Document:

Exhibit

FORBEARANCE AGREEMENT

THIS FORBEARANCE AGREEMENT, dated as of May 3, 2017 (this “Agreement”), is entered into by and between TerraVia Holdings, Inc. (formerly known as Solazyme, Inc.) (“TVIA”) and those certain holders identified on the signature pages hereto (collectively, with such other holders that execute a signature page hereto after the Forbearance Effective Date (as defined below), the “Consenting Holders”) of (i) the 5.00% Convertible Senior Subordinated Notes due 2019 (collectively, the “2019 Notes”) issued by TVIA pursuant to that certain Indenture, dated as of April 1, 2014, between TVIA and Wells Fargo Bank, National Association (including its successor or assign as trustee under said Indenture, the “2019 Indenture Trustee”), as trustee (the “2019 Notes Indenture”) and (ii) with respect to certain Consenting Holders, the 6.00% Convertible Senior Subordinated Notes due 2018 (collectively, the “2018 Notes” and, together with the 2019 Notes, the “Notes”) issued by TVIA pursuant to that certain Indenture, dated as of January 24, 2013, between TVIA and Trustee including its successor or assign as trustee under said Indenture (together with the 2019 Indenture Trustee, the “Trustees”; such Indenture, the “2018 Notes Indenture” and, together with the 2019 Notes Indenture, the “Indentures”).  Each of TVIA and the Consenting Holders shall be referred to herein as a “Party” and collectively as the “Parties.”  For purposes of this Agreement, the term “Requisite Holders” shall mean Consenting Holders holding at least a majority in principal amount of the 2019 Notes held by all Consenting Holders.

WITNESSETH:
WHEREAS, in January 2013, TVIA issued the 2018 Notes in the aggregate principal amount of $125 million, of which approximately $32.5 million in aggregate principal amount remained outstanding as of March 31, 2017;
WHEREAS, in April 2014, TVIA issued the 2019 Notes in the aggregate principal amount of $149.5 million, of which approximately $140.5 million in aggregate principal amount remained outstanding as of March 31, 2017;
WHEREAS, TVIA is currently engaged in a marketing process to sell all or substantially all, or a portion of, its business (the “M&A Process”), as well as discussions with the Consenting Holders regarding a possible restructuring of TVIA’s obligations under the Notes that may be funded by an exit financing facility (the “Exit Financing Search”);
WHEREAS, on April 3, 2017, TVIA failed to make the interest payment on the 2019 Notes due on such date (the “Designated Payment”);
WHEREAS, pursuant to Section 6.01(a) of the 2019 Notes Indenture, TVIA’s Default with respect to the Designated Payment will result in the occurrence of an “Event of Default” under the 2019 Notes Indenture if the Designated Payment is not made on or before May 3, 2017 (the “Grace Period”);
WHEREAS, TVIA anticipates that it may not make the Designated Payment before the expiration of the Grace Period on May 3, 2017, which nonpayment would result in an immediate Event of Default under Section 6.01(a) of the 2019 Notes Indenture (such Event of Default, the “Designated Payment Event of Default”);

    
    

WHEREAS, TVIA acknowledges that, upon the occurrence and during the continuance of an Event of Default of the nature of the Designated Payment Event of Default, the 2019 Indenture Trustee or the Holders of at least 25% in aggregate principal amount of the 2019 Notes then outstanding (subject to the limitations of Section 6.02 of the 2019 Notes Indenture) may, upon notice to TVIA, (i) accelerate 100% of the principal of, and accrued and unpaid interest on, the 2019 Notes (such event, the “Designated Acceleration Event”) to be due and payable immediately upon such acceleration and seek immediate repayment in full of such amounts (collectively, the “2019 Obligations”) and (ii) exercise any and all rights and remedies available under the 2019 Notes Indenture, the 2019 Notes, and applicable law;
WHEREAS, TVIA acknowledges that the occurrence of the Designated Acceleration Event may trigger an Event of Default under Section 6.01(e)(i) of the 2018 Notes Indenture, if such event results in acceleration of the 2019 Notes under the 2019 Notes Indenture, pursuant to which the holders of the 2018 Notes, upon the failure of TVIA to cure such default within 30 days, could accelerate 100% of the principal of, and accrued and unpaid interest on, the 2018 Notes to be due and payable immediately upon such acceleration and seek immediate repayment in full of such amounts (collectively, the “2018 Obligations” and, together with the 2019 Obligations, the “Obligations”);
WHEREAS, TVIA has requested that the Consenting Holders, subject to the terms hereof, temporarily forbear, solely with respect to the Designated Payment Event of Default, from directly or indirectly accelerating (including, without limitation, by directing the 2019 Indenture Trustee to accelerate) any amounts due and/or payable under the 2019 Notes Indenture and otherwise exercising any rights or remedies under the Indentures, in each case, solely during the Forbearance Period (as defined below), in order to permit TVIA to continue the marketing process to sell all or substantially all, or a portion of, its business and negotiating the terms of a possible restructuring of TVIA’s obligations under the Notes; and
WHEREAS, the Consenting Holders agree to accommodate such request of TVIA on the terms and subject to the conditions herein set forth.
NOW, THEREFORE, in consideration of the foregoing, the covenants and conditions contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
Section 1.Confirmation by TVIA of Obligations.
(a)TVIA acknowledges and agrees that, as of the date of this Agreement: (i) the aggregate principal balance of the outstanding 2019 Notes was $140.5 million and the 2018 Notes was $32.5 million; and (ii) the accrued interest that was due and payable under the 2019 Notes was $4.1 million.
Section 2.Forbearance; Forbearance Period; Reservation of Rights.
(a)    In reliance upon the representations, warranties and covenants of TVIA contained in this Agreement, and upon the terms and subject to the conditions of this Agreement, each of the Consenting Holders agrees that, solely during the Forbearance Period, such Consenting Holder shall not (i) take any action, enforce any of its rights or remedies or accelerate the obligations under the Indentures, the 2019 Notes or otherwise or (ii) direct the 2019 Indenture Trustee to take any action, enforce any rights or remedies or accelerate the obligations under the Indentures, the 

