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ASSURANT LONG TERM INCENTIVE PLAN

(Adopted effective April __, 2005)

     The Assurant Long Term Incentive Plan (the “Plan”) is hereby adopted by Assurant, Inc. (the
“Corporation”) effective as of April ___, 2005.

ARTICLE 1

PURPOSE

     1.1 GENERAL. The Plan is a sub-plan created under the Assurant, Inc. 2004 Long-Term
Incentive Plan (“2004 LTIP”). The Plan provides a framework for grants of restricted stock and
stock appreciation rights under the 2004 LTIP to eligible employees of the Company and its
Affiliates. The Plan also provides for the cancellation as of June 30, 2005, of unexercised
appreciation rights issued under the Assurant Appreciation Incentive Rights Plan (as amended and
restated effective January 1, 2004), and the grant of replacement stock appreciation rights with
respect to such cancelled rights. It is intended that neither the restricted stock nor the stock
appreciation rights that are issued under the Plan shall constitute “deferred compensation” as
determined under Section 409A of the Internal Revenue Code of 1986, as amended (“Code”), and IRS
Notice 2005-1, and the Plan shall be so interpreted.

ARTICLE 2

INCORPORATION BY REFERENCE OF PROVISIONS OF 2004 LTIP;

ADDITIONAL DEFINITIONS

     2.1 IN GENERAL. The provisions of the 2004 LTIP are hereby incorporated by reference.

     2.2 ADDITIONAL DEFINITIONS. The following additional definitions are included in this Plan:

      (a) “2004 LTIP” shall mean the Assurant, Inc. 2004 Long-Term Incentive Plan.

      (b) “Effective Date” of this Plan means April ___, 2005.

      (c) “Plan” means the Assurant, Inc. Long Term Incentive Plan, as amended from time to
time.

      (d) “Retirement” shall have the same meaning as it has in the Company’s Employees
Uniform Retirement Plan or any comparable plan that replaces such plan, as such plan may be
amended from time to time, provided that, if such plan shall be terminated and not replaced
by another comparable plan, then Retirement shall mean a Participant’s termination of
employment with the Company or an Affiliate after attaining any normal or early retirement
age specified in any pension, profit sharing or other retirement program sponsored by the
Company, or, in the event of the inapplicability thereof with respect to the individual in
question, as determined by the Committee in its reasonable judgment.

 

 

ARTICLE 3

TERM OF PLAN

     3.1 EFFECTIVE DATE. The Plan was adopted by the Compensation Committee of the Board on
April ___, 2005.

     3.2 TERMINATION OF PLAN. Because this Plan is sub-plan under the 2004 LTIP, the Plan shall
continue until the expiration of the 2004 LTIP, unless this Plan is earlier terminated by the
Compensation Committee of the Board. If the Plan is terminated, such termination shall not affect
the validity of any Award outstanding on the date of termination

ARTICLE 4

FRAMEWORK FOR GRANTING RESTRICTED STOCK

AWARDS AND STOCK APPRECIATION RIGHTS

     4.1 DIVISION OF AWARDS BETWEEN RESTRICTED STOCK AND STOCK APPRECIATION RIGHTS. Awards
under this Plan, other than under Article 6, shall be determined by the Committee with respect to a
nominal target amount that is a percentage of each Participant’s base compensation. The actual
target amount for each Participant may be 75% to 125% of the nominal target amount, as determined
by the Committee based upon such criteria as it deems relevant. It is generally intended that the
value of an Award will consist (i) twenty-five percent (25%) of a Restricted Stock Award, based on
Fair Market Value of Company Stock as of the effective date of such Award; and (ii) seventy-five
percent (75%) of Stock Appreciation Rights with respect to Company Stock, based on a Black-Scholes
or other option valuation methodology adopted by the Committee from time to time; however, the
relative proportion of Awards between Restricted Stock and Stock Appreciation Rights may be varied
from Participant to Participant.

