FIRST MERCURY HOLDINGS, INC. RESTRICTED STOCK GRANT NOTICE AND AGREEMENT
Exhibit 10.31
FIRST MERCURY HOLDINGS, INC.
RESTRICTED STOCK GRANT NOTICE AND AGREEMENT
RESTRICTED STOCK GRANT NOTICE AND AGREEMENT
This grant
of Restricted Stock is made this 4th day of October 2006 (“Award Date”), by First Mercury
Holdings, Inc. (the “Company”) to Xxxx X. Xxxxxxx (the “Grantee” or “you”).
WHEREAS, the grant is a special grant of First Mercury Holdings, Inc. Restricted Stock; and
WHEREAS, it is a condition to Grantee receiving the Restricted Stock that Grantee execute and
deliver to the Company an agreement evidencing the terms, conditions and restrictions applicable to
the Restricted Stock.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and
valuable consideration, the Company hereby awards Restricted Stock to Grantee on the terms and
conditions in this Restricted Stock Grant Notice and Agreement (this “Agreement”):
1. Acceptance of Terms and Conditions. By signing and accepting this Agreement, you agree to
be bound by the terms and conditions herein, and understand that this grant does not confer any
legal or equitable right (other than those rights constituting the grant itself) against the
Company or any Subsidiary (together the “First Mercury Companies”) directly or indirectly, or give
rise to any cause of action at law or in equity against the Company.
2. Award of Restricted Stock. The Company hereby grants to Grantee a total of fifty-two (52)
shares of Company common stock, par value $0.01 per share subject to the terms and conditions set
forth below (the “Restricted Stock”). The shares shall be issued from the Company’s available
treasury shares.
3. Restrictions. The Restricted Stock is being awarded to Grantee subject to the transfer and
forfeiture conditions set forth below (the “Restrictions”) which shall lapse, if at all, as
described in Section 4 below.
a. Grantee may not directly or indirectly, by operation of law or otherwise,
voluntarily or involuntarily, sell, assign, pledge, encumber, charge or otherwise transfer
any of the Restricted Stock still subject to Restrictions. The Restricted Stock shall be
forfeited if Grantee violates or attempts to violate these transfer restrictions.
b. Any Restricted Stock still subject to the Restrictions shall be automatically
forfeited upon the Grantee’s voluntary termination of employment with Company or a
Subsidiary for any reason, other than death, Total and Permanent Disability, or Good Reason
(as defined in Grantee’s employment agreement with the Company). For purposes of this
Agreement, a “Subsidiary” is any corporation or other entity in which a 50 percent or
greater interest is held directly or indirectly by Company and which is consolidated for
financial reporting purposes. Total and Permanent Disability is defined in Section 4(a)
below.
The Company will not be obligated to pay Grantee any consideration whatsoever for forfeited
Restricted Stock.
4. Lapse of Restrictions.
a. The Restrictions applicable to 50% of the Restricted Stock granted pursuant to this
Agreement lapse on the Award Date.
b. As long as the Restricted Stock has not been forfeited as described in Section 3
above, the Restrictions applicable to the remaining 50% of Restricted Stock shall lapse, as
follows:
1. Restrictions applicable to 1.04167% of Restricted Stock shall lapse on the
first month anniversary of the Award Date and on each subsequent monthly anniversary
of the Award Date the until the Restrictions have lapsed relative to entire amount
of Restricted Stock granted under this Agreement.
2. Restrictions applicable to the Restricted Stock shall lapse six (6) months
after the consummation of an Initial Public Offering or Change in Control of the
Company.
