Document:

Exhibit 10.36

 

NATURE’S SUNSHINE PRODUCTS, INC.

2012 STOCK INCENTIVE PLAN
 NON-INCENTIVE STOCK OPTION AGREEMENT

 

This NON-INCENTIVE STOCK OPTION AGREEMENT (the “Agreement”) is made this 11th day of February, 2014, by and between Nature’s Sunshine Products, Inc., a Utah corporation (the “Company”), and Susan M. Armstrong, an individual (“Employee”).

 

1.                                Grant of Option.  The Company hereby grants Employee the option (the “Option”) to purchase all or any part of an aggregate of 15,000 shares (the “Shares”) of Common Stock of the Company at the exercise price of $15.38 per share (the closing price of the Company’s Common Stock on the date of this agreement) according to the terms and conditions set forth in this Agreement and in the Nature’s Sunshine Products, Inc. 2012 Stock Incentive Plan (the “Plan”).  The Option will not be treated as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).  The Option is issued under the Plan and is subject to its terms and conditions.  A copy of the Plan will be furnished upon request of Employee.

 

The Option shall terminate at the close of business ten years from the date hereof.

 

2.                                      Description of Option.  The Option will vest in equal annual installments on the anniversary date of this Agreement over the following four years as set forth in Section 3.

 

3.                                      Vesting of Option Rights.

 

(a)                                 Except as otherwise provided in this Agreement, the Option may be exercised by Employee in accordance with the following schedule:

 

	
On or after each of
   the following dates
    	
 
    	
Number of non-cumulative
   Shares with respect to which
   the Option is exercisable
    
	
February 11,   2015
    	
 
    	
3,750
    
	
 
    	
 
    	
 
    
	
February 11,   2016
    	
 
    	
3,750
    
	
 
    	
 
    	
 
    
	
February 11,   2017
    	
 
    	
3,750
    
	
 
    	
 
    	
 
    
	
February 11,   2018
    	
 
    	
3,750
    

 

(b)                                 During the lifetime of Employee, the Option shall be exercisable only by Employee and shall not be assignable or transferable by Employee, other than by will or the laws of descent and distribution.

 

4.                                Exercise of Option after Death or Termination of Employment.  The Option shall terminate and may no longer be exercised if Employee ceases to be employed by the Company or its affiliates, except that:

 

 

(a)                                                         If Employee’s employment shall be terminated for any reason, voluntary or involuntary, other than for “Cause” (as defined in Section 4(e)) or Employee’s death or disability (within the meaning of Section 22(e)(3) of the Code), Employee may, at any time within a period of 3 months after such termination, exercise the Option to the extent the Option was exercisable or becomes exercisable by Employee on the date of the termination of Employee’s employment.

 

(b)                                                         If Employee’s employment is terminated for Cause, the Option shall be terminated as of the date of the act giving rise to such termination.

 

(c)                                                          If Employee shall die while the Option is still exercisable according to its terms or if employment is terminated because Employee has become disabled (within the meaning of Section 22(e)(3) of the Code) while in the employ of the Company and Employee shall not have fully exercised the Option, such Option may be exercised at any time within 12 months after Employee’s death or date of termination of employment for disability by Employee, personal representatives or administrators or guardians of Employee, as applicable, or by any person or persons to whom the Option is transferred by will or the applicable laws of descent and distribution, to the extent of the full number of Shares Employee was entitled to purchase under the Option on (i) the earlier of the date of death or termination of employment or (ii) the date of termination for such disability, as applicable.

 

(d)                                                         Notwithstanding the above, in no case may the Option be exercised to any extent by anyone after the termination date of the Option.

 

(e)                                                          “Cause” shall mean (i) the willful and continued failure by Employee substantially to perform his or her duties and obligations (other than any such failure resulting from his or her incapacity due to physical or mental illness), (ii) Employee’s conviction or plea bargain of any felony or gross misdemeanor involving moral turpitude, fraud or misappropriation of funds or (iii) the willful engaging by Employee in misconduct which causes substantial injury to the Company or its affiliates, its other employees or the employees of its affiliates or its clients or the clients of its affiliates, whether monetarily or otherwise.  For purposes of this subsection, no action or failure to act on Employee’s part shall be considered “willful” unless done or omitted to be done by Employee in bad faith and without reasonable belief that his or her action or omission was in the best interests of the Company.

