DIRECTOR NOMINATION AGREEMENT
Exhibit 10.2
DIRECTOR NOMINATION AGREEMENT, dated as of [●],
2019 (this “Agreement”), by and among Safe Auto Insurance Group, Inc., an Ohio corporation (the “Company”), each of the Deshe Family Shareholders listed on Schedule A hereto and each of the Diamond Family
Shareholders listed on Schedule B hereto (the Deshe Family Shareholders and the Diamond Family Shareholders each a “Founder” and together the “Founders”).
WHEREAS, the Company has determined that it is in its best interests to effect an initial public offering (“IPO”) of common shares, par value $0.01 per share, of the Company (the “Common
Shares”); and
WHEREAS, in connection with the IPO, the Company and the Founders desire to enter into this Agreement setting forth certain
rights and obligations with respect to the nomination of directors to the Board of Directors of the Company (the “Board”) and other matters relating to the
Board from and after the IPO.
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as follows:
Section 1. Definitions. As used
in this Agreement, the following terms shall have the meanings ascribed to them below:
“Affiliate” means, with respect to
a specified Person, any Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. For purposes of this definition, “control” (including the terms
“controlling,” “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities,
by contract or otherwise.
“Articles of Incorporation” means
the Amended and Restated Articles of Incorporation of the Company, as may be amended from time to time.
“Deshe Family Shareholders” means
each Person listed on Schedule A hereto and their Permitted Transferees that become a party hereto by executing and delivering to the Company a joinder to
this Agreement. Notwithstanding the foregoing, a Person or Permitted Transferee shall cease to be a Deshe Family Shareholder on the first date on which such Person or Permitted Transferee ceases to beneficially own (directly or indirectly) any
shares of Voting Capital Stock.
“Diamond Family Shareholders”
means each Person listed on Schedule B hereto and their Permitted Transferees that become a party hereto by executing and delivering to the Company a
joinder to this Agreement. Notwithstanding the foregoing, a Person or Permitted Transferee shall cease to be a Diamond Family Shareholder on the first date on which such Person or Permitted Transferee ceases to beneficially own (directly or
indirectly) any shares of Voting Capital Stock.
“First Threshold Date” means, with
respect to each Founder, the first date on which such Founder ceases to beneficially own (directly or indirectly) twenty-five percent (25%) or more of the Voting Capital Stock.
“Founders” has the meaning set
forth in the preamble.
“Permitted Transferee” means, with
respect to a specified Person, any (i) Affiliates, (ii) spouses, parents, siblings and descendants (whether natural or adopted) or (iii) beneficiaries of a trust of such Person.
“Person” means any individual,
corporation, partnership, limited liability company, joint venture, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
“Regulations” means the Amended
and Restated Code of Regulations of the Company, as may be amended from time to time.
“Second Threshold Date” means,
with respect to each Founder, the first date on which such Founder ceases to beneficially own (directly or indirectly) fifteen percent (15%) or more of the Voting Capital Stock.
“Third Threshold Date” means, with
respect to each Founder, the first date on which such Founder ceases to beneficially own (directly or indirectly) five percent (5%) or more of the Voting Capital Stock.
“Voting Capital Stock” means the
votes entitled to be cast by the then outstanding capital stock of the Corporation entitled to vote generally in the election of directors.
Section 2. Board Number; Board Nomination.
(a) As of the date hereof, the Board shall be
comprised of eight (8) directors, (i) the following three (3) of whom shall be deemed to have been nominated by the Deshe Family Shareholders: Xxx Xxxxx, Xxxx Xxxxx and Xxxxxxx Xxxxxx (the “Deshe Directors”) and (ii) the following three (3) of whom shall be deemed to have been nominated by the Diamond Family Shareholders: Xxx X. Xxxxxxx, Xxxxxxx Xxxxxxxxx and Xxxx Xxx-Xxxx (the “Diamond Directors”). The foregoing directors shall be divided into two classes of directors, each of whose members shall serve for staggered two-year terms as
follows:
(i) the
Class I directors shall initially include two (2) Deshe Directors and one (1) Diamond Director.
(ii) the
Class II directors shall initially include one (1) Deshe Director and two (2) Diamond Directors.
The initial term of
the Class I directors shall expire immediately following the Company’s 2020 annual meeting of shareholders. The initial term of the Class II directors shall expire immediately following the Company’s 2021 annual meeting of shareholders.
