exv4w1



 




EXHIBIT 4.1



STEWART INFORMATION SERVICES
CORPORATION



2005 LONG-TERM INCENTIVE PLAN


 







 




TABLE OF CONTENTS



	 	 	 	 	 
			Section	
			
	
	
    ARTICLE I

    ESTABLISHMENT, PURPOSE AND DURATION
	
    
    Establishment
    

    	 	 	1.1	 
	
    
    Purpose of the Plan
    

    	 	 	1.2	 
	
    
    Duration of Authority to Make Grants Under the
    Plan
    

    	 	 	1.3	 
	 
	
    ARTICLE II

    DEFINITIONS
	
    
    “Affiliate”
    

    	 	 	2.1	 
	
    
    “Associate”
    

    	 	 	2.2	 
	
    
    “Associate Stock Bonuses”
    

    	 	 	2.3	 
	
    
    “Award”
    

    	 	 	2.4	 
	
    
    “Award Agreement”
    

    	 	 	2.5	 
	
    
    “Board”
    

    	 	 	2.6	 
	
    
    “Change in Control”
    

    	 	 	2.7	 
	
    
    “Code”
    

    	 	 	2.8	 
	
    
    “Committee”
    

    	 	 	2.9	 
	
    
    “Company”
    

    	 	 	2.10	 
	
    
    “Corporate Change”
    

    	 	 	2.11	 
	
    
    “Directors’ Shares”
    

    	 	 	2.12	 
	
    
    “Effective Date”
    

    	 	 	2.13	 
	
    
    “Exchange Act”
    

    	 	 	2.14	 
	
    
    “Executive Officer”
    

    	 	 	2.15	 
	
    
    “Executive Option”
    

    	 	 	2.16	 
	
    
    “Fair Market Value”
    

    	 	 	2.17	 
	
    
    “Fiscal Year”
    

    	 	 	2.18	 
	
    
    “Holder”
    

    	 	 	2.19	 
	
    
    “Incentive Stock Option”
    

    	 	 	2.20	 
	
    
    “Mature Shares”
    

    	 	 	2.21	 
	
    
    “Minimum Statutory Tax Withholding
    Obligation”
    

    	 	 	2.22	 
	
    
    “Nonqualified Stock Option”
    

    	 	 	2.23	 
	
    
    “Option”
    

    	 	 	2.24	 
	
    
    “Option Price”
    

    	 	 	2.25	 
	
    
    “Optionee”
    

    	 	 	2.26	 
	
    
    “Option Agreement”
    

    	 	 	2.27	 
	
    
    “Performance Goals”
    

    	 	 	2.28	 
	
    
    “Plan”
    

    	 	 	2.29	 
	
    
    “Region Manager”
    

    	 	 	2.30	 
	
    
    “Region Manager Option”
    

    	 	 	2.31	 
	
    
    “Section 409A”
    

    	 	 	2.32	 
	
    
    “Service Award”
    

    	 	 	2.33	 
	
    
    “STC”
    

    	 	 	2.34	 
	
    
    “STG”
    

    	 	 	2.35	 




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TABLE OF CONTENTS




(Continued)




	 	 	 	 	 
			Section	
			
	
	
    
    “Stock”
    

    	 	 	2.36	 
	
    
    “Ten Percent Stockholder”
    

    	 	 	2.37	 
	
    
    “Termination of Employment”
    

    	 	 	2.38	 
	 
	
    ARTICLE III

    ELIGIBILITY AND PARTICIPATION
	
    
    Eligibility
    

    	 	 	3.1	 
	
    
    Participation
    

    	 	 	3.2	 
	 
	
    ARTICLE IV

    GENERAL PROVISIONS RELATING TO AWARDS
	
    
    Authority to Grant Awards
    

    	 	 	4.1	 
	
    
    Dedicated Shares; Maximum Awards
    

    	 	 	4.2	 
	
    
    Non-Transferability
    

    	 	 	4.3	 
	
    
    Requirements of Law
    

    	 	 	4.4	 
	
    
    Changes in the Company’s Capital Structure
    

    	 	 	4.5	 
	
    
    Election Under Section 83(b) of the Code
    

    	 	 	4.6	 
	
    
    Forfeiture for Cause
    

    	 	 	4.7	 
	
    
    Forfeiture Events
    

    	 	 	4.8	 
	 
	
    ARTICLE V

    GENERAL PROVISIONS RELATING TO OPTIONS
	
    
    Type of Options Available
    

    	 	 	5.1	 
	
    
    Stock Appreciation Rights
    

    	 	 	5.2	 
	
    
    Option Price
    

    	 	 	5.3	 
	
    
    Maximum Value of Stock Subject to Options that
    are Incentive Stock Options
    

    	 	 	5.4	 
	
    
    Exercise of Options
    

    	 	 	5.5	 
	
    
    Transferability of Options
    

    	 	 	5.6	 
	
    
    Duration of Options
    

    	 	 	5.7	 
	
    
    Employment Obligation
    

    	 	 	5.8	 
	
    
    Option Agreement
    

    	 	 	5.9	 
	
    
    Substitution Options
    

    	 	 	5.10	 
	
    
    No Rights as Stockholder
    

    	 	 	5.11	 
	 
	
    ARTICLE VI

    EXECUTIVE OPTIONS
	 
	
    ARTICLE VII

    REGION MANAGER OPTIONS
	 
	
    ARTICLE VIII

    DIRECTORS’ SHARES
	
    
    Annual Grant to Directors
    

    	 	 	8.1	 
	
    
    Amount of Award
    

    	 	 	8.2	 




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TABLE OF CONTENTS




(Continued)




	 	 	 	 	 
			Section	
			
	
	 
	
    ARTICLE IX

    ASSOCIATES STOCK BONUSES
	
    
    Award of Stock Bonuses
    

    	 	 	9.1	 
	
    
    Valuation
    

    	 	 	9.2	 
	 
	
    ARTICLE X

    SERVICE AWARDS
	 
	
    ARTICLE XI

    SUBSTITUTION AWARDS
	 
	
    ARTICLE XII

    ADMINISTRATION
	
    
    Awards
    

    	 	 	12.1	 
	
    
    Authority of the Committee
    

    	 	 	12.2	 
	
    
    Decisions Binding
    

    	 	 	12.3	 
	
    
    No Liability
    

    	 	 	12.4	 
	 
	
    ARTICLE XIII

    AMENDMENT OR TERMINATION OF PLAN
	
    
    Amendment, Modification, Suspension, and
    Termination
    

    	 	 	13.1	 
	
    
    Awards Previously Granted
    

    	 	 	13.2	 
	 
	
    ARTICLE XIV

    MISCELLANEOUS
	
    
    Unfunded Plan/ No Establishment of a
    Trust Fund
    

    	 	 	14.1	 
	
    
    No Employment Obligation
    

    	 	 	14.2	 
	
    
    Tax Withholding
    

    	 	 	14.3	 
	
    
    Written Agreement
    

    	 	 	14.4	 
	
    
    Indemnification of the Committee
    

    	 	 	14.5	 
	
    
    Gender and Number
    

    	 	 	14.6	 
	
    
    Severability
    

    	 	 	14.7	 
	
    
    Headings
    

    	 	 	14.8	 
	
    
    Other Compensation Plans
    

    	 	 	14.9	 
	
    
    Other Awards
    

    	 	 	14.10	 
	
    
    Successors
    

    	 	 	14.11	 
	
    
    Law Limitations/ Governmental Approvals
    

    	 	 	14.12	 
	
    
    Delivery of Title
    

    	 	 	14.13	 
	
    
    Inability to Obtain Authority
    

    	 	 	14.14	 
	
    
    Investment Representations
    

    	 	 	14.15	 
	
    
    Persons Residing Outside of the United States
    

    	 	 	14.16	 
	
    
    No Fractional Shares
    

    	 	 	14.17	 
	
    
    Arbitration of Disputes
    

    	 	 	14.18	 
	
    
    Governing Law
    

    	 	 	14.19	 




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ARTICLE I




ESTABLISHMENT, PURPOSE AND DURATION



     
1.1     Establishment.
The Company hereby establishes an incentive compensation plan,
to be known as “Stewart Information Services Corporation
2005 Long-Term Incentive Plan,” as set forth in this
document. The Plan permits the grant of Executive Options,
Region Manager Options, Directors’ Shares, Associates Stock
Bonuses, and Service Awards. The Plan shall become effective on
the latest of (a) the date the Plan is approved by the
Board, (b) the date the Plan is approved by the holders of
at least a majority of the outstanding shares of voting stock of
the Company and (c) if the provisions of the corporate
charter, by-laws or applicable state law prescribes a greater
degree of stockholder approval for this action, the approval by
the holders of that percentage, at a meeting of stockholders
(the “Effective Date”), and shall remain in
effect as provided in Section 1.3.