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2019 Notes or otherwise, in each case solely with respect to the Designated Payment Event of Default and the Designated Acceleration Event, against TVIA, its affiliates or, in each case, any assets thereof (the “Forbearance”); provided that (y) past-due Obligations shall continue to bear interest at the Default Rate (as defined in the Indentures) until paid in accordance with the Indentures and (z) except as permitted by this Agreement, TVIA shall comply with all limitations, restrictions or prohibitions that would otherwise be effective or applicable under the Indentures during the continuance of any Event of Default.  TVIA acknowledges and agrees that the Forbearance is limited to the extent specifically set forth above and all other terms, covenants and provisions of the Indentures (including, without limitation, the other rights and remedies of the Consenting Holders thereunder) shall remain in full force and effect unaffected hereby.
(b)    The “Forbearance Period” shall commence on the Forbearance Effective Date  and shall terminate immediately and automatically on the earliest to occur of any of the following (each, an “Automatic Forbearance Termination Event”): (i) any Default or Event of Default under either of the Indentures (other than the Designated Payment Event of Default), (ii) the Designated Acceleration Event, (iii) at such time as TVIA commences any legal action, suit, or proceeding against any of the Consenting Holders and/or any Trustee or contesting or challenging the validity or enforceability of this Forbearance Amendment or any of the Indentures, and (iv) June 28, 2017, at 11:59 pm New York time (the “Outside Date”); provided that the Outside Date may be extended by agreement in writing (including, without limitation, by electronic mail through counsel) by the Parties.
(c)    In addition to Section 2(b) of this Agreement, this Agreement may be terminated by the Requisite Holders by delivery to TVIA of a written notice (including, without limitation, by electronic mail through counsel) upon the occurrence and during the continuation of any of the following events (each, a “Consenting Holder Forbearance Termination Event” and, together with an Automatic Forbearance Termination Event, a “Forbearance Termination Event”):
		
	i.
	During the Forbearance Period, TVIA or any of its subsidiaries makes or enters into any agreement obligating it to make any material payment or expenditure outside the ordinary course of business, or otherwise effects a transaction outside the ordinary course of business, including, without limitation, (A) any sale of material assets of TVIA or any of its subsidiaries or (B) any material payment or expenditure outside the ordinary course of business with respect to executive compensation or benefits (including, without limitation, change-of-control payments);

		
	ii.
	During the Forbearance Period, TVIA or any of its subsidiaries makes, or enters into any agreement obligating it to make, any material payment (whether in the form of a dividend, management fee, stock repurchase, or otherwise) to any subsidiary or affiliate of TVIA other than a direct or indirect payment to or for the benefit of Solazyme Bunge Produtos Renovaveis Ltda. (“SB Oils”) for the purpose of funding the ordinary course operating-related expenses of SB Oils, which are not expected to be greater than $4 million during the Forbearance Period;

