards and assist in the
administration of the Plan with respect to Employees, Outside Directors,
Consultants and other individuals who are not considered officers or directors
of the Company under Section 16 of the Exchange Act or for whom Awards are not
intended to satisfy the provisions of Code section 162(m).  Unless and until
otherwise determined by the Board of Directors, the Compensation Committee of
the Board of Directors shall serve as the Committee; provided, however, that
Board of Directors may serve as the Committee hereunder: (A) if the Compensation
Committee has not been constituted; or (B) with respect to Awards to Outside
Directors.

 

(a)                                 Except as specified herein, the Committee
shall have the sole and complete authority to:

 

10

--------------------------------------------------------------------------------

 

(i)                                                       determine the
individuals to whom Awards are granted, the type and amounts of Awards to be
granted and the time of all such grants;

 

(ii)                                                    determine the terms,
conditions and provisions of, and restrictions relating to, each Award granted;

 

(iii)                                                 consistent with the Plan,
accelerate the exercise, vesting or payment of an Award when such action or
actions would be in the best interests of the Company;

 

(iv)                                                interpret and construe the
Plan and all Award Agreements;

 

(v)                                                   correct any defect, supply
any omission or reconcile any inconsistency in the Plan or any Award Agreement;

 

(vi)                                                prescribe, amend and rescind
rules, regulations and guidelines relating to the Plan and the administration
thereof;

 

(vii)                                             determine the content and form
of all Award Agreements;

 

(viii)                                          determine all questions relating
to Awards under the Plan, including whether any conditions relating to an Award
have been met;

 

(ix)                                                consistent with the Plan and
with the written consent of the Participant, as appropriate, amend any
outstanding Award, amend the exercise date or dates thereof or grant waivers of
terms, conditions, restrictions and limitations thereunder, provided that the
Committee shall not have any discretion or authority to make changes to any
Award that (A) is intended to qualify as a Qualified Performance-Based Award to
the extent that the existence of such discretion or authority would cause such
Award not to so qualify, or (B) would result in a “repricing” of any Options or
Stock Appreciation Rights within the meaning of Section 21(b) hereof;

 

(x)                                                   determine the duration and
purpose of leaves of absence that may be granted to a Participant without
constituting his or her Termination of Service for purposes of the Plan or any
Award;

 

(xi)                                                maintain accounts, records
and ledgers relating to Awards;

 

(xii)                                             maintain records concerning
its decisions and proceedings;

 

(xiii)                                          employ agents, attorneys,
accountants or other persons for such purposes as the Committee considers
necessary or desirable; and

 

(xiv)                                         do and perform all acts which it
may deem necessary or appropriate for the administration of the Plan and to
carry out the objectives of the Plan.

 

11

--------------------------------------------------------------------------------

 

The Committee’s determinations under the Plan shall be final, binding and
conclusive on all persons.

 

(b)                                 Each Award shall be evidenced by an Award
Agreement containing such provisions as may be approved by the Committee.  Each
Award Agreement shall constitute a binding contract between the Company and the
Participant, and every Participant, upon acceptance of the Award Agreement,
shall be bound by the terms and restrictions of the Plan and the Award
Agreement. The terms of each Award Agreement shall be in accordance with the
Plan, but may include such additional provisions and restrictions determined by
the Committee, in its discretion, provided that such additional provisions and
restrictions are not inconsistent with the terms of the Plan.  In particular,
and at a minimum, the Committee shall set forth in each Award Agreement (i) the
type of Award granted, (ii) the Exercise Price of any Option or Stock
Appreciation Right, (iii) the number of Shares subject to the Award; (iv) the
expiration date of the Award, (v) the manner, time, and rate (cumulative or
otherwise) of exercise or vesting of such Award, and (vi) the restrictions, if
any, placed upon such Award, or upon Shares which may be issued pursuant to such
Award.  Awards under a particular Section of the Plan need not be uniform, and
Awards under more than one Section of the Plan may be combined into a single
Award Agreement.  Any combination of Awards may be granted at one time and on
more than one occasion to the same Participant.

 

(c)                                  The Committee in its sole discretion and on
such terms and conditions as it may provide may delegate all or any part of its
authority and powers under the Plan to one or more members of the Board of
Directors and/or officers of the Company; provided, however, that the Committee
may not delegate its authority or power with respect to (i) the selection for
participation in the Plan of an officer or other person subject to Section 16 of
the Exchange Act or decisions concerning the timing, pricing or amount of an
Award to such an officer or person; (ii) any Qualified Performance-Based Award
intended to satisfy the requirements of Code section 162(m); or (iii) any Awards
to an Outside Director.

 

(d)                                 The Committee may rely on the descriptions,
representations, reports and estimates provided to it by the management of the
Company or an Affiliate (or by persons described in Clause (xiii) of
Section 3(a) above) for determinations to be made pursuant to the Plan,
including the satisfaction of any conditions of a Qualified Performance-Based
Award.  However, only the Committee or a portion of the Committee may certify
the attainment of any conditions of a Qualified Performance-Based Award intended
to satisfy the requirements of Code section 162(m).

 

(e)                                  The Committee is authorized to grant Stock
Awards as a bonus or in lieu of other obligations to pay cash or deliver other
property under the Plan or under other plans or compensatory arrangements.

 

(f)                                   No member of the Board of Directors, the
Committee nor any person to whom authority has been delegated hereunder, shall
be personally liable for any action, interpretation or determination made in
good faith with respect to the Plan or Awards granted hereunder, and each such
person shall be fully indemnified and protected by the Company with respect to
any liability he or she may incur with respect to any such action,
interpretation or determination, to the fullest extent permitted by applicable
law.

 

12

--------------------------------------------------------------------------------

 

4.                                      STOCK SUBJECT TO THE PLAN

 

(a)                                 General Limitations.  Subject to adjustment
as provided in Section 18 hereof, the maximum number of Shares reserved for
issuance in connection with Awards under the Plan and the Prior Plan is
6,420,000 Shares, all of which may be issued as Incentive Stock Options and 5%
of which may be issued as Stock Awards.  If all or any portion of any Award
shall terminate, expire, be cancelled or forfeited, settled in cash in lieu of
Shares, or be exchanged with the Committee’s approval, prior to the issuance of
Shares, for an Award not involving Shares (other than a cancellation within the
meaning of Code section 162(m)), new Awards may thereafter be awarded with
respect to such Shares.  Any Shares tendered (by either actual delivery or
attestation) to (i) pay the exercise price of an Option granted under the Plan
or (ii) satisfy tax withholding obligations associated with an Award granted
under the Plan, shall not become available again for grant under the Plan.  Any
Shares that (i) were subject to an Stock Appreciation Right granted under the
Plan that were not issued upon the exercise of such Stock Appreciation Right or
(ii) reacquired by the Company on the open market or otherwise using cash
proceeds from the exercise of an option shall not become available for grant
under the Plan.  Any dividend equivalents settled in Shares under the Plan shall
be applied against the number of Shares available hereunder for Awards.