     
1.2     Purpose of
the Plan. The purpose of the Plan is to reward corporate
officers and other Associates of the Company and its Affiliates
by enabling them to acquire shares of common stock of the
Company and to receive other compensation based on the increase
in value of the common stock of the Company or certain other
performance measures. The Plan is intended to advance the best
interests of the Company, its Affiliates and its stockholders by
providing those persons who have substantial responsibility for
the management and growth of the Company and its Affiliates with
additional performance incentives and an opportunity to obtain
or increase their proprietary interest in the Company, thereby
encouraging them to continue in their employment with the
Company and its Affiliates.



     
1.3     Duration of
Authority to Make Grants Under the Plan. No Awards may be
granted under the Plan on or after the tenth anniversary of the
Effective Date. The applicable provisions of the Plan will
continue in effect with respect to an Award granted under the
Plan for as long as such Award remains outstanding.




ARTICLE II




DEFINITIONS



     
The words and phrases defined in this Article
shall have the meaning set out below throughout the Plan, unless
the context in which any such word or phrase appears reasonably
requires a broader, narrower or different meaning.



     
2.1     “Affiliate”
means any corporation, partnership, limited liability company or
association, trust or other entity or organization which,
directly or indirectly, controls, is controlled by, or is under
common control with, the Company. For purposes of the preceding
sentence, “control” (including, with correlative
meanings, the terms “controlled by” and “under
common control with”), as used with respect to any entity
or organization, shall mean the possession, directly or
indirectly, of the power (a) to vote more than
50 percent (50%) of the securities having ordinary voting
power for the election of directors of the controlled entity or
organization, or (ii) to direct or cause the direction of
the management and policies of the controlled entity or
organization, whether through the ownership of voting securities
or by contract or otherwise.



     
2.2     “Associate”
means (a) a person employed by the Company or any Affiliate
as a common law employee, (b) a person who has agreed to
become a common law employee of the Company or any Affiliate and
is expected to become such within six (6) months from the
date of a determination made for purposes of the Plan or
(c) a director or advisory director of the Company who is
not an employee of the Company or any Affiliate.



     
2.3     “Associate
Stock Bonuses” means an Award granted pursuant to
Article IX of the Plan.



     
2.4     “Award”
means, individually or collectively, a grant under the Plan of
Executive Options, Region Manager Options, Directors’
Shares, Associates Stock Bonuses, and Service Awards, in each
case subject to the terms and provisions of the Plan.



     
2.5     “Award
Agreement” means an agreement that sets forth the
terms and conditions applicable to an Award granted under the
Plan.



1








 



     
2.6     “Board”
means the board of directors of the Company.



     
2.7     “Change
in Control” means the occurrence of any of the
following events: (a) there shall be consummated
(i) any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or
pursuant to which shares of the Stock would be converted into
cash, securities or other property, other than a merger of the
Company where a majority of the Board of the surviving
corporation is, and for a two-year period after the merger
continues to be, persons who were directors of the Company
immediately prior to the merger or were elected as directors, or
nominated for election as director, by a vote of at least
two-thirds of the directors then still in office who were
directors of the Company immediately prior to the merger, or
(ii) any sale, lease, exchange or transfer (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company; (b) the
shareholders of the Company shall approve any plan or proposal
for the liquidation or dissolution of the Company; or
(c) (i) any “person” (as such term is used
in Sections 13(d) and 14(d)(2) of the Exchange Act, other
than the Company or a subsidiary thereof or any Associate
benefit plan sponsored by the Company or a subsidiary thereof,
shall become the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of securities of the
Company representing 20 percent or more of the combined
voting power of the Company’s then outstanding securities
ordinarily (and apart from rights accruing in special
circumstances) having the right to vote in the election of
directors, as a result of a tender or exchange offer, open
market purchases, privately negotiated purchases or otherwise,
and (ii) at any time during a period of two years after
such “person” becomes such a beneficial owner,
individuals who immediately prior to the beginning of such
period constituted the Board shall cease for any reason to
constitute at least a majority thereof, unless the election or
the nomination by the Board for election by the Company’s
shareholders of each new director during such period was
approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of such
period.



     
2.8     “Code”
means the United States Internal Revenue Code of 1986, as
amended from time to time.



     
2.9     “Committee”
means a committee of at least two persons, who are members of
the Compensation Committee of the Board and are appointed by the
Compensation Committee of the Board, or, to the extent it
chooses to operate as the Committee, the Compensation Committee
of the Board. Each member of the Committee in respect of his or
her participation in any decision with respect to an Award
intended to satisfy the requirements of section 162(m) of
the Code must satisfy the requirements of “outside
director” status within the meaning of section 162(m)
of the Code; provided, however, that the failure to satisfy such
requirement shall not affect the validity of the action of any
committee otherwise duly authorized and acting in the matter. As
to Awards, grants or other transactions that are authorized by
the Committee and that are intended to be exempt under
Rule 16b-3 under the Exchange Act, the requirements of
Rule 16b-3(d)(1) under the Exchange Act with respect to
committee action must also be satisfied.



     
2.10     “Company”
means Stewart Information Services Corporation, a Delaware
corporation, or any successor (by reincorporation, merger or
otherwise).



     
2.11     “Corporate
Change” shall have the meaning ascribed to that
term in Section 4.5(c).



     
2.12     “Directors’
Shares” means an Award granted pursuant to
Article VIII.



     
2.13     “Effective
Date” shall have the meaning ascribed to that term
in Section 1.1.



     
2.14     “Exchange
Act” means the United States Securities Exchange
Act of 1934, as amended from time to time.



     
2.15     “Executive
Officer” has the meaning given such term in the
rules and regulations of the Securities and Exchange Commission.



     
2.16     “Executive
Option” means an Option granted pursuant to
Article VI.



     
2.17     “Fair
Market Value” of the Stock as of any particular
date means (1) if the Stock is traded on a stock exchange,
the closing sale price of the Stock on that date as reported on
the principal securities exchange on which the Stock is traded,
or (2) if the Stock is traded in the over-the-counter
market, the average between the high bid and low asked price on
that date as reported in such over-the-counter market; provided
that (a) if



2








 




the Stock is not so traded, (b) if no
closing price or bid and asked prices for the Stock was so
reported on that date or (c) if, in the discretion of the
Committee, another means of determining the Fair Market Value of
a share of Stock at such date shall be necessary or advisable,
the Committee may provide for another means for determining such
Fair Market Value.




     
2.18     “Fiscal
Year” means the Company’s fiscal year.



     
2.19     “Holder”
means a person who has been granted an Award or any person who
is entitled to receive shares of Stock under an Award.