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	iii.
	During the Forbearance Period, TVIA or any of its subsidiaries takes or causes to be taken any material adverse action with respect to any material contract of or for the benefit of TVIA or such subsidiary that would result in a material adverse effect on TVIA, any of its subsidiaries or their respective businesses, assets or prospects;

		
	iv.
	During the Forbearance Period, TVIA fails to (A) continue to review its and its subsidiaries’ operations and take all reasonable efforts in good faith to reduce expenditures, (B) on or before May 9, 2017, provide the financial advisors of the Consenting Holders historic budget detail with respect thereto, and (C) on or before May 17, 2017, provide the financial advisors of the Consenting Holders a proposal to further reduce its ongoing consolidated operating expenses; 

		
	v.
	During the Forbearance Period, TVIA or any of its subsidiaries incurs (A) any indebtedness for borrowed money (including any purchase money indebtedness or capital leases) or (B) any indebtedness that is secured by liens on any assets of TVIA or any of its subsidiaries or otherwise senior in right of payment or priority (in any way whatsoever) to the Obligations.  For the avoidance of doubt, it shall not constitute a Consenting Holder Forbearance Termination Event if TVIA amends, restates or otherwise modifies any of the terms of (1) that certain Loan and Security Agreement, dated as of June 28, 2016, by and between Silicon Valley Bank and TVIA or (2) that certain Loan Facility Agreement, dated as of December 17, 2013, as amended from time to time, by and among Bunge Fertilazantes S.A., as successor in interest to Bunge Alimentos S.A. (together, “Bunge”), SB Oils and TVIA; provided that, in either case, such amendment, restatement, or other modification shall not have a material adverse effect on TVIA or the Consenting Holders.  For the avoidance of doubt, the incurrence of any additional indebtedness by TVIA of the types described in the foregoing clause (A) or (B) shall be deemed to have a material adverse effect on the Consenting Holders;

		
	vi.
	If, during the Forbearance Period, TVIA does not work diligently to advance both the M&A Process and Exit Financing Search, and does not establish May 31, 2017 as a firm deadline for the delivery of (A) non-binding indications of interest in the M&A Process and (B) non-binding financing proposals in the Exit Financing Search;

		
	vii.
	If, prior to May 26, 2017, at 11:59 pm New York time, TVIA and the Consenting Holders have not agreed in writing to the material terms of a potential restructuring; or

		
	viii.
	During the Forbearance Period, TVIA does not pay, within ten (10) business days of receipt of an invoice, the reasonable and documented fees and expenses of Brown Rudnick LLP, as counsel to certain Consenting Holders.

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In furtherance of the foregoing, during the Forbearance Period, TVIA shall promptly provide the Consenting Holders (or, in the event that such information is or may be non-public or otherwise restricting, the Consenting Holders’ legal and financial advisors) with (a) information relating to (i) any action or development that has or reasonably could have a material adverse effect on TVIA or the Consenting Holders and (ii) any action or development that constitutes or reasonably could constitute a Consenting Holder Forbearance Termination Event, (b) any information reasonably requested by the Consenting Holders’ legal and financial advisors, (c) weekly updates on TVIA’s ongoing sale and financing processes, and (d) beginning no later than May 12, 2017, a 13-week cash flow forecast and, thereafter, weekly updates thereto.  TVIA’s failure to provide any of information set forth in the foregoing clauses (a) through (d) shall constitute a Consenting Holder Forbearance Termination Event if such failure is not cured within three (3) days thereof.
In addition, and notwithstanding anything herein or in the 2019 Indenture to the contrary, solely during the Forbearance Period, the occurrence of a Consenting Holder Forbearance Termination Event of the type described in clause (v)(B) above (with respect to indebtedness greater than $10 million incurred outside of the ordinary course by TVIA or any of its subsidiaries other than SB Oils) shall be prohibited by this Agreement and upon such prohibited Consenting Holder Forbearance Termination Event occurring, 100% of the 2019 Obligations shall become and shall automatically be immediately due and payable, without notice to TVIA or any other action by any Consenting Holder.  Notwithstanding the preceding sentence, TVIA and any of its subsidiaries may incur senior and/or secured indebtedness during the Forbearance Period without triggering any such acceleration so long as the Consenting Holders are provided written notice of the terms of any such proposed financing (including, without limitation, by electronic mail through Brown Rudnick LLP) and given seven days in which to match in writing such terms in their entirety (subject to definitive documentation consistent with such terms).
(d)    The Forbearance is limited in nature and nothing contained herein is intended, or shall be deemed or construed (i) to constitute a waiver of the Designated Payment Event of Default or any other past or future Default or Event of Default or compliance with any other term or provision of the Indentures or applicable law, (ii) to establish a custom or course of dealing between TVIA, on the one hand, and any Consenting Holder, on the other hand, or (iii) a commitment to provide financing, or (iv) otherwise to constitute a waiver of any right or remedy that any Consenting Holder may have under the Indentures, the Notes, or applicable law or in equity, all of which are expressly reserved.  For the avoidance of doubt, the Consenting Holders expressly reserve the right to exercise or direct a Trustee to exercise, as the case may be, all remedies under the applicable Indenture, at law or in equity immediately upon the occurrence of a Forbearance Termination Event, including, without limitation, in respect of the Designated Payment Event of Default and/or any other Defaults or Events of Default then existing.  Except for the Forbearance, solely to the extent expressly set forth above, the Consenting Holders reserve each and every right and remedy they may have under the Indentures, at law and in equity.  
(e)    The Parties agree that the running of all statutes of limitation and the doctrine of laches applicable to all claims or causes of action that any Trustee or any Consenting Holder may be entitled to take or bring in order to enforce its rights and remedies against TVIA are, to the fullest extent permitted by law or in equity, tolled and suspended for, during, and as a result of the Forbearance Period.