 

5.                                      Acceleration of Vesting.

 

(a)                                                         In the event that Employee’s employment is terminated by reason of Employee’s death or disability, the Option, in its entirety, shall fully vest and become immediately exercisable.

 

(b)                                                         Additionally, upon the occurrence of a “Change in Control Event” (as defined in Section 5(d) below):

 

(i)                                     If in connection with the Change in Control Event, the Acquiring Person (as defined in subsection 5(d)(iv) below) elects to continue the Option in effect (or substitute a similar option for the Option) and to replace the shares of Common Stock issuable upon exercise of the Option with other equity securities that are registered under the Securities Act of 1933 and are freely transferable under all applicable federal and

 

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state securities laws and regulations, with appropriate adjustments as to the number of shares purchasable thereunder and the exercise price thereof, the Option shall remain subject to the vesting schedule set forth in Section 3 and otherwise become exercisable in full if:

 

(A)       within 24 months after the date of the Change in Control Event, Employee’s employment with the Company (or any successor company or affiliated entity with which Employee is then employed) is terminated for any reason set forth in Sections 5(a) or 5(b) above; or

 

(B)       within 24 months after the date of the Change in Control Event, Employee’s employment with the Company (or any successor company or affiliated entity with which Employee is then employed) is terminated by Employee for “Good Reason” (as defined below).

 

(ii)                                  If the Change in Control Event does not meet the criteria specified in subsection (c)(ii) above, the Option shall fully vest and become immediately exercisable upon the Change in Control Event.

 

(c)                                                          For purposes of this Agreement, “Change in Control Event” shall mean:

 

(i)                                     approval by the stockholders of the Company of a plan of complete dissolution or liquidation of the Company;

 

(ii)                                  consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its subsidiaries that requires the approval of the Company’s stockholders, whether for such transaction or the issuance of securities in the transaction (a “Business Combination”), unless immediately following such Business Combination:  (A) more than 50% of the total voting power of (x) the corporation resulting from such Business Combination (the “Surviving Corporation”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of at least 90% of the voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by Company Voting Securities (as defined in subsection 4(d)(iv)) that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation) is or becomes the beneficial owner, directly or indirectly, of 50% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination were Incumbent Directors (as defined in subsection 5(d)(v))

 

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at the time of the approval by the Company’s board of directors (the “Board”) of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a “Non-Qualifying Transaction”);

 

(iii)                               consummation of a sale of all or substantially all of the Company’s business and/or assets to a person or entity which is not a subsidiary; or

 

(iv)                              any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more (an “Acquiring Person”) of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of the Board (the “Company Voting Securities”); provided, however, that the event described in this subsection 5(d)(iv) shall not be deemed to be a Change in Control Event by virtue of any of the following acquisitions:  (A) by the Company or any subsidiary, (B) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary, (C) by any underwriter temporarily holding securities pursuant to an offering of such securities, or (D) pursuant to a Non-Qualifying Transaction, as defined in subsection 5(d)(ii); or

 

(v)                                 during any period not longer than two consecutive years, individuals who at the beginning of such period constituted the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the beginning of such period whose election or nomination for election was approved by a vote of a least a majority of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director, provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director.

 

(d)                                                         For purposes of this Agreement, “Continuing Director” shall mean any Incumbent Director, who, while such person is a member of the Board, is not an Acquiring Person or an Affiliate or Associate (as defined below) of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate; and for purposes hereof, “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.

 

(e)                                                          For purposes of this Agreement, “Good Reason” shall mean the occurrence of any of the following events following a Change in Control Event, except for the occurrence of such an event in connection with the termination of Employee’s employment by the Company (or any successor company or affiliated entity then employing Employee) for Cause, disability or death:

 

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(i)                                     the assignment to Employee of employment duties or responsibilities which are not substantially comparable in responsibility to the employment duties and responsibilities held by Employee immediately prior to the Change in Control Event;

 

(ii)                                  a reduction in Employee’s base salary as in effect immediately prior to the Change in Control Event or as the same may be increased from time to time during the term of this Agreement; or

 

(iii)                               requiring Employee to work in a location more than 50 miles from Employee’s office location immediately prior to the Change in Control Event, except for requirements of temporary travel on the Company’s business to an extent substantially consistent with Employee’s business travel obligations immediately prior to the Change in Control Event.