     
2.20     “Incentive
Stock Option” means an Option granted under the
Plan that is designated by the Committee as an “Incentive
Option” and satisfies the requirements of section 422
of the Code.



     
2.21     “Mature
Shares” means shares of Stock that the Holder has
held for at least six months.



     
2.22     “Minimum
Statutory Tax Withholding Obligation” means the
amount the Company or an Affiliate is required to withhold for
federal, state and local taxes based upon the applicable minimum
statutory withholding rates required by the relevant tax
authorities.



     
2.23     “Nonqualified
Stock Option” means an Option granted under the
Plan other than an Incentive Option.



     
2.24     “Option”
means an option to purchase Stock granted pursuant to
Article V. An Option may be in the form of either an
Incentive Stock Option or a Nonqualified Stock Option.



     
2.25     “Option
Price” shall have the meaning ascribed to that term
in Section 5.3.



     
2.26     “Optionee”
means a person who is granted an Option under the Plan.



     
2.27     “Option
Agreement” means a written contract setting forth
the terms and conditions of an Option.



     
2.28     “Performance
Goals” means one or more of the criteria described
in Article VIII on which the performance goals applicable
to an Award are based.



     
2.29     “Plan”
means Stewart Information Services Corporation 2005 Long-Term
Incentive Plan, as set forth in this document and as it may be
amended from time to time.



     
2.30     “Region
Manager” means a Region Manager of the Company or
an Associate determined by the Committee to have comparable
responsibilities.



     
2.31     “Region
Manager Option” means an Option granted pursuant to
Article VII.



     
2.32     “Section 409A”
means section 409A of the Code and Department of
Treasury rules and regulations issued thereunder.



     
2.33     “Service
Award” means an Award granted pursuant to
Article X.



     
2.34     “STC”
means Stewart Title Company, a subsidiary of the
Company.



     
2.35     “STG”
means Stewart Title Guaranty Company, a subsidiary of the
Company.



     
2.36     “Stock”
means the common stock of the Company, $1.00 par value per share
(or such other par value as may be designated by act of the
Company’s stockholders).



     
2.37     “Ten
Percent Stockholder” means an individual who owns
stock possessing more than ten percent of the combined voting
power of all classes of stock of the Company and its Affiliates.
For this purpose, an individual will be considered as owning the
stock owned, directly or indirectly, by or for his brothers and
sisters (whether by the whole or half blood), spouse, ancestors
and lineal descendants; and stock owned, directly or indirectly,
by or for a corporation, partnership, estate or trust will be
considered as being owned proportionately by or for its
shareholders, partners or beneficiaries.



     
2.38     “Termination
of Employment” means the termination of the Award
recipient’s employment relationship with the Company and
all Affiliates.



3








 




ARTICLE III




ELIGIBILITY AND PARTICIPATION



     
3.1     Eligibility.
The persons who are eligible to receive Awards under the Plan
are as follows:




	 	 	 
	Type of Award		Eligible Associates
	
		

	
    
    Executive Options
    

    	 	
    Executive Officers of the Company
    
	
    
    Region Manager Options
    

    	 	
    Region Managers of the Company and persons
    determined by the Committee to have equivalent responsibilities.
    
	
    
    Directors’ Shares
    

    	 	
    Directors who are not full-time employees of the
    Company upon their election or re-election.
    
	
    
    Associates Stock Bonuses
    

    	 	
    Associates selected by the Committee who are
    awarded cash bonuses.
    
	
    
    Service Awards
    

    	 	
    Associates who have completed at least five years
    of service with the Company or an Affiliate as the Committee
    shall determine from time to time; provided, that no Executive
    Officer or director of the Company shall be eligible to receive
    any Service Award.
    




     
3.2     Participation.
Subject to the terms and provisions of the Plan, the Committee
may, from time to time, select the Associates to whom Awards
shall be granted and shall determine the nature and amount of
each Award.




ARTICLE IV




GENERAL PROVISIONS RELATING TO AWARDS



     
4.1     Authority to
Grant Awards. The Committee may grant Awards to those
Associates as the Committee shall from time to time determine,
under the terms and conditions of the Plan. Subject only to any
applicable limitations set out in the Plan, the number of shares
of Stock or other value to be covered by any Award to be granted
under the Plan shall be as determined by the Committee in its
sole discretion.



     
4.2     Dedicated
Shares; Maximum Awards. The aggregate number of shares of
Stock with respect to which Awards may be granted under the Plan
is 1,360,000. The aggregate number of shares of Stock with
respect to which the following types of Awards may be granted
under the Plan is:




	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	Maximum Number of Shares
	 	 	

	 	 	 	 	Per Associate in Any
	Type of Award	 	Aggregate	 	One Fiscal Year
	
	 	
	 	

	
    
    Executive Options
    

    	 	 	600,000	 	 	 	35,000	 
	
    
    Region Manager Options
    

    	 	 	300,000	 	 	 	2,500	 
	
    
    Directors’ Shares
    

    	 	 	30,000	 	 	 	 	 
	
    
    Associates Stock Bonuses
    

    	 	 	350,000	 	 	 	 	 
	
    
    Service Awards
    

    	 	 	80,000	 	 	 	10	 





Each of the foregoing numerical limits stated in
this Section 4.2 shall be subject to adjustment in
accordance with the provisions of Section 4.5. The number
of shares of Stock stated in this Section 4.2 shall also be
increased by such number of shares of Stock as become subject to
substitute Awards granted pursuant to Article XI;
provided, however, that such increase shall be
conditioned upon the approval of the stockholders of the Company
to the extent stockholder approval is required by law or
applicable stock exchange rules. If shares of Stock are withheld
from payment of an Award to satisfy tax obligations with respect
to the Award, such shares of Stock will count against the
aggregate number of shares of Stock with respect to which Awards
may be granted under the Plan. To the extent that any
outstanding Award is forfeited or cancelled for any



4








 




reason or is settled in cash in lieu of shares of
Stock, the shares of Stock allocable to such portion of the
Award may again be subject to an Award granted under the Plan.




     
4.3     Non-Transferability.
Except as specified in the applicable Award Agreements or in
domestic relations court orders, Options shall not be
transferable by the Holder other than by will or under the laws
of descent and distribution, and shall be exercisable, during
the Holder’s lifetime, only by him or her. In the
discretion of the Committee, any attempt to transfer an Award
other than under the terms of the Plan and the applicable Award
Agreement may terminate the Award.



     
4.4     Requirements
of Law. The Company shall not be required to sell or issue
any shares of Stock under any Award if issuing those shares of
Stock would constitute or result in a violation by the Holder or
the Company of any provision of any law, statute or regulation
of any governmental authority. Specifically, in connection with
any applicable statute or regulation relating to the
registration of securities, upon exercise of any Option or
pursuant to any other Award, the Company shall not be required
to issue any shares of Stock unless the Committee has received
evidence satisfactory to it to the effect that the Holder will
not transfer the shares of Stock except in accordance with
applicable law, including receipt of an opinion of counsel
satisfactory to the Company to the effect that any proposed
transfer complies with applicable law. The determination by the
Committee on this matter shall be final, binding and conclusive.
The Company may, but shall in no event be obligated to, register
any shares of Stock covered by the Plan pursuant to applicable
securities laws of any country or any political subdivision. In
the event the shares of Stock issuable on exercise of an Option
or pursuant to any other Award are not registered, the Company
may imprint on the certificate evidencing the shares of Stock
any legend that counsel for the Company considers necessary or
advisable to comply with applicable law, or, should the shares
of Stock be represented by book or electronic entry rather than
a certificate, the Company may take such steps to restrict
transfer of the shares of Stock as counsel for the Company
considers necessary or advisable to comply with applicable law.
The Company shall not be obligated to take any other affirmative
action in order to cause or enable the exercise of an Option or
any other Award, or the issuance of shares of Stock pursuant
thereto, to comply with any law or regulation of any
governmental authority.



