(ii) If the Officer ceases to be an officer of the Company by reason of retirement ator after attaining the age of 65, the five-year Exercise Period shall be reduced and theOfficer (or the Officer Representative in the event of the Officer’s death) shall have oneyear following the date of such retirement to exercise a percentage of the Officer’s SARSequal to the sum of (i) the percentage of SARS the Officer was entitled to exercisehereunder as of the date of the Officer’s retirement plus (ii) the pro rata portion, if any,based upon the period included between the Officer’s date of retirement and the precedingAugust 1, of any additional 20% of the SARS which would have become exercisable had theOfficer remained an employee until the following August 1.(c) **Exercise and Payment**. SARS can be exercised by written notice to the Secretary ofthe Company specifying the number of SARS to be exercised. Such exercise date shall be the datesuch written notice of exercise is actually received by the Company’s Secretary. Upon exercise ofSARS, the Company shall pay the then Spread amount with respect to such exercised SARS in cash infull. Upon such exercise and payment, the SARS which were exercised shall terminate.(d) **Corporate Acts****.**The existence of the SARS shall not affect in any way the rightor power of the Company to make or authorize any adjustment, recapitalization, reorganization orother change in the Company’s capital structure or its business, any merger or consolidation of theCompany, any issue of debt or equity securities, the dissolution or liquidation of the Company orany sale, lease, exchange or other disposition of all or any part of its assets or business or anyother corporate act or proceeding. Upon the occurrence of any such corporate act, the SARS may beadjusted as contemplated by Article XII of the Plan.3. **Withholding of Tax**. To the extent that exercise of the SARS results incompensation income to the Officer for federal or state income tax purposes, the Officer shalldeliver to the Company at the time of such receipt or lapse, as the case may be, such amount ofmoney as the Company may require to meet its obligation under applicable tax laws or regulations,and, if the Officer fails to do so, the Company is authorized to withhold from any remunerationthen or thereafter payable to the Officer any tax required to be withheld by reason of suchresulting compensation income.4. **Employment Relationship**. For purposes of this Agreement, the Officer shall beconsidered to be in the employment of the Company as long as the Officer remains an officer ofeither the Company, a parent or subsidiary corporation of the Company or any successor corporation.Any question as to whether and when there has been a termination of such employment, and the causeof such termination, shall be determined by the Company, and its determination shall be final.5. **Notices**. Any notices or other communications provided for in this Agreement shallbe sufficient if in writing. In the case of the Officer, such notices or communications shall beeffectively delivered if hand delivered to the Officer at his principal place of employment or ifsent by registered or certified mail to the Officer at the last address he has filed with theCompany. In the case of the Company, such notices or communications shall be effectively deliveredif hand delivered to the Secretary of the Company or if sent by registered or certified mail to theSecretary of the Company at its principal executive offices.6. **Binding Effect**. This Agreement shall be binding upon and inure to the benefit ofany successors to the Company and all persons lawfully claiming under the Officer.7. **Plan Summary and Prospectus**. The Officer acknowledges receipt of a Plan Summaryand Prospectus. The Officer agrees that the Company shall have the right, from time to time, torevise and amend the Plan Summary and Prospectus in the Company’s sole and absolute discretion.8. **Construction and Administration**. The Compensation Committee of the Board ofDirectors of the Company has the power to construe the Plan and this Agreement and to prescribesuch rules and regulations relating thereto as it may deem advisable. The Compensation Committeealso has the authority, in the exercise of its sole and exclusive discretion, to correct any defector supply any omission or reconcile any inconsistency in this Agreement or in the Plan in themanner and to the extent itshall deem appropriate. The determinations and actions of the Compensation Committee shall beconclusive.
 
 

 
9. **Controlling Law****. This Agreement shall be governed by, and construed in accordancewith, the laws of the State of Texas.****IN WITNESS WHEREOF**, the Company has caused this Agreement to be duly executed by an officerthereunto duly authorized, and the Officer has executed this Agreement, all as of the date firstabove written.         **AMERICAN NATIONAL INSURANCE COMPANY**           **By:**             **G. Richard Ferdinandtsen**      **President, Chief Operating Officer**        **“Company”**                         **“Officer”**