Document:

Exhibit
10.1

 

FIRST INVESTORS FINANCIAL
SERVICES GROUP, INC.

2005 STOCK OPTION PLAN

 

ARTICLE I.  ESTABLISHMENT AND PURPOSE

 

1.1          Establishment
and Purpose.  First
Investors Financial Services Group, Inc. (“First Investors”) hereby establishes
the First Investors Financial Services Group, Inc. 2005 Stock Option Plan,
as set forth in this document.  The
purposes of the Plan are to attract able persons to enter the employ of the
Company, to encourage Employees to remain in the employ of the Company and to
provide motivation to Employees to put forth maximum efforts toward the
continued growth, profitability and success of the Company, by providing
incentives to such persons through the ownership and performance of the Common
Stock of First Investors.  A further purpose
of the Plan is to provide a means through which the Company may attract able
persons to become directors and officers of the Company and to provide such
individuals with incentive and reward opportunities.  Toward these objectives, Options may be granted
under the Plan to Employees, directors and other individuals serving as
officers for the Company on the terms and subject to the conditions set forth
in the Plan.

 

1.2          Effectiveness
and Term.  The
Plan shall become effective as of July 12, 2005, the date of its adoption
by the Board (the “Effective Date”), provided it is duly approved by the
holders of at least a majority of the shares of Common Stock present or
represented and entitled to vote at a meeting of the stockholders of First
Investors duly held in accordance with applicable law within twelve months
after the date of adoption of the Plan by the Board.  If the Plan is not so approved, the Plan
shall terminate and any Option granted hereunder shall be null and void.

 

ARTICLE II.  DEFINITIONS

 

2.1          “Affiliate” means (i) with respect to Incentive Stock
Options, a “parent corporation” or a “subsidiary corporation” of First
Investors, as those terms are defined in sections 424(e) and (f) of
the Code, respectively, and (ii) with respect to Nonqualified Stock Options,
(A) a “parent corporation” or a subsidiary corporation” of First Investors
as defined in (i) above, (B) a limited liability company, partnership
or other entity in which First Investors controls 50% or more of the voting
power or equity interests.

 

2.2          “Board” means the Board of Directors of First Investors.

 

2.3          “Cause” means a finding by the Committee of acts or omissions
constituting willful misconduct or gross negligence in the course of the Optionee’s
employment or service with the Company.

 

2.4          “Change of Control” means any of the following events:

 

(a)           the consummation of a reorganization,
merger, consolidation or other form of business transaction or series of
business transactions, in each case, with respect to which persons who were stockholders
of First Investors immediately prior to such

 

 

reorganization, merger or consolidation or
other transaction do not, immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in the election of directors
of the reorganized, merged or consolidated company’s then outstanding voting
securities; or

 

(b)           the sale, lease or disposition (in
one or a series of related transactions) by the Company of all or substantially
all of the Company’s assets to any person or its Affiliates, other than the
Company or its Affiliates; or

 

(c)           the approval by the Board or the stockholders
of First Investors of a complete or substantially complete liquidation or
dissolution of First Investors; or

 

(d)           any event similar to the foregoing
that the Committee determines in its absolute discretion would, if consummated,
materially alter the structure or business First Investors.

 

2.5          “Code” means the Internal Revenue Code of 1986, as amended
from time to time, including regulations thereunder and successor provisions
and regulations.

 

2.6          “Committee”
means the Compensation Committee of the Board or such
other committee of the Board as may be designated by the Board to administer
the Plan, which committee shall consist of two or more members of the Board.  During such time as the Common Stock is
registered under Section 12 of the Exchange Act, each member of the
Committee shall be an Outside Director.  To
the extent that no Committee exists that has the authority to administer the
Plan, the functions of the Committee shall be exercised by the Board.

 

2.7          “Common Stock” means the common stock of First Investors, $0.001
par value per share, or any stock or other securities of hereafter issued or
issuable in substitution or exchange for the Common Stock.

 

2.8          “Company” means First Investors and any Affiliate.

 

2.9          “Effective
Date” means the date this Plan becomes effective as provided in Section 1.2.

 

2.10        “Employee” means an employee of the Company; provided,
however, that the term “Employee” does not include an Outside Director or an
individual performing services for the Company who is treated for tax purposes
as an independent contractor at the time of performance of the services.

 

2.11        “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

 

2.12        “Fair Market Value” means the fair market value of the Common
Stock, as determined in good faith by the Committee or (i) if the Common
Stock is traded in the over-the-counter market, the average of the
representative closing bid and asked prices as reported by NASDAQ for the date
the Option is granted (or if there was no quoted price for such date of

 

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grant, then for the last
preceding business day on which there was a quoted price), or (ii) if the
Common Stock is traded in the NASDAQ National Market System, the average of the
highest and lowest selling prices for such stock as quoted on the NASDAQ
National Market System for the date the Option is granted (or if there are no
sales for such date of grant, then for the last preceding business day on which
there were sales), or (iii) if the Common Stock is listed on any national
stock exchange, the average of the highest and lowest selling prices for such
stock as quoted on such exchange for the date the Option is granted (or if
there are no sales for such date of grant, then for the last preceding business
day on which there were sales).

 

2.13        “First Investors” means First Investors Financial Services
Group, Inc., a Texas corporation, or any successor thereto.

 

2.14        “Grant Date” means the date an Option is determined to be
effective by the Committee upon the grant of such Option.

 

2.15        “Incentive Stock Option” means an Option that is intended to
meet the requirements of section 422(b) of the Code.

 

2.16        “NASDAQ” means The NASDAQ Stock Market, Inc.

 

2.17        “Nonqualified Stock Option” means an Option that is not an
Incentive Stock Option.

 

2.18        “Option” means an option to purchase shares of Common Stock
granted to an Optionee pursuant to the Plan. 
An Option may be either an Incentive Stock Option or a Nonqualified
Stock Option, as determined by the Committee.

 

2.19        “Option Agreement” means a written agreement between First
Investors and an Optionee that sets forth the terms, conditions, restrictions
and limitations applicable to an Option.

 

2.20        “Optionee” means an Employee, director or officer
performing services for the Company that has been granted an Option.

 

2.21        “Outside Director” means a member of the Board who: (i) meets
the independence requirements of the principal exchange or quotation system
upon which the shares of Common Stock are listed or quoted, (ii) from and
after the date on which the remuneration paid pursuant to the Plan becomes
subject to the deduction limitation under Section 162(m) of the Code,
qualifies as an “outside director” under Section 162(m) of the Code, (iii) qualifies
as a “non-employee director” of First Investors under Rule 16b-3, and (iv) satisfies
independence criteria under any other applicable laws or regulations relating
to the issuance of shares of Common Stock to Employees.

