Document:

a50871418ex10_2.htm

Exhibit 10.2

 

CHANGE IN CONTROL AGREEMENT

(Acceptance Loan Company)

THIS AGREEMENT (this “Agreement”) is made as of the 20th day of May, 2014 (the “Effective Date”) by and between William C. Mitchell (the “Employee”); Acceptance Loan Company, an Alabama corporation (“ALC”); and United Security Bancshares, Inc., a Delaware corporation (“USB”; together with ALC, the “Company”).

WHEREAS, as of the Effective Date, the Employee serves as  President and Chief Executive Officer of ALC, which is a wholly-owned second-tier subsidiary of USB;

WHEREAS, the Company desires to provide certain compensation to the Employee in the event of a Change in Control; and

WHEREAS, capitalized terms used in this Agreement that are not otherwise defined herein have the meanings assigned in Section 19 below.

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1.           Severance Benefits Upon Termination of Employment.

(a)           Payments.  If, during the Term, the Employee either (1) experiences an involuntary Termination of Employment without Cause during the Post-Change in Control Period, or (2) voluntarily resigns effecting a Termination of Employment for Good Reason during the Post-Change in Control Period (each, a “Qualifying Termination of Employment”), then the Employee will be entitled to:

	
  

	
(i)

	
a one-time lump sum payment, within 60 days of the effective date of the Termination of Employment, in an amount equal to two hundred percent (200%) of Base Salary (the “Severance Benefit”);

	
  

	
(ii)

	
any Base Salary that is accrued but unpaid, the value of any vacation that is accrued but unused (determined by dividing Base Salary by 365 and multiplying such amount by the number of unused vacation days), and any business expenses that are unreimbursed, all as of the effective date of the Termination of Employment and payable with the Company’s first regular payroll following the Termination of Employment; and

	
  

	
(iii)

	
any rights and benefits (if any) expressly provided to the Employee under plans and programs of the Company upon termination of employment, determined in accordance with the applicable terms and provisions of such plans and programs.

(b)           Release Condition.  Notwithstanding any other provision of this Agreement to the contrary, as a condition of the Company’s payment of the Severance Benefit, the Employee must (i) execute a general release agreement in favor of the Company and its affiliates in such form as is acceptable to the Company within the 60-day period following the Termination of Employment (but prior to the payment of the Severance Benefit) and (ii) not timely revoke the general release agreement during any revocation period ending prior to the 60-day period pursuant to the terms of the general release agreement.

 

  

  

  

 

(c)           No Section 280G Golden Parachute.  If, in the good faith determination of the Company or its independent certified public accountants (the “Accountants”), the aggregate present value (determined as of the date of the Change in Control in accordance with the provisions of Section 280G of the Code) of both the Severance Benefit and any other payments to the Employee in the nature of compensation that are contingent on a change in ownership or effective control of USB or ALC or in the ownership of a substantial portion of the assets of USB or ALC (the “Aggregate Severance”) would result in a “parachute payment,” as defined under Section 280G of the Code, then the Aggregate Severance shall be reduced (in accordance with Section 409A) to an amount no greater than an amount equal to 2.99 multiplied by Employee’s “base amount” for the “base period,” as those terms are defined under Section 280G of the Code.  In the event that the Aggregate Severance is required to be reduced pursuant to this Section 1(c), the latest payments in time shall be reduced first, and if multiple portions of the Aggregate Severance to be reduced are paid at the same time, any non-cash payments will be reduced before any cash payments, and any remaining cash payments will be reduced pro rata.  The amount and order of any reductions pursuant to this Section 1(c) will be determined in the reasonable discretion of the Company or, at the Company’s election, the Accountants.  Neither the Company nor the Accountants will have any liability for actions taken in compliance with these provisions.

2.           No Mitigation.  No amounts or benefits payable to the Employee hereunder shall be subject to mitigation or reduction by income or benefits that the Employee receives from other sources.

 

3.           Taxes.  All amounts payable and benefits provided hereunder shall be subject to any and all applicable taxes, as required by applicable federal, state, local and foreign laws and regulations. The Company may withhold such taxes in accordance with customary payroll practices.  The Employee, and not the Company, shall be solely responsible for the payment when and as due of any and all taxes in connection with payments and benefits provided to the Employee by the Company, including without limitation all income taxes and any excise taxes that may be due, and no taxes shall be subject to payment or reimbursement by the Company.

4.           Restrictive Covenants.

(a)           Unauthorized Disclosure.  During the period of the Employee’s employment with ALC and for 3 years following any Termination of Employment, without the prior written consent of ALC, except to the extent required by an order of a court having competent jurisdiction or under subpoena from an appropriate government agency, in which event, the Employee shall use the Employee’s best efforts to consult with ALC prior to responding to any such order or subpoena, and except as required in performance of the Employee’s duties hereunder, the Employee shall not use for the benefit of, or disclose to, any Person other than the Company any documents or information, whether written or not, that come into his possession or knowledge during his course of employment with ALC, including without limitation the identity, borrowing arrangements, financial and business conditions and goals and operations of customers of the Company and the Company’s business methods, business records, documentation, sales, services and techniques (collectively, “Confidential Information”), unless such Confidential Information has been previously disclosed to the public generally or is in the public domain, in each case, other than by reason of the Employee’s breach of this Section 4(a).

 

  

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(b)           Non-Competition.  During the period of the Employee’s employment with ALC and for 2 years following a Qualifying Termination of Employment that results in the Employee being entitled to the Severance Benefit and other rights and benefits set forth in Section 1(a) of this Agreement, the Employee shall not (other than on behalf of ALC or its affiliates), directly or indirectly, by or through any Person in any capacity (whether as a principal, employee, consultant, agent, lender, member, organizer or shareholder), (i) carry on or engage in the business of banking or any similar business (including without limitation any business that involves managing banks, accepting deposits and/or making, brokering, servicing or originating loans) in any County in the State of Alabama in which ALC or any of USB’s bank subsidiaries has an office or branch at such time (the “Territory”) or (ii) perform services for any bank, bank holding company, bank or bank holding company in organization, corporation or other Person that has a branch or office in, or conducts any banking or similar business in, the Territory.  For the sake of clarity, following a Termination of Employment the restrictive covenants in this Section 4(b) shall only apply under the circumstances described herein and shall not apply, for example, following any Termination of Employment before or after the Post-Change in Control Period or following a Termination of Employment at any time either (x) by ALC with Cause or (y) by the Employee without Good Reason.

(c)           Non-Solicitation.  During the period of the Employee’s employment with ALC and for 2 years following any Termination of Employment (the “Restriction Period”), the Employee shall not (other than on behalf of ALC or its affiliates), directly or indirectly, for the Employee’s own account or for the account of any other Person (i) solicit, represent in any capacity (or otherwise be involved in any way), accept or transact any business with or from any Customers or prospective Customers that were Customers or prospective Customers at any time during the period within 3 years prior to the Termination of Employment, (ii) take any action reasonably likely to damage the business or prospects of ALC or its affiliates, including without limitation inducing or attempting to induce or encourage any of such Customers or prospective Customers to withdraw or fail to renew any business with, or otherwise curtail, cancel or divert any business away from, ALC, or (iii) solicit or hire (as an employee, independent contractor, consultant or otherwise) any person, or solicit or facilitate the employment (as an employee, independent contractor, consultant or otherwise) of any such person by another entity or person, who is employed or retained by ALC or its affiliates or who was employed or retained by ALC or its affiliates at any time during the period within 12 months prior to the Termination of Employment.

(d)           Return of Documents. Upon the Termination of Employment, the Executive shall deliver to the Company (i) all property of the Company or any of its affiliates then in the Employee’s possession and (ii) all documents and data of any nature and in whatever medium of the Company or any of its affiliates, and the Employee shall not take with the Employee any such property, documents or data or any reproduction thereof, or any documents containing or pertaining to any Confidential Information.

(e)           Non-Disparagement. The Employee will not, at any time during the Restriction Period, disparage ALC or USB or any of their respective current, former or future directors, officers, management personnel, affiliates or representatives.

(f)           Tolling. If the Employee violates any of the provisions of Section 4(b) or (c) above, the period during which the covenants set forth therein shall apply shall be extended one day for each day in which a violation of such covenants occurs.  The purpose of this provision is to prevent the Employee from profiting from his own wrong if he violates such covenants.

 

  

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(g)           Acknowledgements. The Employee acknowledges and agrees that he has and will have a prominent role in the development of the goodwill of ALC and its affiliates, and has and will establish and develop relations and contacts with the principal business relationships of ALC and its affiliates in the State of Alabama and beyond, all of which constitute valuable goodwill of, and could be used by the Employee to compete unfairly with, ALC and its affiliates and that (i) in the course of the Employee’s employment, the Employee will obtain confidential and proprietary information and trade secrets concerning the business and operations of ALC and its affiliates that could be used to compete unfairly with ALC and its affiliates; (ii) the covenants and restrictions contained in this Section 4 are intended to protect the legitimate interests of ALC and its affiliates and their respective goodwill, trade secrets and other confidential and proprietary information; (iii) the Employee desires to be bound by such covenants and restrictions; and (iv) the Employee agrees that the covenants in this Section 4 are reasonable with respect to their duration, geographical area and scope.