 

(f)                                                           Notwithstanding any of the foregoing to the contrary, any acceleration of the Option shall be subject to and conditioned on compliance with applicable regulatory requirements, including, without limitation, Section 409A of the Internal Revenue Code.

 

6.                                Method of Exercise of Option.  Subject to the foregoing, the Option may be exercised in whole or in part from time to time by serving written notice of exercise on the Company at its principal office within the Option period.  The notice shall state the number of Shares as to which the Option is being exercised and shall be accompanied by payment of the exercise price.  Payment of the exercise price shall be made (i) in cash (including bank check, personal check or money order payable to the Company), (ii) with the approval of the Company (which may be given in its sole discretion), by delivering to the Company for cancellation shares of the Company’s Common Stock already owned by Employee having a Fair Market Value (as defined in the Plan) equal to the full exercise price of the Shares being acquired, or (iii) with the approval of the Company (which may be given in its sole discretion), by delivering to the Company a combination thereof.  In addition, with the approval of the Company (which may be given in its sole discretion), the Option may be exercised by delivering to the Employee, a number of Shares having an aggregate Fair Market Value (determined as of the date of exercise) equal to the excess, if positive, of the Fair Market Value of the Shares underlying the Option being exercised, on the date of exercise, over the exercise price of the Option for such Shares.

 

7.                                      Miscellaneous.

 

(a)         Plan Provisions Control.  In the event that any provision of the Agreement conflicts with or is inconsistent in any respect with the terms of the Plan, the terms of the Plan shall control.

 

(b)         No Rights of Stockholders.  Neither Employee, Employee’s legal representative nor a permissible assignee of this Option shall have any of the rights and privileges of a stockholder of the Company with respect to the Shares, unless and until such Shares have been issued in the name of Employee, Employee’s legal representative or permissible assignee, as applicable.

 

(c)          No Right to Employment.  The grant of the Option shall not be construed as giving Employee the right to be retained in the employ of, or as giving a director of the Company or an Affiliate (as defined in the Plan) the right to continue as a director of the Company or an Affiliate

 

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with, the Company or an Affiliate, nor will it affect in any way the right of the Company or an Affiliate to terminate such employment or position at any time, with or without cause.  In addition, the Company or an Affiliate may at any time dismiss Employee from employment, or terminate the term of a director of the Company or an Affiliate, free from any liability or any claim under the Plan or the Agreement.  Nothing in the Agreement shall confer on any person any legal or equitable right against the Company or any Affiliate, directly or indirectly, or give rise to any cause of action at law or in equity against the Company or an Affiliate.  The Option granted hereunder shall not form any part of the wages or salary of Employee for purposes of severance pay or termination indemnities, irrespective of the reason for termination of employment.  Under no circumstances shall any person ceasing to be an employee of the Company or any Affiliate be entitled to any compensation for any loss of any right or benefit under the Agreement or Plan which such employee might otherwise have enjoyed but for termination of employment, whether such compensation is claimed by way of damages for wrongful or unfair dismissal, breach of contract or otherwise.  By participating in the Plan, Employee shall be deemed to have accepted all the conditions of the Plan and the Agreement and the terms and conditions of any rules and regulations adopted by the Committee (as defined in the Plan) and shall be fully bound thereby.

 

(d)         Governing Law.  The validity, construction and effect of the Plan and the Agreement, and any rules and regulations relating to the Plan and the Agreement, shall be determined in accordance with the internal laws, and not the law of conflicts, of the State of Utah.

 

(e)          Severability.  If any provision of the Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Agreement under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan or the Agreement, such provision shall be stricken as to such jurisdiction or the Agreement, and the remainder of the Agreement shall remain in full force and effect.

 

(f)           No Trust or Fund Created.  Neither the Plan nor the Agreement shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and Employee or any other person.

 

(g)          Headings.  Headings are given to the Sections and subsections of the Agreement solely as a convenience to facilitate reference.  Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Agreement or any provision thereof.

 

(h)         Conditions Precedent to Issuance of Shares.  Shares shall not be issued pursuant to the exercise of the Option unless such exercise and the issuance and delivery of the applicable Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder, the requirements of any applicable Stock Exchange and the Utah Revised Business Corporation Act.  As a condition to the exercise of the purchase price relating to the Option, the Company may require that the person exercising or paying the purchase price represent and warrant that the Shares are being purchased only for

 

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investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation and warranty is required by law.