 

(b)                                 Employee and Consultant Limitations. 
Subject to adjustment as provided in Section 18 hereof:

 

(i)                                                       the maximum aggregate
number of Shares for which Awards may be granted to any Participant in any
calendar year that consist of Options or Stock Appreciation Rights shall be
2,000,000 shares of Common Stock;

 

(ii)                                                    the maximum aggregate
number of Shares for which Awards may be granted to any Participant in any
calendar year that consist of Restricted Stock, Restricted Stock Units or Stock
Awards shall be 700,000 shares of Common Stock;

 

(iii)                                                 the maximum aggregate
amount that may be granted to any Participant in any calendar year under Awards
that are payable solely in cash or property other than Shares shall be
$10,000,000; and

 

(iv)                                                the maximum aggregate amount
that may be allocated to any Participant for a calendar year with respect to
dividends or dividend equivalents under Section 14 of the Plan regarding
Qualified Performance-Based Awards of Restricted Stock or Restricted Stock Units
shall be $500,000, determined as of the dividend record dates; provided,
however, that this limitation shall not apply to extraordinary dividends or
equivalents.

 

(c)                                  Outside Director Limitations.  Subject to
adjustment as provided in Section 18 hereof, the maximum aggregate fair market
value of Awards during any calendar year that may be granted to any Outside
Director shall not exceed $500,000 taking into account the Date of Grant dollar
value of Cash Units, the Date of

 

13

--------------------------------------------------------------------------------

 

Grant value of the Shares subject to Awards of Restricted Stock, Restricted
Stock Units or Stock Awards and the Date of Grant value of any Options or Stock
Appreciation Rights as determined by the Committee, it being understood that
grants of Awards to Outside Directors in lieu of annual cash retainer payments,
meeting fees or similar cash payments, as applicable, shall not be applied with
respect to the $500,000 limit described in this paragraph.

 

(d)                                 Substitute Awards.  The Committee may grant
Awards under the Plan in substitution for stock and stock based awards held by
service providers of another corporation in connection with a merger or
consolidation of the service recipient corporation with the Company or an
Affiliate or the acquisition by the Company or an Affiliate of property or stock
of the service recipient corporation.  The Committee may direct that the
substitute awards be granted on such terms and conditions as the Committee
considers appropriate in the circumstances.  Such substitution of any
outstanding Option must satisfy the requirements of Treasury Regulation §
1.424-1 and Code section 409A.

 

(e)                                  Source of Shares.  Shares issued under the
Plan may be either authorized but unissued Shares, authorized Shares previously
issued by the Company that have been reacquired by the Company and held as
treasury shares, or Shares purchased by the Company in the open market.

 

5.                                      ELIGIBILITY

 

Subject to the terms of the Plan, all Employees, Consultants and Outside
Directors shall be eligible to receive Awards under the Plan.

 

6.                                      OPTIONS

 

The Committee may, subject to the limitations of the Plan and the availability
of Shares reserved but not previously awarded under the Plan, grant Options to
eligible individuals upon such terms and conditions as it may determine to the
extent such terms and conditions are consistent with the following provisions:

 

(a)                                 Exercise Price.  The Committee shall
determine the Exercise Price of each Option.  However, the Exercise Price shall
not be less than the Fair Market Value of the Common Stock on the Date of Grant;
provided, further, that with respect to Incentive Stock Options, if at the time
such Option is granted, the Employee owns or is treated as owning, for purposes
of Code section 422, Common Stock representing more than 10% of the total
combined voting securities of the Company (“10% Owner”), the Exercise Price
shall not be less than 110% of the Fair Market Value of the Common Stock on the
Date of Grant.

 

(b)                                 Terms of Options.  The Committee shall
determine the term during which a Participant may exercise an Option, but in no
event may a Participant exercise an Option, in whole or in part, more than 10
years from the Date of Grant; provided, however, that with respect to Incentive
Stock Options, if at the time an Incentive Stock Option is granted to an
Employee who is a 10% Owner, the Incentive Stock Option granted to such Employee
shall not be exercisable after the expiration of five years from the Date of
Grant.  The Committee shall also determine the date on which each Option, or any
part thereof, first becomes exercisable and

 

14

--------------------------------------------------------------------------------

 

any terms or conditions a Participant must satisfy in order to exercise each
Option.  Shares underlying each Option may be purchased, in whole or in part, by
the Participant at any time during the term of such Option, after such Option
becomes exercisable.  An Option may not be exercised for fractional shares.  If,
on the date when an Option would otherwise terminate or expire the Exercise
Price of the Option is less than the Fair Market Value of the Shares subject to
the Option on such date but any portion of the Option has not been exercised,
then subject to Section 6(g), the Option shall automatically be deemed to be
exercised as of such date with respect to such portion by means of a “net
exercise” as described in Section 7.  An Award Agreement with respect to an
Option may also provide for an automatic exercise of the Option on an earlier
date.

 

(c)                                  Termination of Service (General).  Unless
otherwise determined by the Committee and evidenced in an applicable Award
Agreement, upon a Participant’s Termination of Service for any reason other than
resignation, Disability or death, or Termination of Service for Cause, the
Participant may exercise only those Options that were vested and immediately
exercisable by the Participant at the date of such termination and only for
(i) two years with respect to Non-Statutory Stock Options or (ii) three months
with respect to Incentive Stock Options following the date of such termination,
or, if sooner in each case, the expiration of the term of the Option.

 

(d)                                 Termination of Service (Resignation). 
Unless otherwise determined by the Committee and evidenced in an applicable
Award Agreement, upon a Participant’s Termination of Service by resignation, the
Participant may exercise only those Options that were vested and immediately
exercisable by the Participant at the date of such termination and only for
(i) one year with respect to Non-Statutory Stock Options or (ii) three months
with respect to Incentive Stock Options following the date of such termination,
or, if sooner in each case, until the expiration of the term of the Option.

 

(e)                                  Termination of Service (Disability or
Death).  Unless otherwise determined by the Committee and evidenced in an
applicable Award Agreement, in the event of a Participant’s Termination of
Service due to Disability or death, all Options held by such Participant shall
immediately become vested and fully exercisable and remain exercisable for one
year following the date of such termination, or, if sooner, until the expiration
of the term of the Option.

 

(f)                                   Termination of Service for Cause.  Unless
otherwise determined by the Committee and evidenced in an applicable Award
Agreement, in the event of a Participant’s Termination of Service for Cause, all
rights with respect to the Participant’s Options shall be forfeited and expire
immediately upon the effective date of such Termination of Service for Cause.