     4.2. GRANT OF RESTRICTED STOCK AWARDS. Restricted Stock Awards that are granted under
this Plan shall be governed by the 2004 LTIP, and in particular Article 10 of the 2004 LTIP. The
terms and conditions of Restricted Stock Awards under this Plan shall be determined by the
Committee at the time of the grant of the Award and shall be reflected in an Award Certificate. It
is generally intended that Restricted Stock Awards under this Plan shall vest one-third on the
first anniversary of the date the Award was granted, one-third on the second anniversary of the
date the Award was granted, and the remainder on the third anniversary of the date the Award was
granted. Notwithstanding the foregoing, (i) a Participant shall become fully vested in all of his
Restricted Stock Awards as of the date the Company undergoes a Change in Control, and (ii) if a
Participant Retires, becomes Disabled, or dies, then as of the date of such event the Participant
shall vest pro rata in each Award based on a fraction, the numerator of which is the number of
completed calendar months from the date specified in the Award (which generally shall be January 1
of the calendar year in which the Award was granted) to the date of the Participant’s Retirement,
Disability, or death, and the denominator of which is thirty-six (36).

     4.3 GRANT OF STOCK APPRECIATION RIGHTS. Stock Appreciation Rights that are granted
under this Plan shall be governed by the 2004 LTIP, and in particular Article 8 of the 2004 LTIP.
The terms and conditions of Stock Appreciation Rights under this Plan shall be determined by the
Committee at the time of the grant of the Award and shall be reflected in an Award Certificate.

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ARTICLE 5

VESTING AND EXERCISE OF STOCK APPRECIATION RIGHTS

     5.1. VESTING OF STOCK APPRECIATION RIGHTS. Each Stock Appreciation Rights Award shall
vest as of December 31 of the second calendar year following the calendar year in which the Award
was granted, provided that the Participant must be actively employed by the Company or an Affiliate
as of such date for vesting to occur. Notwithstanding the foregoing, (i) a Participant shall
become fully vested in all of the granted Stock Appreciation Rights as of the date the Company
undergoes a Change in Control, and (ii) if a Participant Retires, becomes Disabled, or dies, then
as of the date of such event the Participant shall vest pro rata in each Award based on a fraction,
the numerator of which is the number of completed calendar months from the date specified in the
Award (which generally shall be January 1 of the calendar year in which the Award was granted) to
the date of the Participant’s Retirement, Disability, or death, and the denominator of which is
thirty-six (36).

     5.2 DISCRETIONARY EXERCISE OF STOCK APPRECIATION RIGHTS. Subject to any applicable
securities law restrictions, a Participant may exercise any vested Stock Appreciation Right as of
any business day.

     5.3 MANDATORY EXERCISE OF STOCK APPRECIATION RIGHTS. Any unexercised Stock
Appreciation Rights that have become vested shall be automatically exercised, without election by
the Participant, on the earliest of (i) the fifth anniversary of the date the Award was granted;
(ii) the second anniversary of the date of the Participant’s Retirement, Disability, or death,
(iii) the date the Company undergoes a Change in Control; or (iv) ninety (90) days following the
Participant’s termination of employment with the Company and its Affiliates.

     5.4 RIGHT TO PAYMENT. Upon the exercise of a Stock Appreciation Right, the Participant
to whom it is granted has the right to receive the excess, if any, of:

(i) The Fair Market Value of one Share on the date of exercise, minus

(ii) The grant price of the Stock Appreciation Right as determined by the
Committee, which shall not be less than the Fair Market Value of
one Share on the Grant Date.

Upon exercise, the value of all Appreciation Incentive Rights shall be paid as described in Section
5.5.

     5.5 FORM OF PAYMENT OF STOCK APPRECIATION RIGHTS  The aggregate value determined under
Section 5.4, shall be paid solely in Shares of Company Stock; provided, however, that partial
shares shall be paid in cash unless it is determined that this could negate the Company’s intent
with respect to the tax and accounting treatment of the Plan. Subject to the preceding sentence,
the number of Shares to be delivered shall be determined by dividing the aggregate value determined
under Section 5.4 by the Fair Market Value of one Share on the date of exercise, net of any taxes
required to be withheld by the Company with respect to such Award.