     
4.5     Changes in
the Company’s Capital Structure.




		
	 	     
    (a) The existence of outstanding Awards
    shall not affect in any way the right or power of the Company or
    its stockholders to make or authorize any or all adjustments,
    recapitalizations, reorganizations or other changes in the
    Company’s capital structure or its business, any merger or
    consolidation of the Company, any issue of bonds, debentures,
    preferred or prior preference shares ahead of or affecting the
    Stock or Stock rights, the dissolution or liquidation of the
    Company, any sale or transfer of all or any part of its assets
    or business or any other corporate act or proceeding, whether of
    a similar character or otherwise.
    
	 
	 	     
    (b) If the Company shall effect a
    subdivision or consolidation of Stock or other capital
    readjustment, the payment of a Stock dividend, or other increase
    or reduction of the number of shares of Stock outstanding,
    without receiving compensation therefor in money, services or
    property, then (1) the number, class or series and per
    share price of Stock subject to outstanding Options or other
    Awards under the Plan shall be appropriately adjusted in such a
    manner as to entitle a Holder to receive upon exercise of an
    Option or other Award, for the same aggregate cash
    consideration, the equivalent total number and class or series
    of Stock the Holder would have received had the Holder exercised
    his or her Option or other Award in full immediately prior to
    the event requiring the adjustment, and (2) the number and
    class or series of Stock then reserved to be issued under the
    Plan shall be adjusted by substituting for the total number and
    class or series of Stock then reserved, that number and class or
    series of Stock that would have been received by the owner of an
    equal number of outstanding shares of Stock of each class or
    series of Stock as the result of the event requiring the
    adjustment.
    
	 
	 	     
    (c) If while unexercised Options or other
    Awards remain outstanding under the Plan (1) the Company
    shall not be the surviving entity in any merger, consolidation
    or other reorganization (or survives only as a subsidiary of an
    entity other than an entity that was wholly-owned by the Company
    immediately prior to such merger, consolidation or other
    reorganization), (2) the Company sells, leases
    




5








 


		
	 	
    or exchanges or agrees to sell, lease or exchange
    all or substantially all of its assets to any other person or
    entity (other than an entity wholly-owned by the Company),
    (3) the Company is to be dissolved or (4) the Company
    is a party to any other corporate transaction (as defined under
    section 424(a) of the Code and applicable Department of
    Treasury regulations) that is not described in clauses (1),
    (2) or (3) of this sentence (each such event is
    referred to herein as a “Corporate Change”),
    then, except as otherwise provided in an Award Agreement
    (provided that such exceptions shall not apply in the case of a
    reincorporation merger), or as a result of the Committee’s
    effectuation of one or more of the alternatives described below,
    there shall be no acceleration of the time at which any Award
    then outstanding may be exercised, and no later than ten days
    after the approval by the stockholders of the Company of such
    Corporate Change, the Committee, acting in its sole and absolute
    discretion without the consent or approval of any Holder, shall
    act to effect one or more of the following alternatives, which
    may vary among individual Holders and which may vary among
    Awards held by any individual Holder (provided that, with
    respect to a reincorporation merger in which Holders of the
    Company’s ordinary shares will receive one ordinary share
    of the successor corporation for each ordinary share of the
    Company, none of such alternatives shall apply and, without
    Committee action, each Award shall automatically convert into a
    similar award of the successor corporation exercisable for the
    same number of common shares of the successor as the Award was
    exercisable for common shares of Stock of the Company):
    





		
	 	     
    (1) accelerate the time at which some or all
    of the Awards then outstanding may be exercised so that such
    Awards may be exercised in full for a limited period of time on
    or before a specified date (before or after such Corporate
    Change) fixed by the Committee, after which specified date all
    such Awards that remain unexercised and all rights of Holders
    thereunder shall terminate;
    
	 
	 	     
    (2) require the mandatory surrender to the
    Company by all or selected Holders of some or all of the then
    outstanding Awards held by such Holders (irrespective of whether
    such Awards are then exercisable under the provisions of the
    Plan or the applicable Award Agreement evidencing such Award) as
    of a date, before or after such Corporate Change, specified by
    the Committee, in which event the Committee shall thereupon
    cancel such Award and the Company shall pay to each such Holder
    an amount of cash per share equal to the excess, if any, of the
    per share price offered to stockholders of the Company in
    connection with such Corporate Change over the exercise prices
    under such Award for such shares;
    
	 
	 	     
    (3) with respect to all or selected Holders,
    have some or all of their then outstanding Awards (whether
    vested or unvested) assumed or have a new award of a similar
    nature substituted for some or all of their then outstanding
    Awards under the Plan (whether vested or unvested) by an entity
    which is a party to the transaction resulting in such Corporate
    Change and which is then employing such Holder or which is
    affiliated or associated with such Holder in the same or a
    substantially similar manner as the Company prior to the
    Corporate Change, or a parent or subsidiary of such entity,
    provided that (A) such assumption or substitution is on a
    basis where the excess of the aggregate Fair Market Value of the
    Stock subject to the Award immediately after the assumption or
    substitution over the aggregate exercise price of such Stock is
    equal to the excess of the aggregate Fair Market Value of all
    Stock subject to the Award immediately before such assumption or
    substitution over the aggregate exercise price of such Stock,
    and (B) the assumed rights under such existing Award or the
    substituted rights under such new Award as the case may be will
    have the same terms and conditions as the rights under the
    existing Award assumed or substituted for, as the case may be;
    
	 
	 	     
    (4) provide that the number and class or
    series of Stock covered by an Award (whether vested or unvested)
    theretofore granted shall be adjusted so that such Award when
    exercised shall thereafter cover the number and class or series
    of Stock or other securities or property (including, without
    limitation, cash) to which the Holder would have been entitled
    pursuant to the terms of the agreement or plan relating to such
    Corporate Change if, immediately prior to such Corporate Change,
    the Holder had been the holder of record of the number of shares
    of Stock then covered by such Award; or
    




6








 




		
	 	     
    (5) make such adjustments to Awards then
    outstanding as the Committee deems appropriate to reflect such
    Corporate Change (provided, however, that the Committee may
    determine in its sole and absolute discretion that no such
    adjustment is necessary).
    





		
	 	     
    In effecting one or more of alternatives in (3),
    (4) or (5) immediately above, and except as otherwise
    may be provided in an Award Agreement, the Committee, in its
    sole and absolute discretion and without the consent or approval
    of any Holder, may accelerate the time at which some or all
    Awards then outstanding may be exercised.
    
	 
	 	     
    (d) In the event of changes in the
    outstanding Stock by reason of recapitalizations,
    reorganizations, mergers, consolidations, combinations,
    exchanges or other relevant changes in capitalization occurring
    after the date of the grant of any Award and not otherwise
    provided for by this Section 4.5, any outstanding Award and
    any Award Agreements evidencing such Award shall be subject to
    adjustment by the Committee in its sole and absolute discretion
    as to the number and price of Stock or other consideration
    subject to such Award. In the event of any such change in the
    outstanding Stock, the aggregate number of shares of Stock
    available under the Plan may be appropriately adjusted by the
    Committee, whose determination shall be conclusive.
    
	 
	 	     
    (e) The issuance by the Company of stock of
    any class or series, or securities convertible into, or
    exchangeable for, stock of any class or series, for cash or
    property, or for labor or services either upon direct sale or
    upon the exercise of rights or warrants to subscribe for them,
    or upon conversion or exchange of stock or obligations of the
    Company convertible into, or exchangeable for, stock or other
    securities, shall not affect, and no adjustment by reason of
    such issuance shall be made with respect to, the number, class
    or series, or price of shares of Stock then subject to
    outstanding Options or other Awards.
    




