Form of Commerce Group Restricted Stock Unit Agreement]
Exhibit
10.44
[Form
of Commerce Group Restricted Stock Unit Agreement]
February
16, 2007
«Employee»
«Street_Address»
«City»,
«State» «Zip»
Re: Restricted
Stock Unit Agreement Between The Commerce Group, Inc. and
«Employee»
Dear
«Employee»:
I
am
pleased to inform you that the Compensation Committee of the Board of Directors
of The Commerce Group, Inc. (the “Company”) has awarded to you, effective on
February 16, 2007 (the “Award Date”), «number
written» («number»)
Restricted Stock Units (each a “Unit” and collectively, the “Units” or “RSUs”),
subject to your execution and delivery to the Company of this Agreement. Each
Unit represents
(i)
the
right
to receive, after the Vesting Date (as defined below), one share (each a
“Share”) of Company Common Stock, and
(ii)
the
right
to receive any Dividend Equivalent Payment (as defined below) that may be
payable hereunder.
This
RSU
Award (the “Award”) is subject to the terms of the Company’s 2002 Amended and
Restated Incentive Plan, as amended (the “Plan”), and the terms and conditions
set forth below in this Agreement. A copy of the Plan is attached hereto and
is
incorporated herein in its entirety by reference. It is intended that this
Award
be treated as nonvested equity share units. Any capitalized term used in this
Agreement and not otherwise defined shall have the meaning assigned to that
term
in the Plan. You are sometimes referred to in this Agreement as the
“Participant.”
By
delivering to the Company a countersigned version of this Agreement, the
Participant hereby accepts the Award subject to all of the provisions of the
Plan and the terms and conditions set forth below in this
Agreement:
1.
Vesting
Date.
The RSUs
shall fully vest upon the earliest to occur of the following
events:
(i)
March
15,
2012, if the Participant has been employed by the Company continuously from
the
Award Date through and including March 15, 2012, or
(ii) a
Change
in Control (as defined in the Plan or, to the extent more restrictive, as
defined in Section 409A(a)(2)(v) of the Code) of the Company, or
(iii) the
Company’s termination of the Participant’s employment with the Company without
“Cause” (as defined below) or the Participant’s voluntary resignation as an
employee of the Company for “Good Reason” (as defined below), in each case at a
time when there is a “Pending Business Combination” (as defined
below).
«Employee»
February
16, 2007
Page
2 of 10
For
purposes of the immediately preceding sentence and Section 4(c) of this
Agreement, the term employment shall include engagement in any capacity as
a
service provider subject to the requirements of Section 409A of the
Code.
The
date
on which the RSUs vest under this Section 1 is referred to in this Agreement
as
the “Vesting Date.” If the Vesting Date will not occur because the Participant’s
employment with the Company has ceased, all of the RSUs will be forfeited to
the
Company automatically and without notice or payment to the Participant effective
as of the first date on which the Participant ceases to be an employee of the
Company, and the Participant will have no further rights under this
Agreement.
2.
Restrictions
on Transfer.
During
the period (the “Restricted Period”) beginning on the Award Date and ending at
11:59 P.M. on the day before the Vesting Date and including, if applicable,
the
deferral period under Section 4(b) or 4(c) of this Agreement, the RSUs may
not
be sold, assigned, transferred, pledged, hypothecated, margined or otherwise
encumbered, except as may be permitted by the Committee in its sole discretion
consistent with the Plan and with the parties’ intent that this arrangement
satisfy the requirements of Section 409A of the Code with respect to the
deferral of compensation subject to Section 409A. Any attempt to transfer,
assign, pledge, hypothecate, margin or otherwise dispose or encumber the RSUs
during the Restricted Period shall be null and void and without
effect.
3.
No
Rights as Shareholder.
Unless
and until the Shares are issued in satisfaction of the Company’s obligations
under this Award in the time and manner provided in Section 4 of this Agreement,
nothing in this Agreement shall entitle the Participant to any voting, dividend,
or other rights of an actual owner of shares of Common Stock.
4.
Settlement
of RSUs.
(a)
Subject
to
the provisions of Sections 1 and 6 of this Agreement and the other subsections
of this Section 4, the Company shall deliver to the Participant (or, if
applicable, the Participant's Designated Beneficiary or legal representative)
one or more certificates representing in the aggregate that number of Shares
that is equal to the number of RSUs covered by this Award, which delivery shall
be made as soon as administratively practicable after the Vesting Date, but
in
no event later than the March 15 first occurring after the end of the calendar
year in which the Vesting Date has occurred.
(b)
Notwithstanding
Section 4(a) of this Agreement, if the Vesting Date occurs by reason of clause
(iii) of Section 1 of this Agreement, the distribution of the Shares in respect
of the RSUs shall be deferred for six months from the Vesting Date if the
Participant is, or in the Committee’s sole opinion may be, a "specified
employee" (as that term is defined in Section 409A(a)(2)(B)(i) of the Code)
and such deferral is necessary to avoid the imposition of taxes to the
Participant under Section 409A of the Code.