 

(g)                                  Extension of Term of a Non-Statutory Stock
Option.  If a Non-Statutory Stock Option would expire on a day that the
Participant cannot exercise the Non-Statutory Stock Option because such an
exercise would violate an applicable federal, state, local, or foreign law, the
expiration date shall be tolled, at the discretion of the Committee, to the date
no later than 30 days after the date the exercise of such Non-Statutory Stock
Option would no longer violate an applicable federal, state, local and foreign
laws, but only to the extent allowed under Code section 409A.

 

15

--------------------------------------------------------------------------------

 

(h)                                 Settlement.  Upon exercise, an Option shall
be settled in Shares.

 

(i)                                     Other Restrictions Relating to Incentive
Stock Options.  To the extent the aggregate Fair Market Value of Shares with
respect to which Incentive Stock Options that are exercisable for the first time
by an Employee during any calendar year under the Plan and any other stock
option plan of the Company or an Affiliate exceeds $100,000, or such higher
value as may be permitted under Code section 422, such Options in excess of such
limit shall be treated as Non-Statutory Stock Options.  Fair Market Value shall
be determined as of the Date of Grant with respect to each such Incentive Stock
Option.

 

(j)                                    Notification of Disposition of Shares. 
Each Award Agreement with respect to an Incentive Stock Option shall require the
Participant to notify the Committee of any disposition of Shares issued pursuant
to the exercise of such Option under the circumstances described in Code section
421(b) (relating to certain disqualifying dispositions), within 10 days of such
disposition.

 

7.                                      METHOD OF EXERCISE OF OPTIONS

 

Subject to any applicable Award Agreement, any Option may be exercised by the
Participant in whole or in part at such time or times, and the Participant may
make payment of the Exercise Price in such form or forms, including, without
limitation, payment by delivery of cash or Common Stock owned by the Participant
having a Fair Market Value on the exercise date equal to the total Exercise
Price, or by any combination of cash and Shares, including exercise by means of
a cashless exercise arrangement with a qualifying broker-dealer or a “net
exercise.”  The Participant may deliver shares of Common Stock either by
attestation or by the delivery of a certificate or certificates for shares duly
endorsed for transfer to the Company.  A “net exercise” means the delivery of a
properly executed notice followed by a procedure pursuant to which (1) the
Company shall reduce the number of Shares otherwise issuable to a Participant
upon the exercise of an Option by the largest whole number of Shares having a
Fair Market Value that does not exceed the aggregate Exercise Price for the
Shares with respect to which the Option is exercised, and (2) the Participant
shall pay to the Company in cash the remaining balance of such aggregate
Exercise Price not satisfied by such reduction in the number of whole Shares to
be issued.  Shares shall no longer be outstanding under an Option and shall not
be exercisable thereafter to the extent that (A) Shares are used to pay the
Exercise Price pursuant to a “net exercise,” (B) Shares are delivered to the
Participant as a result of such exercise, and (C) Shares are withheld to satisfy
tax withholding obligations.

 

8.                                      RESTRICTED STOCK AWARDS

 

The Committee may, subject to the limitations of the Plan and the availability
of Shares reserved but not previously awarded under the Plan, grant Restricted
Stock to eligible individuals upon such terms and conditions as it may determine
to the extent such terms and conditions are consistent with the following
provisions:

 

(a)                                 Payment of the Restricted Stock.  Awards of
Restricted Stock may only be made in whole Shares.

 

(b)                                 Terms of the Restricted Stock.  The
Committee shall determine the dates on which Restricted Stock granted to a
Participant shall vest and any specific conditions or

 

16

--------------------------------------------------------------------------------

 

Performance Goals which must be satisfied prior to the vesting of any
installment or portion of the Restricted Stock, it being understood that the
Committee may grant Stock Awards pursuant to this Section 8, which, for the
avoidance of doubt, shall vest immediately upon grant.  Notwithstanding other
paragraphs in this Section 8, the Committee may, in its sole discretion,
accelerate the vesting of any Restricted Stock except for any Restricted Stock
that are Qualified Performance-Based Awards under Section 12 hereof.  The
acceleration of any Restricted Stock shall create no right, expectation or
reliance on the part of any other Participant or that certain Participant
regarding any other Restricted Stock.

 

(c)                                  Termination of Service (General).  Unless
otherwise determined by the Committee and evidenced in an applicable Award
Agreement, upon a Participant’s Termination of Service for any reason other than
Disability or death, the Participant’s unvested Restricted Stock as of the date
of termination shall be forfeited and any rights the Participant had to such
unvested Restricted Stock shall become null and void.

 

(d)                                 Termination of Service (Disability or
Death).  Unless otherwise provided in the applicable Award Agreement, in the
event of a Participant’s Termination of Service due to Disability or death, all
unvested Restricted Stock held by such Participant, including any Restricted
Stock subject to a Performance Goal, shall immediately vest.

 

(e)                                  Voting of Restricted Stock.  Except as
otherwise provided in an applicable Award Agreement, the Participant shall be
entitled to vote the unvested Shares subject to a Restricted Stock Award
pursuant to any rules and procedures adopted by the Committee for this purpose.

 

(f)                                   Restrictive Legend.  Each certificate
issued in respect of one or more shares of Restricted Stock shall be registered
in the name of the Participant and, at the discretion of the Board of Directors,
each such certificate may be deposited in a bank designated by the Board of
Directors.  Each such certificate shall bear the following (or a similar)
legend:

 

“The transferability of this certificate and the shares of stock represented
hereby are subject to the terms and conditions (including forfeiture) contained
in the First Amended and Restated State National Companies, Inc. 2014 Long-Term
Incentive Plan and an agreement entered into between the registered owner and
State National Companies, Inc.  A copy of such plan and agreement is on file at
the principal office of State National Companies, Inc.”

 

(g)                                  Transfers of Unrestricted Shares.  Upon the
vesting date for Restricted Stock or the grant of any Stock Award, the Shares
subject thereto shall be transferred free of all restrictions to a Participant
(or his or her legal representative, beneficiary or heir).

 

9.                                      RESTRICTED STOCK UNITS

 

The Committee may, subject to the limitations of the Plan and the availability
of Shares reserved but not previously awarded under the Plan, grant Restricted
Stock Units to eligible individuals upon such terms and conditions as it may
determine to the extent such terms and conditions are consistent with the
following provisions:

 

17

--------------------------------------------------------------------------------

 

(a)                                 Settlement of Restricted Stock Units. 
Restricted Stock Units shall be settled either by the delivery of whole Shares
or by the payment of cash based upon the Fair Market Value of a specified number
of Shares, in the discretion of the Committee, subject to the terms of the
applicable Award Agreement.  Unless otherwise determined by the Committee and
evidenced in an applicable Award Agreement, any stock certificate evidencing the
Shares payable under an Award of Restricted Stock Units shall be issued (or cash
paid) within an administratively reasonable period after the date on which the
Restricted Stock Units vest so that the payment of Shares complies with
Section 27.