(h)           Remedies. The Employee acknowledges and agrees that the covenants, obligations and agreements of the Employee contained in this Section 4 relate to special, unique and extraordinary matters and that a material violation of any of the terms of such covenants, obligations or agreements will cause ALC and its affiliates irreparable injury for which adequate remedies are not available at law. Therefore, the Employee agrees that the Company shall be entitled to an injunction, restraining order or such other equitable relief (without the requirement to post bond) to restrain the Employee from committing any violation of such covenants, obligations or agreements.  These injunctive remedies are cumulative and in addition to any other rights and remedies that the Company and its affiliates may have.

5.           Terminable At Will Employment.  Nothing herein shall entitle the Employee to continued employment with the ALC, USB or any of their respective affiliates or to continued tenure in any specific office or position.  The Employee’s employment with ALC shall be terminable at the will of ALC, with or without Cause, subject to the terms of any other written agreement as may be in effect between the parties.

 

6.           Assignment.  The rights and obligations of the Company under this Agreement shall inure to the benefit of, and be binding upon, the Company’s successors and assigns.  This Agreement may be assigned by the Company to any legal successor or to an entity that purchases all or substantially all of the assets of the Company, provided that the assignee assumes the obligations of the Company under this Agreement. In the event of any assignment of this Agreement permitted by this Section 6, the terms “ALC,” “USB” and “Company” as defined herein will refer to the assignee(s), and the Employee will not be deemed to have terminated employment hereunder until the Employee terminates employment from the assignee(s).

 

7.           Notice.  All notices, consents, waivers and other communications required or permitted by this Agreement shall be in writing and shall be deemed given to a party when (a) delivered to the appropriate address by hand or by nationally recognized overnight courier service (costs prepaid); (b) sent by facsimile with confirmation of transmission by the transmitting equipment; or (c) received or rejected by the addressee, if sent by certified mail, return receipt requested, in each case to the to the Employee at the last address or facsimile number on file with the Company or, in the case of the Company, to the President of USB at USB’s principal offices.

8.           Headings. Sections or other headings contained herein are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

9.           Entire Agreement.  This Agreement contains the entire understanding of the parties with respect to the subject matter hereof.  All prior understandings and agreements relating to the subject matter of this Agreement are hereby expressly terminated; provided, however, that the restrictive covenants and other provisions in Section 4 of this Agreement are in addition to, and shall not supersede or terminate, any restrictive covenant contained in any other agreement between the Employee and ALC, USB and/or their affiliates entered into on or prior to the Effective Date.  In addition, any payments that otherwise may become due to the Employee under any generally applicable severance plan or similar policy pursuant to which the Employee is or may become eligible for benefits, which plan or policy does not provide for payments of nonqualified deferred compensation, as contemplated by Code Section 409A, shall be reduced by the amount of the Severance Benefit that becomes payable pursuant to this Agreement.

 

  

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10.           Severability.  If any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.  The Employee and the Company agree that the covenants contained in Section 4 hereof are reasonable covenants under the circumstances, and further agree that if, in the opinion of any court of competent jurisdiction, such covenants are not reasonable in any respect, such court shall have the right, power and authority to excise or modify such provision or provisions of these covenants as to the court shall appear not reasonable and to enforce the remainder of these covenants as so amended.  The parties agree that the scope of this Agreement is intended to extend to the Company the maximum protection permitted by law.

11.           Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed in all respects, including as to interpretation, substantive effect and enforceability, by the internal laws of the State of Alabama, without regard to conflicts of laws provisions thereof that would require application of the laws of another jurisdiction, other than those that mandatorily apply.  Each party hereby irrevocably submits to the jurisdiction of the state courts sitting in Clarke County, Alabama, and the federal courts of the United States located in the Southern District of Alabama, solely in respect of the interpretation and enforcement of the provisions of this Agreement and in respect of the transactions contemplated hereby.  Each party hereby waives and agrees not to assert, as a defense in any action, suit or proceeding for the interpretation and enforcement hereof, or in respect of any such transaction, that such action, suit or proceeding may not be brought or is not maintainable in such courts or that the venue thereof may not be appropriate or that this Agreement may not be enforced in or by such courts.  Each party hereby consents to and grants any such court jurisdiction over the person of such parties and over the subject matter of any such dispute and agrees that the mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 7, or in such other manner as may be permitted by law, shall be valid and sufficient service thereof.  Each party acknowledges and agrees that any controversy that may arise under this Agreement is likely to involve complicated and difficult issues, and therefore each party hereby irrevocably and unconditionally waives any right that such party may have to a trial by jury in respect of any litigation directly or indirectly arising out of or relating to this Agreement, or the breach, termination or validity of this Agreement, or the transactions contemplated by this Agreement. Each party certifies and acknowledges that (a) no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver; (b) each such party understands and has considered the implications of this waiver; (c) each such party makes this waiver voluntarily; and (d) each such party has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 11.

12.           Term.  The term of this Agreement (the “Term”) shall become effective as of the Effective Date and shall remain in effect until the earliest of:

(a)           the Employee’s Termination of Employment, regardless of the manner in which it was effected, prior to the effective date of a Change in Control;

(b)           the conclusion of the Post-Change in Control Period, provided there has been no Qualifying Termination of Employment prior thereto;

 

  

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(c)           a termination pursuant to Section 13;

(d)           the expiration date specified in a written notice (the “Expiration Notice”) provided to the Employee by the Company; provided, however, that such expiration date must be at least 90 days following the date of the Expiration Notice; provided, further, that the Company may not provide an Expiration Notice following, or in anticipation of, a Change in Control; or

(e)           the date on which all amounts that may be payable to the Employee pursuant to Section 1 have been paid in connection with a Qualifying Termination of Employment.

13.           Amendment.  This Agreement may not be modified, amended, supplemented or terminated except by a written agreement between the Company and the Employee.

14.           Survival.  The provisions of Sections 2 through 19 of this Agreement shall survive the expiration of the Term or any other termination of this Agreement.

 

15.           Section 409A.  The parties intend that any amounts payable hereunder comply with or are exempt from Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”) (including under Treasury Regulation §§ 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9) (“separation pay plans,” including the exceptions under subparagraph (iii) and subparagraph (v)(D)) and other applicable provisions of Treasury Regulation §§ 1.409A-1 through A-6).  Notwithstanding any provision of this Agreement to the contrary, if the Employee is a “specified employee” within the meaning of Section 409A, any amounts under this Agreement that are “deferred compensation” within the meaning of Section 409A shall not be made before the date that is six (6) months after the date of the Termination of Employment, or if earlier, his date of death.  For purposes of Section 409A, each of the payments that may be made under this Agreement shall be deemed to be a separate payment for purposes of Section 409A. This Agreement shall be administered, interpreted and construed in a manner that does not result in the imposition of additional taxes, penalties or interest under Section 409A. The Company and the Employee agree to negotiate in good faith to make amendments to this Agreement, as the parties mutually agree are necessary or desirable to avoid the imposition of taxes, penalties or interest under Section 409A. Notwithstanding the foregoing, the Company does not guarantee any particular tax effect, and the Employee shall be solely responsible and liable for the satisfaction of all taxes, penalties and interest that may be imposed on or for the account of the Employee in connection with this Agreement (including any taxes, penalties and interest under Section 409A), and neither the Company nor any of its affiliates shall have any obligation to indemnify or otherwise hold the Employee (or any beneficiary) harmless from any or all of such taxes, penalties or interest.

16.           Regulatory Matters.  The Company’s obligations under this Agreement are subject to the orders, rules and regulations of the federal and state banking regulators as may be in effect from time to time, including without limitation FDIC regulations governing “golden parachute payments” set forth at 12 CFR Part 359.  If the Company is prevented from discharging its obligations hereunder as a result of any such orders, rules or regulations, the Company shall be released from its obligations and shall not be deemed to have breached this Agreement, to that extent.  The Company shall have no obligation to petition the FDIC (and/or other regulatory agency having jurisdiction over the Company) for permission to treat any payments as “permissible golden parachute payments.”

17.           Clawback.  Notwithstanding any other provisions in this Agreement to the contrary (but subject to compliance with Section 409A, as applicable), any compensation paid to the Employee pursuant to this Agreement or any other agreement or arrangement with the Company that is subject to recovery under any law, government regulation or stock exchange listing requirement will be subject to such deduction and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company to the extent that it implements the requirements of any such law, government regulation or stock exchange listing requirement).

 

  

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18.           Counterparts.  This Agreement may be executed by facsimile, electronically transmitted signature and/or by “PDF,” and in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

19.           Definitions.  For purposes of this Agreement, the following terms and conditions shall have the meanings set forth in this Section 19:

(a)           “Base Salary” means the Employee’s annual base salary with ALC in effect as of the effective date of the Termination of Employment.

(b)           “Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

(c)           “Board” means the board of directors of USB.