 

2.22        “Permitted Transferee” shall have the meaning given such term
in Section 9.4.

 

2.23        “Plan” means this First Investors Financial Services Group, Inc.
2005 Stock Option Plan, as in effect from time to time.

 

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2.24        “Rule 16b-3” means Rule 16b-3 promulgated by the
Securities and Exchange Commission under the Exchange Act, or any successor rule or
regulation that may be in effect from time to time.

 

ARTICLE III.  PLAN ADMINISTRATION

 

3.1          Plan
Administrator and Discretionary Authority.  The Plan shall be administered by the
Committee.  The Committee shall have
total and exclusive responsibility to control, operate, manage and administer
the Plan in accordance with its terms. 
The Committee shall have all the authority that may be necessary or
helpful to enable it to discharge its responsibilities with respect to the
Plan.  Without limiting the generality of
the preceding sentence, the Committee shall have the exclusive right to:  (i) interpret the Plan and the Option
Agreements executed hereunder; (ii) decide all questions concerning
eligibility for, and the amount of, Options granted under the Plan; (iii) construe
any ambiguous provision of the Plan or any Option Agreement; (iv) prescribe
the form of Option Agreements; (v) correct any defect, supply any omission
or reconcile any inconsistency in the Plan or any Option Agreement; (vi) issue
administrative guidelines as an aid to administering the Plan and make changes
in such guidelines as the Committee from time to time deems proper; (vii) make
regulations for carrying out the Plan and make changes in such regulations as
the Committee from time to time deems proper; (viii) determine whether Options
should be granted singly or in combination; (ix) to the extent permitted
under the Plan, grant waivers of Plan terms, conditions, restrictions and
limitations; (x) accelerate the exercise or vesting of an Option when such
action or actions would be in the best interests of the Company; (xi) require Optionees
to hold a stated number or percentage of shares of Common Stock acquired
pursuant to an Option for a stated period; and (xii) take any and all other
actions the Committee deems necessary or advisable for the proper operation or
administration of the Plan.  The
Committee shall have authority in its sole discretion with respect to all
matters related to the discharge of its responsibilities and the exercise of
its authority under the Plan, including without limitation its construction of
the terms of the Plan and its determination of eligibility for participation in,
and the terms of Options granted under, the Plan.  The decisions of the Committee and its
actions with respect to the Plan shall be final, conclusive and binding on all
persons having or claiming to have any right or interest in or under the Plan,
including without limitation Optionees and their respective Permitted
Transferees, estates, beneficiaries and legal representatives.

 

3.2          Liability;
Indemnification. 
No member of the Committee, nor any person to whom it has delegated authority,
shall be personally liable for any action, interpretation or determination made
in good faith with respect to the Plan or Options granted hereunder, and each
member of the Committee (or delegatee of the Committee) shall be fully
indemnified and protected by First Investors with respect to any liability he
may incur with respect to any such action, interpretation or determination, to
the maximum extent permitted by applicable law.

 

ARTICLE IV.  SHARES SUBJECT TO THE PLAN

 

4.1          Available
Shares.  Subject
to adjustment as provided in Section 4.2, the maximum number of shares of
Common Stock that shall be available for grant of Options under

 

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the Plan, including Incentive
Stock Options, shall be 200,000 shares of Common Stock.  Shares of Common Stock issued pursuant to the
Plan may be original issue or treasury shares or a combination of the
foregoing, as the Committee, in its sole discretion, shall from time to time
determine.  During the term of this Plan,
First Investors will at all times reserve and keep available such number of
shares of Common Stock as shall be sufficient to satisfy the requirements of the
Plan.

 

4.2          Adjustments
for Recapitalizations and Reorganizations.  If there is any change in the number or kind
of shares of Common Stock outstanding (i) by reason of a stock dividend,
spin-off, recapitalization, stock split, or combination or exchange of shares, (ii) by
reason of a merger, reorganization, or consolidation, (iii) by reason of a
reclassification or change in par value, or (iv) by reason of any other
extraordinary or unusual event affecting the outstanding Common Stock as a
class without First Investors’ receipt of consideration, or if the value of
outstanding shares of Common Stock is reduced as a result of a spin-off or First
Investors’ payment of an extraordinary cash dividend, or distribution or
dividend or distribution consisting of any assets of First Investors other than
cash, the maximum number and kind of shares of Common Stock available for
issuance under the Plan, the maximum number and kind of shares of Common Stock
available for issuance under the Plan as Options, including Incentive Stock
Options, the number and kind of shares of Common Stock covered by outstanding Options,
and the price per share or the applicable market value or performance target of
such Options may be appropriately adjusted by the Committee to reflect any increase
or decrease in the number of, or change in the kind or value of, issued shares
of Common Stock to preclude, to the extent practicable, the enlargement or
dilution of rights under such Options; provided, however, that any fractional
shares resulting from such adjustment shall be eliminated.

 

4.3          Adjustments
for Options. 
The Committee shall have sole discretion to determine the manner in
which shares of Common Stock available for grant of Options under the Plan are
counted.  Without limiting the discretion
of the Committee under this Section 4.3, unless otherwise determined by
the Committee, the following rules shall apply for the purpose of
determining the number of shares of Common Stock available for grant of Options
under the Plan:

 

(a)           Options.  The grant of Options shall reduce the number
of shares of Common Stock available for grant under the Plan by the number of
shares of Common Stock subject to such an Option.

 

(b)           Cancellation, Forfeiture
and Termination.  If any Option
referred to in Section 4.3(a) is canceled or forfeited, or
terminates, expires or lapses, for any reason, the shares then subject to such Option
shall again be available for grant of Options under the Plan.

 

(c)           Payment of Exercise Price
and Withholding Taxes.  If
previously acquired shares of Common Stock are used to pay the exercise price
of an Option, the number of shares available for grant of Options under the
Plan shall be increased by the number of shares delivered as payment of such
exercise price.  If previously acquired
shares of Common Stock are used to pay withholding taxes payable upon exercise
or

 

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vesting of an Option, or shares of Common
Stock that would be acquired upon exercise, vesting or payment of an Option are
withheld to pay withholding taxes payable upon exercise or vesting of such Option,
the number of shares available for grant of Options under the Plan shall be
increased by the number of shares delivered or withheld as payment of such
withholding taxes.