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ARTICLE 6

CANCELLATION OF CERTAIN APPRECIATION RIGHTS AND GRANT OF

REPLACEMENT RIGHTS AS OF JUNE 30, 2005

     6.1 CANCELLATION OF ASSURANT, INC. APPRECIATION INCENTIVE RIGHTS AND BUSINESS UNIT
APPRECIATION INCENTIVE RIGHTS. Effective as of 12:01 am on June 30, 2005, all Assurant, Inc.
Appreciation Incentive Rights and all Business Unit Appreciation Incentive Rights, whether or not
vested, that (i) were issued under the Assurant Appreciation Incentive Rights Plan, as amended and
restated effective January 1, 2004 (the “AAIR Plan”); and (ii) have not been exercised by midnight
on June 29, 2005, shall be cancelled.

     6.2 GRANT OF REPLACEMENT RIGHTS WITH RESPECT TO CANCELLED ASSURANT, INC. APPRECIATION
INCENTIVE RIGHTS. Immediately following the cancellation of Assurant, Inc. Appreciation
Incentive Rights described in Section 6.1, there shall be granted under this Plan to each
Participant with Rights that were cancelled, whether or not vested, a number of Stock Appreciation
Rights with respect to Company Stock (referred to herein as “Replacement Rights”) that is equal to
the number of cancelled Assurant, Inc. Appreciation Incentive Rights. Each Replacement Right that
is granted with respect to a cancelled vested Right shall be vested immediately; and each
Replacement Right that is granted with respect to a cancelled non-vested Right shall become vested
on the vesting date for the corresponding cancelled Right. Each Replacement Right shall become
exercisable on the date the Replacement Right becomes vested, and shall remain exercisable for the
remaining term of the corresponding cancelled right described in Section 6.1.

     6.3 GRANT OF REPLACEMENT RIGHTS WITH RESPECT TO CANCELLED BUSINESS UNIT APPRECIATION
INCENTIVE RIGHTS. Immediately following the cancellation of Business Unit Appreciation
Incentive Rights described in Section 6.1, there shall be granted under this Plan to each
Participant with Rights that were cancelled, whether or not vested, a number of Replacement Rights
with respect to Company Stock determined as follows:

      (i) For all Business Unit Appreciation Incentive Rights that were granted in a given
year, the Committee shall determine the ratio of the strike price of the cancelled Business
Unit Appreciation Incentive Rights to the Fair Market Value of such cancelled Rights, as
most recently determined by the Committee. For each Replacement Right issued under this
Section 6.3, the ratio of the strike price to Fair Market Value (as of the date of grant of
the Replacement Right) shall be the same as the ratio determined under the preceding
sentence.

      (ii) The Committee shall determine the aggregate spread of the cancelled Business Unit
Appreciation Incentive Rights described in clause (i).

      (iii) The number of Replacement Rights to be issued to each Participant under this
Section 6.3 shall be determined by dividing the aggregate spread under clause (ii) by the
individual spread of each Replacement Right, as determined under clause (i).

The Committee may establish a reasonable conversion methodology where the aggregate spread between
the strike price of the cancelled Business Unit Appreciation Incentive Rights to the Fair Market
Value of such cancelled Rights is zero or less. Each Replacement Right that is granted with
respect to a cancelled vested Right shall be vested immediately; and each Replacement Right
that is granted with respect to a

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cancelled non-vested Right
shall become vested on the vesting date for the corresponding cancelled Right. Each Replacement Right shall
become exercisable on the
date the Replacement Right becomes vested and shall remain exercisable for the remaining term of
the corresponding cancelled right described in Section 6.1.

*******************************************

     The foregoing is hereby acknowledged as being the Assurant, Inc. Long-Term Incentive Plan as
adopted by the Compensation Committee of the Board on April ___, 2005.