 

(b)                                 Terms of Restricted Stock Units.  The
Committee shall determine the dates on which Restricted Stock Units granted to a
Participant shall vest and any specific conditions or Performance Goals which
must be satisfied prior to the vesting of any Award.  Notwithstanding other
paragraphs in this Section 9, the Committee may, in its sole discretion,
accelerate the vesting of any Restricted Stock Units except for any such
Restricted Stock Units that are Qualified Performance-Based Awards under
Section 12 hereof.  The acceleration of any Restricted Stock Units shall create
no right, expectation or reliance on the part of any other Participant or that
Participant regarding any other Award of Restricted Stock Units.

 

(c)                                  Termination of Service (General).  Unless
otherwise determined by the Committee and evidenced in an applicable Award
Agreement, upon a Participant’s Termination of Service for any reason other than
Disability or death, the Participant’s unvested Restricted Stock Units as of the
date of termination shall be forfeited and any rights the Participant had to
such unvested Awards shall become null and void.

 

(d)                                 Termination of Service (Disability or
Death).  Unless otherwise provided in the applicable Award Agreement, in the
event of a Participant’s Termination of Service due to Disability or death, all
unvested Restricted Stock Units held by such Participant shall immediately vest.

 

(e)                                  Deferral.  Unless expressly permitted by
the Committee in the Award Agreement, a Participant does not have any right to
make any election regarding the time or form of any payment pursuant to an Award
of Restricted Stock Units.  To the extent permissible under applicable law, the
Committee may permit a Participant to defer payment under an Award of Restricted
Stock Units to a date or dates after the Restricted Stock Units vest, provided
that the terms of the Restricted Stock Units and any deferral satisfy the
requirements to avoid imposition of the additional tax under Code section
409A(a)(1)(B).

 

10.                               STOCK APPRECIATION RIGHTS

 

The Committee may, subject to the limitations of the Plan and the availability
of Shares reserved but not previously awarded under the Plan, grant Stock
Appreciation Rights to eligible individuals upon such terms and conditions as it
may determine to the extent such terms and conditions are consistent with the
following provisions:

 

(a)                                 Exercise Price.  The Committee shall
determine the Exercise Price of each Stock Appreciation Right.  However, the
Exercise Price shall not be less than the Fair Market Value of the Common Stock
on the Date of Grant.

 

18

--------------------------------------------------------------------------------

 

(b)                                 Terms of Stock Appreciation Rights.  The
Committee shall determine the term during which a Participant may exercise a
Stock Appreciation Right, but in no event may a Participant exercise a Stock
Appreciation Right, in whole or in part, more than 10 years from the Date of
Grant.  The Committee shall also determine the date on which each Stock
Appreciation Right, or any part thereof, first becomes exercisable and any terms
or conditions a Participant must satisfy in order to exercise each Stock
Appreciation Right.  A Stock Appreciation Right may not be exercised for
fractional shares.  If, on the date when a Stock Appreciation Right would
otherwise terminate or expire the Exercise Price of the Stock Appreciation Right
is less than the Fair Market Value of the Shares subject to the Stock
Appreciation Right on such date but any portion of the Stock Appreciation Right
has not been exercised, then subject to Section 10(g), the Stock Appreciation
Right shall automatically be deemed to be exercised as of such date with respect
to such portion.  An Award Agreement with respect to a Stock Appreciation Right
may also provide for an automatic exercise of the Stock Appreciation Right on an
earlier date.

 

(c)                                  Termination of Service (General).  Unless
otherwise determined by the Committee and evidenced in an applicable Award
Agreement, upon a Participant’s Termination of Service for any reason other than
resignation, Disability or death, or Termination of Service for Cause, the
Participant may exercise only those Stock Appreciation Rights that were vested
and immediately exercisable by the Participant at the date of such termination
and only for two years following the date of such termination, or, if sooner,
the expiration of the term of the Stock Appreciation Right.

 

(d)                                 Termination of Service (Resignation). 
Unless otherwise determined by the Committee and evidenced in an applicable
Award Agreement, upon a Participant’s Termination of Service by resignation, the
Participant may exercise only those Stock Appreciation Rights that were vested
and immediately exercisable by the Participant at the date of such termination
and only for one year following the date of such termination, or, if sooner, the
expiration of the term of the Stock Appreciation Right.

 

(e)                                  Termination of Service (Disability or
Death).  Unless otherwise determined by the Committee and evidenced in an
applicable Award Agreement, in the event of a Participant’s Termination of
Service due to Disability or death, all Stock Appreciation Rights held by such
Participant shall become immediately vested and fully exercisable and remain
exercisable for one year following the date of such termination, or, if sooner,
the expiration of the term of the Stock Appreciation Right.

 

(f)                                   Termination of Service for Cause.  Unless
otherwise determined by the Committee and evidenced in an applicable Award
Agreement, in the event of a Participant’s Termination of Service for Cause, all
rights with respect to the Participant’s Stock Appreciation Rights shall be
forfeited and expire immediately upon the effective date of such Termination of
Service for Cause.

 

(g)                                  Extension of Term of Stock Appreciation
Right.  If a Stock Appreciation Right would expire on a day that the Participant
cannot exercise the Stock Appreciation Right because such an exercise would
violate an applicable federal, state, local, or foreign law, the expiration date
shall be tolled, at the discretion of the Committee, to the date no later than
30 days after the

 

19

--------------------------------------------------------------------------------

 

date the exercise of such Stock Appreciation Right would no longer violate an
applicable federal, state, local and foreign laws, but only to the extent
allowed under Code section 409A.

 

(h)                                 Settlement.  Upon exercise, a Stock
Appreciation Right shall be settled in cash or Shares, or both, in the
discretion of the Committee, subject to the terms of the applicable Award
Agreement.

 

11.                               CASH UNITS

 

The Committee may, subject to the limitations of the Plan, grant Cash Units to
eligible individuals upon such terms and conditions as it may determine to the
extent such terms and conditions are consistent with the following provisions:

 

(a)                                 Value of Cash Units.  Each Award of Cash
Units, whether expressed as Performance Units, Service Units or a combination
thereof, shall have an initial notional value equal to a dollar amount
determined by the Committee, in its sole discretion.

 

(b)                                 Earning of Cash Units.

 

(i)                                                       With respect to any
portion of an Award of Cash Units comprised of Service Units, the Committee
shall determine the date or dates on which such Service Units granted to a
Participant shall vest and any other specific conditions which must be satisfied
prior to the vesting thereof, provided that the Participant’s Termination of
Service does not occur for any reason prior to such date or dates, unless
otherwise determined by the Committee and evidenced in an applicable Award
Agreement.