 

ARTICLE V.  ELIGIBILITY

 

The Committee shall select Optionees from
those Employees, directors and officers performing services for the Company that,
in the opinion of the Committee, are in a position to make a significant
contribution to the success of the Company. 
Once a Optionee has been selected for an Option by the Committee, the
Committee shall determine the type and size of Option to be granted to the Optionee
and shall establish in the related Option Agreement the terms, conditions,
restrictions and limitations applicable to the Option, in addition to those set
forth in the Plan and the administrative guidelines and regulations, if any,
established by the Committee.

 

ARTICLE VI.  OPTIONS

 

6.1          General.  Options may be granted in the form of
Incentive Stock Options or Nonqualified Stock Options, or a combination of both;
provided, however, that Incentive Stock Options may only be granted to
Employees.  All Options shall be subject
to the terms, conditions, restrictions and limitations of the Plan.

 

6.2          Terms
and Conditions of Options.

 

(a)           An Option shall be exercisable in
whole or in such installments and at such times as may be determined by the
Committee.  The price at which a share of
Common Stock may be purchased upon exercise of an Option shall be determined by
the Committee, but such exercise price shall not be less than 100% of the Fair Market Value per share
of Common Stock on the Grant Date unless the Option was granted through the
assumption of, or in substitution for, outstanding awards previously granted to
individuals who became Employees as a result of a merger, consolidation,
acquisition, or other corporate transaction involving the Company.  Except as otherwise provided in Section 6.3,
the term of each Option shall be as specified by the Committee; provided,
however, that no Options shall be exercisable later than ten years after the
Grant Date.

 

(b)           The Committee may, in its sole
discretion, subject any Option to such other terms, conditions, restrictions
and/or limitations (including without limitation the time and conditions of
exercise, vesting or payment of an Option and restrictions on transferability
of any shares of Common Stock issued or delivered pursuant to an Option),
provided they are not inconsistent with the terms of the Plan.  The Committee may, but is not required to,
subject an Option to such conditions as it determines are necessary or
appropriate to ensure than an Option constitutes “qualified performance based
compensation” within the meaning of section 162(m) of the Code and the
regulations thereunder.  Any combination
of Options may be granted at one time and on

 

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more than one occasion to the same
Optionee.  The Committee may permit or
require an Optionee to defer receipt of the payment of cash or the delivery of
shares of Common Stock that would otherwise be due to the Optionee in
connection with any Option; provided, however, that any permitted deferrals
shall be structured to avoid negative tax consequences to the Optionee under Section 409A
of the Code.

 

6.3          Restrictions
Relating to Incentive Stock Options.

 

(a)           Options granted in the form of
Incentive Stock Options shall, in addition to being subject to the terms and
conditions of Section 6.2, comply with section 422(b) of the
Code.  To the extent the aggregate Fair
Market Value (determined as of the times the respective Incentive Stock Options
are granted) of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by an individual during any calendar year under
all incentive stock option plans of First Investors and its Affiliates exceeds
$100,000, such excess Incentive Stock Options shall be treated as options that
do not constitute Incentive Stock Options. 
The Committee shall determine, in accordance with the applicable
provisions of the Code, which of an Optionee’s Incentive Stock Options will not
constitute Incentive Stock Options because of such limitation and shall notify
the Optionee of such determination as soon as practicable after such
determination.  The price at which a
share of Common Stock may be purchased upon exercise of an Incentive Stock
Option shall be determined by the Committee, but such exercise price shall not
be less than 100% of the Fair Market Value of a share of Common Stock on the
Grant Date.  No Incentive Stock Option
shall be granted to an Employee under the Plan if, at the time such Option is
granted, such Employee owns stock possessing more than 10% of the total
combined voting power of all classes of stock of First Investors or an
Affiliate, within the meaning of section 422(b)(6) of the Code,
unless (i) on the Grant Date of such Option, the exercise price of such
Option is at least 110% of the Fair Market Value of the Common Stock subject to
the Option and (ii) such Option by its terms is not exercisable after the
expiration of five years from the Grant Date of the Option.

 

(b)           Each Optionee awarded an Incentive
Stock Option shall notify First Investors in writing immediately after the date
he or she makes a disqualifying disposition of any shares of Common Stock
acquired pursuant to the exercise of such Incentive Stock Option.  A disqualifying disposition is any
disposition (including any sale) of such Common Stock before the later of (i) two
years after the Grant Date of the Incentive Stock Option or (ii) one year
after the date of exercise of the Incentive Stock Option.

 

6.4          Exercise
of Options.

 

(a)           Subject to the terms and conditions
of the Plan, Options shall be exercised by the delivery of a written notice of
exercise to First Investors, setting forth the number of whole shares of Common
Stock with respect to which the Option is to be exercised, accompanied by full
payment for such shares.

 

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(b)           Upon exercise of an Option, the
exercise price of the Option shall be payable to First Investors in full
either: (i) in cash or an equivalent acceptable to the Committee, or (ii) in
the sole discretion of the Committee and in accordance with any applicable administrative
guidelines established by the Committee, by tendering one or more previously
acquired nonforfeitable, unrestricted shares of Common Stock that have been
held by the Optionee for at least six months having an aggregate Fair Market
Value at the time of exercise equal to the total exercise price, or (iii) in
a combination of the forms of payment specified in clauses (i) and (ii) above.

 

(c)           During such time as the Common Stock
is registered under Section 12 of the Exchange Act, to the extent permissible
under applicable law, payment of the exercise price of an Option may also be
made, in the absolute discretion of the Committee, by delivery to First
Investors or its designated agent of an executed irrevocable option exercise
form together with irrevocable instructions to a broker-dealer to sell or
margin a sufficient portion of the shares with respect to which the Option is
exercised and deliver the sale or margin loan proceeds directly to First
Investors to pay the exercise price and any required withholding taxes.

 

(d)           As soon as reasonably practicable
after receipt of written notification of exercise of an Option and full payment
of the exercise price and any required withholding taxes, First Investors shall
(i) deliver to the Optionee, in the Optionee’s name or the name of the Optionee’s
designee, a stock certificate or certificates in an appropriate aggregate amount
based upon the number of shares of Common Stock purchased under the Option, or (ii) cause
to be issued in the Optionee’s name or the name of the Optionee’s designee, in
book-entry form, an appropriate number of shares of Common Stock based upon the
number of shares purchased under the Option.

 

6.5          Termination
of Employment.

 

(a)           Each Option Agreement embodying the award
of an Option shall set forth the extent to which the Optionee shall have the
right to exercise the Option following termination of the Optionee’s employment
or service with the Company.  Such
provisions shall be determined by the Committee in its absolute discretion, need
not be uniform among all Options granted under the Plan and may reflect
distinctions based on the reasons for termination of employment or service.  In the event an Option Agreement does not set
forth such termination provisions, then the following provisions shall apply
with respect to such Option: if the employment or service of an Optionee shall
terminate for any reason, with or without Cause, each outstanding Option held
by the Optionee may be exercised, to the extent then vested, until the earlier
of (i) the expiration of three months from the date of such termination of
employment or service or (ii) the expiration of the term of such Option.