(d)           “Cause” shall be determined by the Board in the exercise of good faith and reasonable judgment and shall mean (i) failure of the Employee to perform his duties or responsibilities or to follow the lawful and reasonable direction of the Board or the Company’s senior management, as the case may be; (ii) the Employee’s material violation of the written policies or procedures of the Company or its affiliates; (iii) the Employee’s engaging in fraud, willful misconduct, dishonesty or any other knowing or willful conduct that has caused or is reasonably expected to result in material injury or reputational harm to the Company or any of its affiliates; (iv) any breach by the Employee of any fiduciary duty owed to the Company any of its affiliates; (v) the Employee’s commission of, or entering a plea of guilty or nolo contendere to, (A) a crime that constitutes a felony in the jurisdiction involved or (B) a misdemeanor involving moral turpitude, deceit, dishonesty or fraud; (vi) any material breach by the Employee of any of his obligations under this Agreement or under any other written agreement or covenant with the Company or any of its affiliates; (vii) the Employee’s misappropriation, theft or embezzlement of funds or property; (viii) the Employee’s insubordination or gross negligence in connection with his employment or the performance of his duties; (ix) the Employee’s knowing or intentional failure or unwillingness to cooperate with any internal investigation or investigation by regulatory or law enforcement authorities, or knowing or intentional destruction or failure to preserve documents or other materials relevant to such investigation, or the knowing or intentional inducement of others to fail to cooperate or to produce documents or other materials in connection with such investigation; or (x) the Employee’s violation of federal or state banking laws or suspension or removal by any federal or state banking regulator.  Except in the event of a failure, violation or breach that, by its nature, cannot reasonably be expected to be cured, if a termination for Cause is based on items (i), (ii) or (vi) above, the Board shall not make any such determination without first providing the Employee with a written notice of the reason(s) that the Board believes Cause exists and giving the Employee a reasonable period within which to cure or to take substantial steps to cure or remediate the results or actions underlying or constituting Cause.

(e)           For purposes of this Agreement, a “Change in Control” shall be deemed to have occurred as of the first day that any one or more of the following conditions has been satisfied after the Effective Date:

 

  

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(i)           any Person (other than (A) those Persons in control of USB as of the Effective Date, (B) a trustee or other fiduciary holding securities under an employee benefit plan of USB or (C) a corporation or holding company owned directly or indirectly by the shareholders of USB in substantially the same proportions as their ownership of stock of USB) becomes the Beneficial Owner of securities of the Company representing more than 50% of the combined voting power of USB’s then outstanding securities; or

(ii)           consummation of the sale or disposition of all or substantially all of the assets of USB; or

(iii)           consummation of a merger, consolidation or reorganization of USB with or involving any other corporation, other than a merger, consolidation or reorganization that results in the voting securities of USB outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) greater than 50% of the combined voting power of the voting securities of USB (or the surviving entity, or an entity that as a result of such transaction owns USB or other surviving entity or all or substantially all of USB’s assets either directly or through one or more subsidiaries) outstanding immediately after such merger, consolidation or reorganization.

Notwithstanding the foregoing, no Change in Control shall be deemed to have occurred for purposes of this Agreement by reason of any actions or events in which the Employee participates in a capacity other than in the Employee’s capacity as an employee or director of USB, ALC or any affiliate or as a shareholder of USB.

(f)           “Code” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

(g)           “Customers” shall include, without limitation, any and all customers, clients, depositors and borrowers of ALC or any of its subsidiaries or affiliates.

(h)           “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(i)           “Good Reason” means, with respect to a resignation by the Employee, any one of the following events arising after the Effective Date, but only if (i) such event occurs without the Employee’s prior written consent; (ii) such event is not cured within 30 days after the Employee gives written notice to the Company describing such event in detail and demanding cure; (iii) such cure notice is given within 90 days after the Employee learns of the occurrence of such event; and (iv) the Termination Employment occurs within 10 days after the expiration of any cure right: (A) an assignment of duties to the Employee that are materially inconsistent with and demonstrably inferior to the Employee’s position as it existed immediately prior to the Post-Change in Control Period, or (B) a material decrease in the Employee’s annual base salary rate, or (C) a material breach of this Agreement by the Company.

(j)           “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d).

(k)           “Post-Change in Control Period” means the last day of the eighteenth (18th) calendar month immediately following the calendar month containing the effective date of a Change in Control.

 

  

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(l)           “Termination of Employment” means a termination of the Employee’s employment with ALC, USB, and all affiliated companies that, together with ALC and USB, constitute the “service recipient” within the meaning of Code Section 409A and the regulations thereunder, which termination constitutes a “separation from service” within the meaning of Code Section 409A.

 

IN WITNESS WHEREOF, each of the parties has executed this Agreement as of the date and year first above written.

	 	 
UNITED SECURITY BANCSHARES, INC.

	 
	 	 	 	 
	 	 	 	 
	
 

	
By: 

	/s/ Andrew C. Bearden, Jr.	 
	 	 	 
Andrew C. Bearden, Jr.

	 
	 	 	 
Chairperson of the Board

	 
	 	 	 	 
	 	 	 	 

	 	 
ACCEPTANCE LOAN COMPANY

	 
	 	 	 	 
	 	 	 	 
	
 

	
By: 

	/s/ Bruce Wilson	 
	 	 	 
 
Bruce Wilson

	 
	 	 	 
Chairperson of the Board

	 
	 	 	 	 
	 	 	 	 

	 	 
EMPLOYEE:

	 
	 	 	 	 
	
 

	
By: 

	/s/ William C. Mitchell	 
	 	 	 
 
William C. Mitchell

	 
	 	 	 	 
	 	 	 	 

 

 

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Exhibit 10.1

 

 

 

 

 

 

 

 

 

 

 

First NBC Bank Holding Company

2014 Omnibus Incentive Plan

 

 

 

 

 

 

 

 

  

  

  

 

Contents 

 

	
Article 1. Establishment, Purpose, and Duration

	
1

	
Article 2. Definitions

	
1

	
Article 3. Administration

	
6

	
Article 4. Shares Subject to This Plan and Maximum Awards

	
8

	
Article 5. Eligibility and Participation

	
9

	
Article 6. Stock Options

	
9

	
Article 7. Stock Appreciation Rights

	
12

	
Article 8. Restricted Stock and Restricted Stock Units

	
12

	
Article 9. Performance Units/Performance Shares

	
13

	
Article 10. Cash-Based Awards and Other Stock-Based Awards

	
14

	
Article 11. Transferability of Awards and Shares

	
15

	
Article 12. Performance Measures

	
15

	
Article 13. Nonemployee Director Awards

	
16

	
Article 14. .  Beneficiary Designation

	
17

	
Article 15. Rights of Participants

	
17

	
Article 16. Change of Control

	
17

	
Article 17. Amendment and Termination of the Plan

	
18

	
Article 18. Reporting and Withholding

	
18

	
Article 19. Successors

	
19

	
Article 20. General Provisions

	
19

  

  

  

  

 

First NBC Bank Holding Company 2014 Omnibus Incentive Plan

 

	
Article 1.

	
Establishment, Purpose, and Duration

 

1.1  Establishment.  First NBC Bank Holding Company, a Louisiana corporation (the “Company”), establishes this incentive compensation plan to be known as First NBC Bank Holding Company 2014 Omnibus Incentive Plan (the “Plan”).  This Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards, and Other Stock-Based Awards.  This Plan shall become effective upon shareholder approval (the “Effective Date”) and shall remain in effect as provided in Section 1.3 hereof.

 

1.2  Objectives. The objectives of this Plan are to optimize the profitability and growth of the Company through incentives consistent with the Company’s goals and that link and align the personal interests of Participants with an incentive for excellence in individual performance, and to promote teamwork.

 

This Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of Participants who make significant contributions to the Company’s success and to allow Participants to share in the success of the Company.

 

1.3  Duration.  This Plan shall commence on the Effective Date and shall remain in effect, subject to the right of the Board of Directors to amend or terminate this Plan at any time pursuant to Article 18, until all Shares subject to the Plan shall have been purchased or acquired according to this Plan’s provisions.  However, in no event may an Award be granted under this Plan on or after ten (10) years from the Effective Date.

 

	
Article 2.

	
Definitions

 

Whenever used in this Plan, the following terms shall have the following meanings:

 

2.1  “Affiliate” means any entity (i) which, directly or indirectly, is controlled by, controls or is under common control with, the Company, or (ii) in which the Company has a significant entity interest, in either case as determined by the Committee, and which is designated by the Committee as such for purposes of the Plan.

 

2.2  “Annual Award Limit” or “Annual Award Limits” have the meaning set forth in Section 4.3.

 

2.3  “Award” means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards, or Other Stock-Based Awards, in each case subject to the terms of this Plan.

 

  

1

  

2.4  “Award Agreement” means either: (a) a written or electronic agreement entered into by the Company and a Participant setting forth the terms and provisions applicable to an Award granted under this Plan, including any amendment or modification thereof, or (b) a written or electronic statement issued by the Company to a Participant describing the terms and provisions of such Award, including any amendment or modification thereof.  The Committee may provide for the use of electronic, Internet, or other non-paper Award Agreements, and the use of electronic, Internet, or other non-paper means for the acceptance thereof and actions thereunder by a Participant.

 

2.5  “Board” or “Board of Directors” means the Board of Directors of the Company.

 

2.6  “Cash-Based Award” means an Award, denominated in cash, granted to a Participant as described in Article 10.