 

(ii)                                                    With respect to any
portion of an Award of Cash Units comprised of Performance Units, the Committee
shall set Performance Goals in its discretion that, depending on the extent to
which they are met over the specified Performance Period, shall determine the
number of Performance Units that shall be settled and paid to the Participant. 
After the applicable Performance Period has ended, the number of Performance
Units earned by the Participant over the Performance Period shall be determined
as a function of the extent to which the applicable corresponding Performance
Goals have been achieved. This determination shall be made solely by the
Committee.

 

(c)                                  Settlement of Cash Units.  Cash Units shall
be settled in the form of cash or, subject to the availability of Shares
reserved but not previously awarded under the Plan, in Shares or in a
combination thereof, as specified in the Participant’s applicable Award
Agreement.  Unless otherwise provided in the applicable Award Agreement, a
Participant must be employed by the Company or Affiliate on the day a Cash Unit
is paid to the Participant.  Cash Units shall be paid to the Participant as soon
as practicable after such time that the terms and conditions that otherwise
entitle the Participant to such payment have been satisfied, it being understood
that any Performance Unit that is otherwise payable hereunder shall be settled
and paid no later than 90 days after the end of the applicable Performance
Period.  Any Shares paid to a Participant under this Section may be subject to
any restrictions deemed appropriate by the Committee.

 

20

--------------------------------------------------------------------------------

 

12.                               QUALIFIED PERFORMANCE-BASED AWARDS

 

(a)                                 Purpose.  The purpose of this Section 12 is
to provide the Committee the ability to grant Restricted Stock, Restricted Stock
Units and Cash Units as Qualified Performance-Based Awards.  If the Committee,
in its discretion, decides to grant to a Covered Employee Restricted Stock,
Restricted Stock Units or Cash Units that are intended to constitute a Qualified
Performance-Based Award, the provisions of this Section 12 shall control over
any contrary provision contained herein; provided, however, that the Committee
may grant Awards to Covered Employees that are based on Performance Criteria or
Performance Goals that do not satisfy the requirements of this Section 12.

 

(b)                                 Applicability.  This Section 12 shall apply
only to those Covered Employees selected by the Committee to receive Qualified
Performance-Based Awards.  The designation of a Covered Employee as a
Participant for a Performance Period shall not in any manner entitle the
Participant to receive an Award for the relevant Performance Period.  Moreover,
neither the designation of a Covered Employee as a Participant for a particular
Performance Period nor his or her prior receipt of any Award shall require
designation of such Covered Employee as a Participant in any subsequent
Performance Period and designation of one Covered Employee as a Participant
shall not require designation of any other Covered Employees as a Participant in
such period or in any other period.

 

(c)                                  Procedures with Respect to Qualified
Performance-Based Awards.  To the extent necessary to comply with the Qualified
Performance-Based Award requirements of Code section 162(m)(4)(C), with respect
to any Award that may be granted to one or more Covered Employees, no later than
90 days following the commencement of any fiscal year in question or any other
designated fiscal period or period of service (or such other time as may be
required or permitted by Code section 162(m)), the Committee shall, in writing,
(i) designate one or more Covered Employees, (ii) select the Performance
Criteria applicable to the Performance Period, (iii) establish the Performance
Goals, and amounts of such Awards, as applicable, which may be earned for such
Performance Period, and (iv) specify the relationship between Performance
Criteria and the Performance Goals and the amounts of such Qualified
Performance-Based Awards, as applicable, to be earned by each Covered Employee
for such Performance Period.  Following the completion of each Performance
Period, the Committee shall certify in writing whether the applicable
Performance Goals have been achieved for such Performance Period.  No Award or
portion thereof that is subject to the satisfaction of any condition shall be
considered to be earned or vested until the Committee certifies in writing that
the conditions to which the distribution, earning or vesting of such Award is
subject have been achieved.  The Committee may not increase during a year the
amount of a Qualified Performance-Based Award that would otherwise be payable
upon satisfaction of the conditions but may reduce or eliminate the payments as
provided for in the Award Agreement.

 

(d)                                 Adjustments and Modifications.  Unless
otherwise determined by the Committee at the time a Qualified Performance-Based
Award is granted, the Committee shall have the authority to specify adjustments
or modifications to be made to the calculation of any applicable

 

21

--------------------------------------------------------------------------------

 

Performance Goals based on and in order to appropriately reflect the following
events: (i) asset write-downs; (ii) litigation or claim judgments or
settlements; (iii) the effect of changes in tax laws, accounting principles, or
other laws or regulatory rules affecting reported results; (iv) any
reorganization and restructuring programs; (v) extraordinary nonrecurring items
as described in Accounting Standards Codification Topic 225-20, as updated from
time to time, and/or in Management’s Discussion and Analysis of Financial
Condition and Results of Operations appearing in the Company’s Annual Report on
Form 10-K for the applicable year; (vi) acquisitions or divestitures and the
related costs and expenses; (vii) any other specific, unusual or nonrecurring
events, or objectively determinable category thereof; (viii) foreign exchange
gains and losses; (ix) discontinued operations and nonrecurring charges; and
(x) a change in the Company’s fiscal year, provided that the exercise of such
authority at such time would not cause any Qualified Performance-Based Award to
fail to qualify as “performance-based compensation” under Code section 162(m).

 

(e)                                  Payment of Qualified Performance-Based
Awards.  Unless otherwise provided in the applicable Award Agreement, a
Participant must be employed by the Company or an Affiliate on the day a
Qualified Performance-Based Award for such Performance Period is paid to the
Participant.  Unless otherwise provided in the applicable Award Agreement, in
the event of Participant’s Termination of Service due to Disability or death,
all unvested Qualified Performance-Based Awards held by such Participant shall
immediately vest.

 

(f)                                   Additional Limitations.  Notwithstanding
any other provision of the Plan, any Award granted to a Covered Employee that is
intended to constitute a Qualified Performance-Based Award shall be subject to
any additional limitations set forth in Code section 162(m) for qualification as
qualified performance-based compensation as described in Code section
162(m)(4)(C), and the Plan shall be deemed amended to the extent necessary to
conform to such requirements.

 

(g)                                  Effect on Other Plans and Arrangements. 
Nothing contained in the Plan shall be deemed in any way to limit or restrict
the Committee from making any award or payment to any person under any other
plan, arrangement or understanding, whether now existing or hereafter in effect.

