Document:

Exhibit 4.40

 

LONG-TERM STOCK-BASED INCENTIVE PROGRAM
NO. 1 

APPROVED AT THE BOARD OF THE DIRECTORS’
MEETING OF 

BRASILAGRO – COMPANHIA BRASILEIRA
DE PROPRIEDADES AGRÍCOLAS 

HELD ON JUNE 18, 2018

 

DRAFT OF PRIVATE INSTRUMENT OF LONG-TERM
STOCK-BASED INCENTIVE CONTRACT AND OTHER COVENANTS

 

By this private instrument, the parties,
on one side:

 

(i)        BRASILAGRO
– COMPANHIA BRASILEIRA DE PROPRIEDADES AGRÍCOLAS – a corporation with head offices at Avenida Brigadeiro
Faria Lima, 1.309, 5th floor, zip code 01452-002, in the City of Sao Paulo, State of Sao Paulo, enrolled at the Corporate
Taxpayer’s Register under CNPJ No. 07.628.528/0001-59, herein represented pursuant to the terms of its By-laws by its under-signed
Officers, hereinafter simply referred to as “Company”; and

 

(ii)       [●],
hereinafter simply referred to as the “Participant”.

 

Company and Participant, whenever individually
and indistinctly referred to herein shall hereinafter be referred to simply as “Party” and, all together, “Parties”.

 

WHEREAS the Company’s Shareholders’
General Meeting held on October 2nd, 2017 approved the establishment of the Long-Term Stock-Based Incentive Plan (“Plan”),
which entered in force on the date of the approval thereof;

 

WHEREAS the Long-Term Stock-Based
Incentive Program Nr. 1 was duly approved by the Company by virtue of the Board of Directors’ Meeting held on June 18, 2018
(“1st ILPA Program”);

 

WHEREAS the Plan and the respective
1st ILPA Program have the purpose to enable the Participants to receive Shares aiming at: (i) fostering the enhancement,
success and achievement of the Company’s purposes; (ii) incentive the Participants to substantially contribute towards the
Company’s success; (iii) align the Company’s shareholders’ interests to the Participants’; (iv) provide
certain employees of the Company, regarding the variable compensation, with a competitive edge vis a vis market conditions, as
well as (v) stimulate the permanence of the main executives and key employees at the Company;

 

WHEREAS that, once having met the
conditions provided by the Plan regarding the due achievement of certain performance conditions, the Participant, [position of
the Participant at the Company] was indicated by the Compensation Committee and later approved by the Company’s Board of
Directors as a member eligible to become a beneficiary of the 1st ILPA Program.

 

    1

     

    

 

WHEREAS the Participant represents
to be aware that the receipt of the Shares is conditioned to the full achievement, by the Company, of the key performance indicators
(KPI’s) provided by clause 1.2, below, to his/her final performance and/or his/her respective working area/department;

 

WHEREAS under the terms of the Plan
and according to the Board of Directors’ resolution held on June 18, 2018, the Vesting Period of the 1st ILPA Program
starts on October 2, 2017 and ends on October 1, 2019 (“Vesting Period”).

 

WHEREAS the Participant represents
to have attended the speech given by the Company on the Plan and the 1st ILPA Program, reason why he/she acknowledges
that he/she has clarified any and all doubts related to the percentages, multiples, and minimum and maximum amounts of Shares that
may be applicable to him/her, and hereby also represents to be aware that the number of Shares shall be subject to the withholding
of applicable taxes and contributions, all in the exact terms as provided hereunder;

 

WHEREAS that, except as otherwise
defined herein, expressions used with capitalized initials herein shall have exactly the same meaning ascribed to them in the Plan,

 

THE PARTIES HAVE RESOLVED, by mutual
and common agreement, to enter into this Private Instrument of Long-Term Stock-Based Incentive Contract and Other Covenants (“Contract”),
which shall be governed by the following clauses and conditions:

 

FIRST CLAUSE 

PURPOSE 

 

1.1       Subject
to the terms and conditions provided by this Contract, by the 1st ILPA Program and by the Plan, the object of this instrument
is the commitment assumed hereunder by the Company to, once properly met certain key performance indicators (KPI’s) of the
Company’s financial and strategic performance set forth in clause 1.2 below, according to the combination (scenarios) established
in clause 1.4 below, freely grant to the Participant, at the Granting Date, that is, after the Vesting Period, remuneration in
Shares/Stocks, net of taxes and contributions, equivalent, based on the Share price of thirteen Reais and three cents (R$13.031)
decreased by the amount of Shares of the dividends declared by the Company during the Vesting Period, to the amount in legal tender
net of tax equal to the amount of [75% / 50%][2] (seventy-five/fifty per cent)
up to [150%/125%]3 (one hundred fifty/one hundred fifty-five per cent) (the “Multiple”)
of the Base Remuneration (defined in clause 1.3 below) (“Remuneration in Shares”), according to the sample
calculation4 shown in Annex I.

 

 

1
Average of the share price in the thirty (30) last trading sessions counted retroactively from the date of the 1st
day of the Vesting Period. 

2
75% if the Participant is the CEO or Officer and 50% if the Participant is Manager or Coordinator 

3
150% if the Participant is the CEO or Officer and 125% if the Participant is Manager or Coordinator 

4
The Participant hereby represents to be duly informed that the values and percentages shall vary as the case may
be. 

 

    2

     

    

  

1.2.      For purposes of
the 1st ILPA Program and this Contract, KPI shall mean the following:

 

	KPI*	BASE	TARGET	TOP
	Financing	TSR (Total Shareholder Return)**	>= 1.18	>= 1.18	>= 1.20
	Financing	Operational Rentability***	>= 3.8%	>= 4.8%	>= 5.8%
	Financing	Farm Sale ****	>= R$ 200.0 million	>= R$ 250.0 million	>= R$ 300.0 million
	Strategic	Company Capitalization*****	>=R$ 150.0 million	>=R$ 200.0 million	>=R$ 250.0 million

 

	*It shall be admitted a difference up to 5% (five per cent) of the KPIs value and the Company’s results achieved at the end of Vesting Period, for the purpose of the mentioned results in the greater KPI Base, Target and Top range.
	**TSR = 	Share Value At the end of the Vesting Period5 + Dividends declared during the Vesting Period 
	Share Value At the begging of the Vesting Period 
	*** Operational Rentability = 	Operational Results of the fiscal years 17/18 e 18/19 –Administrative Expenses of the fiscal years 17/18 e 18/19
	Market Value of the Properties under Production (Deloitte’s Valuation as of June 30, 17)
	**** Farm Sale = 	Total accumulated value (R$) of farm sales carried out during the Vesting Period
	***** Company Capitalization = 	Public or Private share subscription(s) carried out during the Vesting Period

 

1.3.      Base Remuneration means, under the
1st ILPA Program and the Contract, the amount in legal tender equal to [20%/15%/10%]6
of the total potential compensation of the Participant in the period of three (03) years, taking into consideration the amount
of the Participant’s salary at the date of approval of the 1st day of the Vesting Period. For purposes of calculation
of the total potential compensation, it shall be taken into account the fixed compensation (salary), the variable compensation
(bonus/PPR) and the compensation object of this Contract, as provided in Exhibit I.

 

 

5
Share Value based on the average of the quotation on the last thirty (30) trading days on which the Shares were traded on B3, counted
as of the end date of the Vesting Period, that is, on October 1st, 2019.

6
20% if the Participant is the CEO; 15% if the Participant is an Officer; and 10% if the Participant is a Manager
or Coordinator.

 

    3

     

    

 

1.3.1.       Any
extraordinary premiums and/or any other amounts received by the Participant on account of remuneration other than those expressly
provided for in Clause 1.3. above shall not incorporate the Base Remuneration for purposes of this Contract.