For purposes of this Agreement “Change of Control” means: (A) upon the
acquisition by any individual, entity or group, including any Person, of beneficial
ownership (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of 35% or more of the combined voting power of the then outstanding
capital stock of the Company that by its terms may be voted on all matters submitted
to stockholders of the Company generally (“Voting Stock”); provided, however, that
the following acquisitions shall not constitute a Change in Control: (i) any
acquisition directly from the Company (excluding any acquisition resulting from the
exercise of a conversion or exchange privilege in respect of outstanding convertible
or exchangeable securities unless such outstanding convertible or exchangeable
securities were acquired directly from the Company); (ii) any acquisition by the
Company; (iii) any acquisition by an employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the Company;
or (iv) any acquisition by any corporation pursuant to a reorganization, merger or
consolidation involving the Company, if, immediately after such reorganization,
merger or consolidation, each of the conditions described in clauses (i), (ii) and
(iii) of subsection (B) below shall be satisfied; and provided further that, for
purposes of clause (ii) above, if (1) any Person (other than the Company or any
employee benefit plan (or related trust) sponsored or maintained by the Company or
any corporation controlled by the Company) shall become the beneficial owner of 35%
or more of the Voting Stock by reason of an acquisition of Voting Stock by the
Company, and (2) such Person shall, after such acquisition by the Company, become
the beneficial owner of any additional shares of the Voting Stock and such
beneficial ownership is publicly announced, then such additional beneficial
ownership shall constitute a Change in Control; (B) upon the consummation of a
reorganization, merger or consolidation of the Company, or a sale, lease, exchange
or other transfer of all or substantially all of the assets of the Company;
excluding, however, any such reorganization, merger, consolidation, sale, lease,
exchange or other transfer with respect to which, immediately after consummation of
such transaction: (i) all or substantially all of the beneficial owners of the
Voting Stock of the Company outstanding immediately prior to such transaction
continue to beneficially own, directly or indirectly (either by remaining
outstanding or by being converted into voting securities of the entity resulting
from such transaction), more than 65% of the combined voting power of the voting
securities of the entity resulting from such transaction (including, without
limitation, the Company or an entity which as a result of such transaction owns the
Company or all or substantially all of the Company’s property or assets, directly or
indirectly) (the “Resulting Entity”) outstanding immediately after such transaction,
in substantially the same proportions relative to each other as their ownership
immediately prior to such transaction; (ii) no Person (other than any Person that
beneficially owned, immediately prior to such reorganization, merger, consolidation,
sale or other disposition, directly or indirectly, Voting Stock representing 35% or
more of the combined voting power of the Company’s then outstanding securities)
beneficially owns, directly or indirectly, 35% or more of the combined voting power
of the then outstanding securities of the Resulting Entity; and (iii) at least a
majority of the members of the board of directors of the entity resulting from such
transaction were Continuing Directors of the Company at the time of
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the execution of the initial agreement or action of the Board authorizing such
reorganization, merger, consolidation, sale or other disposition; (C) upon the
approval of a plan of complete liquidation or dissolution of the Company; or (D)
when the Continuing Directors cease for any reason to constitute at least a majority
of the Board.
For purposes of this Agreement, “Continuing Directors” means those
individuals initially appointed as the directors of the Company; provided,
however, that any individual who becomes a director of the Company at or
after the first annual meeting of stockholders of the Company whose
election, or nomination for election by the Company’s stockholders, was
approved by the vote of at least a majority of the directors then comprising
the Board (or by the nominating committee of the Board, if such committee is
comprised of Continuing Directors and has such authority) shall be deemed to
have been a Continuing Director; and provided further, that no individual
shall be deemed to be a Continuing Director if such individual initially was
elected as a director of the Company as a result of: (i) an actual or
threatened solicitation by a Person (other than the Board) made for the
purpose of opposing a solicitation by the Board with respect to the election
or removal of directors; or (ii) any other actual or threatened solicitation
of proxies or consents by or on behalf of any Person (other than the Board).
3. Restrictions applicable to the Restricted Stock shall lapse upon termination
of Grantee’s employment by Company or a Subsidiary for any reason.
c. If during the Restricted Period the Grantee takes a Leave of Absence from Company or
a Subsidiary, the Restricted Stock will continue to be subject to this Agreement. If the
Restricted Period expires while the Grantee is on a Leave of Absence the Grantee will be
entitled to the Restricted Stock even if the Grantee has not returned to active employment.
“Leave of Absence” means a leave of absence from Company or a Subsidiary that is not a
termination of employment, as determined by Company.
5. Adjustments. If the number of outstanding shares of Company common stock is changed as a
result of a stock split or the like without additional consideration to the Company, the number of
Restricted Stock shares subject to this Agreement shall be adjusted to correspond to the change in
the outstanding shares of common stock.
6. Voting and Dividends. Subject to the restrictions contained in Section 3 hereof, Grantee
shall have all rights of a stockholder of Company with respect to the Restricted Stock, including
the right to vote the shares of Restricted Stock and the right to receive any cash or stock
dividends payable with respect to Common Stock. Stock dividends issued with respect to the
Restricted Stock shall be treated as additional shares of Restricted Stock that are subject to the
same restrictions and other terms and conditions that apply to the shares with respect to which
such dividends are issued. If a dividend is paid in shares of stock of another company or in other
property, the Grantee will be credited with the number of shares of stock of that company or the
amount of property which the Grantee otherwise would have received as the owner of a number of
shares of Restricted Stock. The shares and property so credited will be subject to the same
Restrictions and other terms and conditions applicable to the Restricted Stock and will be paid out
in kind at the time the Restrictions lapse.