 

(i)             Withholding.  In order to provide the Company with the opportunity to claim the benefit of any income tax deduction which may be available to it upon the exercise of the Option and in order to comply with all applicable federal or state income tax laws or regulations, the Company may take such action as it deems appropriate to insure that, if necessary, all applicable federal or state payroll, withholding, income or other taxes are withheld or collected from Employee.

 

(j)            Consultation With Professional Tax and Investment Advisors.  The holder of this Award acknowledges that the grant, exercise, vesting or any payment with respect to this Award, and the sale or other taxable disposition of the Shares acquired pursuant to the exercise thereof, may have tax consequences pursuant to the Code or under local, state or international tax laws.  The holder further acknowledges that such holder is relying solely and exclusively on the holder’s own professional tax and investment advisors with respect to any and all such matters (and is not relying, in any manner, on the Company or any of its employees or representatives).  Finally, the holder understands and agrees that any and all tax consequences resulting from the Award and its grant, exercise, vesting or any payment with respect thereto, and the sale or other taxable disposition of the Shares acquired pursuant to the Plan, is solely and exclusively the responsibility of the holder without any expectation or understanding that the Company or any of its employees or representatives will pay or reimburse such holder for such taxes or other items.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the Company and Employee have executed this Agreement on the date set forth in the first paragraph.

 

	
 
    	
NATURE’S SUNSHINE   PRODUCTS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Stephen M. Bunker
    
	
 
    	
Name:
    	
Stephen M. Bunker
    
	
 
    	
Title:
    	
Executive Vice President,   CFO & Treasurer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EMPLOYEE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Susan M. Armstrong
    
	
 
    	
Susan M. Armstrong, an individual
    

 

[Signature page of Non-Incentive Stock Option Agreement—Susan M. Armstrong]Exhibit 10.1

 

 

RESTRICTED STOCK UNIT AWARD AGREEMENT

THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”), dated as of the ____ day of___________, between First Acceptance Corporation, a Delaware corporation (the “Company”), and __________ (the “Participant”).

W I T N E S S E T H

In consideration of the mutual promises and covenants made herein and the mutual benefits to be derived herefrom, the parties hereto agree as follows:

1.Grant and Vesting of Restricted Stock Units.

(a)Subject to the provisions of this Agreement and to the provisions of the Amended and Restated First Acceptance Corporation 2002 Long Term Incentive Plan (the “Plan”), the Company hereby grants to the Participant as of _________, ______ (the “Grant Date”), an Award under the Plan of ________ Restricted Stock Units (the “Awarded Units”).  Each Awarded Unit shall be a notional share of Common Stock, with the value of each Awarded Unit being equal to the Fair Market Value of a share of Common Stock at any time.  All capitalized terms used herein, to the extent not defined, shall have the meaning set forth in the Plan.  

(b)Subject to the terms and conditions of this Agreement, one hundred percent (100%) of the Awarded Units shall vest and no longer be subject to any restriction (other than the restrictions set forth in Section 4(b) and Section 5 below) on the third anniversary of the  Date of Grant (the “Restriction Period”), provided that the Participant is employed by (or, if the Participant is an Outside Director or Consultant, is providing services to) the Company or any of its Subsidiaries on such date.  

(c)Notwithstanding the foregoing, in the event of the Participant’s Termination of Service during the Restriction Period due to death or Total and Permanent Disability, Retirement or by the Company without Cause, a prorated portion of the Awarded Units granted hereunder shall immediately vest and no longer be subject to restriction, with such proration determined by multiplying the total number of the Awarded Units granted hereunder by a fraction, the numerator of which is the number of months during the Restriction Period that the Participant was employed, including the full vesting month in which the Participant’s death or Total and Permanent Disability, Retirement or Termination of Service without Cause occurs, and the denominator of which is thirty-six (36).  Except as provided in the preceding sentence, in the event of the Participant’s Termination of Service during the Restriction Period, all unvested Awarded Units shall be forfeited by the Participant for no consideration effective immediately upon such termination.  Upon forfeiture, all of the Participant’s rights with respect to the forfeited Awarded Units shall cease and terminate, without any further obligation on the part of the Company.   Nothing in this Agreement or the Plan shall confer upon the Participant any right to continue in the employ of the Company or any of its Subsidiaries or interfere in any way with the right of the Company or any such Subsidiaries to terminate the Participant’s employment at any time.