 

(b)           Notwithstanding the foregoing, an
Option will not be treated as an Incentive Stock Option unless at all times
beginning on the Grant Date and ending on the day three months (one year in the
case of an Optionee who is “disabled” within the meaning of Section 22(e)(3) of
the Code) before the date of exercise of the Option, the

 

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Optionee is an
Employee of First Investors or an Affiliate (or a corporation or a parent or
subsidiary corporation of such corporation issuing or assuming an option in a
transaction to which Section 424(a) of the Code applies).

 

6.6          No
Repricing. 
Except for adjustments made pursuant to Section 4.2,  no Option may be repriced, replaced,
regranted through cancellation or otherwise modified without stockholder
approval, if the effect would be to reduce the exercise price for the shares
underlying such Option; and, the Committee may not cancel an outstanding Option
that is under water for the purpose of granting a replacement Option of a
different type.

 

6.7          Loans.  The Committee may, in its sole discretion,
approve the extension of a loan by the Company to an Optionee who is an
Employee to assist the Optionee in paying the exercise price or purchase price
of an Option; provided, however, that no loan shall be permitted if the
extension of such loan would violate any provision of applicable law.  Any loan will be made upon such terms and
conditions as the Committee shall determine.

 

ARTICLE VII.  CHANGE OF CONTROL

 

7.1          Vesting
of Options.  Except as provided
otherwise below in this Article or in an Option Agreement at the time an
Option is granted, notwithstanding anything to the contrary in this Plan, upon
any Change of Control, any time periods, conditions or contingencies relating
to the exercise of any Option shall be automatically accelerated so that the
Option may be exercised at the effective time of the Change of Control;
provided, however, that in the event all outstanding Options are replaced as of
the effective time of a Change of Control by comparable types of awards of
greater or at least substantially equivalent value, as determined by the Committee
in its sole discretion, no such automatic acceleration shall occur except to
the extent the Committee, in its sole discretion, provides for such
acceleration or unless such acceleration is expressly provided for in
connection with such replacement.

 

7.2          Cancellation of Options.  Notwithstanding
the foregoing, on or prior to the date of a Change of Control, with respect to
any or all outstanding Options, the Committee may, without the consent of any
Optionee, require that Optionees surrender their outstanding Options in
exchange for payment by the Company, in cash, Common Stock, the securities of
another company, or a combination thereof, as determined by the Committee, in
an amount equal to the amount, if any, by which the then Fair Market Value of
the shares of Common Stock subject to the Optionee’s unexercised Options
exceeds the exercise price.

 

ARTICLE VIII.  AMENDMENT AND TERMINATION

 

8.1          Plan
Amendment and Termination.  The Board may
at any time suspend, terminate, amend or modify the Plan, in whole or in part;
provided, however, that no amendment or modification of the Plan shall become
effective without the approval of such amendment or modification by the holders
of at least a majority of the shares of Common Stock if (i) such amendment
or modification increases the maximum number of shares subject to the Plan
(except as provided in Article IV) or changes the designation or class of
persons eligible to receive Options under the Plan, or (ii) counsel for First
Investors determines that such approval is

 

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otherwise required by or necessary to comply with
applicable law or the listing requirements of NASDAQ or such other exchange or
association on which the Common Stock is then listed or quoted.  An amendment to the Plan
shall not require stockholder approval if it curtails rather than expands the
scope of the Plan, nor if it is made to conform the Plan to new statutory or
regulatory requirements that arise after submission of the Plan to stockholders
for their approval, such as, without limitation, changes to section 409A
of the Code, or regulations or other guidance issued thereunder.  Upon
termination of the Plan, the terms and provisions of the Plan shall,
notwithstanding such termination, continue to apply to Options granted prior to
such termination.  Except as otherwise
provided herein, no suspension, termination, amendment or modification of the
Plan shall adversely affect in any material way any Option previously granted
under the Plan, without the consent of the Optionee (or the Permitted
Transferee) holding such Option.

 

8.2          Option
Amendment and Cancellation.  The Committee
may amend the terms of any outstanding Option granted pursuant to the Plan, but
except as otherwise provided herein, no such amendment shall adversely affect
in any material way the Optionee’s (or a Permitted Transferee’s) rights under
an outstanding Option without the consent of the Optionee (or the Permitted
Transferee) holding such Option.

 

ARTICLE IX. 
MISCELLANEOUS

 

9.1          Option
Agreements.  After the Committee grants an Option under
the Plan to an Optionee, First Investors and the Optionee shall enter into an Option
Agreement setting forth the terms, conditions, restrictions and limitations
applicable to the Option and such other matters as the Committee may determine
to be appropriate.  The terms and
provisions of the respective Option Agreements need not be identical.  All Option Agreements shall be subject to the
provisions of the Plan, and in the event of any conflict between an Option
Agreement and the Plan, the terms of the Plan shall govern.

 

9.2          Listing; Suspension.

 

(a)           As long as the Common Stock is listed on a national securities
exchange or system sponsored by a national securities association, the issuance
of any shares of Common Stock pursuant to an Option shall be conditioned upon
such shares being listed on such exchange or system.  First Investors shall have no obligation to
issue such shares unless and until such shares are so listed, and the right to
exercise any Option or other Option with respect to such shares shall be
suspended until such listing has been effected.

 

(b)           If at any time counsel to First Investors or its Affiliates shall
be of the opinion that any sale or delivery of shares of Common Stock pursuant
to an Option is or may in the circumstances be unlawful or result in the
imposition of excise taxes on First Investors or its Affiliates under the laws
of any applicable jurisdiction, First Investors or its Affiliates shall have no
obligation to make such sale or delivery, or to make any application or to
effect or to maintain any qualification or registration under the Securities
Act of 1933, as amended, or otherwise, with respect to shares of Common Stock
or Options, and the right to exercise any Option or other Option shall be
suspended

 

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until, in
the opinion of such counsel, such sale or delivery shall be lawful or will not
result in the imposition of excise taxes on First Investors or its Affiliates.

 

(c)           Upon termination of any period of suspension under this Section,
any Option affected by such suspension that shall not then have expired or
terminated shall be reinstated as to all shares available before such suspension
and as to shares that would otherwise have become available during the period
of such suspension, but no such suspension shall extend the term of any Option
unless otherwise determined by the Committee in its sole discretion.