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Section 3.Representations and Warranties. 
TVIA hereby represents and warrants to the Consenting Holders that as of the date hereof: (a) it is duly incorporated, formed or organized, as applicable, and validly existing and in good standing under the laws of its jurisdiction of organization; (b) the execution, delivery and performance of this Agreement are within its powers, have been duly authorized, and do not contravene (i) its certificate of incorporation, bylaws or other organizational documents or (ii) any applicable law, statute, regulation, ordinance, tariff or order; (c) no consent, license, permit, approval or authorization of, or registration, filing or declaration with any governmental authority or other person is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement by or against it; (d) this Agreement has been duly executed and delivered by it; (e) this Agreement constitutes its legal, valid and binding obligations enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally or by general principles of equity; and (f) after giving effect to this Agreement, it is in compliance with all covenants and agreements in the Indentures (other than with respect of the making of the Designated Payment).
Section 4.Conditions to Effectiveness of this Agreement; Public Filing.
(a)    This Agreement shall become effective as to each Consenting Holder (the date of such effectiveness being referred to herein as the “Forbearance Effective Date”) upon execution of this Agreement by the respective Consenting Holder and TVIA.  
(b)    TVIA shall, on or before 5:30 pm New York time on the Forbearance Effective Date, file a Form 8-K announcing (i) the material terms and conditions of this Agreement, and (ii) including a copy of this Agreement as an exhibit thereto.
Section 5.Successors and Assigns. 
This Agreement shall be binding upon and inure to the benefit of each Party and their respective successors and assigns.  Each Consenting Holder acknowledges and agrees that during the period commencing on the date hereof and ending on the last day of the Forbearance Period, it shall not transfer or assign any of its Notes or rights under the Indentures or this Agreement to (nor shall any such transfer or assignment become effective in respect of) any Person that is not a Consenting Holder or that does not agree to become a Consenting Holder concurrently with such transfer or assignment.  
Notwithstanding anything in this Agreement to the contrary and for the avoidance of doubt, each Consenting Holder is executing and becoming bound by this Agreement solely as to the specific business unit, division or desk of such Consenting Holder (in each case as set forth in greater detail in that certain letter agreement, dated as of April 1, 2017, between TVIA and the Consenting Holders), and no affiliate of such Consenting Holder or other business unit, division or desk within any such Consenting Holder shall be subject to this Agreement except in accordance with this Section 4; provided that no Consenting Holder shall make or direct any such affiliate or other such business unit, division or desk within such Consenting Holder to (i) take any action, enforce any of its rights or remedies or accelerate the 2019 Obligations under the 2019 Notes Indenture, the 2019 Notes or otherwise, or (ii) direct the 2019 Indenture Trustee to take any action, enforce any rights or remedies or accelerate the 2019 Obligations under the 2019 Indenture, the 2019 Notes or otherwise.

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Section 6.No Third Party Beneficiaries.
No Person other than TVIA and the Consenting Holders shall have any rights hereunder or be entitled to rely on this Agreement, and all other third party beneficiary rights are hereby expressly disclaimed; provided, however, that nothing herein shall prohibit TVIA from disclosing the existence of terms of this Agreement.
Section 7.Severability.
The invalidity, illegality or unenforceability of any provision in or obligation under this Agreement in any jurisdiction shall not affect or impair the validity, legality or enforceability of the remaining provisions or obligations under this Agreement or of such provision or obligation in any other jurisdiction. 
Section 8.Governing Law, Jurisdiction; Waiver of Jury Trial.
Section 17.04 and Section 17.13 of the Indentures apply to this Agreement, mutatis mutandis.
Section 9.Amendments.
The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, without the express prior written consent of each of the Parties.
Section 10.Good Faith Cooperation; Further Assurances.
The Parties hereby agree to execute and deliver from time to time such other documents and take such other actions as may be reasonably necessary in order to effectuate the terms hereof.  The Parties shall cooperate with each other and with their respective counsel in good faith in connection with any steps required to be taken as part of their respective obligations under this Agreement.
Section 11.Prior Negotiations; Entire Agreement.
This Agreement (together with the Indentures and the Notes) constitutes the entire agreement of the Parties with respect to the subject matter hereof, and supersedes all other prior negotiations, understandings or agreements with respect to the subject matter hereof.
Section 12.Interpretation.
This Agreement is the product of negotiations of the Parties and in the enforcement or interpretation hereof, is to be interpreted in a neutral manner, and any presumption with regard to interpretation for or against any Party by reason of that Party having drafted or caused to be drafted this Agreement, or any portion hereof, shall not be effective in regard to the interpretation hereof.
Section 13.Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which taken together shall constitute one and the same instrument.  