     
4.6     Election
Under Section 83(b) of the Code. No Holder shall
exercise the election permitted under section 83(b) of the
Code with respect to any Award without the written approval of
the Chief Financial Officer of the Company. Any Holder who makes
an election under section 83(b) of the Code with respect to
any Award without the written approval of the Chief Financial
Officer of the Company may, in the discretion of the Committee,
forfeit any or all Awards granted to him or her under the Plan.



     
4.7     Forfeiture
for Cause. Notwithstanding any other provision of the Plan
or an Award Agreement, if the Committee finds by a majority vote
that a Holder, before or after his Termination of Employment
(a) committed a fraud, embezzlement, theft, felony or an
act of dishonesty in the course of his employment by the Company
or an Affiliate which conduct damaged the Company or an
Affiliate or (b) disclosed trade secrets of the Company or
an Affiliate, then as of the date the Committee makes its
finding, any Awards awarded to the Holder that have not been
exercised by the Holder (including all Awards that have not yet
vested) will be forfeited to the Company. The findings and
decision of the Committee with respect to such matter, including
those regarding the acts of the Holder and the damage done to
the Company, will be final for all purposes. No decision of the
Committee, however, will affect the finality of the discharge of
the individual by the Company or an Affiliate.



     
4.8     Forfeiture
Events. The Committee may specify in an Award Agreement that
the Holder’s rights, payments, and benefits with respect to
an Award shall be subject to reduction, cancellation,
forfeiture, or recoupment upon the occurrence of certain
specified events, in addition to any otherwise applicable
vesting or performance conditions of an Award. Such events may
include, but shall not be limited to, Termination of Employment
for cause, termination of the Holder’s provision of
services to the Company or its Affiliates, violation of material
policies of the Company and its Affiliates, breach of
noncompetition, confidentiality, or other restrictive covenants
that may apply to the Holder, or other conduct by the Holder
that is detrimental to the business or reputation of the Company
and its Affiliates.



7








 




ARTICLE V




GENERAL PROVISIONS RELATING TO OPTIONS



     
5.1     Type of
Options Available. The Committee may grant the following
Options any time during the term of the Plan to any eligible
Associate that it chooses:




		
	 	     
    (a) Incentive Stock Options. The
    Committee may grant to an Associate who is a key employee of the
    Company or an Affiliate that is a corporation an Option, or
    Options, to buy a stated number of shares of Stock under the
    terms and conditions of the Plan, which Option or Options would
    be an “incentive stock option” within the meaning of
    section 422 of the Code.
    
	 
	 	     
    (b) Nonqualified Options. The
    Committee may grant to any Associate an Option, or Options, to
    buy a stated number of shares of Stock under the terms and
    conditions of the Plan, which Option or Options would not
    constitute an “incentive stock option” within the
    meaning of section 422 of the Code.
    




     
5.2     Stock
Appreciation Rights. Stock appreciation rights
(“Stock Appreciation Rights”) may be included
in each Option granted under the Plan to allow the holder of an
Option (an “Optionee”) to surrender that Option
(or a portion of the part that is then exercisable) and receive
in exchange, upon a written request from the Optionee describing
the special circumstances that exist which create the need to
use such Stock Appreciation Rights and subject to any other
conditions and limitations set by the Committee, an amount equal
to the excess of the Fair Market Value of the Stock covered by
the Option (or the portion of it surrendered), determined as of
the date of surrender, over the aggregate option price of the
Stock. The payment will be made in shares of Stock valued at
Fair Market Value. Stock Appreciation Rights may be exercised
only when the Fair Market Value of the Stock covered by the
Option surrendered exceeds the option price of the Stock.



     
Upon the surrender of an Option, or a portion of
it, for Stock Appreciation Rights, the shares represented by the
Option (or that part of it surrendered) shall not be available
for reissuance under the Plan.



     
Each of the Stock Appreciation Rights
(a) will expire not later than the expiration of the
underlying Option, (b) may be for no more than
100 percent of the difference between the exercise price of
the underlying Option and the Fair Market Value of a share of
the Stock at the time the Stock Appreciation Right is exercised,
and (c) may be exercised only when the underlying Option is
eligible to be exercised.



     
5.3     Option
Price. The price at which shares of Stock may be purchased
pursuant to an Option that is an Incentive Stock Option shall be
not less than the Fair Market Value of the shares of Stock on
the date the Option is granted. The Committee in its discretion
may provide that the price at which shares may be purchased
shall be more than the minimum price required. If an individual
is a Ten Percent Stockholder, the option price at which shares
may be purchased under an Option that is an Incentive Stock
Option shall be not less than 110 percent of the Fair
Market Value of the Stock on the date the Option is granted.



     
5.4     Maximum Value
of Stock Subject to Options that are Incentive Stock
Options. To the extent that the aggregate Fair Market Value
(determined as of the date the Option is granted) of the Stock
with respect to which Incentive Stock Options are exercisable
for the first time by the Optionee in any calendar year (under
the Plan and any other incentive stock option plan(s) of the
Company and any parent and subsidiary corporation) exceeds
$100,000, the Options shall be treated as Nonqualified Options.
In making this determination, Options shall be taken into
account in the order in which they were granted.



     
5.5     Exercise of
Options. Each Option shall be exercised by request to the
Committee setting forth the number of shares of Stock with
respect to which the Option is to be exercised. Except in the
case of exercise by a third-party broker, as provided below,
payment of the exercise price and any applicable tax withholding
amounts must be made at the time of exercise by any combination
of the following: (a) cash, certified check, bank draft or
postal or express money order payable to the order of the
Company for an amount equal to the exercise price under the
Option, (b) Mature Shares with a Fair Market Value on the
date of exercise equal to the exercise price under the Option,
(c) an election to make a cashless exercise through a
registered broker-dealer (if approved in advance by the
Committee or by an executive officer of the Company) or
(d) except as specified below, any other form of payment
which is acceptable to the Committee. As promptly as practicable



8








 




after receipt of the Holder’s request and
payment, the Company shall deliver to the Holder the number of
shares with respect to which the Option has been exercised. If
Mature Shares are used for payment by the Holder, the aggregate
Fair Market Value of the shares of Stock tendered must be equal
to or less than the aggregate exercise price of the shares being
purchased upon exercise of the Option, and any difference must
be paid by cash, certified check, bank draft or postal or
express money order payable to the order of the Company.




     
The Committee shall not permit a Holder to pay
such Holder’s exercise price upon the exercise of an Option
by having the Company reduce the number of shares of Stock that
will be delivered to the Holder pursuant to the exercise of the
Option. In addition, the Committee shall not permit a Holder to
pay such Holder’s exercise price upon the exercise of an
Option by using shares of Stock other than Mature Shares.



     
An Option may not be exercised for a fraction of
a share of Stock.



     
5.6     Duration of
Options. Unless the Option Agreement specifies a shorter
general term, an Option shall expire on the earliest of the date
that is (a) the tenth anniversary of the date the Option is
granted (the fifth anniversary of the date the Option is granted
in the case of an Incentive Stock Option granted to a Ten
Percent Stockholder), or (b) one day less than three months
after the date of the Holder’s Termination of Employment
(other than by reason of the Holder’s death) or
(c) the date that is one year after the date of the
Holder’s death. Unless the Holder’s Option Agreement
specifies otherwise, an Option shall not continue to vest after
the severance of the employment relationship between the Company
and all Affiliates.



     
Whether authorized leave of absence, or absence
on military or government service, shall constitute severance of
the employment relationship between the Company and the Optionee
shall be determined by the Committee at the time thereof.