 

1.4.         The
Multiple shall mean one of the following percentages to be applicable on the Base Remuneration for the calculation purposes of
the Remuneration in Shares, as follows:

 

		(i)	[75%/50%] if the Company achieves the TSR KPI indicated in the Base Column, plus one of the other
three KPIs indicated in the Target Column or more two of the other three KPIs indicated in the Base Column, as provided for in
the KPI chart established in clause 1.2 above;

 

		(ii)	[100%], if the Company achieves the TSR KPI indicated in the Target Column, more two of the other
three KPIs indicated in the Target Column or more all of the other KPIs indicated in the Base Column, as provided for in the KPI
chart established in clause 1.2 above;

 

		(iii)	[150%/125%] if the Company achieve the TSR KPI indicated in the Top Column, more two of the other
three KPIs indicated in the Top Column or more all of the other KPIs indicated in the Target Column, as provided for in the KPI
chart established in clause 1.2 above; or

 

		(iv)	0% if the results achieved by the Company concerning the KPIs as provided for in the KPI chart
established in clause 1.2 above do not consist in any of the scenarios of items (i) to (iii) of this clause 1.4.

 

1.4.1.      If the results obtained by the Company
with respect to the KPIs give cause to a combination distinct from those provided for in items (i) to (iv) of Clause 1.4 above,
the Remuneration/Compensation Committee shall propose the framework that shall apply to said results for purposes of the definition
of the Multiple and submit such proposal to the approval of the Board of Directors, at its sole and exclusive discretion.

 

1.5.          The
Participant expressly represents to be aware that the maximum number of Shares granted to the Participants under the Plan cannot
exceed, in under circumstance, the maximum and cumulative amount of 2% (per cent) of the stock issued by the Company at any time
(“Limit of Shares”). In this sense, in case the Shares to be granted to the Participants of the 1st
ILPA Program exceed the Limit of Shares by virtue of the dividends considered in the calculation of the Remuneration in Shares
under the terms of clause 1.1 above, the Company shall adjust, proportionally to the quantity of Shares due to each Participant,
the quantity of Shares to be actually granted, so that the Limit of Shares is respected. The Participant hereby waives the quantity
of Shares corresponding to the adjustment to be made under the terms of this clause.

 

    4

     

    

 

SECOND CLAUSE 

SHARES

 

2.1           The
Participant shall only be entitled to the receipt of the Remuneration in Shares at the Granting Date if, in the aggregate, (i)
at the end of the Vesting Period, the KPIs, according to the combination (scenarios) provided in clause 1.4 above, are met; and
(ii) if the Participant does not voluntarily resign or is dismissed from the Company and/or Affiliates before the end of the Vesting
Period, respecting the provision of clauses Fourth and Seventh below.

 

2.2          The
amount of Shares to be delivers/granted, provided that all the conditions applicable to the delivery of the Shares pursuant to
this Contract have been met, to the Participant as Remuneration in Shares in the three (03) different scenarios provided for in
clause 1.4 above, are provided for in the Annex II to this Contract, which shall be adjusted, observing the provision
of clauses 1.1 and 1.5 above and 3.1 below, at the end of the Vesting Period according to the dividends declared and applicable
taxes.

 

2.3           The
granting of the Shares shall be made by the Company on behalf of the Participant without charges, up to thirty (30) days counted
as of the end of the Vesting Period and provided that the totality of the conditions applicable under the terms of this Contract
for the receipt of the Shares are met, upon transfer to the Participant of the Shares held in treasury.

 

2.4           In
case of change to the number, type and class of Shares existing as a result of the bonus, capitalization, split, grouping, conversion
of Shares from a type into another or conversion of other securities issued by the Company, the Board of Directors may, at its
own discretion, make all changes and/or adjustments necessary to avoid dilution or the increase of the right of the Participant
regarding the Shares.

 

2.5           The
Remuneration in Shares shall have the nature of dividends, being paid only and solely on account of actual remuneration to the
Participant.

 

THIRD CLAUSE 

TAXES

 

3.1           The
Company is authorized to proceed to the withholding of any taxes that may possibly by levied onto the Remuneration in Shares, including,
although not limited to, the Income Tax Withheld and Social Security Contribution on Gross Revenue or Payroll, as the case may
be, in such a way that, if due, it shall be granted to the Participant the Remuneration in Shares net of discounts applicable under
the terms herein provided.

 

    5

     

    

 

FOURTH CLAUSE 

EFFECTIVENESS AND TERMINATION OF THE
CONTRACT

 

4.1          This
Contract shall enter in force as of the date of its execution as shall remain in force up to the Date of Granting of Shares, which
shall occur, if applicable, in the period up to thirty (30) days counted from the end of the Vesting Period, as defined in the
Plan.

 

4.2          This
Contract shall be considered automatically terminated in the following cases:

 

(a)
upon the full receipt by the Participant of the Remuneration in Shares;

(b)
upon the full achievement, from either party, of the totality of the obligations assumed under this Contract;

(c)
upon the change to the Company’s control, as provided by the Sixth Clause;

(d)
in case of voluntary resignation of the Participant prior to the completion of the Vesting Period, under the terms of Clause 5.1
below; or

(e)
in case of dismissal, with or without cause, of the Participant, pursuant to Section 5.2, 5.2.1 and 5.3 below.

 

FIFTH CLAUSE 

EVENTS OF TERMINATION

 

5.1         In the cases of voluntary dismissal,
by the Participant’s own initiative, by any reason, prior to the completion of the Vesting Period, the Participant shall
lose, regardless of previous notice or indemnification, the right to the receipt of the Remuneration in Shares.

 

5.2          In case of termination/dismissal without
cause, the Participant, always conditioned to the sole previous approval of the Company’s Board of Directors to do so, may
or may not be entitled to the equivalent prorated to the period actually worked; it being understood, however, that in any and
all case, the payment, if approved by the Board of Directors as due, will always be conditioned upon and shall only occur at the
end of the Vesting Period.

 

5.2.1        Particularly with regards to the clause 5.2 above, it is hereby clarified that, for purposes of definition as to the possibility
of the Participant to be or not entitled to the receipt of the amount equivalent to the prorated amount of the period actually
worked in case of termination without cause, the Board of Directors shall take into consideration the specific conditions, assessed
on a case-by-case basis, that gave cause to said dismissal.

 

5.3          In
case the dismissal of the Participant takes place by the Company’s initiative and grounded on cause, the Participant shall
legally lose, regardless of previous notice or indemnification in such regard, the right to receive the Remuneration in Shares.

 

5.4          In case of death or disability of the
Participant, the amount in legal tender equal to the maximum quantity of Remuneration in Shares according to the chart provided
for in the Annex I hereto shall be fully paid directly to the Participant (in case of permanent disability) or to his/her
heirs and/or beneficiaries (in case of death) in the period of eighteen (18) months counted from the date of the regular actual
evidence thereof, under the terms of the legislation applicable by the relevant entity, of the permanent disability condition or
death, as the case may be.

 

5.5          Any exceptions to the treatment to
be given in the cases of termination shall be subject to the analysis and resolution by the Board of Directors.

 

    6

     

    

 

SIXTH CLAUSE 

CORPORATE REORGANIZATION AND CHANGE
OF CONTROL

 

6.1          If the control of the Company changes,
pursuant to applicable regulation, during the Vesting Period, the amount in legal tender equivalent to the maximum quantity of
the Remuneration in Shares according to the chart provided for in Annex II hereto shall be released to the Participants
up to thirty (30) days from the date of corporate transaction in question and the ILPA Program shall be terminated. For purposes
of calculation of the amount in legal tender to be granted to the Participant, it shall be taken into consideration the selling
price of the Share in the transaction and it shall be at the discretion of the new controlling shareholder the decision whether
or not to implement a new long-term incentive plan with shares. For the purposes of this Clause, it shall not be construed as change
of control any possible corporate reorganizations of the economic group of the current controlling shareholder.