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(b) Until the First Threshold Date, each of the
Founders shall have the right (but not the obligation) pursuant to this Agreement to submit for nomination to the Board the number of individuals that, if elected, will result in such Founder having nominated three (3) individuals to the Board and
the Company shall obtain any necessary approvals from the Board and any duly authorized committee of the Board with director nominating responsibility and shall include in the slate of nominees recommended to shareholders of the Company (the “Shareholders”) for election as a director at any annual or special meeting of the Shareholders (or, if permitted, by any action by written consent of the
Shareholders) at which directors of the Company are to be elected, the up to three individuals identified in advance by such Founder.
(c) After the First Threshold Date and until the
Second Threshold Date, such Founder shall have the right (but not the obligation) pursuant to this Agreement to submit for nomination to the Board the number of individuals that, if elected, will result in such Founder having nominated two (2)
individuals to the Board and the Company shall obtain any necessary approvals from the Board and any duly authorized committee of the Board with director nominating responsibility and shall include in the slate of nominees recommended to the
Shareholders for election as a director at any annual or special meeting of the Shareholders (or, if permitted, by any action by written consent of the Shareholders) at which directors of the Company are to be elected, the up to two individuals
identified in advance by such Founder.
(d) After the Second Threshold Date and until the
Third Threshold Date, such Founder shall have the right (but not the obligation) pursuant to this Agreement to submit for nomination to the Board the number of individuals that, if elected, will result in such Founder having nominated one (1)
individual to the Board and the Company shall obtain any necessary approvals from the Board and any duly authorized committee of the Board with director nominating responsibility and shall include in the slate of nominees recommended to the
Shareholders for election as a director at any annual or special meeting of the Shareholders (or, if permitted, by any action by written consent of the Shareholders) at which directors of the Company are to be elected, the one (1) individual
identified in advance by such Founder (any such individuals identified pursuant to Section 2(b), Section 2(c) or Section 2(d) hereof, the “Deshe Nominees” or
“Diamond Nominees,” as applicable, and collectively, the “Nominees”).
(e) In the event that either of the Founders has
nominated less than the total number of individuals that such Founder shall be entitled to nominate pursuant to this Section 2(b), Section 2(c) or Section 2(d), then such Founder shall have the right, at any time, to nominate such additional
individual(s) to which such Founder is entitled, in which case, the Company shall cause the Board to take all necessary corporate action to (1) increase the size of the Board as required to enable such Founder to so nominate such additional
individuals and (2) nominate such additional individuals identified by the Founder to fill such newly created vacancies.
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(f) Subject to applicable law, vacancies arising
through the death, resignation or removal of any Deshe Nominee or Diamond Nominee who was nominated to the Board pursuant to this Section 2 may be filled by the Board with a Deshe Nominee or Diamond Nominee, as applicable, and the director so
chosen shall hold office until the next election for the applicable class of directors and until his or her successor is duly elected and qualified, or until his or her earlier death, resignation or removal; provided, however, that the applicable Founder shall not have the right to nominate a
replacement Nominee to the extent that appointment of such Nominee to the Board would result in a number of directors in excess of the number of directors such Founder is entitled to nominate to the Board pursuant to this Section 2.
(g) Notwithstanding the provisions of this
Section 2, the Founders shall not be entitled to nominate a Person as a nominee to the Board upon a written determination by the Board or any duly authorized committee of the Board with director nominating responsibility (which determination shall
set forth in writing reasonable grounds for such determination) that (i) such Person would not be qualified under any applicable law, rule or regulation to serve as a director of the Company or (ii) the nomination of such Person would constitute a
breach of the directors’ fiduciary duties or applicable law. Upon the occurrence of either (i) or (ii) above, the applicable Founder shall be entitled to select a Person as a replacement nominee and the Company shall cause such Person to be
nominated as a Deshe Nominee or Diamond Nominee, as applicable, at the same meeting (or, if permitted, pursuant to the same action by written consent of the Shareholders) as such initial Person was to be nominated. Other than with respect to any
of the issues set forth in the first sentence of this Section 2(g), neither the Company nor any other party to this Agreement shall have the right to object to any Deshe Nominee or Diamond Nominee.