 

2.7  “Cause” means, with respect to any Participant, unless otherwise specified in an Award Agreement or in an applicable employment or similar agreement between the Company or an Affiliate, on the other hand, and a Participant, on the other hand:

 

(a)  any act that would constitute a material violation of the Company’s material written policies;

 

(b)  willfully engaging in conduct materially and demonstrably injurious to the Company, provided, however, that no act or failure to act, on the Participant’s part, shall be considered “willful” unless done, or omitted to be done, by the Participant not in good faith and without reasonable belief that such action or omission was in the best interest of the Company;

 

(c)  being indicted for, or if charged with but not indicted for, being charged with (i) a crime of embezzlement or a crime involving moral turpitude, or (ii) a crime with respect to the Company involving a breach of trust or dishonesty, or (iii) in either case, a plea of guilty or no contest to such a crime;

 

(d)  abuse of alcohol in the workplace, use of any illegal drug in the workplace or a presence under the influence of alcohol or illegal drugs in the workplace;

 

(e)  failure to comply in any material respect with the Foreign Corrupt Practices Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, and the Truth in Negotiations Act, or any rules and regulations issued thereunder; and

 

(f)  failure to follow the lawful directives of the Company’s Chief Executive Officer, the President or the Board of Directors.

 

The determination of Cause, and whether Cause exists, shall be made by the Committee in its sole and absolute discretion.

 

2.8  “Change of Control” means the consummation of any of the following events:

 

(a)  Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act, but other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any affiliate, and other than any corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company's then outstanding voting securities;

 

  

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(b)  the sale or disposition by the Company of all or substantially all of the Company's assets other than (1) the sale or disposition of all or substantially all of the assets of the Company to a person or persons who beneficially own, directly or indirectly, at least 50% or more of the combined voting power of the outstanding voting securities of the Company at the time of the sale or (2) pursuant to a spin-off type transaction, directly or indirectly, of such assets to the Company's shareholders;

 

(c)  A change in the composition of the Board occurring within a one-year period as a result of which fewer than a majority of the Directors are Incumbent Directors.  “Incumbent Directors” are Directors who either (1) are Directors as of the effective date of the Plan, or (2) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of Directors); or

 

(d)  a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least 50% of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

 

2.9  “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time.  For purposes of this Plan, references to sections of the Code shall be deemed to include references to any applicable regulations thereunder and any successor or similar provision.

 

2.10  “Committee” means a committee of Directors or other individuals that are appointed by the Board and, unless otherwise designated by the Board, means the Compensation and Human Resources Committee of the Board.

 

2.11  “Company” means First NBC Bank Holding Company, a Louisiana corporation, and any successor thereto as provided in Article 20 herein.

 

2.12  “Director” means a member of the Board.

 

2.13  “Disability” has the meaning set forth in the Award Agreement or in an applicable employment or similar agreement between the Company or an Affiliate, on the other hand, and a Participant, on the other hand.  If no such agreement exists, or if such an agreement exists but disability is not defined therein, then “disability” means a total and permanent disability as defined in Section 22(e)(3) of the Code, provided that in the case of Awards other than Incentive Stock Options, the term “disability” shall mean that the Participant: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company; or (iii) is determined by the Social Security Administration to be disabled.  Notwithstanding the foregoing, the Participant shall not be considered to have incurred a “disability” unless he or she furnishes proof of such impairment sufficient to satisfy the Committee in its sole discretion.

 

  

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2.14  “Dividend Equivalent” means a credit, made at the sole discretion of the Committee, to the account of a Participant in an amount equal to the value of dividends paid on one Share for each Share represented by an Award held by such Participant.  Under no circumstances shall the payment of a Dividend Equivalent be made contingent on the exercise of an Option or Stock Appreciation Right.

 

2.15  “Effective Date” has the meaning set forth in Section 1.1.

 

2.16  “Employee” means any individual performing services for the Company, an Affiliate, or a Subsidiary and designated as an employee of the Company, an Affiliate, or a Subsidiary on the payroll records thereof.  An Employee shall not include any individual during any period he or she is classified or treated by the Company, Affiliate, or Subsidiary as an independent contractor, a consultant, or any employee of an employment, consulting, or temporary agency or any other entity other than the Company, Affiliate, or Subsidiary, without regard to whether such individual is subsequently determined to have been, or is subsequently retroactively reclassified as a common-law employee of the Company, Affiliate, or Subsidiary during such period.  An individual shall not cease to be an Employee in the case of: (a) any leave of absence approved by the Company or (b) transfers between locations of the Company or between the Company, any Affiliates, or any Subsidiaries.  For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract.  If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three (3) months following the ninety-first (91st) day of such leave, any Incentive Stock Option held by a Participant shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonqualified Stock Option.  Neither service as a Director nor payment of a Director’s fee by the Company shall be sufficient to constitute “employment” by the Company.  For purposes of Awards other than Incentive Stock options, a leave of absence may continue so long as the Employee is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six (6) months, or if longer, so long as the Participant retains a right to reemployment with the Company, a Subsidiary, or an Affiliate under an applicable statute or by contract.

 

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

 

2.18  “Fair Market Value” means, as of any date, the value of Shares determined as follows:

 

(a)  If the Shares are listed on any established stock exchange or a national market system, including without limitation the NASDAQ Global Select Market, the NASDAQ Global Market (formerly the NASDAQ National Market) or the NASDAQ Capital Market (formerly the NASDAQ SmallCap Market) of the NASDAQ Stock Market, the Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the day of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable;

 

(b)  If the Shares are regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share shall be the mean between the high bid and low asked prices for the Shares for the day of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable; or

 

  

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(c)  In the absence of an established market for the Shares, the Fair Market Value shall be determined in good faith by the Committee.

 

Notwithstanding the preceding, for federal, state, and local income tax reporting purposes and for such other purposes as the Committee deems appropriate, the Fair Market Value shall be determined by the Committee in accordance with uniform and nondiscriminatory standards adopted by it from time to time.

 

2.19  “Grant Date” means the date an Award is granted to a Participant pursuant to the Plan.

 

2.20  “Grant Price” means the price established at the time of grant of an SAR pursuant to Article 7, used to determine whether there is any payment due upon exercise of the SAR.

 

2.21  “Incentive Stock Option” or “ISO” means an Option to purchase Shares that is granted under Article 6 to an Employee, that is designated as an Incentive Stock Option, and that is intended to meet the requirements of Code Section 422 or any successor provision thereto.

 

2.22  “Nonemployee Director” means a Director who is not an Employee.

 

2.23  “Nonemployee Director Award” means any Award granted, whether singly, in combination, or in tandem, to a Participant who is a Nonemployee Director.

 

2.24  “Nonqualified Stock Option” or “NQSO” means an Option that is not intended to meet the requirements of Code Section 422, or that otherwise does not meet such requirements.

 

2.25  “Option” means an Incentive Stock Option or a Nonqualified Stock Option, as described in Article 6.

 

2.26  “Option Price” means the price at which a Share may be purchased by a Participant pursuant to an Option.

 

2.27  “Other Stock-Based Award” means an equity-based or equity-related Award not otherwise described by the terms of this Plan, granted pursuant to Article 10.

 

2.28  “Participant” means any eligible individual as set forth in Article 5 to whom an Award is granted.

 

2.29  “Performance-Based Compensation” means compensation under an Award that is intended to satisfy the requirements of Code Section 162(m) for certain performance-based compensation.  Notwithstanding the foregoing, nothing in this Plan shall be construed to mean that an Award which does not satisfy the requirements for performance-based compensation under Code Section 162(m) does not constitute performance-based compensation for other purposes, including Code Section 409A.

 

2.30  “Performance Measures” mean measures as described in Article 12 on which the performance goals are based and which are approved by the Company’s shareholders pursuant to this Plan in order to qualify Awards as Performance-Based Compensation.

 

2.31  “Performance Period” means the period of time, as determined by the Compensation Committee, during which the performance goals must be met in order to determine the degree of payout and/or vesting with respect to an Award; provided, however, that in no event shall such a period be less than 12 consecutive months.

 

  

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2.32  “Performance Share” means an Award under Article 9 herein and subject to the terms of this Plan, denominated in Shares, the value of which at the time it is payable is determined as a function of the extent to which applicable Performance Measures have been achieved during a Performance Period.

 

2.33  “Performance Unit” means an Award under Article 9 herein and subject to the terms of this Plan, denominated in units, the value of which at the time it is payable is determined as a function of the extent to which applicable Performance Measures have been achieved during a Performance Period.

 

2.34  “Plan” means this First NBC Bank Holding Company 2014 Omnibus Incentive Plan.

 

2.35  “Prior Plan” means that certain First NBC Bank Holding Company Stock Incentive Plan, as amended, adopted in 2006.

 

2.36  “Restricted Stock” means an Award granted to a Participant pursuant to Article 8.

 

2.37  “Restricted Stock Unit” means an Award granted to a Participant pursuant to Article 8, except no Shares are actually awarded to the Participant on the Grant Date.

 

2.38  “Share” means a share of common stock of the Company, no par value per share.

 

2.39  “Stock Appreciation Right” or “SAR” means an Award, designated as an SAR, pursuant to the terms of Article 7 herein.

 

2.40  “Subsidiary” means any corporation or other entity, whether domestic or foreign, in which the Company has or obtains, directly or indirectly, an interest of more than fifty percent (50%) by reason of stock ownership or otherwise.

 

	
Article 3.

	
Administration

 

3.1  General.  The Committee shall be responsible for administering this Plan, subject to this Article 3 and the other provisions of this Plan.  The Committee may employ attorneys, consultants, accountants, agents, and other individuals, any of whom may be an Employee, and the Committee, the Company, and its officers and Directors shall be entitled to rely upon the advice, opinions, or valuations of any such individuals.  All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Participants, the Company, and all other interested individuals.