 

13.                               VESTING

 

(a)                                 Options and Stock Appreciation Rights.  A
Participant may not exercise an Option or Stock Appreciation Right until it has
become vested.  The portion of an Award of Options or Stock Appreciation Rights
that is vested depends upon the period that has elapsed since the Date of
Grant.  The following schedule applies to any Award of Options or Stock
Appreciation Rights under the Plan unless the Committee establishes a different
vesting schedule on the Date of Grant as set forth in the Award Agreement
evidencing the Award:

 

22

--------------------------------------------------------------------------------

 

Number of Months
Since Date of Grant

 

Vested
Percentage

fewer than 12 months

 

0%

at least 12 months, but less than 24 months

 

331/3%

at least 24 months, but less than 36 months

 

662/3%

36 months or more

 

100%

 

Unless the Committee otherwise provides in the applicable Award Agreement or the
preceding provisions of this Section or Section 13(c) applies, if a
Participant’s employment with or service to the Company or an Affiliate
terminates for any reason other than Disability or death, any Awards that are
not yet vested are immediately and automatically forfeited; provided, however,
in such special circumstances as the Committee deems appropriate, the Committee
may take such action as it deems equitable in the circumstances or in the best
interests of the Company, including, without limitation, fully vesting an Award
or waiving or modifying any other limitation or requirement under the Award.

 

(b)                                 Restricted Stock, Restricted Stock Units and
Cash Units.  The Committee shall establish the vesting schedule to apply to any
Award of Restricted Stock, Restricted Stock Units or Cash Units, and in the
absence of such a vesting schedule set forth in the applicable Award Agreement,
no portion of such Award shall vest over a period that is less than one year
unless otherwise permissible under Section 13(a) above or Section 13(c) below,
except that no such vesting shall operate to accelerate the time of payment in
violation of Code section 409A or to cause a Qualified Performance-Based Award
to fail to be “performance-based compensation” within the meaning of Code
section 162(m).  In the event such an Award (e.g., in the case of Cash Units
when such Award may be settled in Shares) shall vest pursuant to a schedule that
is more favorable for the Participant than what is set forth in this
Section 13(b), such Award shall be deemed as a Stock Award solely for purposes
of the Share limitation provisions of Section 4(a).

 

(c)                                  Effect of “Change of Control.”

 

(i)                                                       Unless otherwise
provided in the applicable Award Agreement, in the event of a Change of Control
in which the successor company assumes or substitutes for an Option, Stock
Appreciation Right, Restricted Stock, Restricted Stock Unit or Cash Unit (or in
which the Company is the ultimate parent corporation and continues the Award),
if a Participant’s employment with such successor company (or the Company) or a
subsidiary thereof is terminated without Cause, or Participant resigns for Good
Reason, at the time of, or within 12 months after such Change of Control (or
such other period set forth in the Award Agreement):

 

1.                                Options and Stock Appreciation Rights
outstanding as of the Change of Control (or Termination of Service, if later)
shall immediately vest upon the Change of Control (or Termination of Service, if
later), become fully exercisable, and may thereafter be exercised for two years
(or the period of time set forth in the Award Agreement), or, if sooner, the
expiration of the term of the Award; and

 

23

--------------------------------------------------------------------------------

 

2.                                The restrictions, limitations and other
conditions applicable to Restricted Stock, Restricted Stock Units and Cash Units
outstanding as of the Change of Control (or Termination of Service, if later)
shall lapse and the Restricted Stock, Restricted Stock Units and Cash Units
shall become free of all restrictions, limitations and conditions and become
fully vested.

 

(ii)                                                    Unless otherwise
provided in the applicable Award Agreement, in the event of a Change of Control,
to the extent the successor company does not assume or substitute for an Option,
Stock Appreciation Right, Restricted Stock, Restricted Stock Unit or Cash Unit
(or in which the Company is the ultimate parent corporation and does not
continue the Award), then as of the Change of Control:

 

1.                                Those Options and Stock Appreciation Rights
outstanding as of the date of the Change of Control that are not assumed or
substituted for (or continued) shall immediately vest and become fully
exercisable;

 

2.                                The restrictions, limitations and other
conditions applicable to Restricted Stock, Restricted Stock Units and Cash Units
outstanding as of the date of the Change of Control that are not assumed or
substituted for (or continued) shall lapse and the Restricted Stock, Restricted
Stock Units and Cash Units shall become free of all such restrictions,
limitations and conditions and become fully vested to the full extent of the
original grant; and

 

3.                                Any Award outstanding as of the date of the
Change of Control and subject to Performance Criteria shall be subject to
prorated vesting based on the performance from the Date of Grant to the date of
the Change of Control.  The proration shall be based upon the method set forth
in the Award Agreements evidencing the applicable Awards, or if no method is
specified, based upon the total number of days during the Performance Period
prior to the Change of Control in relation to the total number of days during
the Performance Period.

 

14.                               DIVIDENDS AND DIVIDEND EQUIVALENTS

 

The Committee may provide that Restricted Stock and Restricted Stock Units shall
earn dividends or dividend equivalents. Such dividends or dividend equivalents
may be paid currently (in connection with any such Awards that were granted
prior to the Effective Date) or may be credited to an account maintained on the
books of the Company.  Any payment or crediting of

 

24

--------------------------------------------------------------------------------

 

dividends or dividend equivalents shall be subject to such terms, conditions,
limitations and restrictions as the Committee may establish, from time to time,
including, without limitation, reinvestment in additional Shares or Common Stock
equivalents.  Notwithstanding the foregoing, the Committee may not provide for
the current payment of dividends or dividend equivalents with respect to any
shares of Common Stock subject to a Qualified Performance-Based Award.  For all
Qualified Performance-Based Awards and Awards of Restricted Stock and Restricted
Stock Units granted on and after the Effective Date, the Committee may only
provide for the accrual of dividends or dividend equivalents that shall not be
payable to a Participant unless and until, and only to the extent that, the
shares of Common Stock subject to such Award vest upon satisfaction of, as
applicable, the relevant Performance Goals or the other conditions to vesting. 
Dividend or dividend equivalent rights shall be as specified in the Award
Agreement, or pursuant to a resolution adopted by the Committee with respect to
outstanding Awards.  No dividends or dividend equivalents shall be paid on
Options or Stock Appreciation Rights.

 

15.                               RIGHTS OF PARTICIPANTS

 

Except as otherwise provided herein or in an Award Agreement, no Participant
shall have any rights as a stockholder with respect to any Shares covered by an
Award until the date of issuance of a stock certificate for such Common Stock. 
Nothing contained in the Plan or in any Award Agreement confers on any person
any right to continue in the employ or service of the Company or an Affiliate or
interferes in any way with the right of the Company or an Affiliate to terminate
a Participant’s services.

 

16.                               DESIGNATION OF BENEFICIARY

 

A Participant may, with the consent of the Committee (which shall not be
unreasonably withheld), designate a beneficiary or beneficiaries to receive, in
the event of death, any Award to which the Participant would then be entitled. 
Such designation shall be made upon forms supplied by and delivered to the
Company and may be revoked in writing.  If a Participant fails to designate a
beneficiary, or if no designated beneficiary survives the Participant, then the
Participant’s estate shall be deemed to be the beneficiary.