(h) Until the Third Threshold Date, the Company
shall notify the applicable Founder in writing of the date on which proxy materials are expected to be mailed by the Company in connection with an election of directors at an annual or special meeting of the Shareholders (and the Company shall
deliver such notice at least sixty (60) days (or such shorter period to which such applicable Founder consents, which consent need not be in writing) prior to such expected mailing date or such earlier date as may be specified by the Company
reasonably in advance of such earlier delivery date on the basis that such earlier delivery is necessary so as to ensure that such nominee may be included in such proxy materials at the time such proxy materials are mailed). The Company shall
provide such Founder with a reasonable opportunity to review and provide comments on any portion of the proxy materials relating to its Nominee or Nominees or the rights and obligations provided under this Agreement and to discuss any such comments
with the Company. The Company shall notify such Founder of any opposition to its Nominee or Nominees in accordance with Section 2(g) sufficiently in advance of the date on which such proxy materials are to be mailed by the Company in connection
with such election of directors so as to enable the Founder to propose a replacement Nominee, if necessary, in accordance with the terms of this Agreement, and the Founder shall have ten (10) business days to identify such replacement Nominee.
(i) In the event that a Founder ceases to have
the requisite nomination rights pursuant to Section 2, such Founder shall use its best efforts to cause its applicable Nominee(s) to resign if so requested by the Board.
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(j) The initial chairman of the Board (the “Chairman”) is Xxx Xxxxx. If Xxx Xxxxx is unable for any reason to serve as Chairman, Xxx Xxxxxxx shall serve as Chairman, provided he is able. If neither Xxx
Xxxxx nor Xxx Xxxxxxx is able to serve as Chairman, unless otherwise agreed by the Deshe Family Shareholders, the Chairman shall be nominated by the Deshe Family Shareholders and the Company shall obtain any necessary approvals from the Board. If
the Deshe Family Shareholders cease to beneficially own (directly or indirectly) at least twenty percent (20%) of the Voting Capital Stock, then the Deshe Family Shareholders shall cease to have the right to nominate the Chairman. If the Deshe
Family Shareholders no longer have the right to nominate the Chairman, but the Diamond Family Shareholders beneficially own (directly or indirectly) at least twenty percent (20%) of the Voting Capital Stock, then the Diamond Family Shareholders
shall have the right to nominate the Chairman.
(k) If the number of independent directors at any
given time is insufficient to satisfy the independence requirements of the Nasdaq Stock Market (“Nasdaq”) rules and the Xxxxxxxx-Xxxxx Act of 2002 (the “Act”), as amended, the Company and the Founders agree to take such action as may be required under applicable law, the Amended and Restated Articles of
Incorporation or the Amended and Restated Regulations (including, without limitation, voting their Common Shares) to appoint such number of additional or replacement directors that shall satisfy the relevant independence criteria under the Nasdaq
rules and the Act, such that the Board at all times includes at least the minimum number of required independent directors needed to comply with such requirements.
Section 3. Voting.
(a) Deshe Family Shareholder Representative. The holders of a majority of the Voting Capital Stock held by the Deshe Family Shareholders shall appoint an individual member of the Deshe Family
Shareholders to serve as the authorized representative of the Deshe Family Shareholders for purposes of this Agreement and for whom written notice shall be delivered to the Company. The initial Deshe Family Representative is Xxx Xxxxx.
(b) Diamond Family Shareholder Representative. The holders of a majority of the Voting Capital Stock held by the Diamond Family Shareholders shall appoint an individual member of the Diamond Family
Shareholders to serve as the authorized representative of the Diamond Family Shareholders for purposes of this Agreement and for whom written notice shall be delivered to the Company. The initial Diamond Family Representative is Xxx X. Xxxxxxx.
(c) Support of Directors. Each of the Deshe Family Shareholders and the Diamond Family Shareholders shall vote all the Voting Capital Stock that it beneficially owns (directly or indirectly) in favor
of appointing each Deshe Nominee and Diamond Nominee as a director and against the removal of any Deshe Nominee and Diamond Nominee.
Section 4. Miscellaneous.
(a) Effective Date. This Agreement shall become effective upon the closing of the IPO.
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(b) Governing Law. This Agreement and the rights and obligations of the parties hereto and the Persons subject hereto shall be governed by, and construed and interpreted in accordance with, the laws of
the State of Ohio.
(c) Certain Adjustments. The provisions of this Agreement shall apply to the full extent set forth herein with respect to any and all shares of capital stock of the Company or any successor or assign
of the Company (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for, or in substitution for the capital stock of the Company, by combination, recapitalization, reclassification, merger,
consolidation or otherwise and the term “Voting Capital Stock” shall include all such other securities.