 

3.2  Authority of the Committee.  Subject to any express limitations set forth in the Plan, the Committee shall have full and exclusive discretionary power and authority to take such actions as it deems necessary and advisable with respect to the administration of the Plan including, but not limited to, the following:

 

(a)  To determine from time to time which of the persons eligible under the Plan shall be granted Awards, when and how each Award shall be granted, what type or combination of types of Awards shall be granted, the provisions of each Award granted (which need not be identical), including the time or times when a person shall be permitted to receive Shares pursuant to an Award, and the number of Shares subject to an Award;

 

  

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(b)  To construe and interpret the Plan and Awards granted under it, and to establish, amend, and revoke rules and regulations for its administration.  The Committee, in the exercise of this power, may correct any defect, omission, or inconsistency in the Plan or in an Award Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective;

 

(c)  To approve forms of Award Agreements for use under the Plan;

 

(d)  To determine Fair Market Value of a Share in accordance with Section 2.18 of the Plan;

 

(e)  To amend the terms of any outstanding Award, including the discretionary authority to extend the post-termination exercise period of Awards and accelerate the satisfaction of any vesting criteria or waiver of forfeiture or repurchase restrictions, provided that any amendment that would adversely affect the Participant's rights under an outstanding Award shall not be made without the Participant's written consent.  Notwithstanding the foregoing, an amendment shall not be treated as adversely affecting the rights of the Participant if the amendment causes an Incentive Stock Option to become a Nonqualified Stock Option or if the amendment is made to the minimum extent necessary to avoid the adverse tax consequences of Section 409A of the Code;

 

(f)  Allow Participants to satisfy withholding tax obligations by electing to have the Company withhold from the Shares or cash to be issued upon exercise or vesting of an Award that number of Shares or cash having a Fair Market Value equal to the minimum amount required to be withheld.  The Fair Market Value of any Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined, and all elections by a Participant to have Shares or cash withheld for this purpose shall be made in such form and under such conditions as the Committee may deem necessary or advisable;

 

(g)  To adopt subplans and/or special provisions applicable to stock awards regulated by the laws of a jurisdiction other than and outside of the United States.  Such subplans and/or special provisions may take precedence over other provisions of the Plan, but unless otherwise superseded by the terms of such subplans and/or special provisions, the provisions of the Plan shall govern;

 

(h)  To authorize any person to execute on behalf of the Company any instrument required to effect the grant of a stock award previously granted by the Board;

 

(i)  To determine whether Awards will be settled in Shares of common stock, cash, or in any combination thereof;

 

(j)  Subject to Article 13, to determine whether Awards will be adjusted for dividend equivalents, with “Dividend Equivalents” meaning a credit, made at the discretion of the Committee, to the account of a Participant in an amount equal to the cash dividends paid on one Share for each Share represented by an Award held by such Participant;

 

(k)  To impose such restrictions, conditions, or limitations as it determines appropriate as to the timing and manner of any resales by a Participant or other subsequent transfers by the Participant of any Shares, including, without limitation: (i) restrictions under an insider trading policy and (ii) restrictions as to the use of a specified brokerage firm for such resales or other transfers.

 

  

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Notwithstanding the powers and authorities of the Committee set forth in this Article 3, and subject to Section 4.4, the Committee shall not permit the repricing of Options or SARs by any method, such that the terms of an outstanding Award may not be amended to reduce the Option Price of an outstanding Option or the Grant Price of an outstanding SAR and provided further no outstanding Option or SAR may be cancelled in exchange for cash, other Awards, or an Option or SAR with an Option Price or Grant Price, as applicable, that is less than the Option Price of the cancelled Option or the Grant Price of the cancelled SAR without prior shareholder approval.

 

3.3  Delegation.  Except to the extent prohibited by applicable law, the Committee may delegate to one or more individuals the day-to-day administration of the Plan and any of the functions assigned to it in this Plan.  Such delegation may be revoked at any time with or without notice.

 

3.4  Decisions Binding.  All determinations and decisions made by the Committee pursuant to the provisions of this Plan and all related orders and resolutions of the Board shall be final, conclusive, and binding on all persons, including the Company, its stockholders, Employees, Participants, and their estates and beneficiaries.

 

	
Article 4.

	
Shares Subject to This Plan and Maximum Awards

 

4.1  Number of Shares Available for Grants.  Subject to adjustment under Section 4.4, Awards (including ISOs) may be made under the Plan for up to the number of Shares that is equal to the sum of 800,000 Shares plus (a) any Shares not issued or subject to outstanding awards under the Company’s Prior Plan as of the Effective Date and (b) any Shares subject to outstanding awards under the Prior Plan as of the Effective Date that on or after the Effective Date cease for any reason to be subject to such awards (other than by reason of exercise or settlement of the awards to the extent they are exercised for or settled in vested and nonforfeitable Shares).

 

4.2  Share Usage.  Any Shares covered by an Award shall be counted as used only to the extent they are issued.  Any Shares related to Awards under this Plan or under the Prior Plan that terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of the Shares, or are settled in cash in lieu of Shares, or are exchanged with the Committee’s permission, prior to the issuance of Shares, for Awards not involving Shares, shall be available again for grant under this Plan.  Moreover, if the Option Price of any Option granted under this Plan or the tax withholding requirements with respect to any Award granted under this Plan are satisfied by Shares withheld by the Company or by tendering Shares to the Company (by either actual delivery or by attestation), the withheld or tendered Shares shall again be available for grant under this Plan.  Furthermore, if an SAR is exercised and settled in Shares, the difference between the total Shares exercised and the net Shares delivered shall again be available for grant under this Plan, with the result being that only the number of Shares issued upon exercise of an SAR is counted against the Shares available for issuance under the Plan.  The Shares available for issuance under this Plan may be authorized and unissued Shares or treasury Shares.

 

4.3  Annual Award Limits.  Subject to Section 4.4 and except as limited by Section 13.3, (a) the maximum number of Shares that may be subject to Options or SARs granted to any Participant in any calendar year shall equal 400,000 Shares and contain an exercise price equal to the Fair Market Value of the Shares as of the Date of Grant, (b) the maximum number of Shares that may be subject to Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units and Other Stock-Based Awards granted to any Participant in any calendar year shall equal 200,000 Shares, and (c) the maximum dollar amount that may be subject to Cash-Based Awards granted to any Participant in any calendar year shall equal $1,500,000.

 

  

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4.4  Adjustments in Authorized Shares.  In the event of any change in the outstanding Shares by reason of any stock split, stock dividend or other non-recurring dividends or distributions, recapitalization, merger, consolidation, spin-off, combination, repurchase or exchange of stock, reorganization, liquidation, dissolution or other similar corporate transaction that affects the Shares, an adjustment shall be made, as the Committee deems necessary or appropriate, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.  Such adjustment may include an adjustment to the number and class of Shares which may be delivered under the Plan, the number, class and price of Shares subject to outstanding Awards, the number and class of Shares issuable pursuant to Options, and the numerical limits in Sections 4.1 and 4.3.  Notwithstanding the preceding, the number of Shares subject to any Award always shall be a whole number.

 

	
Article 5.

	
Eligibility and Participation

 

5.1  Eligibility.  Persons eligible to participate in this Plan include all officers, key Employees or non-Employee directors of the Company or any of its Affiliates, as determined by the Committee.

 

5.2  Actual Participation.  Subject to the provisions of this Plan, the Committee may, from time to time, select from all eligible individuals, those individuals to whom Awards shall be granted and shall determine, in its sole discretion, the nature of any and all terms permissible by law and the amount of each Award.

 

	
Article 6.

	
Stock Options

 

6.1  Grant of Options.  Subject to the terms and provisions of this Plan, Options may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee, in its sole discretion.

 

6.2  Award Agreement.  Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the maximum duration of the Option, the number of Shares to which the Option pertains, the conditions upon which an Option shall become vested and exercisable, and such other provisions as the Committee shall determine which are not inconsistent with the terms of this Plan.  The Award Agreement also shall specify whether the Option is intended to be an ISO or an NQSO.

 

6.3  Option Price.  The Option Price for each grant of an Option under this Plan shall be determined by the Committee in its sole discretion and shall be specified in the Award Agreement; provided, however, the Option Price must be at least equal to one hundred percent (100%) of the FMV of a Share as of the Option’s Grant Date.

 

6.4  Term of Options.  Each Option granted to a Participant shall expire at such time as the Committee shall determine at the time of grant; provided, however, no Option shall be exercisable later than the tenth (10th) anniversary date of its grant.  Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than 10% of the total combined voting power of all classes of stock of the Company or any parent or Subsidiary, the term of the Incentive Stock Option shall be five years from the Grant Date or such shorter term as may be provided in the Award Agreement.

 

  

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6.5  Exercise of Options.  Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which terms and restrictions need not be the same for each grant or for each Participant.