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Delivery of an executed counterpart of a signature page to this Agreement by facsimile transmission or by electronic mail (e.g., “.pdf” or “.tif”) shall be effective as delivery of an original executed counterpart of this Agreement.
Section 14.Section Titles.
The section and subsection titles contained in this Agreement are included for convenience only, shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the Parties.  Any reference in this Agreement to any “Section” refers, unless the context otherwise indicates, to a section of this Agreement.
[signature pages follow]

IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement as of the day and year first above written.
TERRAVIA HOLDINGS, INC. (formerly Solazyme, Inc.)

By:        
Name: 
Title:

ZAZOVE ASSOCIATES, LLC

By:        
Name: 
Title:

PASSPORT CAPITAL, LLC

By:        
Name: 
Title:

LAZARD ASSET MANAGEMENT LLC

By:        
Name: 
Title:

CITADEL EQUITY FUND, LTD.

By:        
Name: 
Title:

GILEAD CAPITAL LP

By:        
Name: 
Title:

8exhibit101psuagreement

 {02204061.DOCX} STOCK AWARD AGREEMENT  (RESTRICTED STOCK UNITS – PERFORMANCE UNITS)  UNDER THE UNITED FIRE GROUP, INC.   STOCK PLAN  Award Number       1. Award of Stock Awards.  United Fire Group, Inc. (hereinafter the “Company”), in the exercise of its sole discretion pursuant to the United Fire Group, Inc. Stock Plan (the “Plan”), does on                                (the “Award Date”) hereby award to       (the “Awardee”) a target number of     Stock Awards (“SAs” and commonly referred to as “Restricted Stock Units” or “RSUs”) for the Performance Cycle commencing _____________________ and ending _________________________, upon the terms and subject to the conditions hereinafter contained, subject to vesting as set forth in Section 2.  Capitalized terms used but not defined herein shall have the meanings assigned to them in the Plan.  SAs represent the Company’s unfunded and unsecured promise to issue Shares at a future date, subject to the terms of this Award Agreement and the Plan.  The Awardee has no rights under the SAs other than the rights of a general unsecured creditor of the Company.    2. Conditions to Vesting of Award.    a. Performance Measures.  The number of SAs vested during the Performance Cycle shall be determined based on the Performance Measures set forth below. The actual number of SAs vested will be determined by multiplying the Total Target Number of SAs subject to each Performance Measure by the applicable Level of Attainment from the table below. The Level of Attainment for each Performance Measure will be determined based on the level of the Company’s performance during the Performance Cycle for that Performance Measure. The precise extent to which the Company will have satisfied the Performance Measure, and the number of SAs vested, will be determined by the Compensation Committee of the Company’s Board (the “Committee”) as soon as practicable following the close of the Performance Cycle.  The number of SAs in which the Awardee is vested at the conclusion of the Performance Cycle shall be rounded up to the nearest whole share.  No SAs subject to a Performance Measure shall vest and all such SAs shall be forfeited, if the Threshold Level with respect to the Performance Measure is not attained during the Performance Cycle.  Performance Measure   Percentage of Total SAs Subject to Performance  Measure  Level of Attainment   Threshold Level   Target Level  Maximum Level Participant earns ___% of SAs Subject to the Performance Measure Participant earns 100% of SAs Subject to the Performance Measure Participant earns ___% of SAs Subject to the Performance Measure  ___%     ___%     ___%     ___%     b. Company Policies.  THE AWARDEE’S RIGHTS IN THE SAs SHALL BE AFFECTED, WITH REGARD TO BOTH VESTING SCHEDULE AND TERMINATION, BY LEAVES OF ABSENCE, CHANGES IN THE NUMBER OF HOURS WORKED, PARTIAL DISABILITY, AND OTHER CHANGES IN AWARDEE’S EMPLOYMENT STATUS AS PROVIDED IN THE COMPANY’S CURRENT POLICIES IN SUCH MATTERS. THESE POLICIES MAY CHANGE FROM TIME TO TIME WITHOUT NOTICE IN THE COMPANY’S SOLE DISCRETION, AND AWARDEE’S RIGHTS WILL BE GOVERNED BY THE POLICIES 

 