(d) Enforcement. Each of the parties hereto agrees that in the event of a breach of any provision of this Agreement, the aggrieved party may elect to institute and prosecute proceedings in any court of
competent jurisdiction to enforce specific performance or to enjoin the continuing breach of this Agreement. Such remedies, however, shall be cumulative and not exclusive, and shall be in addition to any other remedy which any party hereto may
have.
(e) Jurisdiction. In any judicial proceeding involving any dispute, controversy or claim arising out of or relating to this Agreement, each of the parties hereto unconditionally accepts the
non-exclusive jurisdiction and venue of the United States District Court for the Southern District of Ohio, Eastern Division, or of the Court of Common Pleas of Franklin County, Ohio, and the appellate courts to which orders and judgments thereof
may be appealed. In any such judicial proceeding, each of the parties hereto agrees that in addition to any method for the service of process permitted or required by such courts, to the fullest extent permitted by law, service of process may be
made by delivery provided pursuant to the directions in Section 3(h). EACH OF THE PARTIES HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING ANY DISPUTE, CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(f) Successors and Assigns. Except as otherwise provided herein, the provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns.
(g) Entire Agreement; Termination. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subject matter hereof and supersedes all prior oral
or written (and all contemporaneous oral) agreements or understandings with respect to the subject matter hereof. This Agreement shall terminate and be of no further force and effect at such time that each of the Founders ceases to beneficially
own (directly or indirectly) at least five percent (5%) of the Voting Capital Stock.
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(h) Notices. All notices, requests, demands, waivers, consents and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly
given if (a) delivered personally, (b) mailed by certified or registered mail with postage prepaid, (c) sent by next-day or overnight mail or delivery with proof of receipt maintained or (d) sent by fax, to the following addresses (or to such other
address as the party entitled to notice shall hereafter designate in accordance with the terms hereof):
If to the Company:
0 Xxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxx
Facsimile No.: (000) 000-0000
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxx
Facsimile No.: (000) 000-0000
If to the Deshe Family Shareholders:
Deshe Capital
00000 Xxxxxxxx Xxxx. #000
Xxxxxxxx, XX 00000
Attention: Xxx Xxxxx
Attention: Xxx Xxxxx
with copies (which shall not constitute notice) to:
Deshe Capital
00000 Xxxxxxxx Xxxx. #000
Xxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx or Current CFO
Attention: Xxxxxxx Xxxxxx or Current CFO
If to the Diamond Family Shareholders:
Diamond Family Xxxxxx
0000 Xxxxxxx Xxx.
Xxxxxxxx Xxxxxxx 00000
Attention: Xxx X. Xxxxxxx
with copies (which shall not constitute notice) to:
Diamond Family Xxxxxx
0000 Xxxxxxx Xxx.
Xxxxxxxx Xxxxxxx 00000
Attn: Xxxx Xxxxxxx or Current CFO
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All such notices, requests, demands, waivers, consents and other communications shall be deemed to have been received by (a) if by personal
delivery, on the day delivered, (b) if by certified or registered mail, on the fifth business day after the mailing thereof, (c) if by next-day or overnight mail or delivery, on the day delivered, or (d) if by fax, on the day delivered, provided that such delivery is confirmed.
(i) Counterparts. This Agreement may be executed 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.
(j) Headings. The headings in this Agreement are for the convenience of the parties only and shall not control or affect the meaning or construction of any provision hereof.
(k) Invalidity of Provision. The invalidity or unenforceability of any provision of this Agreement in any jurisdiction shall not affect the validity or enforceability of the remainder of this Agreement
in that jurisdiction or the validity or enforceability of this Agreement, including that provision, in any other jurisdiction.
(l) Amendments and Waivers. The provisions of this Agreement may be amended at any time and from time to time, and particular provisions of this Agreement may be waived or modified, with and only with
an agreement or consent in writing signed by each of the parties hereto. Waiver by any party hereto of any breach or default by the other party of any of the terms of this Agreement shall not operate as a waiver of any other breach or default,
whether similar to or different from the breach or default waived. No waiver of any provision of this Agreement shall be implied from any course of dealing between the parties hereto or from any failure by either party to assert its or his or her
rights hereunder on any occasion or series of occasions.
(m) Further Assurances. Each party hereto shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates,
instruments and documents as any other party hereto or Person subject hereto may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement.