 

6.6  Payment.  Options granted under this Article 6 shall be exercised by the delivery of a notice of exercise to the Company or an agent designated by the Company in a form specified or accepted by the Committee, or by complying with any alternative procedures which may be authorized by the Committee, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares.  A condition of the issuance of the Shares as to which an Option shall be exercised shall be the payment of the Option Price.  The Option Price of any exercised Option shall be payable to the Company in accordance with one of the following methods:

 

(a)  In cash or its equivalent;

 

(b)  By tendering (either by actual delivery or attestation) previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the Option Price (provided that such Shares are not the subject of any pledge or other security interest and have been owned by the Participant for at least six months);

 

(c)  By a cashless (broker-assisted) exercise;

 

(d)  By any combination of (a), (b), and (c); or

 

(e)  Any other method approved or accepted by the Committee in its sole discretion.

 

Subject to any governing rules or regulations, as soon as practicable after receipt of written notification of exercise and full payment (including satisfaction of any applicable tax withholding), the Company shall deliver to the Participant evidence of book entry Shares, or upon the Participant’s request, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option(s).  Unless otherwise determined by the Committee, all payments under all of the methods indicated above shall be paid in United States dollars or Shares, as applicable.

 

6.7  Termination of Employment.  Each Participant’s Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant’s employment or provision of services to the Company or any Affiliate or Subsidiary, as the case may be.  Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Options issued pursuant to this Article 6, and may reflect distinctions based on the reasons for termination.

 

6.8  Special Rules Regarding ISOs.  Notwithstanding any provision of the Plan to the contrary, an ISO granted to a Participant shall be subject to the following rules:

 

(a)  Special ISO Definitions.

 

(i)  “Parent Corporation” shall mean as of any applicable date a corporation in respect of the Company that is a parent corporation within the meaning of Code Section 424(e).

 

  

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(ii)  “ISO Subsidiary” shall mean as of any applicable date any corporation in respect of the Company that is a subsidiary corporation within the meaning of Code Section 424(f).

 

(iii)  A “10% Owner” is an individual who owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or its Parent Corporation or any ISO Subsidiary.

 

(b)  Eligible Employees.  ISOs may be granted solely to eligible Employees of the Company, Parent Corporation, or ISO Subsidiary (as permitted under Code Sections 422 and 424).

 

(c)  Specified as an ISO.  The Award Agreement evidencing the grant of an ISO shall specify that such grant is intended to be an ISO.

 

(d)  Option Price.  The Option Price of an ISO granted under the Plan shall be determined by the Committee in its sole discretion and shall be specified in the Award Agreement; provided, however, the Option Price must at least equal one hundred percent (100%) of the Fair Market Value of a Share as of the ISO’s Grant Date (in the case of 10% Owners, the Option Price may not be not less than 110% of such Fair Market Value).

 

(e)  Right to Exercise.  Any ISO granted to a Participant under the Plan shall be exercisable during his or her lifetime solely by such Participant.

 

(f)  Termination of Employment.  In the event a Participant terminates employment due to death or disability, as defined under Code Section 22(e)(3), the Participant (or his beneficiary, in the case of death) shall have the right to exercise the Participant’s ISO Award during the period specified in the applicable Award Agreement solely to the extent the Participant had the right to exercise the ISO on the date of his death or disability, as applicable; provided, however that such period may not exceed one (1) year from the date of such termination of employment or, if shorter, the remaining term of the ISO.  In the event a Participant terminates employment for reasons other than death or disability, as defined under Code Section 22(e)(3), the Participant shall have the right to exercise the Participant’s ISO Award during the period specified in the applicable Award Agreement solely to the extent the Participant had the right to exercise the ISO on the date of such termination of employment; and provided further, that such period may not exceed three (3) months from the date of such termination of employment or, if shorter, the remaining term of the ISO.

 

(g)  Dollar Limitation.  To the extent that the aggregate Fair Market Value of: (i) the Shares with respect to which Options designated as Incentive Stock Options plus (ii) the Shares of common stock of the Company, Parent Corporation, and any Subsidiary with respect to which other Incentive Stock Options are exercisable for the first time by a holder of an ISO during any calendar year under all plans of the Company and any Affiliate and Subsidiary exceeds one hundred thousand dollars ($100,000), such Options shall be treated as Nonqualified Stock Options.  For purposes of the preceding sentence, Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the time the Option or other Incentive Stock Option is granted.

 

  

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Article 7.

	
Stock Appreciation Rights

 

7.1  Grant of SARs.  Subject to the terms and conditions of this Plan, SARs may be granted to Participants at any time and from time to time as shall be determined by the Committee.  Subject to the terms and conditions of this Plan, the Committee shall have complete discretion in determining the number of SARs granted to each Participant and, consistent with the provisions of this Plan, in determining the terms and conditions pertaining to such SARs.

 

7.2  Grant Price.  The Grant Price for each grant of an SAR shall be determined by the Committee and shall be specified in the Award Agreement; provided, however, the Grant Price must be at least equal to one hundred percent (100%) of the FMV of a Share as of the Grant Date.

 

7.3  SAR Agreement.  Each SAR Award shall be evidenced by an Award Agreement that shall specify the Grant Price, the term of the SAR, the number of Shares subject to the SAR, and such other provisions as the Committee shall determine.

 

7.4  Term of SAR.  The term of an SAR granted under this Plan shall be determined by the Committee, in its sole discretion, and except as determined otherwise by the Committee and specified in the SAR Award Agreement, no SAR shall be exercisable later than the tenth (10th) anniversary date of its grant.  Notwithstanding the foregoing, for SARs granted to Participants outside the United States, the Committee may provide for a longer term to accommodate regulations in non-U.S. jurisdictions that require a minimum exercise or vesting period following a participant’s death to achieve favorable tax results or comply with local law.

 

7.5  Exercise of SARs.  SARs may be exercised upon whatever terms and conditions the Committee, in its sole discretion, imposes.

 

7.6  Settlement of SARs.  Upon the exercise of an SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying:

 

(a)  The excess of the Fair Market Value of a Share on the date of exercise over the Grant Price; by

 

(b)  The number of Shares with respect to which the SAR is exercised.

 

7.7  Form of Payment.  Payment, if any, with respect to an SAR settled in accordance with Section 7.6 of the Plan shall be made in accordance with the terms of the applicable Award Agreement, in cash, Shares, or a combination thereof, as the Committee determines.

 

	
Article 8.

	
Restricted Stock and Restricted Stock Units

 

8.1  Grant of Restricted Stock or Restricted Stock Units.  Subject to the terms and provisions of this Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock and/or Restricted Stock Units to Participants in such amounts as the Committee shall determine.  Restricted Stock Units shall be similar to Restricted Stock except that no Shares are actually awarded to the Participant on the Grant Date.

 

8.2  Restricted Stock or Restricted Stock Unit Agreement.  Each Restricted Stock and/or Restricted Stock Unit grant shall be evidenced by an Award Agreement that shall specify the Period(s) of Restriction, the number of Shares of Restricted Stock, or the number of Restricted Stock Units granted, and such other provisions as the Committee shall determine.

 

  

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8.3  Other Restrictions.  The Committee shall impose such other conditions and/or restrictions on any Shares of Restricted Stock or Restricted Stock Units granted pursuant to this Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock or each Restricted Stock Unit, restrictions based upon the achievement of specific performance goals, time-based restrictions on vesting following the attainment of the performance goals, time-based restrictions, restrictions under applicable laws or under the requirements of any stock exchange or market upon which such Shares are listed or traded, or holding requirements or sale restrictions placed on the Shares by the Company upon vesting of such Restricted Stock or Restricted Stock Units.  To the extent deemed appropriate by the Committee, the Company may retain the certificates representing Shares of Restricted Stock in the Company’s possession until such time as all conditions and/or restrictions applicable to such Shares have been satisfied or lapse.  Except as otherwise provided in this Article 8, Shares of Restricted Stock covered by each Restricted Stock Award shall become freely transferable by the Participant after all conditions and restrictions applicable to such Shares have been satisfied or lapse (including satisfaction of any applicable tax withholding obligations), and Restricted Stock Units shall be paid in cash, Shares, or a combination of cash and Shares as the Committee, in its sole discretion, shall determine.

 

8.4  Certificate Legend.  The certificates for any Shares of Restricted Stock granted pursuant to this Plan may bear any legend that the Committee deems appropriate to reflect any restrictions on transfer.

 

8.5  Voting Rights.  Unless otherwise determined by the Committee and set forth in a Participant’s Award Agreement, to the extent permitted or required by law, as determined by the Committee, Participants holding Shares of Restricted Stock granted hereunder shall be granted the right to exercise full voting rights with respect to those Shares during the vesting period.  A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder.

 

	
Article 9.

	
Performance Units/Performance Shares

 

9.1  Grant of Performance Units/Performance Shares.  Subject to the terms and provisions of this Plan, the Committee, at any time and from time to time, may grant Performance Units and/or Performance Shares to Participants in such amounts and upon such terms as the Committee shall determine.

 

9.2  Value of Performance Units/Performance Shares.  Each Performance Unit shall have an initial value that is established by the Committee at the time of grant.  Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the Grant Date.  The Committee shall set performance goals in its discretion which, depending on the extent to which they are met, will determine the value and/or number of Performance Units/Performance Shares that will be paid out to the Participant.

 

9.3  Earning of Performance Units/Performance Shares.  Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder of Performance Units/Performance Shares shall be entitled to receive payout on the value and number of Performance Units/Performance Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance goals have been achieved.