 

SEVENTH CLAUSE 

GENERAL PROVISIONS

 

7.1           This Contract shall be governed and
construed according to the laws of the Federative Republic of Brazil.

 

7.2           The Participant shall meet all legal
and regulatory norms applicable, both in Brazil as abroad, concerning the disclosure of information about possible stock trading,
as well as any other applicable to the Plan and this Contract.

 

7.3           It is expressly agreed upon that it
shall not be considered novation the failure by any of the parties in the exercise of any right, power, resource or ability ensured
by law or by this instrument, nor any tolerance of delay in the fulfillment of any obligations or by any of the parties, that shall
not prevent the other party, at its own discretion, may exercise at any moment such rights, powers, resources or abilities which
are cumulative and not exclusive regarding those provided by law.

 

7.4           Unless as expressly otherwise provided
by this Contract, neither party may assign or in any way transfer to third parties, wholly or partially, his/her rights and obligations
arising from this Contract, without the previous and express consent, in writing, of the other party, under penalty of complete
nullity.

 

7.5           Unless as expressly otherwise provided,
the communications and notices between the parties regarding to this Contract shall be made in registered letter or e-mail, directed
to the addressees in the addresses indicated below, being considered as validly received if and when correctly sent.

 

    7

     

    

 

If to the Company:

 

BRASILAGRO - COMPANHIA BRASILEIRA
DE PROPRIEDADES AGRÍCOLAS 

Avenida Brigadeiro Faria Lima,
No. 1.309, 5th floor 

01452-002, São Paulo
– SP 

Att.: Mr. Gustavo Javier Lopez 

Fax: (55 11) 3035 5366 

E-mail: gustavo.lopes@brasil-agro.com 

c/c to the Company’s
Legal Department 

juridico@brasil-agro.com 

 

If to the Participant:

 

[●]

 

7.6           The
Company reserves the right to change or eliminate, without any burden, any provision of this Contract for purposes of its adequacy
to the legal and regulatory norms applicable. The Parties also undertake to observe and adjust, whenever applicable to each one
of them, to any changes to the legal and regulatory norms applicable to rights and obligations.

 

7.7           This
Contract constitutes an onerous business of exclusively civil nature, being certain that it does not create any labor or social
security obligation between the Company and the Participant, whether he/she may be coordinator, manager, statutory manager or employee.
The inclusion of the Participant in the 1st ILPA Program and the entering into of this Contract, does not guarantee
to the Participant his/her permanence in the position that was attributed to him/her the eligibility to the Plan or to any other
Company’s position, nor even will it interfere, in any way, to the terms and conditions of the labor contract originally
executed between the Parties, and not even to the right of the Company to terminate, at any time, the relationship kept with the
Participant.

 

7.8          In
the same line as provided for above, no provision of this Contract shall grant to any Participant rights regarding his/her permanence
until the end of his/her term of office as administrator, or will interfere in any way to the right of the Company to remove him/her
at any time, nor shall it ensure the right to his/her reelection to the position.

 

7.9           For
all purposes applicable, the Participant declares to have read the Plan in its entirety, and, by means of signature to the present
instrument, he/she declares to expressly accept his/her adherence to the Plan, in all of its terms and conditions, with no reservations.

 

7.10         The
Participant undertakes to keep secrecy of the contents of the Plan, refraining from reproducing or copying, wholly or partially,
the documents related to the Plan, and/or informing to third parties the information herein contained, under penalty of unilateral
termination of this Contract by the Company.

 

    8

     

    

 

7.11         It
is hereby agreed upon that, in the cases of cancellation of the company’s listing, cessation of trading of the Company’s
issued Shares in the over-the-counter market, organized market or stock exchange, corporate reorganizations – such as transformation,
incorporation, merger, spin-off and incorporation of shares, Company’s dissolution or winding up, the present Contract will
not be affected, being certain that in the cases mentioned, the Company’s Board of Directors and the companies involved may,
at their discretion, determine, without prejudice to other measures that they decide by equity: (a) the replacement of the remuneration
in Shares by shares, quotas or other securities issued by the Company’s successor entity; and/or (b) the anticipation of
the acquisition to the right to receive the Remuneration in Shares.

 

7.12         The
obligations herein assumed in the present Contract shall be subject to the specific execution according to articles 493, 497, 500,
536, 537 and 815 of the Brazilian Civil Procedure Code (as amended).

 

7.13         All
litigations regarding the interpretation, validity, performance, enforceability, default or termination of this Plan shall be settled
in a friendly way, upon direct negotiations in good faith, for a period no longer than thirty (30) days, counted from the receipt
of the extra-judicial notice as to the existence of the controversy and the need to settlement of interests.

 

7.14         In
case the Parties fail to reach an agreement in the period referred to in Clause 7.13 above, the controversy shall be submitted,
exclusively and definitively, to arbitration, which shall be conducted before the Market Arbitration Chamber set by B3 S.A. –
Brasil, Bolsa, Balcão, in compliance with the Regulation of the referred Chamber.

 

7.15        Without
prejudice to the validity of the arbitration clause, any of the parties to the arbitration procedure shall have the right to appeal
to the Judicial Branch with the purpose, if and when necessary, to require precautious measure of protection of rights, whether
the arbitration procedure has been installed or not, being that as soon as any measure of such nature is granted, the competence
for decision of the merit shall be immediately restored to the arbitration court, instituted or not. For purposes of this Clause,
it is elected the court of the Judicial District of Sao Paulo, State of Sao Paulo, no matter privileged other might be.

 

In witness whereof, the parties execute
the present instrument in two (02) counterparts of equal contents and form, in the presence of two (2) witnesses named below.

 

Sao Paulo, [●]
of [●] of [●].

 

BRASILAGRO COMPANHIA BRASILEIRA DE PROPRIEDADES
AGRÍCOLAS

 

	 	 	 

 

[PARTICIPANT]

 

 

 

    9

     

    

 

	Witnesses:	 	 
	 	 	 
	1.	 	 	2.	 
	Name:	 	Name:
	ID:	 	ID:
	CPF/MF:	 	CPF/MF:

 

    10Exhibit 10.1

 

federal
life group, INC.

2018 equity Incentive Plan

 

     

     

    

  

federal
life group, INC.

2018 equity Incentive Plan

 

TABLE OF
CONTENTS

 

	ARTICLE	 	PAGE
	 	 	 
	ARTICLE 1. PURPOSE OF THE PLAN; TYPES OF AWARDS	 	1
	 	 	 
	ARTICLE 2. DEFINITIONS	 	1
	 	 	 
	ARTICLE 3. ADMINISTRATION	 	5
	 	 	 
	ARTICLE 4. COMMON STOCK SUBJECT TO THE PLAN	 	7
	 	 	 
	ARTICLE 5. ELIGIBILITY	 	8
	 	 	 
	ARTICLE 6. STOCK OPTIONS IN GENERAL	 	8
	 	 	 
	ARTICLE 7. TERM, VESTING AND EXERCISE OF OPTIONS	 	9
	 	 	 
	ARTICLE 8. EXERCISE OF OPTIONS FOLLOWING TERMINATION OF EMPLOYMENT OR SERVICE	 	10
	 	 	 
	ARTICLE 9. RESTRICTED STOCK	 	11
	 	 	 
	ARTICLE 10. ADJUSTMENT PROVISIONS	 	13
	 	 	 
	ARTICLE 11. GENERAL PROVISIONS	 	14

 

     

     

    

  

ARTICLE
1. PURPOSE OF THE PLAN; TYPES OF AWARDS

 

1.1 Purpose. The Federal Life Group,
Inc. 2018 Equity Incentive Plan, adopted as of October 23, 2018, is intended to provide selected employees and non-employee directors
of Federal Life Group, Inc. (the “Corporation”) and its Subsidiaries (as hereinafter defined) with an opportunity to
acquire Common Stock of the Corporation. The Plan is designed to help the Corporation attract, retain, and motivate employees and
non-employee directors to make substantial contributions to the success of the Corporation’s business and the businesses
of its Subsidiaries. Awards made under the Plan are based upon, among other things, a participant’s level of responsibility
and performance within the Corporation and its Subsidiaries.