 

9.3          Additional
Conditions.  Notwithstanding anything in the Plan to the
contrary:  (i) the Committee may, if
it shall determine it necessary or desirable in its sole discretion, at the
time of grant of any Option or the issuance of any shares of Common Stock
pursuant to any Option, require the recipient of the Option or such shares of
Common Stock, as a condition to the receipt thereof, to deliver to First
Investors a written representation of present intention to acquire the Option
or such shares of Common Stock for his own account for investment and not for
distribution, (ii) the certificate for shares of Common Stock issued to an
Optionee may include any legend that the Committee deems appropriate to reflect
any restrictions on transfer, and (iii) all certificates for shares of
Common Stock delivered under the Plan shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable under the
rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange or association upon which the Common Stock is
then listed or quoted, any applicable federal or state securities law, and any
applicable corporate law, and the Committee may cause a legend or legends to be
placed on any such certificates to make appropriate reference to such
restrictions.

 

9.4          Transferability.

 

(a)           All Options granted to an Optionee shall
be exercisable during his lifetime only by such Optionee, or if applicable, a
Permitted Transferee as provided in subsection (c) of this Section;
provided, however, that in the event of an Optionee’s legal incapacity, an Option
may be exercised by his guardian or legal representative.  When an Optionee dies, the
personal representative, beneficiary, or other person entitled to succeed to
the rights of the Optionee may acquire the rights under an Option. Any such
successor must furnish proof satisfactory to First Investors of the successor’s
entitlement to receive the rights under an Option under the Optionee’s will or
under the applicable laws of descent and distribution.

 

(b)           Except as otherwise provided in this
Section, no Option shall be subject to execution, attachment or similar
process, and no Option may be sold, transferred, pledged, exchanged,
hypothecated or otherwise disposed of, other than by will or pursuant to the
applicable laws of descent and distribution. 
Any attempted sale, transfer, pledge, exchange, hypothecation or other
disposition of an Option not specifically permitted by the Plan or the Option
Agreement shall be null and void and without effect.

 

11

 

(c)           If provided in the Option Agreement,
Nonqualified Stock Options may be transferred by an Optionee to a Permitted
Transferee.  For purposes of the Plan, “Permitted
Transferee” means (i) a member of an Optionee’s immediate family, (ii) any
person sharing the Optionee’s household (other than a tenant or employee of the
Optionee), (iii) trusts in which a person listed in (i) or (ii) above
has more than 50% of the beneficial interest, (iv) a foundation in which
the Optionee or a person listed in (i) or (ii) above controls the
management of assets, (v) any other entity in which the Optionee or a
person listed in (i) or (ii) above owns more than 50% of the voting
interests, provided that in the case of the preceding clauses (i) through
(v), no consideration is provided for the transfer, and (vi) any
transferee permitted under applicable securities and tax laws as determined by
counsel to First Investors.  In
determining whether a person is a “Permitted Transferee,” immediate family
members shall include an Optionee’s child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships.

 

(d)           Incident to an
Optionee’s divorce, the Optionee may request that First Investors agree to
observe the terms of a domestic relations order which may or may not be part of
a qualified domestic relations order (as defined in Code section 414(p))
with respect to all or a part of one or more Options made to the Optionee under
the Plan.  First Investors’ decision
regarding such a request shall be made by the Committee, in its sole and
absolute discretion, based upon the best interests of First Investors.  The Committee’s decision need not be uniform
among Optionees.  As a condition of
participation, an Optionee agrees to hold First Investors harmless from any
claim that may arise out of First Investors’ observance of the terms of any
such domestic relations order.

 

9.5          Withholding
Taxes.  The Company shall be entitled to deduct from
any payment made under the Plan, regardless of the form of such payment, the
amount of all applicable income and employment taxes required by law to be
withheld with respect to such payment, may require the Optionee to pay to the
Company such withholding taxes prior to and as a condition of the making of any
payment or the issuance or delivery of any shares of Common Stock under the
Plan, and shall be entitled to deduct from any other compensation payable to
the Optionee any withholding obligations with respect to Options.  In accordance with any applicable
administrative guidelines it establishes, the Committee may allow an Optionee
to pay the amount of taxes required by law to be withheld from or with respect
to an Option by (i) withholding shares of Common Stock from any payment of
Common Stock due as a result of such Option, or (ii) permitting the Optionee
to deliver to the Company previously acquired shares of Common Stock, in each
case having an aggregate Fair Market Value equal to the amount of such required
withholding taxes.  No payment shall be
made and no shares of Common Stock shall be issued pursuant to any Option
unless and until the applicable tax withholding obligations have been
satisfied.

 

9.6          No
Fractional Shares.  No fractional shares of Common
Stock shall be issued or delivered pursuant to the Plan or any Option granted
hereunder, provided that the Committee in its sole discretion may round
fractional shares down to the nearest whole share or settle fractional shares
in cash.

 

12

 

9.7          Notices. 
All notices required or permitted to be given or made under the Plan or pursuant
to any Option Agreement (unless provided otherwise in such Option Agreement)
shall be in writing and shall be deemed to have been duly given or made if (i) delivered
personally, (ii) transmitted by first class registered or certified United
States mail, postage prepaid, return receipt requested, (iii) sent by
prepaid overnight courier service, or (iv) sent by telecopy or facsimile
transmission, with confirmation receipt, to the person who is to receive it at
the address that such person has theretofore specified by written notice
delivered in accordance herewith.  Such
notices shall be effective (i) if delivered personally or sent by courier
service, upon actual receipt by the intended recipient, (ii) if mailed,
upon the earlier of five days after deposit in the mail or the date of delivery
as shown by the return receipt therefor, or (iii) if sent by telecopy or
facsimile transmission, when the answer back is received.  First Investors or an Optionee may change, at
any time and from time to time, by written notice to the other, the address
that it or such Optionee had theretofore specified for receiving notices.  Until such address is changed in accordance
herewith, notices hereunder or under an Option Agreement shall be delivered or
sent (i) to an Optionee at his address as set forth in the records of the
Company or (ii) to First Investors at the principal executive offices of First
Investors clearly marked “Attention:  Stock
Option Plan Administration.”