 

  

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9.4  Form and Timing of Payment of Performance Units/Performance Shares.  Payment of earned Performance Units/Performance Shares shall be as determined by the Committee and as evidenced in the Award Agreement.  Subject to the terms of this Plan, the Committee, in its sole discretion, may pay earned Performance Units/Performance Shares in the form of cash or in Shares (or in a combination thereof) equal to the value of the earned Performance Units/Performance Shares within ninety (90) days after the close of the applicable Performance Period.  Any Shares may be granted subject to any restrictions deemed appropriate by the Committee.  The determination of the Committee with respect to the form of payout of such Awards shall be set forth in the Award Agreement pertaining to the grant of the Award.  In absence of other payment arrangements in the Award Agreement in accordance with Code Section 409A, payments related to Performance Units/Performance Shares shall be made in a lump sum within ninety (90) calendar days of the end of the Performance Period; provided, however, that if such ninety (90) day period begins in one calendar year and ends in another calendar year, the Participant shall have no right to designate the calendar year of payment.  Notwithstanding any other provision to the contrary in Article 9, Performance Units/Performance Shares payable upon a termination of employment of a Specified Employee during the six (6) month period following such termination of employment, to the extent that they constitute nonqualified deferred compensation subject to Code Section 409A, shall not be paid or issued until within the thirty (30) day period commencing with the first day of the seventh month following the month of the Specified Employee’s termination of employment (provided that if such thirty(30) day period begins in one calendar year and ends in another calendar year, the Participant shall have no right to designate the calendar year of payment).

 

9.5  Compliance with Section 162(m).  The Plan is intended to comply with Section 162(m) of the Code

 

	
Article 10.

	
Cash-Based Awards and Other Stock-Based Awards

 

10.1  Grant of Cash-Based Awards.  Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Cash-Based Awards to Participants in such amounts and upon such terms as the Committee may determine.

 

10.2  Other Stock-Based Awards.  The Committee may grant other types of equity-based or equity-related Awards not otherwise described by the terms of this Plan (including the grant or offer for sale of unrestricted Shares) in such amounts and subject to such terms and conditions as the Committee shall determine.  Such Awards may involve the transfer of actual Shares to Participants, or payment in cash or otherwise of amounts based on the value of Shares, and may include, without limitation, Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.

 

10.3  Value of Cash-Based and Other Stock-Based Awards.  Each Cash-Based Award shall specify a payment amount or payment range as determined by the Committee.  Each Other Stock-Based Award shall be expressed in terms of Shares or units based on Shares, as determined by the Committee.  The Committee may establish performance goals in its discretion.  If the Committee exercises its discretion to establish performance goals, the number and/or value of Cash-Based Awards or Other Stock-Based Awards that will be paid out to the Participant will depend on the extent to which the performance goals are met.

 

10.4  Payment of Cash-Based Awards and Other Stock-Based Awards.  Payment, if any, with respect to a Cash-Based Award or an Other Stock-Based Award shall be made in accordance with the terms of the Award, in cash or Shares as the Committee determines in accordance with Code Section 409A to the extent applicable.

 

  

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Article 11.

	
Transferability of Awards and Shares

 

11.1  Transferability of Awards.  Except as provided in Section 11.2, during a Participant’s lifetime, his or her Awards shall be exercisable only by the Participant.  Awards shall not be transferable other than by will or the laws of descent and distribution or, subject to the consent of the Committee, pursuant to a domestic relation order entered into by a court of competent jurisdiction; no Awards shall be subject, in whole or in part, to attachment, execution, or levy of any kind; and any purported transfer in violation of this Section 11.1 shall be null and void.  The Committee may establish such procedures as it deems appropriate for a Participant to designate a beneficiary to whom any amounts payable or Shares deliverable in the event of, or following, the Participant’s death may be provided.

 

11.2  Committee Action.  Except as provided in Section 6.8(k), the Committee may, in its discretion, determine that notwithstanding Section 11.1, any or all Awards shall be transferable to and exercisable by such transferees, and be subject to such terms and conditions as the Committee may deem appropriate; provided, however, no Award may be transferred for value without shareholder approval.

 

11.3  Restrictions on Share Transferability.  The Committee may impose such restrictions on any Shares acquired by a Participant under the Plan as it may deem advisable, including, without limitation, minimum holding period requirements, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed or traded, or under any blue sky or state securities laws applicable to such Shares.

 

	
Article 12.

	
Performance Measures

 

12.1  Performance Measures.  The performance goals upon which the payment or vesting of an Award that is intended to qualify as Performance-Based Compensation shall be limited to the following Performance Measure.

 

(a)  Share price, including (i) market price per share; and (ii) share price appreciation;

 

(b)  Earnings, including (i) earnings per share; (ii) gross or pre-tax profits; (iii) post-tax profits; (iv) operating profit; (v) operating earnings; (vi) growth in earnings or growth in earnings per share; and (vii) total earnings;

 

(c)  Return on equity, including (i) return on equity; (ii) return on invested capital; (iii) return or net return on assets or net assets; (iv) return on investment; (v) return on capital; (vi) financial return ratios; (vii) value of assets; and (viii) change in assets;

 

(d)  Cash flow(s), including (i) operating cash flow; (ii) net cash flow; (iii) free cash flow; and (iv) cash flow on investment;

 

(e)  Revenue, including (i) gross or net revenue; and (ii) changes in annual revenues;

 

(f)  Margins, including (i) adjusted pre-tax margin; and (ii) operating margins;

 

(g)  Income, including (i) net income; and (ii) consolidated net income;

 

(h)  Costs and expenses, including (i) operating or administrative expenses; (ii) expense or cost levels; (iii) reduction of losses, loss ratios or expense ratios; (iv) reduction in fixed costs; (v) expense reduction levels; (vi) operating cost management; and (vii) cost of capital;

 

  

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(i)  Financial ratings, including (i) credit rating; (ii) capital expenditures; (iii) debt; (iv) debt reduction; (v) working capital; (vi) average invested capital; and (vii) attainment of balance sheet or income statement;

 

(j)  Market share, including (i) market share; (ii) volume; (iii) market share or market penetration with respect to specific geographic areas;

 

(k)  Shareholder return, including (i) total shareholder return; (ii) shareholder return based on growth measures or the attainment of a specified share price for a specified period of time; and (iii) dividends

 

Any Performance Measure(s) may be used to measure the performance of the Company, Subsidiary, and/or Affiliate as a whole or any business unit of the Company, Subsidiary, and/or Affiliate, or any combination thereof, as the Committee may deem appropriate, or any of the above Performance Measures as compared to the performance of a group of comparator companies, or published or special index that the Committee, in its sole discretion, deems appropriate, or the Company may select Performance Measure (k) above as compared to various stock market indices.  The Committee also has the authority to provide for accelerated vesting of any Award based on the achievement of performance goals pursuant to the Performance Measures specified in this Article 12; provided, however, that any restrictions on acceleration of payment under Code Section 409A shall be observed.

 

12.2  Adjustment of Performance-Based Compensation.  Awards that are intended to qualify as Performance-Based Compensation may not be adjusted upward.  The Committee shall retain the discretion to adjust such Awards downward, either on a formula or discretionary basis or any combination, as the Committee determines.

 

12.3  Committee Discretion.  In the event that applicable tax or securities laws change to permit Committee discretion to alter the governing Performance Measures without obtaining shareholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining shareholder approval.  In addition, in the event that the Committee determines that it is advisable to grant Awards that shall not qualify as Performance-Based Compensation, the Committee may make such grants without satisfying the requirements of Code Section 162(m) and base vesting on Performance Measures other than those set forth in Section 12.1.

 

	
Article 13.

	
Nonemployee Director Awards

 

13.1  Awards to Nonemployee Directors.  The Board or Committee shall determine and approve all Awards to Nonemployee Directors.  The terms and conditions of any grant of any Award to a Nonemployee Director shall be set forth in an Award Agreement.

 

13.2  Awards in Lieu of Fees; Deferral of Award Payment.  In accordance with Code Section 409A, the Board or Committee may permit a Nonemployee Director the opportunity to: (a) receive an Award in lieu of payment of all or a portion of future director fees (including but not limited to cash retainer fees and meeting fees) or other types Awards pursuant to such terms and conditions as the Board or Committee may prescribe and set forth in an applicable subplan or Award Agreement or (b) defer the grant or payment of an Award pursuant to such terms and conditions as the Board or Committee may prescribe and set forth in any applicable subplan or Award Agreement.

 

13.3  Annual Award Limits.  Subject to Section 4.4, (a) the maximum number of Shares that may be subject to Options or SARs granted to any Nonemployee Director in any calendar year shall equal 40,000 Shares and contain an exercise price equal to the Fair Market Value of the Shares as of the Date of Grant, (b) the maximum number of Shares that may be subject to Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units and Other Stock-Based Awards granted to any Nonemployee Director in any calendar year shall equal 20,000 Shares and (c) the maximum dollar amount that may be subject to Cash-Based Awards granted to any Nonemployee Director in any calendar year shall equal $150,000.

 

  

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Article 14.

	
Beneficiary Designation

 

Each Participant under this Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under this Plan is to be paid in case of his death before he receives any or all of such benefit.  Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime.  In the absence of any such beneficiary designation, benefits remaining unpaid or rights remaining unexercised at the Participant’s death shall be paid to or exercised by the Participant’s executor, administrator, or legal representative.

 

	
Article 15.