{02204061.DOCX} 2 IN EFFECT AT THE TIME OF ANY EMPLOYMENT STATUS CHANGE. CONTACT HUMAN RESOURCES FOR A COPY OF THE MOST CURRENT POLICY STATEMENT AT ANY POINT IN TIME.   3. Termination.  Unless terminated earlier under Section 4, 5, or 6 below, the Awardee’s rights under this Award Agreement with respect to the SAs issued under this Award Agreement shall terminate at the time such SAs are converted into Shares.   4. Termination of the Awardee’s Status as an Employee.  Except as otherwise specified in this Section 4, upon termination of the Awardee’s Continuous Status as an Employee (as such term is defined in Section 2(h) of the Plan), the Awardee’s rights under this Award Agreement in any unvested SAs shall terminate.  For the avoidance of doubt, the Awardee’s Continuous Status as an Employee terminates at the time the Awardee’s actual employer ceases to be the Company or a Subsidiary of the Company, as that term is defined in Section 2(v) of the Plan, and as further described in Section 6(g) of this Award Agreement.   Notwithstanding the foregoing provisions of this Section 4,  upon the termination of Employee’s Continuous Status as an Employee due to death or total and permanent disability (as such term is defined in Section 12(c) of the Plan), the SAs shall vest as set forth below.   To the extent the SAs become vested pursuant to this Section 4, such SAs shall be converted into Shares and shall be distributed to the Awardee in accordance with Section 6 of this Award Agreement.    a. Disability of the Awardee.  Upon termination of the Awardee’s Continuous Status as an Employee as a result of total and permanent disability (as such term is defined in Section 12(c) of the Plan), the Awardee shall vest at the conclusion of the Performance Cycle, pro-rata, in a number of SAs equal to (i) the number of SAs that would have been earned had the Awardee been in Continuous Status as an Employee through the last day of the Performance Cycle, multiplied by (ii) a percentage equal to the number of days from the first day of the Performance Cycle to the date of the total and permanent disability of the Awardee, divided by the total number of days in the Performance Cycle.  If the Awardee’s disability originally required the Awardee to take a short-term disability leave that was later converted into long-term disability, then for the purposes of determining vesting under the preceding sentence, the date on which the Awardee ceased Continuous Status as an Employee shall be deemed to be the date of commencement of the short-term disability leave.     b. Death of Awardee.  Upon termination of the Awardee’s Continuous Status as an Employee as a result of death of the Awardee, the SAs shall vest, at the conclusion of the Performance Cycle, pro- rata, in a number of SAs equal to (i) the number of SAs that would have been earned had the Awardee been in Continuous Status as an Employee through the last day of the Performance Cycle, multiplied by (ii) a percentage equal to the number of days from the first day of the Performance Cycle to the date of death of the Awardee, divided by the total number of days in the Performance Cycle.     5. Value of Unvested SAs.  In consideration of the award of these SAs, the Awardee agrees that upon and following termination of the Awardee’s Continuous Status as an Employee for any reason (whether or not in breach of applicable laws) and regardless of whether the Awardee is terminated with or without cause, notice, or pre-termination procedure or whether the Awardee asserts or prevails on a claim that the Awardee’s employment was terminable only for cause or only with notice or pre-termination procedure, any unvested SAs under this Award Agreement shall be deemed to have a value of zero dollars ($0.00).    6. Conversion of SAs to Shares; Responsibility for Taxes.    a. Provided the Awardee has satisfied the requirements of Section 6(b) below, on the vesting of any SAs, such vested SAs shall be converted into an equivalent number of Shares that will be distributed to the Awardee or, in the event of the Awardee’s death, to the Awardee’s legal representative, as soon as practicable.  The distribution to the Awardee, or in the case of the Awardee’s death, to the Awardee’s legal representative, of Shares in respect of the vested SAs shall be evidenced by a stock certificate, appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company, or other appropriate means as determined by the Company.  If ownership or issuance of Shares is not feasible due to applicable exchange controls, securities regulations, tax laws, or other provisions of applicable law, as determined by the Company in its sole discretion, the Awardee, or in the event of the Awardee’s death, the Awardee’s legal representative, shall receive cash proceeds in 

 