 

9.8          Compliance with Law and Stock
Exchange or Association Requirements.  In
addition, it is the intent of the First Investors that Options designated
Incentive Stock Options comply with the applicable provisions of Section 422
of the Code, and that Options intended to constitute “qualified
performance-based awards” comply with the applicable provisions of Section 162(m)
of the Code and that any deferral of the receipt of the payment of cash or the
delivery of shares of Common Stock that the Committee may permit or require,
and any Option granted that is subject to Section 409A of the Code, comply
with the requirements of Section 409A of the Code. To the extent that any
legal requirement of Section 16 of the Exchange Act or Sections 422,
162(m) or 409A of the Code as set forth in the Plan ceases to be required under
Section 16 of the Exchange Act or Sections 422, 162(m) or 409A of the
Code, that Plan provision shall cease to apply. 
Any provision of this Plan to the contrary notwithstanding, the
Committee may revoke any Option if it is contrary to law, governmental
regulation, or stock exchange or association requirements or modify an Option
to bring it into compliance with any government regulation or stock exchange or
association requirements.  The Committee
may agree to limit its authority under this Section.

 

9.9          Binding
Effect.  The obligations of First Investors under the
Plan shall be binding upon any successor corporation or organization resulting
from the merger, consolidation or other reorganization of First Investors, or
upon any successor corporation or organization succeeding to all or
substantially all of the assets and business of First Investors.  The terms and conditions of the Plan shall be
binding upon each Optionee and his Permitted Transferees, heirs, legatees,
distributees and legal representatives.

 

9.10        Severability. 
If any provision of the Plan or any Option Agreement is held to be
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions of the Plan or such agreement, as the case may
be, but such provision shall be fully

 

13

 

severable and the
Plan or such agreement, as the case may be, shall be construed and enforced as
if the illegal or invalid provision had never been included herein or therein.

 

9.11        No Restriction
of Corporate Action.  Nothing
contained in the Plan shall be construed to prevent First Investors or any
Affiliate from taking any corporate action (including any corporate action to
suspend, terminate, amend or modify the Plan) that is deemed by First Investors
or such Affiliate to be appropriate or in its best interest, whether or not
such action would have an adverse effect on the Plan or any Options made or to
be made under the Plan.  No Optionee or
other person shall have any claim against First Investors or any Affiliate as a
result of such action.

 

9.12        Governing
Law.  The Plan shall be governed by and construed
in accordance with the internal laws (and not the principles relating to
conflicts of laws) of the State of Texas except as superseded by applicable
federal law.

 

9.13        No
Right, Title or Interest in Company Assets. 
No Optionee shall have any rights as a stockholder of First Investors as
a result of participation in the Plan until the date of issuance of Common
Stock in his name.  To the extent any
person acquires a right to receive payments from the Company under the Plan,
such rights shall be no greater than the rights of an unsecured general
creditor of the Company, and such person shall not have any rights in or
against any specific assets of the Company. 
All Options shall be unfunded.

 

9.14        Risk
of Participation.  Nothing contained in the Plan
shall be construed either as a guarantee by First Investors or the Affiliates,
or their respective stockholders, directors, officers or employees, of the
value of any assets of the Plan or as an agreement by First Investors or the
Affiliates, or their respective stockholders, directors, officers or employees,
to indemnify anyone for any losses, damages, costs or expenses resulting from
participation in the Plan.

 

9.15        No
Guarantee of Tax Consequences.  No person
connected with the Plan in any capacity, including without limitation First
Investors and the Affiliates and their respective directors, officers, agents
and employees, makes any representation, commitment or guarantee that any tax
treatment, including without limitation federal, state and local income, estate
and gift tax treatment, will be applicable with respect to any Options or
payments thereunder made to or for the benefit of an Optionee under the Plan or
that such tax treatment will apply to or be available to an Optionee on account
of participation in the Plan.

 

9.16        Continued
Employment.  Nothing contained in the Plan or in any Option
Agreement shall confer upon any Optionee the right to continue in the employ or
service of the Company, or interfere in any way with the rights of the Company
to terminate an Optionee’s employment at or service any time, with or without
cause.  The loss of existing or potential
profit in Options will not constitute an element of damages in the event of
termination of employment or service for any reason, even if the termination is
in violation of an obligation of First Investors or an Affiliate to the Optionee.

 

9.17        Miscellaneous. 
Headings are given to the articles and sections of the Plan solely as a
convenience to facilitate reference. 
Such headings shall not be deemed in any way material

 

14

 

or relevant to the construction of the Plan or any
provisions hereof.  The use of the
masculine gender shall also include within its meaning the feminine.  Wherever the context of the Plan dictates,
the use of the singular shall also include within its meaning the plural, and
vice versa.

 

IN WITNESS
WHEREOF, this Plan has been executed as of the Effective Date.

 

	
   

  	
  FIRST
  INVESTORS FINANCIAL SERVICES

  GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ TOMMY A. MOORE, JR.

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Tommy A.
  Moore, Jr.

  
	
   

  	
   

  	
  Title:

  	
  President
  and

  
	
   

  	
   

  	
   

  	
  Chief
  Executive Officer

  
					

 

15Exhibit 10.2

 

FIRST INVESTORS FINANCIAL SERIVES GROUP, INC.

2005 LONG-TERM INCENTIVE PLAN

SUMMARY OF STOCK OPTION GRANT

 

You,
the Optionee named below, have been granted the following option (the “Option”)
to purchase shares of the common stock, $0.001 par value per share (the “Common
Stock”), of First Investors Financial Services Group, Inc., a Delaware
corporation (“First Investors”), on the terms and conditions set forth below
and in accordance with the Stock Option Award Agreement (the “Agreement”) to which
this Summary of Stock Option Grant is attached and the First Investors
Financial Services Group, Inc. 2005 Long-Term Incentive Plan (the “Plan”):

 

	
  Optionee
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Number of
  Option Shares Granted:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Type of
  Option (check one):

  	
   

  	
  o

  	
  Incentive Stock
  Option

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o

  	
  Nonqualified
  Stock Option

  
	
   

  	
   

  	
   

  
	
  Grant Date:

  	
   

  	
   

  	
  , 200

  
	
   

  	
   

  	
   

  
	
  Exercise
  Price Per Share:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  
	
  Vesting
  Commencement Date:

  	
   

  	
   

  	
  , 20

  
					

 

 

Vesting Schedule:        The Option shall vest over a period of time
and shares of Common Stock subject to the Option shall become purchasable in
installments in accordance with the following schedule:  (i) 20% of such shares (if a fractional
number, then the next lower whole number) shall become purchasable, in whole at
any time or in part from time to time, on the first anniversary of the Vesting
Commencement Date, if Optionee is in the continuous employment or service of
First Investors or an Affiliate until such vesting date; (ii) 20% of such
shares (if a fractional number, then the next lower whole number) shall become
purchasable, in whole at any time or in part from time to time, on the second anniversary
of the Vesting Commencement Date, if Optionee is in the continuous employment
or service of First Investors or an Affiliate until such vesting date; (iii) an
additional 20% of such shares (if a fractional number, then the next lower
whole number) shall become purchasable, in whole at any time or in part from
time to time, on the third anniversary of the Vesting Commencement Date, if the
Optionee is in the continuous employment or service of First Investors or an
Affiliate until such vesting date; (iv) an additional 20% of such shares
(if a fractional number, then the next lower whole number) shall become
purchasable, in whole at any time or in part from time to time, on the fourth
anniversary of the Vesting Commencement Date, if the Optionee is in the
continuous employment or service of First Investors or an Affiliate until such
vesting date; and (v) the remaining shares shall become purchasable, in
whole at any time or in part from time to time, on the third anniversary of the
Vesting Commencement Date, if the Optionee is in the continuous employment or service
of First Investors or an Affiliate until such vesting date.