(d)In the event of a Change in Control, to the extent not previously forfeited, the Awarded Units shall immediately vest in full and no longer be subject to restriction.

(e)Awarded Units which have become vested pursuant to the terms of this Section 1 are collectively referred to herein as “Vested RSUs.”  All other Awarded Units are collectively referred to herein as “Unvested RSUs.”

2.Issuance of Shares.  

The Company shall convert the Vested RSUs into the number of whole shares of Common Stock equal to the number of Vested RSUs, subject to the provisions of the Plan and this Agreement, including, without limitation, the forfeiture provisions of Section 1(c) and Section 5, and the clawback provisions of Section 16, and shall either electronically register such shares of Common Stock in the Participant’s name or issue certificates for the number of shares of Common Stock equal to the Vested RSUs in the Participant’s name, on the first of the following events:

(i)on the third anniversary of the Date of Grant;

(ii) within thirty (30) days following the Participant’s Termination of Service due to death, Total and Permanent Disability, Retirement or by the Company without Cause, provided, that if such thirty (30) day period begins in one taxable year and ends in a second taxable year, the Vested RSUs shall be converted into shares of Common Stock in the second taxable year; or 

 

(iii)on the effective date of a Change in Control (so long as such Change in Control qualifies as a permissible payment event pursuant to Section 409A(a)(2)(A)(v) of the Code and the regulations issued thereunder). 

 

The Company shall electronically register such shares, or issue certificates for the number of shares of Common Stock, equal to the Vested RSUs in the Participant’s name or in the name of such person or persons to whom the Participant’s rights under the Award passed by will or the applicable laws of descent and distribution.  From and after the date of registration or receipt of such shares of Common Stock, the Participant, or such person or persons to whom the Participant’s rights under the Award passed by will or the applicable laws of descent and distribution, as the case may be, shall have full rights of transfer or resale with respect to such shares of Common Stock, subject to Section 4(b) and Section 5 hereof and applicable state and federal regulations.

3.Who May Receive Converted Vested RSUs.  

During the lifetime of the Participant, the shares of Common Stock received upon conversion of Vested RSUs may only be received by the Participant or the Participant’s legal representative.  If the Participant dies prior to the date his or her Vested RSUs are converted into shares of Common Stock as described in Section 2 above, the shares of Common Stock relating to such converted Vested RSUs may be received by any individual who is entitled to receive the property of the Participant pursuant to the applicable laws of descent and distribution.

4. Nontransferability of the Restricted Stock Units.

(a)Subject to the provisions of the Plan and this Agreement, the Unvested RSUs shall not be transferable by the Participant by means of sale, assignment, exchange, encumbrance, pledge, or otherwise.

(b)Notwithstanding anything to the contrary contained herein, for the one year period immediately following the end of the Restriction Period, the Vested RSUs (and the shares of Common Stock received upon the conversion of the Vested RSUs under Section 3) shall not be transferable by the Participant by means of sale, assignment, exchange, or otherwise, provided that (i) nothing in this Section 4(b) shall prevent the Participant from pledging or encumbering such shares of Common Stock during such one year period so long as such pledge or encumbrance cannot cause a transfer or sale of the shares of Common Stock until after the expiration of such one year period; (ii) in the event of the Participant’s death during such one year period, such restrictions shall terminate on the Participant’s death and the shares of Common Stock may be transferred to the individual who is entitled to receive the property of the Participant pursuant to the applicable laws of descent and distribution; (iii) nothing in this Section 4(b) shall prevent the sale or transfer of the shares 

of Common Stock on, in connection with, or after a Change in Control; and (iv) nothing in this Section 4(b) shall prevent the withholding of shares of Common Stock deliverable upon vesting of the Awarded Units as provided in Section 9 below.

5.Non-Solicitation. 