(n) No Third-Party Beneficiaries. This Agreement is not intended to, and does not, confer upon any Person other than the parties hereto any rights or remedies.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF this Agreement has been signed by each of the parties hereto, and shall be effective as of the date first
above written.
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COMPANY:
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By:
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Name:
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Title:
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DESHE FAMILY SHAREHOLDERS:
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XXX XXXXX
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By:
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Name: Xxx Xxxxx
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XXX X. XXXXX
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By:
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Name: Xxx X. Xxxxx
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XXX X. XXXXX, TRUSTEE OF THE ELIE
XXXXXXX XXXXX 2012 IRREVOCABLE TRUST
DATED DECEMBER 24, 2012
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By:
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Name: Xxx X. Xxxxx
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XXX X. XXXXX, TRUSTEE OF THE XXXXX
XXXXX DESHE 2012 IRREVOCABLE TRUST
DATED DECEMBER 24, 2012
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By:
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Name: Xxx X. Xxxxx
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[Signature Page to Director Nomination Agreement]
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XXX X. XXXXX, TRUSTEE OF THE XXXX
XXXXXX DESHE 2012 IRREVOCABLE TRUST
DATED DECEMBER 24, 2012
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By:
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Name: Xxx X. Xxxxx
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XXX X. XXXXX, TRUSTEE OF THE XXXXXX
XXXXXXX XXXXX 2012 IRREVOCABLE TRUST
DATED DECEMBER 24, 2012
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By:
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Name: Xxx X. Xxxxx
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XXX X. XXXXX, TRUSTEE OF THE XXXXXX
XXXXXXX XXXXX 1987 SUBCHAPTER S TRUST
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By:
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Name: Xxx X. Xxxxx
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[Signature Page to Director Nomination Agreement]
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DIAMOND FAMILY SHAREHOLDERS:
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XXX X. XXXXXXX
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By:
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Name: Xxx X. Xxxxxxx
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XXX X. XXXXXXX, TRUSTEE OF THE XXXXX
XXXXXXX 1998 IRREVOCABLE TRUST
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By:
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Name: Xxx X. Xxxxxxx
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XXXXX X. XXXXXXX, TRUSTEE OF THE
XXXXXXX X. XXXXXXX TRUST AGREEMENT
DATED JANUARY 5, 2009
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By:
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Name: Xxxxx X. Xxxxxxx
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XXXXX X. XXXXXXX, TRUSTEE OF THE
XXXXXX X. XXXXXXX TRUST AGREEMENT
DATED JANUARY 6, 2009
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By:
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Name: Xxxxx X. Xxxxxxx
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XXXXX X. XXXXXXX, TRUSTEE OF THE XXX X.
XXXXXXX 2011 IRREVOCABLE TRUST NO. 1
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By:
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Name: Xxxxx X. Xxxxxxx
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[Signature Page to Director Nomination Agreement]
Schedule A
Deshe Family Shareholders
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Name
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1.
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Xxx Xxxxx
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2.
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Xxx X. Xxxxx
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3.
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Xxx X. Xxxxx, trustee of the Elie Xxxxxxx Xxxxx 2012 Irrevocable Trust dated December 24, 2012
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4.
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Xxx X. Xxxxx, trustee of the Xxxxx Xxxxx Deshe 2012 Irrevocable Trust dated December 24, 2012
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5.
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Xxx X. Xxxxx, trustee of the Xxxx Xxxxxx Deshe 2012 Irrevocable Trust dated December 24, 2012
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6.
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Xxx X. Xxxxx, trustee of the Xxxxxx Xxxxxxx Xxxxx 2012 Irrevocable Trust dated December 24, 2012
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7.
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Xxx Xxxxx, trustee of the Xxxxxx Xxxxxxx Xxxxx 1987 Subchapter S Trust
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Schedule B
Diamond Family Shareholders
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Name
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1.
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Xxx X. Xxxxxxx
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2.
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Xxx X. Xxxxxxx, trustee of the Xxxxx Xxxxxxx 1998 Irrevocable Trust
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3.
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Xxxxx X. Xxxxxxx, trustee of the Xxxxxxx X. Xxxxxxx Trust Agreement dated January 5, 2009
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4.
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Xxxxx X. Xxxxxxx, trustee of the Xxxxxx X. Xxxxxxx Trust Agreement dated January 6, 2009
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5.
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Xxxxx X. Xxxxxxx, trustee of the Xxx X. Xxxxxxx 2011 Irrevocable Trust No. 1
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