{02204061.DOCX} 3 an amount equal to the value of the Shares otherwise distributable to the Awardee, net of the satisfaction of the requirements of Section 6(b) below.    b. Regardless of any action the Company or the Awardee’s actual employer takes with respect to any or all income tax (including federal, state and local taxes), social insurance, payroll tax or other tax- related withholding (“Tax Related Items”), the Awardee acknowledges that the ultimate liability for all Tax Related Items legally due by the Awardee is and remains the Awardee’s responsibility and that the Company and/or the Awardee’s actual employer (i) make no representations or undertakings regarding the treatment of any Tax Related Items in connection with any aspect of the SAs, including the grant of the SAs, the vesting of SAs, the conversion of the SAs into Shares or the receipt of an equivalent cash payment, the subsequent sale of any Shares acquired at vesting and the receipt of any dividends, and (ii) do not commit to structure the terms of the grant or any aspect of the SAs to reduce or eliminate the Awardee’s liability for Tax Related Items.    Prior to the issuance of Shares upon vesting of SAs or the receipt of an equivalent cash payment as provided in Section 6(a) above, Awardee shall pay, or make adequate arrangements satisfactory to the Company or to the Awardee’s actual employer (in their sole discretion) to satisfy all withholding obligations of the Company and/or the Awardee’s actual employer.  In this regard, Awardee authorizes the Company or the Awardee’s actual employer to withhold all applicable Tax Related Items legally payable by Awardee from Awardee’s wages or other cash compensation payable to Awardee by the Company or the Awardee’s actual employer.  Alternatively, or in addition, if permissible under applicable law, the Company or the Awardee’s actual employer may, in their sole discretion, (i) sell or arrange for the sale of Shares to be issued on the vesting of SAs to satisfy the withholding obligation, and/or (ii) withhold in Shares, provided that the Company and the Awardee’s actual employer shall withhold only the amount of shares necessary to satisfy the minimum withholding amount.  The Awardee shall pay to the Company or to the Awardee’s actual employer any amount of Tax Related Items that the Company or the Awardee’s actual employer may be required to withhold as a result of Awardee’s receipt of SAs, the vesting of SAs, or the conversion of vested SAs to Shares that cannot be satisfied by the means previously described.  Except where applicable legal or regulatory provisions prohibit, the standard process for the payment of the Awardee’s Tax Related Items shall be for the Company or the Awardee’s actual employer to withhold in Shares only to the amount of shares necessary to satisfy the minimum withholding amount.  The Company may refuse to deliver Shares to Awardee if Awardee fails to comply with Awardee’s obligation in connection with the Tax Related Items as described herein.    c. In lieu of issuing fractional Shares, on the vesting of a fraction of a SA, the Company shall round the shares to the nearest whole share and any such share which represents a fraction of a SA will be included in a subsequent vest date.   d. Until the distribution to Awardee of the Shares in respect to the vested SAs is evidenced by a stock certificate, appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company, or other appropriate means, the Awardee shall have no right to vote or receive dividends or any other rights as a shareholder with respect to such Shares, notwithstanding the vesting of SAs.  The Company shall cause such distribution to Awardee to occur promptly upon the vesting of SAs.  No adjustment will be made for a dividend or other right for which the record date is prior to the date the Awardee is recorded as the owner of the Shares, except as provided in Section 14 of the Plan.  e. By accepting the Award of SAs evidenced by this Award Agreement, the Awardee agrees not to sell any of the Shares received on account of vested SAs at a time when applicable laws or Company policies prohibit a sale.  This restriction shall apply so long as Awardee is an Employee of the Company or a Subsidiary of the Company.    7. Non-Transferability of SAs.  The Awardee’s right in the SAs awarded under this Award Agreement and any interest therein may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner, other than by will or by the laws of descent or distribution, prior to the distribution of the Shares in respect of such SAs.  SAs shall not be subject to execution, attachment, or other process.    8. Acknowledgment of Nature of Plan and SAs.  In accepting the Award, the Awardee acknowledges that:  

 