The Participant covenants and agrees that during his or her employment with the Company or its Subsidiaries and for a period of twelve (12) months subsequent to the Participant’s Termination of Service for any reason, whether involuntary or voluntary, the Participant shall not directly or indirectly, as an owner, stockholder, director, employee, partner, agent, broker, or consultant recruit, hire or attempt to recruit or hire other employees of the Company or its Subsidiaries, directly or by assisting other employees of the Company and its Subsidiaries, nor shall the Participant contact or communicate with any other employees of the Company or its Subsidiaries for the purpose of inducing other employees to terminate their employment with the Company or its Subsidiaries.  For purposes of this Section 5, “other employees” shall refer to employees who are still actively employed by or doing business with the Company or its Subsidiaries at the time of the attempted recruiting or hiring. Notwithstanding anything to the contrary contained herein, in the event the Participant fails to comply with the non-solicitation provisions set forth in this Section 5, or the non-solicitation provisions contained in any written agreement by and between the Participant and the Company or its Subsidiaries, then (i) the Awarded Units shall immediately cease to vest as of the date of such violation, and (ii) any Vested RSUs that had not been converted into shares of Common Stock prior to the date of such violation and any Unvested RSUs shall be immediately forfeited and this Agreement (other than the provisions of this Section 5) will be terminated on the date of such violation.

6.Rights as a Stockholder.

The Participant will have no rights as a stockholder with respect to any shares of Common Stock covered by this Agreement until the electronic registration of, or the issuance of certificates for, such shares of Common Stock in the Participant’s name with respect to the Awarded Units.  The Awarded Units shall be subject to the terms and conditions of this Agreement regarding such shares of Common Stock.  No adjustment shall be made for dividends or other rights for which the record date is prior to the registration of, or the issues of certificates for, such shares of Common Stock in the Participant’s name.

7.Adjustments.

Adjustments to the Awarded Units (or any of the shares of Common Stock covered by the Awarded Units), if any, shall be made in accordance with Article XI of the Plan.

8.Conditions for Issuance.  

The Committee may, in its discretion, require the Participant to represent to, and agree with, the Company in writing that such person is acquiring the shares of Common Stock without a view to the distribution thereof.  The certificates for such shares of Common Stock may include any legend which the Committee deems appropriate to reflect any restrictions on transfer.  Notwithstanding any other provision of the Plan or this Agreement, the Company shall not be required to issue or deliver any certificate or certificates for shares of Common Stock under the Plan prior to fulfillment of all of the following conditions: (i) listing, or approval for listing upon notice of issuance, of such shares of Common Stock on the applicable exchange; (ii) any registration or other qualification of such shares  of Common Stock under any state or federal law or regulation, or the maintaining in effect of any such registration or other qualification which the Committee shall, in its absolute discretion upon the advice of counsel, deem necessary or advisable; and (iii) obtaining any other consent, approval, or permit from any state or federal governmental agency which the Committee shall, in 

its absolute discretion after receiving the advice of counsel, determine to be necessary or advisable. Notwithstanding any of the provisions hereof, the Participant hereby agrees that he or she will not acquire any shares of Common Stock, and that the Company will not be obligated to issue any shares of Common Stock to the Participant hereunder, if the issuance of such shares of Common Stock shall constitute a violation by the Participant or the Company of any provision of any law or regulation of any governmental authority.  Any determination in this connection by the Company shall be final, binding, and conclusive.  The obligations of the Company and the rights of the Participant are subject to all applicable laws, rules, and regulations.  

9. Taxes and Withholding.

No later than the date as of which an amount with respect to this Agreement first becomes includible in the gross income of the Participant or subject to withholding for federal, state, local, or foreign income or employment or other tax purposes, the Participant shall pay to the Company or the applicable Subsidiary, or make arrangements satisfactory to the Company regarding the payment of, any federal, state, local, or foreign taxes of any kind required by applicable law and regulations to be withheld with respect to such amount.  Unless the Participant has made separate arrangements satisfactory to the Company, the Company may elect, but shall not be obligated, to withhold shares of Common Stock deliverable upon vesting of the Awarded Units having a Fair Market Value on the date of withholding equal to the minimum amount (and not any greater amount) required to be withheld for tax purposes, all in accordance with such procedures as the Committee establishes.  The obligations of the Company under this Agreement and the Plan shall be conditional on compliance by the Participant with this Section 9, and the Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise payable to the Participant.  The Committee may establish such procedures as it deems appropriate, including making irrevocable elections, for the settlement of withholding obligations with shares of Common Stock.  

10.Notices.

All notices and other communications under this Agreement shall be in writing and shall be given by hand delivery to the other party or by facsimile, overnight courier, or registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

			
	
If to the Participant:
	
 
	
At the most recent address maintained by the
Company in its personnel records.