 

1.2 Authorized Plan Awards. Incentive
Stock Options, Nonqualified Stock Options, and Restricted Stock may be awarded within the limitations of the Plan herein described.

 

ARTICLE
2. DEFINITIONS

 

2.1 “Agreement.” A written
or electronic agreement between the Corporation and a Participant evidencing an Award. A Participant may be issued one or more
Agreements from time to time, reflecting one or more Awards.

 

2.2 “Award.” An award
of a Stock Option or of Restricted Stock.

 

2.3 “Board.” The Board
of Directors of the Corporation.

 

2.4 “Change in Control.”
Except as otherwise provided in an Agreement, the first to occur of any of the following events:

 

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

 

(b) the shareholders of the Corporation approve
a merger, consolidation, or other reorganization of the Corporation, unless:

 

(i) under the terms of the agreement
providing for such merger, consolidation, or reorganization, the shareholders of the Corporation immediately before such merger,
consolidation, or reorganization, will own, directly or indirectly immediately following such merger, consolidation, or reorganization,
at least 50% of the combined voting power of the outstanding voting securities of the Corporation resulting from such merger, consolidation,
or reorganization (the “Surviving Corporation”);

 

(ii) under the terms of the agreement
providing for such merger, consolidation, or reorganization, the individuals who were members of the Board immediately prior to
the execution of such agreement will constitute at least a majority of the members of the board of directors of the Surviving Corporation
after such merger, consolidation, or reorganization; and

 

    	 	1	 

     

    

 

(iii) based on the terms of the
agreement providing for such merger, consolidation, or reorganization, no Person (other than (i) the Corporation or any Subsidiary
of the Corporation, (ii) any Benefit Plan, (iii) the Surviving Corporation or any Subsidiary of the Surviving Corporation,
or (iv) any Person who, immediately prior to such merger, consolidation, or reorganization had beneficial ownership of 25%
or more of the then outstanding voting securities) will have beneficial ownership of 25% or more of the combined voting power of
the Surviving Corporation’s then outstanding voting securities;

 

(c) Any Person (or more than one Person acting
as a group), acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition) assets
from the Corporation that have a total gross fair market value equal to or more than 50% of the total gross fair market value of
all of the assets of the Company immediately before such acquisition(s).

 

(d) a plan of liquidation or dissolution of
the Corporation, other than pursuant to bankruptcy or insolvency laws, is adopted; or

 

(e) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board cease for any reason to constitute at least a majority of
the Board unless the election, or the nomination for election by the Corporation’s shareholders, 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 (a), a Change
in Control shall not be deemed to have occurred if a Person becomes the beneficial owner, directly or indirectly, of the Corporation’s
securities representing 25% or more of the combined voting power of the Corporation’s then outstanding securities solely
as a result of the Corporation’s acquisition of its voting securities that, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such Person to 25% or more of the combined voting power of the
Corporation’s then outstanding securities; provided, however, that if a Person becomes a beneficial owner of 25% or more
of the combined voting power of the Corporation’s then outstanding securities by reason of share purchases by the Corporation
and shall, after such share purchases by the Corporation, become the beneficial owner, directly or indirectly, of any additional
voting securities of the Corporation (other than as a result of a stock split, stock dividend or similar transaction), then a Change
in Control of the Corporation shall be deemed to have occurred with respect to such Person under Clause (a). In no event shall
a Change in Control of the Corporation be deemed to occur under Clause (a) by virtue of the acquisition of the Corporation’s
securities by Benefit Plans. In no event shall the purchase by Insurance Capital Group LLC of a majority of the outstanding shares
of Common Stock in connection with the conversion offering constitute a Change in Control.

 

2.5 “Code.” The Internal
Revenue Code of 1986, as amended.

 

    	 	2	 

     

    

 

2.6 “Code of Conduct.”
The policies and procedures related to employment of Employees or Non-Employee Directors set forth in the Corporation’s employee
handbook or any similar document, as amended and updated from time to time. The term “Code of Conduct” shall also include
any other policy or procedure that may be adopted by the Corporation or a Subsidiary and communicated to Employees and/or Non-Employee
Directors.

 

2.7 “Committee.” The
Compensation Committee of the Board, which Committee shall be composed of two or more members of the Board, all of whom are (a) “non-employee
directors” as such term is defined under the rules and regulations that the Securities and Exchange Commission may adopt
from time to time pursuant to Section 16(b) of the Exchange Act, and (b) independent under any applicable stock listing agreement
with, or rules of, any exchange or electronic trading system. The Board may from time to time remove members from, or add members
to, the Committee. The Board shall fill all vacancies on the Committee, however caused.

 

2.8 “Common Stock.”
The common stock of the Corporation (par value $0.01 per share) as described in the Corporation’s Articles of Incorporation,
or such other stock as shall be substituted therefor.

 

2.9 “Corporation.” Federal
Life Group, Inc., a Pennsylvania corporation.

 

2.10 “Disability.” “Permanent
and total disability” (as defined in Code Section 22(e)(3)).

 

2.11 “Employee.” Any
common law employee of the Corporation or a Subsidiary. An Employee does not include any individual who: (i) does not receive
payment for services directly from the Corporation’s or a Subsidiary’s payroll; (ii) is employed by an employment
agency that is not a Subsidiary; or (iii) who renders services pursuant to a written arrangement that expressly provides that
the service provider is not eligible for participation in the Plan, regardless if the Internal Revenue Service or a court of law
later determines such person to be a common law employee.

 

2.12 “Exchange Act.”
The Securities Exchange Act of 1934, as amended.

 

2.13 “Fair Market Value.”
The Fair Market Value of a share of Common Stock means:

 

(a) If the Common Stock is listed on an
established securities market (within the meaning of Code Section 409A), the Fair Market Value per share of the Common Stock
shall be the closing sale price for such a share on the relevant day. If no sale of Common Stock has occurred on that day, the
Fair Market Value shall be determined by reference to such price for the next preceding day on which a sale occurred.

 

(b) In the event that the Common Stock is
not traded on an established securities market (within the meaning of Code Section 409A), then the Fair Market Value per share
of Common Stock will be the price that the Committee establishes in good faith by application of a reasonable valuation method
(within the meaning of Code Section 409A).

 

    	 	3	 

     

    

 

(c) Notwithstanding the foregoing, (i) in
the event of any change in law or interpretation of law, including but not limited to Code Section 409A and the regulations
and guidance promulgated thereunder, the Fair Market Value shall be determined in accordance with such law or interpretation of
law and (ii) in connection with determining the Fair Market Value, the Committee may use any source that it deems reliable; and
its determination shall be final and binding on all affected persons, absent clear error.

 

2.14 “Incentive Stock Option.”
A Stock Option intended to satisfy the requirements of Code Section 422(b).

 

2.15 “Non-Employee Director.”
A member of the Board, or of the board of directors of a Subsidiary, or any other body performing the function of a board of directors,
who is not an Employee.

 

2.16 “Nonqualified Stock Option.”
A Stock Option which does not satisfy the requirements of Code Section 422(b).