{02204061.DOCX} 4  a. The Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, as provided in the Plan;    b. The Award of SAs is voluntary and occasional and does not create any contractual or other right to receive future awards of SAs or benefits in lieu of SAs even if SAs have been awarded repeatedly in the past;   c. All decisions with respect to future awards, if any, will be at the sole discretion of the Company;   d. The Awardee’s participation in the Plan is voluntary;  e. The future value of the underlying Shares is unknown and cannot be predicted with certainty;   f. If Awardee receives Shares, the value of such Shares acquired on vesting of SAs may increase or decrease in value;  g. Notwithstanding any terms or conditions of the Plan to the contrary and consistent with Section 4, above, upon involuntary termination of the Awardee’s employment (whether or not in breach of applicable laws), (1) the Awardee’s right to receive SAs and vest under the Plan, if any, will terminate effective as of the date that the Awardee is no longer actively employed and will not be extended by any notice period mandated under applicable law, (2) the Awardee’s right to receive Shares pursuant to the SAs after termination of employment, if any, will be measured by the date of termination of Awardee’s active employment and will not be extended by any notice period mandated under applicable law, and (3) the Committee shall have the exclusive discretion to determine when the Awardee is no longer actively employed for purposes of the award of SAs; and   h. The Awardee acknowledges and agrees that, regardless of whether the Awardee is terminated with or without cause, notice, or pre-termination procedure or whether the Awardee asserts or prevails on a claim that Awardee’s employment was terminable only for cause or only with notice or pre-termination procedure, the Awardee has no right to, and will not bring any legal claim or action for, (1) any damages for any portion of the SAs that have been vested and converted into Shares, or (2) termination of any unvested SAs under this Award Agreement.    9. No Employment Right.  The Awardee acknowledges that neither the fact of this Award of SAs nor any provision of this Award Agreement or the Plan or the policies adopted pursuant to the Plan shall confer upon the Awardee any right with respect to employment or continuation of current employment with the Company or with the Awardee’s actual employer, or to employment that is not terminable at will.  The Awardee further acknowledges and agrees that neither the Plan nor this Award of SAs makes the Awardee’s employment with the Company or the Awardee’s actual employer for any minimum or fixed period, and that such employment is subject to the mutual consent of the Awardee and the Company or the Awardee’s actual employer, and may be terminated by either the Awardee or the Company or the Awardee’s actual employer at any time, for any reason or no reason, with or without cause or notice or any kind of pre- or post-termination warning, discipline, or procedure.    10. Administration.  The authority to manage and control the operation and administration of this Award Agreement shall be vested in the Board and the Committee (as such terms are defined in Sections 2(d) and 2(f) of the Plan), and the Board and the Committee shall have all powers and discretion with respect to this Award Agreement as it has with respect to the Plan.  Any interpretation of the Award Agreement by the Board or the Committee and any decision made by the Board or the Committee with respect to the Award Agreement shall be final and binding on all parties.    11. Plan Governs.  Notwithstanding anything in this Award Agreement to the contrary, the terms of this Award Agreement shall be subject to the terms of the Plan, and this Award Agreement is subject to all 

 

{02204061.DOCX} 5 interpretations, amendments, rules, and regulations promulgated by the Board or the Committee from time to time pursuant to the Plan.    12. Notices.  Any written notices provided for in this Award Agreement that are sent by mail shall be deemed received three business days after mailing, but not later than the date of actual receipt.  Notices shall be directed, if to the Awardee, at the Awardee’s address indicated by the Company’s records and, if to the Company, at the Company’s principal executive office.    13. Electronic Delivery.  The Company may, in its sole discretion, decide to deliver any documents related to SAs awarded under the Plan or future SAs that may be awarded under the Plan by electronic means or request the Awardee’s consent to participate in the Plan by electronic means.  The Awardee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.    14. Acknowledgment.  By the Awardee’s acceptance as evidenced below, the Awardee acknowledges that the Awardee has received and has read, understood, and accepted all the terms, conditions, and restrictions of this Award Agreement, the Plan, and the current policies referenced in Section 2(b) of this Award Agreement. The Awardee understands and agrees that this Award Agreement is subject to all the terms, conditions, and restrictions stated in this Award Agreement and in the other documents referenced in the preceding sentence, as the latter may be amended from time to time in the Company’s sole discretion.  The Awardee further acknowledges that the Awardee must accept this Award Agreement in the manner prescribed by the Company no later than the earlier of the first anniversary of Award Date or the first vesting date specified in Section 2 of this Award Agreement.    15. Board Approval.  These SAs have been awarded pursuant to the Plan and accordingly this Award of SAs is subject to approval by an authorized committee of the Board of Directors.  If this Award of SAs has not already been approved, the Company agrees to submit this Award for approval as soon as practical.  If such approval is not obtained, this award is null and void.    16. Governing Law.  This Award Agreement shall be governed by the laws of the State of Iowa, without regard to Iowa laws that might cause other law to govern under applicable principles of conflicts of law.    17. Severability.  If one or more of the provisions of this Award Agreement shall be held invalid, illegal, or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, and the invalid, illegal, or unenforceable provisions shall be deemed null and void; however, to the extent permissible by law, any provisions that could be deemed null and void shall first be construed, interpreted, or revised retroactively to permit this Award Agreement to be construed so as to foster the intent of this Award Agreement and the Plan.    18. Complete Award Agreement and Amendment.  This Award Agreement and the Plan constitute the entire agreement between the Awardee and the Company regarding these SAs.  Any prior agreements, commitments or negotiations concerning these SAs are superseded.  This Award Agreement may be amended only by written agreement of the Awardee and the Company, without consent of any other person.  The Awardee agrees not to rely on any oral information regarding this Award of SAs or any written materials not identified in this Section 20.    Executed at Cedar Rapids, Iowa the day and year first above written.     UNITED FIRE GROUP, INC.                 ,         AWARDEE’S ACCEPTANCE:   

 

{02204061.DOCX} 6 I have read and fully understood this Award Agreement and, as referenced in Section 14 above, I accept and agree to be bound by all of the terms, conditions, and restrictions contained in this Award Agreement and the other documents referenced in it.     AWARDEE  Date:                 Print Name:

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