	
 
	
 
	
 

	
If to the Company:
	
 
	
First Acceptance Corporation

	
 
	
 
	
3813 Green Hills Village Drive

	
 
	
 
	
Nashville, Tennessee 37215

	
Attention:
	
 
	
Chief Financial Officer

 

or to such other address or facsimile number as any party shall have furnished to the other in writing in accordance with this Section 10.  Notice and communications shall be effective when actually received by the addressee.

11.Successors and Assigns.

The terms of this Agreement shall be binding upon the Participant and upon the Participant’s heirs, executors, administrators, personal representatives, transferees, and successors in interest, and upon the Company and its successors and assignees.  Notwithstanding anything to the contrary in this Agreement, neither this Agreement nor any rights granted herein shall be assignable by the Participant.

12.Laws Applicable to Construction.

The interpretation, performance, and enforcement of this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to principles of conflict of laws.  In addition to the terms and conditions set forth in this Agreement, this Award is subject to the terms and conditions of the Plan, as it may be amended from time to time, which are hereby incorporated by reference.  

13.Severability.

The invalidity or enforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

14.Conflicts and Interpretation.

In the event of any conflict between this Agreement and the Plan, the Plan shall control.  In the event of any ambiguity in this Agreement, or any matters as to which this Agreement is silent, the Plan shall govern, including, without limitation, the provisions thereof pursuant to which the Committee has the power, among others, to (i) interpret the Plan; (ii) prescribe, amend, and rescind rules and regulations relating to the Plan; and (iii) make all other determinations deemed necessary or advisable for the administration of the Plan.  The Participant hereby agrees to accept as binding, conclusive, and final all decisions or interpretations of the Committee upon any question arising under this Agreement.  

15.Amendment.

This Agreement may be unilaterally amended or modified by the Committee at any time; provided that no amendment or modification shall cause a Performance Award to cease to qualify for the exemption under Section 162(m) of the Code or, without the Participant’s written consent, materially impair the rights of the Participant as provided by this Agreement, except such an amendment made to cause the terms of this Agreement or the Awarded Units granted hereunder to comply with applicable law (including tax law), applicable exchange listing standards, or accounting rules.  The waiver by either party of compliance with any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by such party of a provision of this Agreement.

16.Clawback.

All Awarded Units granted pursuant to this Agreement shall be subject to any clawback, recoupment, or forfeiture provisions (i) required by law or regulation and applicable to the Company or its Subsidiaries as in effect from time to time or (ii) set forth in any policies adopted or maintained by the Company or any of its Subsidiaries as in effect from time to time.

17.Headings.

The headings of paragraphs herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any of the provisions of this Agreement.

18.Counterparts.

This Agreement may be executed in counterparts, which together shall constitute one and the same original.

19.Entire Agreement.

This Agreement together with the Plan supersede any and all other prior understandings and agreements, either oral or in writing, between the parties with respect to the subject matter hereof and constitute the sole and only agreements between the parties with respect to the said subject matter.  All prior negotiations and agreements between the parties with respect to the subject matter hereof are merged into this Agreement.  Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement or the Plan, and that any agreement, statement, or promise that is not contained in this Agreement or the Plan shall not be valid or binding or of any force or effect.

20. Section 409A; Six Month Delay.  

The Awarded Units granted under this Agreement are intended to be exempt from Section 409A of the Code, and the provisions of this Agreement will be administered, interpreted, and construed accordingly.  Notwithstanding anything to the contrary contained herein, in the event any distribution made on account of the Participant’s Termination of Service as provided in Section 1 above is deemed to be subject to (and not otherwise exempt from) the requirements of Section 409A of the Code and the Participant is deemed a “specified employee” (within the meaning of Section 409A of the Code and the regulations issued thereunder), then the Participant shall not be entitled to any such distributions that are subject to Section 409A of the Code until the earliest of: (i) the first day of the seventh month following the Participant’s Termination of Service; (ii) the date of the Participant’s death; or (iii) such earlier date as complies with the requirements of Section 409A of the Code.

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IN WITNESS WHEREOF, as of the date first above written, the Company has caused this Agreement to be executed on its behalf by a duly authorized officer and the Participant has hereunto set the Participant’s hand.

FIRST ACCEPTANCE CORPORATION

 

			
	
By:
	
 
	
 

	
Name:
	
 

	
Title:
	
 

 

 

Agreed and acknowledged:

 

PARTICIPANT

 

 

___________________________

Name:

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