	 	 	 	 	 
	 	 	 
	 	By:  	     _________________________
 	 
	 	 	 	 
	 	 	Its:  Senior Vice President 	 
	 

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EXHIBIT 10.1

EXECUTION COPY

SETTLEMENT AGREEMENT

     SETTLEMENT AGREEMENT, dated this 11th day of April, 2005 (the “Agreement”),
between Beverly Enterprises, Inc., a Delaware corporation (the “Company”), Arnold M.
Whitman (“Mr. Whitman”), Appaloosa Management L.P., Formation Capital LLC, Franklin Mutual
Advisers, LLC and Northbrook NBV, LLC (collectively, the “Consortium Members” and each,
individually, a “Consortium Member”). Terms used and not otherwise defined herein shall
have the meaning attributed to such terms in the Confidentiality Agreement (as defined below).

RECITALS

     WHEREAS, the Company has scheduled its 2005 Annual Meeting of Stockholders (the “2005
Annual Meeting”) for April 21, 2005;

     WHEREAS, Mr. Whitman filed with the Securities and Exchange Commission (the “SEC”) a
definitive proxy statement on March 14, 2005, for the election at the 2005 Annual Meeting of a
slate of nominees to the Company’s Board of Directors (the “Board”) and certain other
proposals;

     WHEREAS, the Company, Mr. Whitman and the Consortium Members have determined that the
interests of the Company and its stockholders would best be served (i) by the Consortium Members
not engaging in a solicitation of proxies for the purpose of electing Mr. Whitman’s nominees to the
Board at the 2005 Annual Meeting, (ii) by Mr. Whitman not nominating any individuals for election
as directors at the 2005 Annual Meeting and (iii) by the parties’ entering into the arrangements
set forth herein; and

     WHEREAS, the Company and the Consortium Members have signed, in conjunction with this
Agreement, a confidentiality agreement, dated April 11, 2005 (the “Confidentiality
Agreement”), in contemplation of a Possible Transaction (as defined in the Confidentiality
Agreement).

AGREEMENT

     NOW THEREFORE, and in consideration of the foregoing premises and the mutual covenants,
representations and warranties contained herein, the Company, Mr. Whitman and the Consortium
Members agree as follows:

1. Company Agreement to Amend Rights Plan.

     The Company agrees that, promptly, but in any event within five (5) business days, after the
execution and delivery of this Agreement, it will cause its Rights Agreement, dated as of January
26, 2005 (as amended, the “Rights Agreement”), to be amended substantially as set forth on
Exhibit A. Within two (2) business days after such amendment becomes effective, the
Company shall file a copy of such amendment with the Securities and Exchange Commission (the “SEC”)
as an amendment to the Registration Statements on Form 8-A previously filed by

 

 

the Company with respect to the Rights Agreement. Prior to October 21, 2005, the Company
shall not adopt any amendment to the Rights Agreement (or adopt any replacement rights plan)
containing provisions inconsistent with, or that would have the effect of repealing, the provisions
in the amendment set forth on Exhibit A.

     The Company represents and warrants that its Board has duly and validly adopted the
resolutions dated March 21, 2005, filed as Exhibit 99.1 to the Current Report on Form 8-K filed by
the Company with the SEC on March 23, 2005 (the “March 21, 2005 Resolutions”), and the
resolutions effective as of March 25, 2005, filed as Exhibit 99.1 to the Current Report on Form 8-K
filed by the Company with the SEC on April 7, 2005 (the “March 25, 2005 Resolutions” and,
together with the March 21, 2005 Resolutions, the “Board Resolutions”). The Company agrees
that it will fully comply with the provisions of, and take all actions contemplated by, the Board
Resolutions, including taking all actions necessary to convene the Special Meeting (as defined in
the Board Resolutions) as contemplated by the Board Resolutions if the requisite notifications are
received as contemplated thereby. The Company represents and warrants that each of the directors
of the Company shall resign as a director of the Company effective immediately prior to the
tabulation of the votes for new directors at the Special Meeting, if held; provided that, in the
event of any dispute with respect to the results of the election, the then current directors shall
remain in office until the final tabulation has been completed and all disputes resolved.

     Except as set forth herein, the Company shall not at any time on or prior to the Special
Meeting adopt, amend, modify or revoke the Board Resolutions or any bylaw of the Company or take
any other action so as to alter in any way any of the voting requirements or provisions applicable
to the Special Meeting Demands (as defined in the March 25, 2005 Resolutions), the Special Meeting
Notice (as defined in the March 21, 2005 Resolutions) or the Special Meeting.