	
Rights of Participants

 

15.1  Employment.  Nothing in this Plan or an Award Agreement shall: (a) interfere with or limit in any way the right of the Company, its Affiliates, and/or its Subsidiaries to terminate any Participant’s employment or service on the Board or to the Company at any time or for any reason not prohibited by law, or (b) confer upon any Participant any right to continue his employment or service as a Director for any specified period of time.  Neither an Award nor any benefits arising under this Plan shall constitute an employment contract with the Company or any Affiliate or Subsidiary and, accordingly, subject to Article 3 and Article 17, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Committee without giving rise to any liability on the part of the Company, its Affiliates, and/or its Subsidiaries.

 

15.2  Participation.  No individual shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award.

 

15.3  Rights as a Shareholder.  Except as otherwise provided herein, a Participant shall have none of the rights of a shareholder with respect to Shares covered by any Award until the Participant becomes the record holder of such Shares.

 

	
Article 16. 

	
Change of Control

 

16.1  Change of Control of the Company.  Notwithstanding any other provision of this Plan to the contrary, the provisions of this Article 16 shall apply in the event of a Change of Control, unless otherwise determined by the Committee in connection with the grant of an Award as reflected in the applicable Award Agreement.  All outstanding Awards may be assumed by an acquiring entity in connection with a Change of Control, and, to the extent not assumed, then the vesting of such outstanding Awards shall fully accelerate immediately prior to consummation of a Change of Control.  To the extent not assumed, all outstanding Awards shall terminate upon consummation of a Change of Control.

 

16.2  Assumed Awards and Later Termination of Employment.  Upon a termination of employment of a Participant occurring in connection with or during the period of two (2) years after such Change of Control, other than for Cause: (a) all assumed Awards held by the Participant shall become fully vested and (if applicable) exercisable and free of restrictions, and (b) all Options and Stock Appreciation Rights held by the Participant immediately before the termination of employment or termination of directorship that the Participant held as of the date of the Change of Control or that constitute Replacement Awards shall remain exercisable for not less than one (1) year following such termination or until the expiration of the stated term of such Option or SAR, whichever period is shorter; provided that if the applicable Award Agreement provides for a longer period of exercisability, that provision shall control.

 

  

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Article 17.

	
Amendment and Termination of the Plan

 

17.1  Amendment and Termination.  The Board may at any time amend, alter, suspend or terminate the Plan.

 

17.2  Shareholder Approval.  The Company shall obtain shareholder approval of any Plan amendment to the extent necessary to comply with applicable laws.

 

17.3  Effect of Amendment or Termination.  No amendment, alteration, suspension, or termination of the Plan shall materially or adversely impair the rights of any Participant, unless otherwise mutually agreed upon by the Participant and the Committee, which agreement must be in writing and signed by the Participant and the Company.  Termination of the Plan shall not affect the Committee’s ability to exercise the powers granted to it under this Plan with respect to Awards granted under the Plan prior to the date of termination.

 

17.4  Amendment to Conform to Law.  Notwithstanding any other provision of this Plan to the contrary, the Committee may amend the Plan or an Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming the Plan or an Award Agreement to any present or future law relating to plans of this or similar nature, and to the administrative regulations and rulings promulgated thereunder.  By accepting an Award under this Plan, a Participant agrees to any amendment made pursuant to this Section 17.4 to any Award granted under the Plan without further consideration or action.

 

	
Article 18.

	
Reporting and Withholding

 

18.1  Reporting and Tax Withholding.  The Company shall have the power and the right to report income and to deduct or withhold, or require a Participant to remit to the Company, the minimum statutory amount to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Plan.

 

18.2  Share Withholding.  With respect to withholding required upon the exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock and Restricted Stock Units, or upon the achievement of performance goals related to Performance Shares or Performance Units, or any other taxable event arising as a result of an Award granted hereunder (collectively and individually referred to as a “Share Payment”), Participants may elect, subject to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold from a Share Payment the number of Shares having a Fair Market Value on the date the withholding is to be determined equal to the minimum statutory withholding requirement but in no event shall such withholding exceed the minimum statutory withholding requirement.  All such elections shall be irrevocable, made in writing, and signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.

 

  

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Article 19. 

	
Successors

 

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

 

	
Article 20.

	
General Provisions

 

20.1  Forfeiture Events

 

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

 

(b)  All compensation and Awards payable or paid under the Plan and any sub-plans shall be subject to the Company's ability to recover incentive-based compensation from executive officers pursuant to any recoupment policy adopted by the Company, as is required by the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, any regulations or rules promulgated thereunder, or any other “clawback” provision required by applicable law or the listing standards of any applicable stock exchange or national market system.

 

20.2  Legend.  The certificates for Shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer of such Shares.

 

20.3  Gender and Number.  Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular, and the singular shall include the plural.

 

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

 

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

 

20.6  Delivery of Title.  The Company shall have no obligation to issue or deliver evidence of title for Shares issued under this Plan prior to:

 

(a)  Obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and

 

  

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(b)  Completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.

 

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

 

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

 

20.9  Uncertificated Shares.  To the extent that this Plan provides for issuance of certificates to reflect the transfer of Shares, the transfer of such Shares may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange.

 

20.10  Unfunded Plan.  Participants shall have no right, title, or interest whatsoever in or to any investments that the Company, its Subsidiaries, or its Affiliates may make to aid it in meeting its obligations under this Plan.  Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative, or any other individual.  To the extent that any individual acquires a right to receive payments from the Company or any Affiliate or Subsidiary under this Plan, such right shall be no greater than the right of an unsecured general creditor of the Company or the Subsidiary or Affiliate, as the case may be.  All payments to be made hereunder shall be paid from the general funds of the Company, or the Subsidiary or Affiliate, as the case may be and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in this Plan.

 

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

 

20.12  Section 409A.  It is the intention of the Company that no Award shall be “deferred compensation” subject to Section 409A of the Code, unless and to the extent that the Committee specifically determines otherwise, and the Plan and the terms and conditions of all Awards shall be interpreted accordingly.  The following rules shall apply to Awards intended to be subject to Section 409A of the Code (“409A Awards”):

 

(a)  Any distribution of a 409A Award following a separation from service that would be subject to Section 409A(a)(2)(A)(i) of the Code as a distribution following a separation from service of a “specified employee” (as defined under Section 409A(a)(2)(B)(i) of the Code) shall occur no earlier than the expiration of the six-month period following such separation from service.

 

(b)  In the case of a 409A Award providing for distribution or settlement upon vesting or lapse of a risk of forfeiture, if the time of such distribution or settlement is not otherwise specified in the Plan or Award Agreement or other governing document, the distribution or settlement shall be made no later than March 15 of the calendar year following the calendar year in which such 409A Award vested or the risk of forfeiture lapsed.

 

  

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(c)  In the case of any distribution of any other 409A Award, if the timing of such distribution is not otherwise specified in the Plan or Award Agreement or other governing document, the distribution shall be made not later than the end of the calendar year during which the settlement of the 409A Award is specified to occur.

 

20.13  Nonexclusivity of this Plan.  The adoption of this Plan shall not be construed as creating any limitations on the power of the Board or Committee to adopt such other compensation arrangements as it may deem desirable for any Participant.

 

20.14  No Constraint on Corporate Action.  Nothing in this Plan shall be construed to: (a) limit, impair, or otherwise affect the Company’s or a Subsidiary’s or an Affiliate’s right or power to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets; or (b) limit the right or power of the Company or a Subsidiary or an Affiliate to take any action which such entity deems to be necessary or appropriate.

 

20.15  Governing Law.  The Plan and each Award Agreement shall be governed by the laws of the state of Louisiana, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Plan to the substantive law of another jurisdiction.  Unless otherwise provided in the Award Agreement, recipients of an Award under this Plan are deemed to submit to the exclusive jurisdiction and venue of the federal or state courts of Louisiana to resolve any and all issues that may arise out of or relate to this Plan or any related Award Agreement.

 

20.16  Delivery and Execution of Electronic Documents.  To the extent permitted by applicable law, the Company may: (a) deliver by email or other electronic means (including posting on a Web site maintained by the Company or by a third party under contract with the Company) all documents relating to the Plan or any Award thereunder (including without limitation, prospectuses required by the SEC) and all other documents that the Company is required to deliver to its security holders (including without limitation, annual reports and proxy statements), and (b) permit Participants to electronically execute applicable Plan documents (including, but not limited to, Award Agreements) in a manner prescribed to the Committee.

 

20.17  No Representations or Warranties Regarding Tax Effect.  Notwithstanding any provision of the Plan to the contrary, the Company, its Affiliates and Subsidiaries, the Board, and the Committee neither represent nor warrant the tax treatment under any federal, state, local, or foreign laws and regulations thereunder (individually and collectively referred to as the “Tax Laws”) of any Award granted or any amounts paid to any Participant under the Plan including, but not limited to, when and to what extent such Awards or amounts may be subject to tax, penalties and interest under the Tax Laws.

 

  

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20.18  Indemnification.  Subject to requirements of Louisiana law, each individual who is or shall have been a member of the Board, or a Committee appointed by the Board, or an officer of the Company to whom authority was delegated in accordance with Article 3, shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under this Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his/her own behalf, unless such loss, cost, liability, or expense is a result of his/her own willful misconduct or except as expressly provided by statute.  The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such individuals may be entitled under the Company’s Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

 

 

 

 

 

 

 

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