 

17.                               TRANSFERABILITY OF AWARDS

 

(a)                                 Incentive Stock Options.  Incentive Stock
Options are not transferable, voluntarily or involuntarily, other than by will
or by the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Code.  During a Participant’s
lifetime, Incentive Stock Options may be exercised only by the Participant (or a
legal representative if the Participant becomes incapacitated).

 

(b)                                 Awards Other Than Incentive Stock Options. 
All Awards granted pursuant to the Plan other than Incentive Stock Options are
transferable only by will or by the laws of descent and distribution or pursuant
to a qualified domestic relations order as defined by the Code; provided,
however, with the approval of the Committee, a Participant may transfer a
Non-Statutory Stock Option or a Stock Appreciation Right for no consideration to
or for the benefit of one or more Permitted Transferees subject to such limits
as the Committee may establish, and the Permitted Transferee shall remain
subject to all the terms and conditions

 

25

--------------------------------------------------------------------------------

 

applicable to the Award prior to such transfer.  The transfer of an Award
pursuant to this Section shall include a transfer of the rights of a Participant
under the Plan to consent to certain amendments to the Plan or an Award
Agreement and, in the discretion of the Committee, shall also include transfer
of ancillary rights associated with the Award.

 

18.                               ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR
A CHANGE OF CONTROL

 

(a)                                 Adjustment Clause.  In the event of any
change in the outstanding shares of Common Stock of the Company by reason of any
stock dividend, split, spinoff, recapitalization, merger, consolidation,
combination, extraordinary dividend, exchange of shares or other change
affecting the outstanding shares of Common Stock as a class without the
Company’s receipt of consideration, or other equity restructuring within the
meaning of Financial Accounting Standards Board (FASB) Accounting Standards
Codification (ASC) Topic 718, Stock Compensation (formerly, FASB Statement
123R), as updated from time to time, appropriate adjustments shall be made to
(i) the aggregate number of Shares with respect to which awards may be made
under the Plan pursuant to Section 4(a); (ii) the terms and the number of Shares
and/or the Exercise Price per Share of any outstanding Options, Stock
Appreciation Rights, Restricted Stock and Restricted Stock Units; and (iii) the
share limitations set forth in Section 4 hereof.  The Committee shall also make
appropriate adjustments described in Clauses (i)-(iii) of the previous sentence
in the event of any distribution of assets to stockholders other than a normal
cash dividend.  For purposes of this Section, (A) conversion of any convertible
securities of the Company shall be deemed to have been effected for adequate
consideration, and (B) except as expressly provided herein, no issuance by the
Company of shares of any class or securities convertible into shares of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to an Award.

 

(b)                                 Change of Control.  If a Change of Control
occurs, the Committee may, in its discretion and without limitation:

 

(i)                                                       cancel outstanding
Awards in exchange for payments of cash, property or a combination thereof
having an aggregate value equal to the value of such Awards, as determined by
the Committee or the Board of Directors in its sole discretion; it being
understood that if stockholders receive consideration other than publicly traded
equity securities of the surviving entity, any determination by the Committee
that the value of an Option or Stock Appreciation Right shall equal the excess,
if any, of the value of the consideration being paid for each Share in such
transaction over the Exercise Price of such Option or Stock Appreciation Right
shall conclusively be deemed valid.  Accordingly, if the Exercise Price of the
Shares subject to an Option or Stock Appreciation Right exceeds the Fair Market
Value of such Shares, then such Option or Stock Appreciation Right may be
cancelled without making a payment to the holder of the Option or Stock
Appreciation Right;

 

(ii)                                                    substitute other
property (including, without limitation, cash or other securities of the Company
and securities of entities other than the Company) for Shares subject to
outstanding Awards;

 

26

--------------------------------------------------------------------------------

 

(iii)                                                 arrange for the assumption
or substitution of Awards, or replacement of Awards with new awards based on
other property or other securities (including, without limitation, other
securities of the Company and securities of entities other than the Company);
and

 

(iv)                                                may, after giving
Participants an opportunity to exercise their outstanding Options and Stock
Appreciation Rights, terminate any or all unexercised Options and Stock
Appreciation Rights.  Such termination shall take place as of the date of the
Change of Control or such other date as the Committee may specify.

 

(c)                                  Section 409A Provisions with Respect to
Adjustments.  Notwithstanding the foregoing: (i) any adjustments made pursuant
to this Section to Awards that are considered “deferred compensation” within the
meaning of Code section 409A shall be made in compliance with the requirements
of Code section 409A unless the Participant consents otherwise in writing;
(ii) any adjustments made to Awards that are not considered “deferred
compensation” subject to Code section 409A shall be made in such a manner as to
ensure that after such adjustment, the Awards either continue not to be subject
to Code section 409A or comply with the requirements of Code section 409A unless
the Participant consents otherwise in writing; and (iii) the Committee shall not
have the authority to make any adjustments under this Section to the extent that
the existence of such authority would cause an Award that is not intended to be
subject to Code section 409A to be subject thereto.

 

19.                               TAX WITHHOLDING

 

Whenever under the Plan, cash or Shares are to be delivered upon exercise of an
Award or any other event with respect to rights and benefits hereunder, the
Committee shall be entitled to require as a condition of delivery (1) that the
Participant remit an amount sufficient to satisfy all federal, state, and local
withholding tax requirements related thereto, (2) that the applicable
withholding of such sums come from compensation otherwise due to the Participant
or from any Shares due to the Participant under the Plan, or (3) any combination
of the foregoing, provided that the amount to be withheld in each case may not
exceed the applicable federal, state and local tax withholding obligations
associated with the transaction to the extent needed for the Company to avoid an
accounting charge.

 

20.                               CLAWBACK/RECOVERY

 

All Awards granted under the Plan shall be subject to recoupment in accordance
with any clawback policy that (1) the Board of Directors may adopt in its
discretion, or (2) the Company is specifically required to adopt pursuant to the
listing standards of any national securities exchange or association on which
the Company’s securities are listed or as is otherwise specifically required by
applicable law.  In addition, the Committee may impose such other clawback,
recovery or recoupment provisions in an Award Agreement as the Committee
determines necessary or appropriate, including, but not limited to, a
reacquisition right in respect of previously acquired Shares or other cash or
property upon the occurrence of Cause.