     The Company and its Board hereby agree and acknowledge that it shall not be necessary for any
stockholder of the Company to comply with the advance notice bylaws of the Company (including the
provisions contained Article II, Sections 15 and 16 of the Company’s Bylaws) in order to nominate
candidates for election at the Special Meeting, compliance with such Bylaws having been duly and
validly waived by the Company and its Board. The Board shall not expand its size to be greater
than eight (8) at any time prior to October 22, 2005.

2. Request for Section 220 Information.

     The Company shall provide to Mr. Whitman or the Consortium Members, as promptly as reasonably
practicable after the receipt by the Company from any of them of a request therefor, copies of all
of the records and other information in the possession of the Company or its Representatives (as
defined in the Confidentiality Agreement) contemplated by Section 220 of the Delaware General
Corporation Law in the same manner and to the same extent similar information was provided in
connection with the 2005 Annual Meeting.

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3. Termination of the Proxy Contest.

     Mr. Whitman and each Consortium Member agree that, promptly after the execution and delivery
of this Agreement, it will take all actions necessary to discontinue the solicitation of proxies in
connection with the 2005 Annual Meeting (the “Annual Meeting Proxy Solicitation”). Mr.
Whitman further agrees not to nominate any individuals for election as directors at the 2005 Annual
Meeting. Within five (5) business days following receipt of the documentation thereof, the Company
shall reimburse the Consortium Members for all out-of-pocket fees and expenses incurred by them and
Mr. Whitman in connection with the Annual Meeting Proxy Solicitation and the negotiation and
execution of this Agreement and all related activities, provided that such reimbursement shall not
exceed $600,000, in the aggregate.

4. Postponement of the Special Meeting.

     In the event that Mr. Whitman or any of the Consortium Members (i) files a preliminary proxy
statement in respect of the election of directors at the Special Meeting no later than September 9,
2005, (ii) provides to the Secretary of the Company by September 9, 2005, a Nomination Notice (as
defined in the March 25 Resolutions) signed by or on behalf of the beneficial owners of not less
than 5% of the issued and outstanding shares of Company common stock and (iii) thereafter uses its
reasonable best efforts to cause such proxy statement to become definitive but is unable to cause
the proxy statement to become definitive by September 26, 2005, the Company and its Board of
Directors shall take all action necessary to postpone the date of the Special Meeting to a date
reasonably requested by any of the Consortium Members; provided that the Company need not hold the
Special Meeting unless the Secretary of the Company receives a Special Meeting Notice or one or
more Special Meeting Demands from beneficial owners of at least 20% of the Company’s issued and
outstanding common stock; provided further, that, in any event, the Company need not postpone the
date of the Special Meeting to a date that is more than (i) thirty (30) days after the date Mr.
Whitman or any Consortium Member files with the SEC a definitive proxy statement with respect to
the Special Meeting or (ii) 90 days following the filing by Mr. Whitman or the Consortium Members
of the first preliminary proxy statement with respect to the Special Meeting. It is understood and
agreed that the Company shall not be required to postpone the Special Meeting on more than one
occasion.

5. Public Statements.

     The parties shall consult with each other before issuing any press release or making any
public statement with respect to this Agreement, the Confidentiality Agreement and the negotiations
related hereto or thereto and, subject to the provisions of Section 2(c) of the Confidentiality
Agreement, shall not issue any such press release or make any such public statement without the
prior consent of the other party, which shall not be unreasonably withheld or delayed, except as
may be required by applicable law or any listing agreement with any national securities exchange.
The provisions contained in this Section 5 shall terminate upon the earlier of (x) the delivery to
the Company of Special Meeting Demands, a Special Meeting Notice or a Nomination Notice or (y) the
filing with the SEC of a preliminary proxy statement by the Company, Mr. Whitman or any of the
Consortium Members with respect to the solicitation of Special Meeting Demands or the Special
Meeting; provided, that in no event shall the provisions of this paragraph terminate before August
21, 2005.

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6. No Waiver of Rights.

     It is understood and agreed that no failure or delay by any party hereto in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder.