 

2.17 “Optionee.” A Participant
who is awarded a Stock Option pursuant to the provisions of the Plan.

 

2.18 “Participant.”
An Employee or Non-Employee Director to whom an Award has been made and remains outstanding.

 

2.19 “Performance Goal.”
One or more goals that the Committee may establish, with respect to an Award intended to constitute a Performance Award, that relate
to one or more performance criteria. The Committee may specify a period of time to which a Performance Goal may relate. The terms
of the applicable Performance Goal(s) shall be set forth in an applicable Agreement at the time the related Performance Award is
made.

 

2.20 “Performance Award.”
An Award, the vesting or receipt without restriction of which is conditioned on the satisfaction of one or more Performance Goals.

 

2.21 “Plan.” The Federal
Life Group, Inc. 2018 Equity Incentive Plan

 

2.22 “Restricted Stock.”
An Award of Common Stock pursuant to the provisions of the Plan, which award is subject to such restrictions and other conditions,
as the Committee may specify at the time of such award and set forth in an applicable Agreement.

 

2.23 “Retirement.” Termination
of employment or service on or after attainment of age 65.

 

2.24 “Securities Act.”
The Securities Act of 1933, as amended.

 

2.25 “Stock Option”
or “Option.” An Award of a right to purchase Common Stock pursuant to the provisions of the Plan.

 

2.26 “Subsidiary.” A
subsidiary corporation, as defined in Code Section 424(f), that is a subsidiary of a relevant corporation.

 

    	 	4	 

     

    

 

2.27 “Termination or Dismissal
For Cause.” “Termination or Dismissal For Cause” shall have the meaning ascribed to such term (or a similar
term) set forth in an applicable employment, severance, or other similar agreement between an individual and the Corporation or
a Subsidiary, or if no such agreement exists, the Corporation’s or Subsidiary’s termination or dismissal of a Participant
after:

 

(a) any government regulatory agency recommends
or orders in writing that the Corporation or a Subsidiary terminate the employment of such Employee or dismiss him or her of his
or her duties;

 

(b) such Employee or Non-Employee Director
is convicted of or enters a plea of guilty or nolo contendere to a felony, a crime of falsehood, or a crime involving fraud or
moral turpitude, or the actual incarceration of the Employee or Non-Employee Director for a period of 45 consecutive days;

 

(c) in the case of an Employee, the Committee’s
determination that such Employee willfully failed to follow the lawful instructions of the Board or any officer of the Corporation
or a Subsidiary after such Employee’s receipt of written notice of such instructions, other than a failure resulting from
the Employee’s incapacity because of a Disability;

 

(d) the Committee’s determination that
the willful or continued failure by such Employee or Non-Employee Director to substantially and satisfactorily perform his duties
with the Corporation or a Subsidiary (other than any such failure resulting from the Employee’s or Non-Employee Director’s
Disability), within a reasonable period of time after a demand for substantial performance or notice of lack of substantial or
satisfactory performance is delivered to the Employee or Non-Employee Director, which demand identifies the manner in which the
Employee or Non-Employee Director has not substantially or satisfactorily performed his or her duties; or

 

(e) the Committee’s determination that
such Employee or Non-Employee Director has failed to conform to an applicable Code of Conduct.

 

For purposes of the Plan, no act, or failure
to act, on an Employee’s or Non-Employee Director’s part shall be deemed “willful” unless done, or omitted
to be done, by such Employee or Non-Employee Director not in good faith and without reasonable belief that such Employee’s
or Non-Employee Director’s action or omission was in the best interest of the Corporation or a Subsidiary.

 

ARTICLE
3. ADMINISTRATION

 

3.1 Administration of the Plan.
The Committee shall administer the Plan.

 

3.2 Powers of the Committee.

 

(a) The Committee shall be vested with full
authority to make such rules and regulations as it deems necessary or desirable to administer the Plan and to interpret the provisions
of the Plan, unless otherwise determined by a majority of the disinterested members of the Board. Any determination, decision,
or action of the Committee in connection with the construction, interpretation, administration, or application of the Plan shall
be final, conclusive, and binding upon all Participants and any person claiming under or through a Participant, unless otherwise
determined by a majority of the disinterested members of the Board.

 

    	 	5	 

     

    

 

(b) Subject to the terms, provisions, and
conditions of the Plan and subject to review and approval by a majority of the disinterested members of the Board, the Committee
shall have exclusive jurisdiction to:

 

(i) determine and select the Employees
and Non-Employee Directors to receive Awards (it being understood that more than one Award may be made to the same person);

 

(ii) determine the number of shares
subject to each Award;

 

(iii) determine the date or dates
when the Awards will be made;

 

(iv) determine the exercise price
of shares subject to an Option in accordance with Article 6;

 

(v) determine the date or dates
when an Option may be exercised within the term of the Option specified pursuant to Article 7;

 

(vi) determine whether an Option
constitutes an Incentive Stock Option or a Nonqualified Stock Option;

 

(vii) determine the performance
criteria and establish Performance Goals with respect thereto, to be applied to an Award; and

 

(viii) prescribe the form, which
shall be consistent with the Plan document, of the Agreement evidencing any Awards made under the Plan.

 

3.3 Indemnification. In addition
to such other rights of indemnification as the Board or the Committee or a member of the Board of the Committee may have, the Corporation
shall indemnify the Board and the Committee (and each member thereof) against any liability, including reasonable attorneys’
fees, actually incurred in connection with any suit, action, or proceeding or in connection with any appeal therein, to which the
Board or the Committee (or such member thereof) may be a party by reason of any action or failure to act under or in connection
with the Plan or any award granted under the Plan, and any amounts that the Committee, the Board, or a member thereof, as applicable,
may pay (a) in settlement thereof or (b) in satisfaction of a judgment in any such suit, action, or proceeding, except in with
respect to matters where it shall be adjudged in such suit, action, or proceeding, that the Committee, the Board, or a member thereof,
as applicable, did not act in good faith and in a manner that such person reasonably believed to be in the Corporation’s
best interest, or in the case of a criminal proceeding, had no reason to believe that the applicable conduct was unlawful.

 

3.4 Establishment and Certification
of Performance Goals. The Committee shall establish, prior to award, Performance Goals with respect to each Award intended
to constitute a Performance Award. Except as may otherwise be provided in Articles 6 and 7 hereof, as applicable, no Option
that is intended to constitute a Performance Award may be exercised until the Performance Goal or Goals applicable thereto is or
are satisfied.

 

    	 	6	 

     

    

 

3.5 Performance Awards Not Mandatory.
Nothing herein shall be construed as requiring that any Award be made a Performance Award.

 

3.6 Binding Determination. A decision
that the Committee makes pursuant to the provisions of the Plan shall be final and binding on the Corporation and Participants,
except to the extent that a court having jurisdiction determines such decision to be arbitrary and capricious.

 

ARTICLE
4. COMMON STOCK SUBJECT TO THE PLAN

 

4.1 Common Stock Authorized.

 

(a) The total aggregate number of shares of
Common Stock that Awards may be made under the Plan shall not exceed 480,000 shares. The limitation established by the preceding
sentence shall be subject to adjustment as provided in Article 10.

 

(b) The maximum aggregate number of shares
of Common Stock that may be issued under the Plan pursuant to the vesting of Awards of Restricted Stock shall not exceed 140,000 shares.
The limitation established by the preceding sentence shall be subject to adjustment as provided in Article 10.

 

(c) The maximum aggregate number of shares
of Common Stock that may be awarded under the Plan as Options shall not exceed 340,000 shares. The limitation established by the
preceding sentence shall be subject to adjustment as provided in Article 10.