 

You, by your signature as
Optionee below, acknowledge that you (i) have reviewed the Agreement and
the Plan in their entirety and have had the opportunity to obtain the advice of
counsel prior to executing this Summary of Stock Option Grant, (ii) understand
that the Option is granted under and governed by the terms and provisions of
the Agreement and the Plan, and (iii) agree to accept as binding all of
the determinations and interpretations made by the Committee with respect to
matters arising under or relating to the Option, the Agreement and the Plan.

 

	
  OPTIONEE:

  	
  FIRST
  INVESTORS FINANCIAL SERVICES

  
	
   

  	
  GROUP,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  (Signature
  of Optionee)

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

FIRST INVESTORS FINANCIAL SERVICES GROUP, INC.

2005 LONG-TERM INCENTIVE PLAN

 

STOCK OPTION AWARD AGREEMENT

 

THIS
AGREEMENT is made as of the Grant Date (as set forth on the Summary of Stock
Option Grant) between First Investors Financial Services Group, Inc., a
Delaware corporation (“First Investors”), and Optionee pursuant to the First
Investors Financial Services Group, Inc. 2005 Long-Term Incentive Plan
(the “Plan”).

 

WHEREAS,
the Compensation Committee of the Board of Directors of First Investors with
respect to an Option granted to an employee or other service provider, or the
Board of Directors of First Investors with respect to an Option granted to an
outside director (the “Committee”) has authority to grant Options under the
Plan to employees and outside directors of and other individuals performing
services for First Investors and its Affiliates; and

 

WHEREAS,
the Committee has determined to award Optionee the Option described in this
Agreement;

 

NOW,
THEREFORE, First Investors and Optionee agree as follows:

 

1.             Effect of Plan
and Authority of Committee.  This
Agreement and the Option granted hereunder are subject to the Plan, which is
incorporated herein by reference.  The
Committee is authorized to make all determinations and interpretations with
respect to matters arising under or relating to the Plan, this Agreement and
the Option granted hereunder. 
Capitalized terms used and not otherwise defined herein have the
respective meanings given them in the Plan or in the Summary of Stock Option
Grant, which are attached hereto and incorporated herein by this reference for
all purposes.

 

2.             Grant of Option.  On the terms and conditions set forth in this
Agreement, the Summary of Stock Option Grant and the Plan, as of the Grant Date,
First Investors hereby grants to Optionee the option to purchase the number of
shares of Common Stock set forth on the Summary of Stock Option Grant at the
Exercise Price per share set forth on the Summary of Stock Option Grant (the “Option”).  The Option is intended to be an Incentive
Stock Option or a Nonqualified Stock Option, as provided in the Summary of
Stock Option Grant.  It is agreed that the
exercise price is at least 100% of the Fair Market Value of a share of Common
Stock on the Grant Date (110% of Fair Market Value if the Option is an
Incentive Stock Option and the Optionee owns stock possessing more than 10% of
the total combined voting power of all classes of stock of First Investors or any
Affiliate, within the meaning of Section 422(b)(6) of the Code).  If this Option is intended to be an Incentive
Stock Option, but the aggregate Fair Market
Value of Common Stock with respect to which Incentive Stock Options granted to
Optionee (including all options qualifying as incentive stock options pursuant
to Section 422 of the Code granted to Optionee under any other plan of First
Investors or any Affiliate) are exercisable for the first time by Optionee
during any calendar year exceeds $100,000 (determined as of the date the
Incentive Stock Option is granted), this Option shall not be void but shall be
deemed to be an Incentive Stock Option to the extent it does not exceed the
$100,000 limit and shall be deemed a Nonqualified Stock Option to the extent it
exceeds that limit.

 

3.             Vesting.  This Option may be exercised only to the
extent it is vested on the vesting dates in accordance with the Vesting Schedule set
forth in the Summary of Stock Option Grant. 
The vested percentage indicated in such Vesting Schedule shall be
exercisable, as to all or part of the vested shares, at any time or times after
the respective vesting date and until the expiration or termination of the
Option.  The vesting of this

 

2

 

Option may be accelerated in certain events as
set forth in the Plan.  The unvested
portion of this Option shall terminate and be forfeited immediately on the date
of Optionee’s termination of employment or service.

 

4.             Term.

 

(a)           Term of Option.  This Option may not be exercised after the
expiration of ten years from the Grant Date (five years from the Grant Date if
the Option is an Incentive Stock Option and Optionee owns stock possessing more
than 10% of the total combined voting power of all classes of stock of First
Investors or any Affiliate, within the meaning of Section 422(b)(6) of
the Code, as of the Grant Date).  If the
expiration date of this Option or any termination date provided for in this
Agreement shall fall on a Saturday, Sunday or a day on which the executive
offices of the Company are not open for business, then such expiration or
termination date shall be deemed to be the last normal business day of the
Company at its executive offices preceding such Saturday, Sunday or day on
which such offices are closed.

 

(b)           Early Termination.  Except as provided below, this Option may not
be exercised unless Optionee shall have been in the continuous employ or
service of First Investors or any Affiliate from the Grant Date to the date of
exercise of the Option.  This Option may
be exercised after the date of Optionee’s termination of employment or service
with First Investors and its Affiliates only in accordance with Section 6.5
of the Plan.

 

5.             Manner of Exercise and
Payment.  The Optionee (or his or her
representative, guardian, devisee or heir, as applicable) may exercise any
portion of this Option that has become exercisable in accordance with the terms
hereof as to all or any of the shares of Common Stock then available for
purchase by delivering to First Investors written notice, in a form
satisfactory to the Committee, specifying:

 

(a)           the number of whole shares of Common
Stock to be purchased together with payment in full of the purchase price of
such shares;

 

(b)           the address to which dividends,
notices, reports, and other information are to be sent; and

 

(c)           Optionee’s social security number or
social insurance number.