 

27

--------------------------------------------------------------------------------

 

21.                               AMENDMENT OF THE PLAN AND AWARDS

 

(a)                                 The Board of Directors may at any time, and
from time to time, modify or amend the Plan in any respect, prospectively or
retroactively; provided; however, (i) provisions governing grants of Incentive
Stock Options shall be submitted for stockholder approval to the extent required
by applicable law or regulation; (ii) except as permitted by Section 18, no
amendment may increase the share limitations set forth in Section 4 or decrease
the minimum Exercise Price for Options or Stock Appreciation Rights set forth in
Sections 6(a) and 10(a), unless any such amendment is approved by the Company’s
stockholders within 12 months before or after such amendment; and (iii) the
provisions of Section 21(b) (relating to Option and Stock Appreciation Right
repricing) may not be amended, unless any such amendment is approved by the
Company’s stockholders.  Failure to ratify or approve amendments or
modifications by stockholders shall be effective only as to the specific
amendment or modification requiring such approval or ratification.  Other
provisions of the Plan shall remain in full force and effect.  No such
modification or amendment may materially adversely affect the rights of a
Participant under an outstanding Award without the written consent of such
Participant.

 

(b)                                 The Committee may amend any Award Agreement,
prospectively or retroactively; provided, however, that no such amendment shall
adversely affect the rights of any Participant under an outstanding Award
without the written consent of such Participant; provided, however, that
repricing of Options or Stock Appreciation Rights shall not be permitted.  For
this purpose and except as provided in Section 18, a “repricing” means any of
the following (or any other action that has the same effect as any of the
following): (i) changing the terms of an Option or Stock Appreciation Right to
lower its Exercise Price; (ii) any other action that is treated as a repricing
under generally accepted accounting principles; and (iii) canceling an Option or
Stock Appreciation Right at a time when its exercise price is equal to or
greater than the fair market value of the underlying stock in exchange for cash
or for another Option, Stock Appreciation Right or other Award.  Such
cancellation and exchange would be considered a repricing regardless of whether
it is treated as a repricing under generally accepted accounting principles and
regardless of whether it is voluntary on the part of the Participant.

 

22.                               RIGHT OF OFFSET

 

The Company shall have the right to offset against its obligation to deliver
Shares (or other property) under the Plan or any Award Agreement any outstanding
amounts (including, without limitation, documented travel and entertainment or
advance account balances, loans, repayment obligations under any Awards, or
amounts repayable to the Company pursuant to tax equalization, housing,
automobile or other employee programs) that the Participant then owes to the
Company on a past due basis, and any amounts the Committee otherwise deems
appropriate pursuant to any tax equalization policy or agreement; provided,
however, that no such offset shall be permitted if it would result in a
violation of Code section 409A.  This right of offset shall not be an exclusive
remedy and the Company’s election not to exercise the right of offset with
respect to any amount payable to a Participant shall not constitute a waiver of
this right of offset with respect to any other amount payable to the Participant
or any other remedy.

 

28

--------------------------------------------------------------------------------

 

23.                               ELECTRONIC DELIVERY AND SIGNATURES

 

(a)                                 Any reference in an Award Agreement or the
Plan to a written document includes without limitation any document delivered
electronically or posted on the Company’s or an Affiliate’s intranet or other
shared electronic medium controlled by the Company or an Affiliate.

 

(b)                                 The Committee and any Participant may use
facsimile and PDF signatures in signing any Award or Award Agreement, in
exercising any Option or Stock Appreciation Right, or in any other written
document in the Plan’s administration.  The Committee and each Participant are
bound by facsimile and PDF signatures, and acknowledge that the other party
relies on facsimile and PDF signatures.

 

24.                               EFFECTIVE DATE OF PLAN

 

The Plan shall become effective immediately upon the Effective Date.

 

25.                               TERMINATION OF THE PLAN

 

The right to grant Awards under the Plan shall terminate 10 years after the
earlier of: (1) the date the Plan is adopted by the Board of Directors; or
(2) the Effective Date.  The Board of Directors has the right to suspend or
terminate the Plan at any time, provided that no such action shall, without the
written consent of a Participant, adversely affect a Participant’s rights under
an outstanding Award.

 

26.                               APPLICABLE LAW; COMPLIANCE WITH LAWS

 

(a)                                 The Plan shall be administered in accordance
with the laws of the state of Delaware and applicable federal law. 
Notwithstanding any other provision of the Plan, the Company shall have no
liability to issue any Shares, or make any other payment, under the Plan unless
such issuance or payment would comply with all applicable laws and the
applicable requirements of any securities exchange or similar entity.  Prior to
the issuance of any Shares under the Plan, the Company may require a written
statement that the recipient is acquiring the shares for investment and not for
the purpose or with the intention of distributing the shares.

 

(b)                                 The foregoing notwithstanding and provided
the Company treats all payments to similarly situated Participants on a
reasonably consistent basis:

 

(i)                                                 A payment to a Participant
may be delayed to the extent the Company reasonably anticipates that if the
payment were made as scheduled, the Company’s deduction with respect to such
payment would not be permitted due to the applicability of Code section 162(m),
provided that the payment is made either during the Participant’s first taxable
year in which the Company reasonably anticipates, or should reasonably
anticipate, that if the payment is made during such year, the deduction of such
payment shall not be barred by the applicability of Code section 162(m).  No
election may be provided to the Participant with respect to the timing of
payment under this paragraph.

 

29

--------------------------------------------------------------------------------

 

(ii)                                        A payment may be delayed where the
Company reasonably anticipates that the making of the payment will violate
federal securities laws or other applicable law; provided, however, that the
payment is made at the earliest date at which the Company reasonably anticipates
that the making of the payment will not cause such violation.  For this purpose,
the making of a payment that would cause inclusion in gross income or the
application of any penalty provision or other provision of the Code is not
treated as a violation of applicable law.

 

27.                               SECTION 409A

 

It is the intention of the Company that no Award shall be “deferred
compensation” subject to Code section 409A unless and to the extent that the
Committee specifically determines otherwise, and the Plan and the terms and
conditions of all Awards shall be interpreted accordingly.  The terms and
conditions governing any Awards that the Committee determines shall be subject
to Code section 409A, including any rules for elective or mandatory deferral of
the delivery of cash or Shares pursuant thereto, shall be set forth in the
applicable Award Agreement, and shall comply in all respects with Code section
409A.  Notwithstanding any provision herein to the contrary, any Award issued
under the Plan that constitutes a deferral of compensation under a “nonqualified
deferred compensation plan” as defined under Code section 409A(d)(1) and is not
specifically designated as such by the Committee shall be modified or cancelled
to comply with the requirements of Code section 409A, including any rules for
elective or mandatory deferral of the delivery of cash or Shares pursuant
thereto.

 

28.                               NO GUARANTEE OF TAX TREATMENT

 

Notwithstanding anything herein to the contrary, a Participant shall be solely
responsible for the taxes relating to the grant or vesting of, or payment
pursuant to, any Award, and none of the Company, the Board of Directors, the
Committee (or any of their respective members, officers or employees) nor any
person to whom authority has been delegated hereunder guarantees any particular
tax treatment with respect to any Award.

 

30

--------------------------------------------------------------------------------