 

(d) Subject to adjustment in accordance with
Section 10, no Participant shall be granted, during any one-year period, more than 125,000 shares of common stock in
the aggregate.

 

(e) If any Option is exercised by tendering
Common Stock, either actually or by attestation, to the Corporation as full or partial payment in connection with the exercise
of such Option under the Plan, or if the tax withholding requirements are satisfied through such tender, only the number of shares
of Common Stock issued net of the Common Stock tendered shall be deemed delivered for purposes of determining the maximum number
of shares available for Awards under the Plan.

 

4.2 Shares Available. The Common
Stock to be issued under the Plan shall be the Corporation’s Common Stock, which shall be made available in the Board’s
discretion either from authorized but unissued Common Stock, treasury shares, or shares acquired by the Corporation, including
shares purchased on the open market. In the event that any outstanding Award under the Plan for any reason expires, terminates,
or is forfeited, the shares of Common Stock allocable to such expiration, termination, or forfeiture may thereafter again be made
subject to an Award under the Plan.

 

    	 	7	 

     

    

 

ARTICLE
5. ELIGIBILITY

 

5.1 Participation. The Committee
shall make Awards only to persons who are Employees or Non-Employee Directors.

 

5.2 Incentive Stock Option Eligibility.
The Committee shall make Incentive Stock Option Awards only to Employees of the Corporation. Notwithstanding any other provision
of the Plan to the contrary, an individual who owns more than ten percent of the total combined voting power of all classes of
outstanding stock of the Corporation shall not be eligible for the award of an Incentive Stock Option, unless the special requirements
set forth in Sections 6.1 and 7.1 are satisfied. For purposes of this Section 5.2, in determining stock ownership, an individual
shall 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. Stock owned, directly or indirectly, by or for a corporation, partnership,
estate, or trust shall be considered as being owned proportionately by or for its shareholders, partners, or beneficiaries. “Outstanding
stock” shall include all stock actually issued and outstanding immediately before the award of the Option. For purposes of
this Section 5.2, “outstanding stock” shall not include shares authorized for issue under outstanding Options held
by the Optionee or by any other person.

 

ARTICLE
6. STOCK OPTIONS IN GENERAL

 

6.1 Exercise Price. The exercise
price of an Option to purchase a share of Common Stock shall be, in the case of an Incentive Stock Option, not less than 100% of
the Fair Market Value of a share of Common Stock on the date the Option is awarded, except that the exercise price shall be not
less than 110% of such Fair Market Value in the case of an Incentive Stock Option awarded to any individual described in the second
sentence of Section 5.2. The exercise price of an Option to purchase a share of Common Stock shall be, in the case of a Nonqualified
Stock Option, not less than 100% of the Fair Market Value of a share of Common Stock on the date the Option is awarded. The exercise
price shall be subject to adjustment pursuant to the limited circumstances set forth in Article 10.

 

6.2 Limitation on Incentive Stock Options.
The aggregate Fair Market Value (determined as of the date an Option is awarded) of the Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by any individual in any calendar year (under the Plan and all other plans maintained
by the Corporation or Subsidiaries) shall not exceed $100,000.

 

6.3 Transferability of Options.

 

(a) Except as provided in Subsection (b),
an Option awarded hereunder shall not be transferable other than by will or the laws of descent and distribution, and such Option
shall be exercisable, during the Optionee’s lifetime, only by him or her.

 

(b) An Optionee may, with the prior approval
of the Committee, transfer a Nonqualified Stock Option for no consideration to or for the benefit of one or more members of the
Optionee’s “immediate family” (including a trust, partnership, or limited liability company for the benefit of
one or more of such members), subject to such limits as the Committee may impose, and the transferee shall remain subject to all
terms and conditions applicable to the Option prior to its transfer. The term “immediate family” shall mean an Optionee’s
spouse, parents, children, stepchildren, adoptive relationships, sisters, brothers, and grandchildren (and, for this purpose, shall
also include the Optionee).

 

    	 	8	 

     

    

 

ARTICLE
7. TERM, VESTING AND EXERCISE OF OPTIONS

 

7.1 Term. Each Option awarded under
the Plan shall terminate on the date as the Committee may determine and set forth in an Agreement; provided, however, that:

 

(a) each intended Incentive Stock Option awarded
to an individual described in the second sentence of Section 5.2 shall terminate not later than five years after the date
of the Award,

 

(b) each other intended Incentive Stock Option
shall terminate not later than ten years after the date of the Award, and

 

(c) each Option awarded under the Plan which
is intended to be a Nonqualified Stock Option shall terminate not later than ten years and one month after the date of the Award.

 

7.2 Vesting. Each Option awarded
under the Plan shall be subject to such terms and conditions as the Committee may provide and set forth in the Agreement issued
to a Optionee to evidence such Option; provided, however, that, unless the Committee may otherwise provide and set forth in an
applicable Agreement, each Option shall be fully exercisable (i.e., become 100% vested) after the earlier of the date on which:

 

(a) a Change in Control occurs, unless;

 

(i) the successor company assumes
the award, or

 

(ii) the award is subject to performance
criteria, in which case it will vest on a pro rate basis based on performance to date, or

 

(b) the Optionee terminates employment or
service by reason of Retirement, death, or Disability; or

 

(c) the Corporation or a Subsidiary terminates
an Optionee’s employment or service other than by reason of a Termination or Dismissal For Cause

 

Except as provided in Article 8 or
10.2, an Option may be exercised only during the continuance of the Optionee’s employment or service with the Corporation
or a Subsidiary.

 

    	 	9	 

     

    

 

7.3 Exercise.

 

(a) A person electing to exercise an Option
shall give notice to the Corporation of such election and of the number of shares he or she has elected to purchase and shall at
the time of exercise tender the full exercise price of the shares he or she has elected to purchase. The exercise notice shall
be delivered to the Corporation in person, by certified mail, or by such other method (including electronic transmission) and in
such form as the Committee may determine. The exercise price shall be paid in full, in cash, upon the exercise of the Option; provided,
however, that in lieu of cash, an Optionee may exercise an Option by tendering to the Corporation shares of Common Stock owned
by him or her and having a Fair Market Value equal to the cash exercise price applicable to the Option (with the Fair Market Value
of such stock to be determined in the manner provided in Section 6.3) or by delivering such combination of cash and such shares
as the Committee in its sole discretion may approve; further provided, however, that no such manner of exercise shall be permitted
if such exercise would violate Section 402 of the Sarbanes-Oxley Act of 2002. Notwithstanding the foregoing, Common Stock
acquired pursuant to the exercise of an Incentive Stock Option may not be tendered as payment unless the holding period requirements
of Code Section 422(a)(1) have been satisfied, and Common Stock not acquired pursuant to the exercise of an Incentive Stock
Option may not be tendered as payment unless it has been held, beneficially and of record, for at least six months (or such longer
time as may be required by applicable securities law or accounting principles to avoid adverse consequences to the Corporation
or a Participant).

 

(b) At the request of the Participant and
to the extent permitted by applicable law, the Committee shall approve an arrangement whereby the Participant irrevocably authorizes
a third party to sell shares of Common Stock (or a sufficient portion of the shares) acquired upon the exercise of an Option and
to remit to the Corporation a sufficient portion of the sales proceeds to pay the entire exercise price and any tax withholding
required as a result of such exercise.

 

(c) At the request of the Participant and
to the extent permitted by applicable law, the Committee shall approve a “net exercise” arrangement whereby the Corporation
will reduce the number of shares of Common Stock issued upon exercise of a Nonqualified Stock Option by the largest whole number
of shares of Common Stock with a Fair Market Value that does not exceed the exercise price of the Option; provided, however, that
the Optionee provide cash to the Corporation to the extent of any remaining balance of the exercise price. Shares of Common Stock
will no longer be subject to such Option and such Option will no longer be exercisable thereafter to the extent of the number of
shares used to pay the exercise price pursuant to the net exercise, the number of shares delivered to the Optionee as a result
of such net exercise and the number of shares, if any withheld to satisfy any tax withholding obligations.