 

Payment
of the purchase price of the shares of Common Stock shall be made (i) in cash,
or by certified or cashier’s check payable to the order of First Investors,
free from all collection charges, or (ii) by delivery of nonforfeitable,
unrestricted shares of Common Stock previously acquired by Optionee that have
been held for at least six months having an aggregate Fair Market Value as of
the date of exercise equal to the total exercise price, or (iii) by a
combination of cash (or certified or cashier’s check) and such already-owned
shares of Common Stock.  Optionee also may
elect to pay all or a portion of the purchase price of such shares of Common
Stock through a special sale and remittance procedure pursuant to which
Optionee shall concurrently provide (A) irrevocable instructions to a broker-dealer
to effect the immediate sale or margin of a sufficient portion of the purchased
shares and remit directly to First Investors, out of the sale or margin loan proceeds
available on the settlement date, sufficient funds to cover the purchase price
payable for the purchased shares plus all applicable taxes required to be
withheld by reason of such exercise and (B) an executed irrevocable option
exercise form to First Investors along with instructions to First Investors to deliver
the certificates for the purchased shares directly to such broker-dealer to
complete the sale.  This Option shall be
deemed to have been exercised on the first date upon which First Investors receives
written notice of exercise as described above, payment of the purchase price
and all other documents, information and amounts required with respect to such
exercise under this Agreement and the Plan. 
Notwithstanding the foregoing provisions of this Section 5, the
Committee may, in its

 

3

 

discretion,
reject payment of the purchase price of the shares of Common Stock subject to
this Option in the form of already-owned shares or through a sale and
remittance procedure with a broker-dealer in the event that the Committee
determines that such payment forms violate the provisions of applicable law or result
in negative accounting treatment to First Investors.

 

6.             Withholding Tax.  Promptly after demand by First Investors, and
at its direction, Optionee shall pay to First Investors or the appropriate
Affiliate an amount equal to the applicable withholding taxes due in connection
with the exercise of the Option.  Pursuant
to Section 9.5 of the Plan, such withholding taxes may be paid in cash or,
subject to the further provisions of this Section 6 of this Agreement, in
whole or in part, by having First Investors withhold from the shares of Common
Stock otherwise issuable upon exercise of the Option a number of shares of
Common Stock having a value equal to the amount of such withholding taxes or by
delivering to First Investors or the appropriate Affiliate a number of previously
acquired issued and outstanding shares of Common Stock (excluding restricted
shares still subject to a risk of forfeiture) having a value equal to the
amount of such withholding taxes.  The
value of any shares of Common Stock so withheld by or delivered to First
Investors or the appropriate Affiliate shall be based on the Fair Market Value
(as defined in the Plan) of such shares on the date on which the tax
withholding is to be made.  Optionee
shall pay to First Investors or the appropriate Affiliate in cash the amount,
if any, by which the amount of such withholding taxes exceeds the value of the
shares of Common Stock so withheld or delivered.  An election by Optionee to have shares
withheld or to deliver shares to pay withholding taxes shall be made in accordance
with administrative guidelines established by the Committee.

 

7.             Delivery of
Shares.  Delivery of the certificates
representing the shares of Common Stock purchased, upon exercise of this Option
shall be made as soon as reasonably practicable after receipt of notice of
exercise and full payment of the Exercise Price and any required withholding
taxes.  If First Investors so elects, its
obligation to deliver shares of Common Stock upon the exercise of this Option
shall be conditioned upon its receipt from the person exercising this Option of
an executed investment letter, in form and content satisfactory to First
Investors and its legal counsel, evidencing the investment intent of such
person and such other matters as First Investors may reasonably require.  If First Investors so elects, the certificate
or certificates representing the shares of Common Stock issued upon exercise of
this Option shall bear a legend to reflect any restrictions on transferability.

 

8.             Optional
Issuance in Book-Entry Form.  Notwithstanding the provisions of Section 7,
at the option of First Investors, any shares of Common Stock that under the
terms of this Agreement are issuable in the form of a stock certificate may
instead be issued in book-entry form.

 

9.             Transferability.  This
Option is personal to Optionee and during Optionee’s lifetime may be
exercised only by Optionee or his or her guardian or legal representative upon
the events and in accordance with the terms and conditions set forth in the
Plan, and shall not be transferred except by will or by the laws of descent and
distribution, nor may it be otherwise sold, transferred, pledged, exchanged, hypothecated
or otherwise disposed of in any way (by operation of law or otherwise) and it
shall not be subject to execution, attachment or similar process. Any attempted sale, transfer, pledge,
exchange, hypothecation or other disposition of this Option not specifically
permitted by the Plan or this Agreement shall be null and void and without
effect.

 

10.           Notices.  All notices between the parties hereto shall
be in writing and given in the manner provided in Section 9.7 of the
Plan.  Notices to Optionee shall be given
to Optionee’s address as contained in First Investors’ records.  Notices to First Investors shall be addressed
to its Long-Term Incentive Plan Administrator at the principal executive
offices of First Investors as set forth in Section 9.7 of the Plan.

 

4

 

11.           Relationship With Contract
of Employment or Services.

 

(a)           The grant of an Option does not form
part of Optionee’s entitlement to remuneration or benefits pursuant to his or
her contract of employment or services, if any, and, except as otherwise
provided in a written contract of employment or for services, the existence of such
a contract between any person and First Investors or any Affiliate does not
give such person any right or entitlement to have an Option granted to him or
any expectation that an Option might be granted to him whether subject to any
conditions or at all.

 

(b)           The rights and obligations of
Optionee under the terms of his or her contract of employment or other contract
or agreement for services with First Investors or any Affiliate, if any, shall
not be affected by the grant of an Option.

 

(c)           The rights granted to Optionee upon
the grant of an Option shall not afford Optionee any rights or additional
rights to compensation or damages in consequence of the loss or termination of his
or her office, employment or service with First Investors or any Affiliate for
any reason whatsoever.

 

(d)           Optionee shall not be entitled to any
compensation or damages for any loss or potential loss which he or she may
suffer by reason of being or becoming unable to exercise an Option in
consequence of the loss or termination of his or her office, employment or
service with First Investors or any Affiliate for any reason (including,
without limitation, any breach of contract by First Investors or any Affiliate)
or in any other circumstances whatsoever.

 

12.           Governing Law; Exclusive
Forum; Consent to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the internal laws (and not the
principles relating to conflicts of laws) of the State of Texas, except as
superseded by applicable federal law.

 

5

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