     
In the event of the death of the holder of any
Option while in the employ of the Company and before the date of
expiration of such Option, such Option shall continue in effect
until the date of expiration of the Option. After the death of
the Optionee, his executors, administrators or any person or
person to whom his Option may be transferred by will or by the
laws of descent and distribution, shall have the right, any time
before the termination of an Option, to exercise the Option in
respect to the number of shares that the Optionee would have
been entitled to exercise if he had exercised the Option on the
date of his death while in employment.



     
Notwithstanding the foregoing provisions of this
Article V, in the case of an Option that is a Nonqualified
Option, the Committee may provide for a different option
termination date in the option agreement with respect to such
Option. For purposes of Incentive Stock Options issued under the
Plan, an employment relationship between the Company and the
Optionee shall be deemed to exist during any period in which the
Optionee is employed by the Company, by any parent or subsidiary
corporation, by a corporation issuing or assuming an option in a
transaction to which section 424(a) of the Code, as
amended, applies, or by a parent or subsidiary corporation of
such corporation issuing or assuming an option. For purposes of
Nonqualified Options issued under the Plan, an employment
relationship between the Company and the Optionee will exist
under the circumstances described above for Incentive Stock
Options and will also exist if the Optionee is transferred to an
affiliate corporation approved by the Committee.



     
5.7     Option
Agreement. Each Option grant under the Plan shall be
evidenced by an Option Agreement that shall specify (a) the
Option Price, (b) the duration of the Option, (c) the
number of shares of Stock to which the Option pertains,
(d) the exercise restrictions, if any, applicable to the
Option, (e) whether the Option is intended to be an
Incentive Option or a Nonqualified Option, and (f) such
other provisions as the Committee shall determine that are not
inconsistent with the terms and provisions of the Plan.



     
5.8     Substitution
Options. Options may be granted under the Plan from time to
time in substitution for stock options held by employees of
other corporations who are about to become employees of or
affiliated with the Company or any Affiliate as the result of a
merger or consolidation of the employing corporation with the
Company or any Affiliate, or the acquisition by the Company or
any Affiliate of the assets of the employing corporation, or the
acquisition by the Company or any Affiliate of stock of the
employing corporation as the result of which it becomes an
Affiliate of the Company. The terms and conditions of the
substitute Options



9








 




granted may vary from the terms and conditions
set out in the Plan to the extent the Committee, at the time of
grant, may deem appropriate to conform, in whole or in part, to
the provisions of the stock options in substitution for which
they are granted.




     
5.9     No Rights as
Stockholder. No Holder, as such, shall have any rights as a
stockholder.




ARTICLE VI




EXECUTIVE OPTIONS



     
The individuals who shall be eligible to receive
grants of Executive Options shall be the Executive Officers of
the Company. No individual shall be eligible to receive an
Option under the Plan while that individual is a member of the
Committee.




ARTICLE VII




REGION MANAGER OPTIONS



     
The Committee may grant Options to those eligible
Region Managers as it shall from time to time determine, under
the terms and conditions of the Plan. Factors the Committee may
consider include, without limitation:




			
	 	• 	
    Region rank of consolidated STG/ STC pretax
    profit (dollars) in the Region Manager’s territory as
    reported on the Region Manager’s consolidated profit center
    statement;
    
	 
	 	• 	
    Region rank of profit percentage in the Region
    Manager’s territory as reported on the Region
    Manager’s STG/ STC profit center statement;
    
	 
	 	• 	
    Region rank of percentage of policy losses to
    premiums generated YTD as reported on the Region Performance
    Summary Report;
    
	 
	 	• 	
    Market share increase in the Region Manger’s
    territory over the prior year as reported on the quarterly ALTA
    statistics on market share. Market share weight will be
    increased with market share growth in key states and percentage
    of state responsibility of Region Manager;
    
	 
	 	• 	
    Region rank of percentage increase in Cash to
    Houston remittances as reported on the Region Performance
    Summary Report;
    
	 
	 	• 	
    Region rank of percentage of delinquent premium
    YTD;
    
	 
	 	• 	
    Net expansion of territory via acquisitions,
    branch offices, increased number of agents;
    
	 
	 	• 	
    Region Manager incorporation and pursuit of SISCO
    Strategies and Ten Standards in region’s goals;
    
	 
	 	• 	
    Other contributions towards overall company
    performance or failure to comply with company requests. Items
    considered may include Region Manager rollout of technology, new
    products or other programs sponsored by the company, completion
    of agency visits, follow-up on audits and training and benefit
    participation.
    





The Committee shall evaluate the relative
importance of these factors, and the Region Manager’s
standing among the recipient group, in its sole and absolute
discretion and shall have full power and authority to determine,
according to the above criteria, the amount of shares subject to
any option, subject only to any applicable limitations set out
in the Plan.




ARTICLE VIII




DIRECTORS’ SHARES



     
8.1     Annual Grant
to Directors. Each person who is not a full-time employee of
the Company or any of its subsidiaries and who shall be elected
or re-elected as a director of the Company shall be awarded
shares



10








 




of Stock annually on the first business day
following the Company’s annual meeting of stockholders at
which such person was elected or re-elected to serve, provided
that the Plan is in effect on that day. Each person who is not a
full-time employee of the Company or any of its subsidiaries and
who shall be elected or re-elected as an Advisory Director of
the Company shall be awarded shares of Stock annually on the
first business day following the Company’s annual meeting
of directors at or subsequent to which such person was elected
or re-elected to serve, provided that the Plan is in effect on
that day.




     
8.2     Amount of
Award. The number of shares of Stock to be awarded pursuant
to this Article VII shall be the amount determined by
dividing the amount authorized by the Company’s Board of
Directors by the Fair Market Value of a share of the Stock on
the date of the award.




ARTICLE IX




ASSOCIATES STOCK BONUSES



     
9.1     Award of
Stock Bonuses. The Company shall, during the first quarter
of each Fiscal Year during the term of the Plan, issue Stock to
each Associate selected by the Committee having a value (as
determined below) equal to one-ninth of the total amount of cash
bonus earned by such Associate for the previous Fiscal Year
pursuant to the established bonus policy of STG or STC, as the
case may be. Any such Award shall be granted no later than March
15 following the close of the Fiscal Year with respect to which
the applicable bonus was earned. The fact that an Associate is
granted an Award pursuant to this Article IX with respect
to one Fiscal Year shall not entitle the Associate to receive
such a grant in a subsequent Fiscal Year.



     
9.2     Valuation.
The shares of Stock to be issued pursuant to the Plan shall be
valued as of their closing price on the day following the
Company’s year-end earnings release.




ARTICLE X




SERVICE AWARDS



     
Service Awards of ten shares of Stock will be
made to each eligible Associate selected by the Committee upon
his completion of the Associate’s first five years of
service for the Company and its Affiliates.




ARTICLE XI




SUBSTITUTION AWARDS



     
Awards may be granted under the Plan from time to
time in substitution for stock options and other awards held by
employees of other entities who are about to become Associates,
or whose employer is about to become an Affiliate as the result
of a merger of consolidation of the Company with another
corporation, or the acquisition by the Company of substantially
all the assets of another corporation, or the acquisition by the
Company of at least 50 percent (50%) of the issued and
outstanding stock of another corporation as the result of which
it becomes a subsidiary of the Company. The terms and conditions
of the substitute Awards so granted may vary from the terms and
conditions set forth in the Plan to such extent as the Board at
the time of grant may deem appropriate to conform, in whole or
in part, to the provisions of the Award in substitution for
which they are granted, but with respect to Options that are
Incentive Stock Options, no such variation shall be such as to
affect the status of any such substitute Option as an Incentive
Stock Option under section 422 of the Code.