 

(d) A person holding more than one Option
at any relevant time may, in accordance with the provisions of the Plan, elect to exercise such Options in any order.

 

ARTICLE
8. EXERCISE OF OPTIONS FOLLOWING TERMINATION

OF EMPLOYMENT OR SERVICE

 

8.1 Other Termination by Corporation
or Subsidiary. In the event of an Optionee’s termination of employment or service by the Corporation or a Subsidiary
other than Termination or Dismissal for Cause such Optionee’s Option shall lapse at the earlier of the expiration of the
term of such Option or:

 

(a) in the case of an Incentive Stock Option,
three months from the date of such termination of employment; and

 

    	 	10	 

     

    

 

(b) in the case of a Nonqualified Stock Option,
24 months from the date of such termination of employment or service.

 

8.2 Death or Total Disability. In
the event of an Optionee’s termination of employment or service by reason of death or Disability, such Optionee’s vested
Options shall lapse at the earlier of the expiration of the term of such Option or:

 

(a) in the case of an Incentive Stock Option,
12 months from the date of such termination of employment; and

 

(b) in the case of a Nonqualified Stock Option,12
months from the date of such termination of employment or service; and

 

(c) in the case of a Nonqualified Stock Option,
a three-year period if the participant is eligible for Retirement at the time of death or disability

 

8.3 Termination or Dismissal For Cause;
Other Termination/Resignation by Optionee. In the event of an Optionee’s Termination or Dismissal For Cause or in the
event of the Optionee’s termination of employment or service at the election of an Optionee (other than Retirement), such
Optionee’s right to exercise a vested or unvested Incentive or Nonqualified Option, shall be forfeited and immediately expire.

 

8.4 Retirement. In the event of
an Optionee’s Retirement, such vested options shall lapse at the earlier of the term of such Option or:

 

(a) in the case of an Incentive Stock Option,
three months from the Optionee’s Retirement; and

 

(b) in the case of a Nonqualified Stock Option,
12 months from the Optionee’s Retirement, unless the Optionee enters into an agreement with the consent of the Committee,
which could extend the exercise period for five years.

 

ARTICLE
9. RESTRICTED STOCK

 

9.1 In General. Each Restricted
Stock Award shall be subject to such terms and conditions as may be specified in the Agreement issued to a Participant to evidence
such Award. Subject to Section 3.5, a Restricted Stock Award shall be subject to a vesting schedule or Performance Goals,
or both.

 

9.2 Vesting. Each Restricted Stock
Award shall vest under such terms and conditions the Committee may provide and set forth in an applicable Agreement; provided,
however, that, each Restricted Stock Award shall become fully vested upon the earlier of the date on which: (a) a Change in
Control occurs; (b) the Participant terminates employment or service by reason of death or Disability; or (c) the Corporation
terminates the Participant’s employment or service other than Termination or Dismissal For Cause.

 

    	 	11	 

     

    

 

9.3 Waiver of Vesting Requirements for
Certain Restricted Stock Awards. In the event that a Participant’s employment or service is terminated and the Committee
deems it equitable to do so, the Committee may, in its discretion and subject to the approval of a majority of the disinterested
members of the Board, waive any minimum vesting period (but not any Performance Goals) with respect to a Restricted Stock Award
held by such Participant. The Committee may make any such waiver with retroactive effect, provided it makes it within 60 days
following such Participant’s termination of employment or service.

 

9.4 Issuance and Retention of Share
Certificates By Corporation. Shares of restricted stock issued pursuant to a Restricted Stock award may be evidenced by book
entry on the Corporation’s stock transfer records or by one or more physical stock certificates issued in the Participant’s
name.; but until such time as the Restricted Stock shall vest or otherwise become distributable by reason of satisfaction of one
or more Performance Goals, the Corporation shall retain such share certificates.

 

9.5 Stock Powers. At the time of
the award of Restricted Stock, the Participant to whom the award is made shall deliver such stock powers, endorsed in blank, as
the Corporation may request.

 

9.6 Release of Shares. Within 30 days
following the date on which a Participant becomes entitled under an Agreement to receive shares of previously Restricted Stock,
the Corporation shall deliver to such Participant one or more certificates evidencing the ownership of such shares. Notwithstanding
any other provision of this Plan to the contrary, the Corporation may elect to satisfy any requirement under this Plan for the
delivery or release of certificates through the use of book-entry.

 

9.7 Forfeiture of Restricted Stock Awards.
In the event of the forfeiture of a Restricted Stock Award, by reason of a Participant’s termination of employment or termination
of service prior to vesting, the failure to achieve a Performance Goal or otherwise, the Corporation shall take such steps as may
be necessary to cancel the affected shares and return the same to its treasury.

 

9.8 Assignment, Transfer, Etc. of Restricted
Stock Rights. The potential rights of a Participant to shares of Restricted Stock may not be assigned, transferred, sold, pledged,
hypothecated, or otherwise encumbered or disposed of until such time as the Participant receives unrestricted certificates for
such shares.

 

9.9 Shareholder Rights. Unless the
Committee otherwise provides and sets forth in an applicable Agreement, Participants who have been awarded shares of Restricted
Stock shall not have voting or dividend rights until such time as the Participant receives unrestricted certificates for such shares.

 

9.10 Additional Holding Periods.
Nothing in this Article 9 shall preclude the Committee from providing in an Agreement for additional (a) restrictions on the transfer
or assignment of Common Stock acquired by reason of the vesting of a Restricted Stock Award or (b) forfeiture provisions with respect
to Common Stock acquired by reason of the vesting of a Restricted Stock Award.

 

    	 	12	 

     

    

 

ARTICLE
10. ADJUSTMENT PROVISIONS

 

10.1 Share Adjustments.

 

(a) In the event that the shares of Common
Stock of the Corporation, as presently constituted, shall be changed into or exchanged for a different number or kind of shares
of stock or other securities of the Corporation, or if the number of such shares of Common Stock shall be changed through the payment
of a stock dividend, stock split, or reverse stock split, then (i) the shares of Common Stock authorized hereunder to be made
the subject of Awards, (ii) the shares of Common Stock then subject to outstanding Awards and the exercise price thereof (where
relevant), (iii) the maximum number of Awards that may be made within a 12-month period and (iv) the nature and terms
of the shares of stock or securities subject to Awards hereunder shall be increased, decreased, or otherwise changed to such extent
and in such manner as may be necessary or appropriate to reflect any of the foregoing events.

 

(b) If there shall be any other change in
the number or kind of the outstanding shares of the Common Stock of the Corporation, or of any stock or other securities into which
such Common Stock shall have been changed, or for which it shall have been exchanged, and if a majority of the disinterested members
of the Board shall, in its sole discretion, determine that such change equitably requires an adjustment in any Award which was
theretofore granted or which may thereafter be granted under the Plan, then such adjustment shall be made in accordance with such
determination.

 

(c) An Award pursuant to the Plan shall not
affect in any way the right or power of the Corporation to make adjustments, reclassifications, reorganizations, or changes of
its capital or business structure, to merge, to consolidate, to dissolve, to liquidate, or to sell or transfer all or any part
of its business or assets.