7. Endorsement on Certificates. All certificates representing the Restricted Stock shall be
endorsed on the face thereof with the following legend:
“The shares of stock represented by this certificate and the transferability thereof are
restricted by and subject to a Restricted Stock Agreement dated
October 4, 2006, a copy of
which is on file with the Secretary of the Company.”
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Upon lapse of the Restrictions, the Grantee or his representative shall be entitled to have the
legend removed from certificates representing the Restricted Stock.
8. Delivery of Certificates or Equivalent. Upon the lapse of Restrictions applicable to the
Restricted Stock, the Company shall, at its election, either (i) deliver to the Grantee a
certificate representing a number of shares of Common Stock equal to the number of shares of
Restricted Stock upon which such Restrictions have lapsed, or (ii) establish a brokerage account
for the Grantee and credit to that account the number of shares of Common Stock equal to the number
of shares of Restricted Stock upon which such Restrictions have lapsed.
9. Withholding Taxes. The Company is entitled to withhold an amount equal to Company’s
required minimum statutory withholdings taxes for the respective tax jurisdiction attributable to
any share of Common Stock or property deliverable in connection with the Restricted Stock. Grantee
may satisfy any withholding obligation in whole or in part by electing to have Company retain
shares of the Restricted Stock having a fair market value on the date the Restrictions lapse equal
to the minimum amount required to be withheld.
10. Public Offer Waiver. By voluntarily accepting this grant of Restricted Stock, you
acknowledge and understand that your rights under this Agreement are offered to you strictly as an
employee of the First Mercury Companies and that this grant of Restricted Stock is not an offer of
securities made to the general public.
11. No Rights to Continued Employment. By voluntarily acknowledging and accepting this grant
of Restricted Stock, you acknowledge and understand that this grant shall not form part of any
contract of employment between you and any of the First Mercury Companies. Nothing in this
Agreement, confers on the Grantee any right to continue in the employ of the First Mercury
Companies or in any way affects the First Mercury Companies’ right to terminate the Grantee’s
employment without prior notice at any time or for any reason. You further acknowledge that this
grant of Restricted Stock is for future services to the First Mercury Companies and is not under
any circumstances to be considered compensation for past services.
12. Miscellaneous.
a. Governing Law. All matters regarding or affecting the relationship of the Company
and its stockholders shall be governed by the General Corporation Law of the State of
Delaware. All other matters arising under this Agreement including matters of validity,
construction and interpretation, shall be governed by the internal laws of the State of
Michigan, without regard to any state’s conflict of law principles. You and the Company
agree that all claims in respect of any action or proceeding arising out of or relating to
this Agreement shall be heard or determined in any state or federal court sitting in
Michigan, and you agree to submit to the jurisdiction of such courts, to bring all such
actions or proceedings in such courts and to waive any defense of inconvenient forum to such
actions or proceedings. A final judgment in any action or proceeding so brought shall be
conclusive and may be enforced in any manner provided by law.
b. Successors and Assigns. Except as otherwise provided herein, this Agreement will
bind and inure to the benefit of the respective successors and permitted assigns of the
parties hereto whether so expressed or not.
c. Waiver. The failure of the Company to enforce at any time any provision of this
grant shall in no way be construed to be a waiver of such provision or any other provision
hereof.
d. Severability. Whenever feasible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or invalid under applicable law,
such provision will be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of this Agreement.
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IN WITNESS WHEREOF, the Company has executed this Agreement in duplicate as of day and year first
above written.
| FIRST MERCURY HOLDINGS, INC. |
||||
| By: | Xxxxxxx X. Xxxxx | |||
| Name Xxxxxxx X. Xxxxx |
||||
| Its: |
President & CEO | |||
The undersigned Grantee hereby accepts, and agrees to, all terms and provisions of the foregoing
Agreement. If you do not sign and return this Agreement you will not be entitled to the Restricted
Stock.
| /s/ Xxxx X. Xxxxxxx | ||||
| Signature of Grantee | ||||
| Xxxx X. Xxxxxxx | ||||
| Name of Grantee | ||||
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