7. Remedies.

     It is understood and agreed that money damages would not be a sufficient remedy for any breach
of this Agreement by any party hereto and that each party hereto shall be entitled to equitable
relief, including, without limitation, injunction and specific performance, as a remedy for any
such breach any other party. Such remedies shall not be deemed to be the exclusive remedies for a
breach by a party of this Agreement but shall be in addition to all other remedies available at law
or equity to the other parties hereto. Each of the parties hereto further agrees not to raise as a
defense or objection to the request or granting of such relief that any breach of this Agreement is
or would be compensable by an award of money damages, and each party hereto agrees to waive any
requirements for the securing or posting of any bond or other security in connection with such
remedy.

8. Governing Law.

     This Agreement is for the benefit of the parties hereto, and shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to agreements made and to
be performed entirely within the State of Delaware, without regard to the conflict of law
provisions thereof. Each party hereto hereby irrevocably and unconditionally consents to submit to
the exclusive jurisdiction of the Chancery Court of the State of Delaware for any actions, suits or
proceedings arising out of or relating to this Agreement and the transactions contemplated hereby
(and each party hereto agrees not to commence any action, suit or proceeding relating thereto
except in such courts, and further agrees that service of any process, summons, notice or document
by U.S. registered mail to its address set forth above shall be effective service of process for
any action, suit or proceeding brought against you in any such court). Each party hereto hereby
irrevocably and unconditionally waives any objection which it may now or hereafter have to the
laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in the Chancery Court of the State of Delaware, and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such court that any such action,
suit or proceeding brought in any such court has been brought in an inconvenient forum.

9. Entire Agreement.

     This Agreement and the Confidentiality Agreement contain the entire agreement between Mr.
Whitman, the Consortium Members and the Company regarding their subject matter and supersede all
prior agreements, understandings, arrangements and discussions between the Consortium Members and
the Company regarding such subject matter.

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10. No Modification.

     No provision in this Agreement can be waived, modified or amended except by written consent of
Mr. Whitman, the Consortium Members and the Company, which consent shall specifically refer to the
provision to be waived, modified or amended and shall explicitly make such waiver, modification or
amendment.

11. Counterparts.

     This Agreement may be signed by facsimile and in one or more counterparts, each of which shall
be deemed an original but all of which shall be deemed to constitute a single instrument.

12. Severability.

     If any provision of this Agreement is found to violate any statute, regulation, rule, order or
decree of any governmental authority, court, agency or exchange, such invalidity shall not be
deemed to affect any other provision hereof or the validity of the remainder of this Agreement, and
such invalid provision shall be deemed deleted herefrom to the minimum extent necessary to cure
such violation.

13. Successors.

     This Agreement shall inure to the benefit of, and be enforceable by, the Company and each of
Mr. Whitman and the Consortium Members and their respective successors and assigns.

14. No Third Party Beneficiaries.

     The parties hereto each agree and acknowledge that nothing herein expressed or implied is
intended to confer upon or give any rights or remedies to persons not party to this Agreement under
or by reason of this Agreement.

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date
first set forth above.

BEVERLY ENTERPRISES, INC.

By: /s/ Douglas J. Babb

      Name: Douglas J. Babb

      Title: Executive Vice President and Chief

      Administrator and Legal Officer and Secretary

CONFIRMED AND AGREED

as of the date written above:

APPALOOSA MANAGEMENT L.P.

By: /s/ Kenneth Maiman

     Name: Kenneth Maiman

     Title: Principal

FORMATION CAPITAL LLC

By: /s/ Arnold M. Whitman

     Name: Arnold M. Whitman

     Title: Chief Executive Officer and Co-Chairman

FRANKLIN MUTUAL ADVISERS, LLC

By: /s/ Bradley Takahashi

     Name: Bradley Takahashi

     Title: Vice President

NORTHBROOK NBV, LLC

By: /s/ Robert Hartman

     Name: Robert Hartman

     Title: Manager

ARNOLD M. WHITMAN

/s/ Arnold M. Whitman

 

 

Exhibit A

Amendment No. 1 to Rights Agreement

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