ARTICLE XII




ADMINISTRATION




12.1     Awards.
The Plan shall be administered by the Committee or, in the
absence of the Committee, the Plan shall be administered by the
Board. The members of the Committee shall serve at the
discretion of the Board. The Committee shall have full and
exclusive power and authority to administer the Plan and to take
all



11








 




actions that the Plan expressly contemplates or
are necessary or appropriate in connection with the
administration of the Plan with respect to Awards granted under
the Plan.





12.2     Authority of
the Committee. The Committee shall have full and exclusive
power to interpret and apply the terms and provisions of the
Plan and Awards made under the Plan, and to adopt such rules,
regulations and guidelines for implementing the Plan as the
Committee may deem necessary or proper, all of which powers
shall be exercised in the best interests of the Company and in
keeping with the objectives of the Plan. A majority of the
members of the Committee shall constitute a quorum for the
transaction of business, and the vote of a majority of those
members present at any meeting shall decide any question brought
before that meeting. Any decision or determination reduced to
writing and signed by a majority of the members shall be as
effective as if it had been made by a majority vote at a meeting
properly called and held. All questions of interpretation and
application of the Plan, or as to award granted under the Plan,
shall be subject to the determination, which shall be final and
binding, of a majority of the whole Committee. No member of the
Committee shall be liable for any act or omission of any other
member of the Committee or for any act or omission on his own
part, including but not limited to the exercise of any power or
discretion given to him under the Plan, except those resulting
from his own gross negligence or willful misconduct. In carrying
out its authority under the Plan, the Committee shall have full
and final authority and discretion, including but not limited to
the following rights, powers and authorities, to:




		
	 	     
    (a) determine the persons to whom and the
    time or times at which Awards will be made;
    
	 
	 	     
    (b) determine the number and exercise price
    of shares of Stock covered in each Award, subject to the terms
    and provisions of the Plan;
    
	 
	 	     
    (c) determine the terms, provisions and
    conditions of each Award, which need not be identical and need
    not match the default terms set forth in the Plan;
    
	 
	 	     
    (d) accelerate the time at which any
    outstanding Award will vest;
    
	 
	 	     
    (e) prescribe, amend and rescind rules and
    regulations relating to administration of the Plan; and
    
	 
	 	     
    (f) make all other determinations and take
    all other actions deemed necessary, appropriate or advisable for
    the proper administration of the Plan.
    




     
The Committee may correct any defect or supply
any omission or reconcile any inconsistency in the Plan or in
any Award to a Holder in the manner and to the extent the
Committee deems necessary or desirable to further the
Plan’s objectives. Further, the Committee shall make all
other determinations that may be necessary or advisable for the
administration of the Plan. As permitted by law and the terms
and provisions of the Plan, the Committee may delegate its
authority as identified in Section 11.3.



     
The actions of the Committee in exercising all of
the rights, powers, and authorities set out in this
Article XI and all other Articles of the Plan, when
performed in good faith and in its sole judgment, shall be
final, conclusive and binding on all persons. The Committee may
employ attorneys, consultants, accountants, agents, and other
persons, any of whom may be an Associate, and the Committee, the
Company, and its officers and Board shall be entitled to rely
upon the advice, opinions, or valuations of any such persons.



     
12.3     Decisions
Binding. All determinations and decisions made by the
Committee or the Board, as the case may be, pursuant to the
provisions of the Plan and all related orders and resolutions of
the Committee or the Board, as the case may be, shall be final,
conclusive and binding on all persons, including the Company,
its stockholders, Associates, Holders and the estates and
beneficiaries of Associates and Holders.



     
12.4     No
Liability. Under no circumstances shall the Company, the
Board or the Committee incur liability for any indirect,
incidental, consequential or special damages (including lost
profits) of any form incurred by any person, whether or not
foreseeable and regardless of the form of the act in which such
a claim may be brought, with respect to the Plan or the
Company’s, the Committee’s or the Board’s roles
in connection with the Plan.



12








 




ARTICLE XIII




AMENDMENT OR TERMINATION OF PLAN



     
13.1     Amendment,
Modification, Suspension, and Termination. Subject to
Section 12.2 the Committee may, at any time and from time
to time, alter, amend, modify, suspend, or terminate the Plan
and any Award Agreement in whole or in part; provided, however,
that, without the prior approval of the Company’s
stockholders and except as provided in Section 4.5, the
Committee shall not directly or indirectly lower the Option
Price of a previously granted Option, and no amendment of the
Plan shall be made without stockholder approval if stockholder
approval is required by applicable law or stock exchange rules.



     
13.2     Awards
Previously Granted. Notwithstanding any other provision of
the Plan to the contrary, no termination, amendment, suspension,
or modification of the Plan or an Award Agreement shall
adversely affect in any material way any Award previously
granted under the Plan, without the written consent of the
Holder holding such Award.




ARTICLE XIV




MISCELLANEOUS



     
14.1     Unfunded
Plan/ No Establishment of a Trust Fund. Holders shall
have no right, title, or interest whatsoever in or to any
investments that the Company or any of its Affiliates may make
to aid in meeting obligations under the Plan. Nothing contained
in the Plan, and no action taken pursuant to its provisions,
shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and any Holder,
beneficiary, legal representative, or any other person. To the
extent that any person acquires a right to receive payments from
the Company under the Plan, such right shall be no greater than
the right of an unsecured general creditor of the Company. All
payments to be made hereunder shall be paid from the general
funds of the Company and no special or separate fund shall be
established and no segregation of assets shall be made to assure
payment of such amounts, except as expressly set forth in the
Plan. No property shall be set aside nor shall a trust fund of
any kind be established to secure the rights of any Holder under
the Plan. All Holders shall at all times rely solely upon the
general credit of the Company for the payment of any benefit
which becomes payable under the Plan. The Plan is not intended
to be subject to the Employee Retirement Income Security Act of
1974, as amended.



     
14.2     No
Employment Obligation. The granting of any Award shall not
constitute an employment contract, express or implied, nor
impose upon the Company or any Affiliate any obligation to
employ or continue to employ, or utilize the services of, any
Holder. The right of the Company or any Affiliate to terminate
the employment of any person shall not be diminished or affected
by reason of the fact that an Award has been granted to him, and
nothing in the Plan or an Award Agreement shall interfere with
or limit in any way the right of the Company or its Affiliates
to terminate any Holder’s employment at any time or for any
reason not prohibited by law.



     
14.3     Tax
Withholding. The Company or any Affiliate shall be entitled
to deduct from other compensation payable to each Holder any
sums required by federal, state or local tax law to be withheld
with respect to the vesting or exercise of an Award or lapse of
restrictions on an Award. In the alternative, the Company may
require the Holder (or other person validly exercising the
Award) to pay such sums for taxes directly to the Company or any
Affiliate in cash or by check within one day after the date of
vesting, exercise or lapse of restrictions. In the discretion of
the Committee, and with the consent of the Holder, the Company
may reduce the number of shares of Stock issued to the Holder
upon such Holder’s exercise of an Option to satisfy the tax
withholding obligations of the Company or an Affiliate; provided
that the Fair Market Value of the shares of Stock held back
shall not exceed the Company’s or the Affiliate’s
Minimum Statutory Tax Withholding Obligation. The Committee may,
in its discretion, permit a Holder to satisfy any Minimum
Statutory Tax Withholding Obligation arising upon the grant or
vesting (as applicable) of an Award granted pursuant to
Article VIII, IX or X by delivering to the Holder of the
Award a reduced number of shares of Stock in the manner
specified herein. If permitted by the Committee and acceptable
to the Holder, at the time of grant or vesting (as applicable)
of an Award granted pursuant to Article VIII, IX or X, the
Company shall