 

10.2 Change in Control. In the event
of a Change in Control of the Company, the Committee may, in its discretion, (i) arrange for the cancellation of outstanding
awards in consideration of a payment in cash, property, or both, with an aggregate value equal to each award; (ii) substitute
other property, including cash or other securities of the Company or another entity, in exchange for our shares underlying outstanding
awards; (iii) arrange for the assumption of outstanding awards by another entity or the replacement of awards with other awards
for securities of another entity; and (iv) after providing notice to Participants and an opportunity to exercise outstanding
options and rights, provide that all unexercised options and rights will be cancelled upon the date of the Change in Control or
such other date as specified by it. In the event a successor company assumes an award (or issues a substitute award) and the Participant
is terminated without cause within 12 months following the Change in Control, then: (i) all options held by the Participant
will be fully vested and may be exercised for two years after the termination, or, if sooner, until the expiration of the applicable
award; and (ii) all Restricted Stock held by the participant shall be vested.

 

10.3 Fractional Shares. Fractional
shares resulting from any adjustment in Awards pursuant to this article may be settled as the Committee shall determine.

 

    	 	13	 

     

    

 

ARTICLE
11. GENERAL PROVISIONS

 

11.1 Effective Date. The Plan shall
become effective upon the Board’s adoption of the Plan, provided that, subject to applicable law, any Award made hereunder
shall be subject to the Plan’s approval by the shareholders of the Corporation within 12 months of the Board’s
adoption of the Plan.

 

11.2 Termination of the Plan. Unless
previously terminated by the Board, the Plan shall terminate on, and no Awards shall be made after, the day immediately preceding
the 10th anniversary of the Board’s adoption of the Plan.

 

11.3 Limitation on Termination, Amendment,
or Modification.

 

(a) The Board may at any time terminate, amend,
modify or suspend the Plan, provided that, without the approval of the shareholders of the Corporation, the Board may make no amendment
or modification that:

 

(i) increases the maximum number
of shares of Common Stock subject to Awards under the Plan (except as provided in Section 10.1);

 

(ii) changes the class of eligible
Participants; or

 

(iii) otherwise requires the approval
of shareholders under applicable state law or under applicable federal law to avoid potential liability or adverse consequences
to the Corporation or a Participant.

 

(b) No amendment, modification, suspension,
or termination of the Plan shall in any manner adversely affect any Award theretofore made under the Plan without the applicable
Participant’s consent.

 

11.4 No Right to an Award or Continued
Employment or Service. Nothing contained in this Plan or otherwise shall be construed to (a) require that an Award be
made to an individual who qualifies as an Employee or Non-Employee Director, or (b) confer upon a Participant any right to
continue in the employ or service of the Corporation or any Subsidiary or limit in any respect the right of the Corporation or
of any Subsidiary to terminate the Participant’s employment or service at any time and for any reason.

 

11.5 No Obligation. No exercise
of discretion under this Plan with respect to an event or person shall create an obligation to exercise such discretion in any
similar or same circumstance, except as otherwise provided or required by law.

 

11.6 Withholding Taxes.

 

(a) Subject to the provisions of Subsection (b),
the Corporation will require, where sufficient funds are not otherwise available, that a Participant who is an Employee pay or
reimburse to it any withholding taxes when withholding is required by law.

 

    	 	14	 

     

    

 

(b) Subject to the Committee’s consent,
a Participant who is an Employee may satisfy the withholding obligation described in Subsection (a), in whole or in part,
by electing to have the Corporation withhold shares of Common Stock (otherwise issuable to him or her) having a Fair Market Value
equal to the maximum amount of tax permitted to be withheld without resulting in adverse financial accounting consequences to the
Corporation. An election by a Participant who is an Employee to have shares withheld for this purpose shall be subject to such
conditions as may then be imposed thereon by any applicable securities law.

 

11.7 Code Section 409A. This
Plan is intended to be exempt from the provisions of Code Section 409A by reason of not being deemed a “nonqualified
deferred compensation plan” within the meaning of Code Section 409A(d)(1). Each of the provisions of this Plan document,
however, are qualified by reference to provisions of Code Section 409A, and the guidance promulgated thereunder, to the extent
such section applies to this Plan. Notwithstanding anything herein to the contrary, if Code Section 409A is applicable, the
exercise of any discretionary authority and the implementation or carrying out of each other provision of the Plan shall be conditioned
upon the conditions and limitations of Code Section 409A and compliance with its specific terms, as the same may have been
interpreted by regulatory, case law, or other governing authority. Further, if this Plan or any Option granted hereunder is, or
shall become subject to the provisions of Code Section 409A, each such affected Option shall be deemed exercised on the date
it vests, or the date the Plan or such Option, as applicable, becomes subject to Code Section 409A; provided, however, that
if an Optionee is unable to deliver the exercise price and required withholding taxes to the Corporation, such Optionee shall be
paid in one lump sum as soon as practicable, to the extent permitted by tax, corporate, securities, and any other relevant laws,
(a) the excess (if any) of the Fair Market Value of the Option at the relevant time over the exercise price, less (b) the
required tax withholdings.

 

11.8 Listing and Registration of Shares.

 

(a) No Option awarded pursuant to the Plan
shall be exercisable in whole or in part, and no share certificate with respect to any Award shall be delivered, if at any relevant
time the Committee determines in its discretion that the listing, registration, or qualification of the shares of Common Stock
subject to an Award on any securities exchange or under any applicable law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection with, such Award, until such listing, registration, qualification,
consent, or approval shall have been effected or obtained free of any conditions not acceptable to the Committee.

 

(b) If a registration statement under the
Securities Act with respect to the shares issuable under the Plan is not in effect at any relevant time, as a condition of the
issuance of the shares, a Participant (or any person claiming through a Participant) shall give the Committee a written or electronic
statement, satisfactory in form and substance to the Committee, that he or she is acquiring the shares for his or her own account
for investment and not with a view to their distribution. The Corporation may place on each certificate, if any, or book entry
representing Restricted Stock awarded under the Plan, if any, a legend or book entry notation substantially in the form of the
following, in addition to any other information the Corporation deems appropriate, to prevent disposition of the shares in violation
of the Securities Act, other applicable law, or the terms of the Plan or an applicable Agreement:

 

    	 	15	 

     

    

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (“ACT”) AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THEM UNDER THE ACT OR A WRITTEN
OPINION OF COUNSEL FOR THE CORPORATION THAT REGISTRATION IS NOT REQUIRED.”

 

11.9 Disinterested Director. For
purposes of this Plan, a director shall be deemed “disinterested” if such person could qualify as a member of the Committee
under Section 3.1.

 

11.10 Clawback. Notwithstanding
any other provisions in this Plan, any Award that is subject to recovery under any law, government regulation, or stock exchange
listing requirement shall be subject to such deductions and clawback as may be required to be made pursuant to such law, government
regulation, or stock exchange listing requirement (or any policy that the Corporation adopts pursuant to any such law, government
regulation, or stock exchange listing requirement).

 

11.11 Beneficiary Designation. Notwithstanding
Section 6.3(a), each Participant under the Plan may from time to time name any beneficiary or beneficiaries by whom any right under
the Plan is to be exercised in case of such Participant’s death. Each designation shall revoke all the Participant’s
prior designations, shall be in a form that the Committee may reasonably prescribe, and shall be effective only when filed by the
Participant in writing with the Corporation during the Participant’s lifetime.

 

11.12 Gender; Number. Words of one
gender, wherever used herein, shall be construed to include each other gender, as the context requires. Words used herein in the
singular form shall include the plural form, as the context requires, and vice versa.

 

11.13 Applicable Law. Except to
the extent preempted by federal law, this Plan document, and the Agreements issued pursuant hereto, shall be construed, administered,
and enforced in accordance with the domestic internal law of the Commonwealth of Pennsylvania.

 

11.14 Headings. The headings of
the several articles and sections of this Plan document have been inserted for convenience of reference only and shall not be used
in the construction of the same.

 

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