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(a) calculate the amount of the
Company’s or an Affiliate’s Minimum Statutory Tax
Withholding Obligation on the assumption that all such vested
shares are made available for delivery, (b) reduce the
number of such shares of Stock made available for delivery so
that the Fair Market Value of the shares of Stock withheld on
the vesting date approximates the Company’s or an
Affiliate’s Minimum Statutory Tax Withholding Obligation
and (c) in lieu of the withheld shares of Stock, remit cash
to the United States Treasury and other applicable governmental
authorities, on behalf of the Holder, in the amount of the
Minimum Statutory Tax Withholding Obligation. The Company shall
withhold only whole shares of Stock to satisfy its Minimum
Statutory Tax Withholding Obligation. Where the Fair Market
Value of the withheld shares of Stock does not equal the amount
of the Minimum Statutory Tax Withholding Obligation, the Company
shall withhold shares of Stock with a Fair Market Value slightly
less than the amount of then Minimum Statutory Tax Withholding
Obligation and the Holder must satisfy the remaining minimum
withholding obligation in some other manner permitted under this
Section 14.3. The withheld shares of Stock not made
available for delivery by the Company shall be retained as
treasury shares or will be cancelled and, in either case, the
Holder’s right, title and interest in such shares of Stock
shall terminate. The Company shall have no obligation upon
vesting or exercise of any Award or lapse of restrictions on any
Award until the Company or an Affiliate has received payment
sufficient to cover the Minimum Statutory Tax Withholding
Obligation with respect to that vesting, exercise or lapse of
restrictions. Neither the Company nor any Affiliate shall be
obligated to advise a Holder of the existence of the tax or the
amount which it will be required to withhold.




     
14.4 Written Agreement. Each Award shall
be embodied in a written agreement or statement which shall be
subject to the terms and conditions of the Plan. The Award
Agreement shall be signed by a member of the Committee on behalf
of the Committee and the Company or by an executive officer of
the Company, other than the Holder, on behalf of the Company,
and may be signed by the Holder to the extent required by the
Committee. The Award Agreement may specify the effect of a
Change in Control on the Award. The Award Agreement may contain
any other provisions that the Committee in its discretion shall
deem advisable which are not inconsistent with the terms and
provisions of the Plan.



     
14.5 Indemnification of the Committee. The
Company shall indemnify each present and future member of the
Committee against, and each member of the Committee shall be
entitled without further action on his or her part to indemnity
from the Company for, all expenses (including attorney’s
fees, the amount of judgments and the amount of approved
settlements made with a view to the curtailment of costs of
litigation, other than amounts paid to the Company itself)
reasonably incurred by such member in connection with or arising
out of any action, suit or proceeding in which such member may
be involved by reason of such member being or having been a
member of the Committee, whether or not he or she continues to
be a member of the Committee at the time of incurring the
expenses, including, without limitation, matters as to which
such member shall be finally adjudged in any action, suit or
proceeding to have been negligent in the performance of such
member’s duty as a member of the Committee. However, this
indemnity shall not include any expenses incurred by any member
of the Committee in respect of matters as to which such member
shall be finally adjudged in any action, suit or proceeding to
have been guilty of gross negligence or willful misconduct in
the performance of his duty as a member of the Committee. In
addition, no right of indemnification under the Plan shall be
available to or enforceable by any member of the Committee
unless, within 60 days after institution of any action,
suit or proceeding, such member shall have offered the Company,
in writing, the opportunity to handle and defend same at its own
expense. This right of indemnification shall inure to the
benefit of the heirs, executors or administrators of each member
of the Committee and shall be in addition to all other rights to
which a member of the Committee may be entitled as a matter of
law, contract or otherwise.



     
14.6     Gender and
Number. If the context requires, words of one gender when
used in the Plan shall include the other and words used in the
singular or plural shall include the other.



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



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14.8     Headings.
Headings of Articles and Sections are included for convenience
of reference only and do not constitute part of the Plan and
shall not be used in construing the terms and provisions of the
Plan.



     
14.9     Other
Compensation Plans. The adoption of the Plan shall not
affect any other option, incentive or other compensation or
benefit plans in effect for the Company or any Affiliate, nor
shall the Plan preclude the Company from establishing any other
forms of incentive compensation arrangements for Associates.



     
14.10     Other
Awards. The grant of an Award shall not confer upon the
Holder the right to receive any future or other Awards under the
Plan, whether or not Awards may be granted to similarly situated
Holders, or the right to receive future Awards upon the same
terms or conditions as previously granted.



     
14.11     Successors.
All obligations of the Company under the Plan with respect to
Awards granted hereunder shall be binding on any successor to
the Company, whether the existence of such successor is the
result of a direct or indirect purchase, merger, consolidation,
or otherwise, of all or substantially all of the business and/or
assets of the Company.



     
14.12     Law
Limitations/ Governmental Approvals. The granting of Awards
and the issuance of Shares under the Plan shall be subject to
all applicable laws, rules, and regulations, and to such
approvals by any governmental agencies or national securities
exchanges as may be required.



     
14.13     Delivery of
Title. The Company shall have no obligation to issue or
deliver evidence of title for shares of Stock issued under the
Plan prior to:




		
	 	     
    (a) obtaining any approvals from
    governmental agencies that the Company determines are necessary
    or advisable; and
    
	 
	 	     
    (b) completion of any registration or other
    qualification of the Stock under any applicable national or
    foreign law or ruling of any governmental body that the Company
    determines to be necessary or advisable.
    




     
14.14     Inability
to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which
authority is deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any shares of Stock
hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such shares of Stock as to which
such requisite authority shall not have been obtained.



     
14.15     Investment
Representations. The Committee may require any person
receiving Stock pursuant to an Award under the Plan to represent
and warrant in writing that the person is acquiring the Shares
for investment and without any present intention to sell or
distribute such Stock.



     
14.16     Persons
Residing Outside of the United States. Notwithstanding any
provision of the Plan to the contrary, in order to comply with
the laws in other countries in which the Company or any of its
Affiliates operates or has Associates, the Committee, in its
sole discretion, shall have the power and authority to:




		
	 	     
    (a) determine which Affiliates shall be
    covered by the Plan;
    
	 
	 	     
    (b) determine which persons employed outside
    the United States are eligible to participate in the Plan;
    
	 
	 	     
    (c) amend or vary the terms and provisions
    of the Plan and the terms and conditions of any Award granted to
    persons who reside outside the United States;
    
	 
	 	     
    (d) establish subplans and modify exercise
    procedures and other terms and procedures to the extent such
    actions may be necessary or advisable — any subplans
    and modifications to Plan terms and procedures established under
    this Section 13.16 by the Committee shall be attached to
    the Plan document as Appendices; and
    
	 
	 	     
    (e) take any action, before or after an
    Award is made, that it deems advisable to obtain or comply with
    any necessary local government regulatory exemptions or
    approvals.
    




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Notwithstanding the above, the Committee may not
take any actions hereunder, and no Awards shall be granted, that
would violate the Exchange Act, the Code, any securities law or
governing statute or any other applicable law.



     
14.17     No
Fractional Shares. No fractional shares of Stock shall be
issued or delivered pursuant to the Plan or any Award. The
Committee shall determine whether cash, additional Awards, or
other property shall be issued or paid in lieu of fractional
shares of Stock or whether such fractional shares or any rights
thereto shall be forfeited or otherwise eliminated.



     
14.18     Arbitration
of Disputes. Any controversy arising out of or relating to
the Plan or an Option Agreement shall be resolved by arbitration
conducted pursuant to the arbitration rules of the American
Arbitration Association. The arbitration shall be final and
binding on the parties.



     
14.19     Governing
Law. The provisions of the Plan and the rights of all
persons claiming thereunder shall be construed, administered and
governed under the laws of the State of Texas.



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