«Employee»
February
16, 2007
Page
3 of 10
(c)
Notwithstanding
Section 4(a) of this Agreement, if the Participant is, or in the Committee’s
sole opinion may be, a "covered employee" within the meaning of
Section 162(m) of the Code for the calendar year in which delivery of the
Shares would otherwise be made to the Participant and if the delivery of the
Shares would otherwise result in any compensation expense attributable to the
Shares being non-deductible by the Company by virtue of Section 162(m), the
distribution of the Shares in respect of the RSUs shall be deferred, and the
Company shall instead deliver the Shares as soon as administratively practicable
after the later of (i) six months after the date of the termination of the
Participant’s employment with the Company (and all members of the controlled
group of entities of which the Company is a member) and (ii) the first day
of
the Company’s tax year next following the tax year in which the Participant
ceases to be a covered employee within the meaning of Section 162(m). The
Participant’s right to receive the Shares upon the conclusion of the deferral
period provided in the immediately preceding sentence shall not be affected
by
any event occurring after the Vesting Date, including the Company’s termination
of the Employee for Cause or the Participant’s voluntary resignation other than
for Good Reason.
(d)
The
Participant shall receive a Dividend Equivalent Payment (as defined in Section
5) with respect to each Share the delivery of which is deferred pursuant to
Sections 4(b) or 4(c) of this Agreement, determined and paid in the manner
provided in Section 5(d) of this Agreement, and subject to the tax withholding
provisions of Section 6(d) of this Agreement, to the extent in the Committee’s
sole opinion the Company has an obligation to withhold taxes in connection
with
such payment.
(e)
Absent
willful misconduct by the Company, it shall be exempted from any responsibility
or liability for any failure to deliver or any delay in delivering the Shares
pursuant to this Agreement and for any other act or omission related to this
Agreement, except that if, because of any delay in the Company’s issuance and
delivery of the Shares, the Participant (or the person or persons to whom rights
under this Agreement shall have passed by bequest or inheritance, as the case
may be) fails to receive one or more dividend payments, the Company shall hold
the party harmless by making, at the time the Company delivers the Shares,
a
Dividend Equivalent Payment, calculated in the manner provided in Section 5
of
this Agreement and subject to the tax withholding provisions of Section 6(d)
of
this Agreement, to the extent in the Committee’s sole opinion the Company has an
obligation to withhold taxes in connection with such payment.
5.
Dividend
Equivalent Payment.
(a)
The
Participant shall have the right to receive from the Company, at the times
provided in this Section 5, an amount in cash (the “Dividend Equivalent
Payment”) for each RSU equal to the cash dividend payments made in respect of
one share of Common Stock for which a dividend record date occurs during the
Restricted Period.
(b)
The
Company shall make a Dividend Equivalent Payment on or as soon as
administratively practicable after (i) March 15, 2008 in an amount equal to
the
dividends paid by the Company per share of Common Stock for which a dividend
record date occurs after the Award Date and through and including March 15,
2008, and (ii) each subsequent March 15 through March 15, 2012, in an amount
equal to the dividends paid by the Company per share of Common Stock for which
a
dividend record date occurs during the twelve-month period ending on such March
15.
«Employee»
February
16, 2007
Page 4
of 10
(c)
If
the
Vesting Date occurs before March 15, 2012 and the delivery of the Shares is
not
deferred under Section 4(b) or (c) of this Agreement, the Company shall make
a
Dividend Equivalent Payment on or as soon as administratively practicable after
the Vesting Date in an amount equal to the dividends paid by the Company per
share of Common Stock for which a dividend record date occurs after the Award
Date or, if later, the March 15 Dividend Equivalent Payment date immediately
preceding the Vesting Date and through and including the Vesting Date.
(d)
If
the
delivery of the Shares is deferred pursuant to Section 4(b) or 4(c) of this
Agreement, (i) the Company shall make a Dividend Equivalent Payment on each
March 15 occurring during the deferral period, in an amount equal to the
dividend(s) paid by the Company per share of Common Stock for which a dividend
record date occurs during the twelve-month period ending on such March 15,
and
(ii) if the deferral period expires other than on a March 15, the Company shall
make a Dividend Equivalent Payment on or as soon as administratively practicable
after the expiration of the deferral period in an amount equal to the
dividend(s) paid by the Company per share of Common Stock for which a dividend
record date occurs during the portion of the deferral period commencing on
the
March 15 Dividend Equivalent Payment date immediately preceding the expiration
of the deferral period and through and including the date on which the deferral
period expires.
(e)
Forfeiture
of RSUs pursuant to this Agreement shall not create any obligation to repay
any
Dividend Equivalent Payment received as to such RSUs.
6.
Tax
Withholding.
(a)
The
Participant shall be responsible for all taxes and related amounts due under
federal, state and/or local law relating to this Agreement and the Participant’s
receipt of the Shares or any Dividend Equivalent Payment.
(b)
The
Participant acknowledges that, under applicable federal law in effect as of
the
Award Date, the Participant will generally recognize compensation income for
income tax purposes (i) upon the Participant’s receipt of the Shares following
the Vesting Date in an amount equal to the fair market value of the Shares
at
the time of receipt and (ii) upon the receipt of a Dividend Equivalent Payment
in the amount of such payment. The parties hereto recognize that the Company
may
be obligated to withhold federal, state and local income taxes and social
security and medicare taxes to the extent that the Participant realizes
compensation income in connection with the Participant’s receipt of the Shares
or any Dividend Equivalent Payment.
(c)
The
Participant agrees that whenever the Company is so obligated to withhold any
such taxes on account of the Participant’s receipt of one or more Shares, the
Company shall withhold from the Shares otherwise deliverable to the Participant
that number of Shares having a fair market value, on the Tax Measurement Date
(as defined below), equal to the aggregate of the Company’s required tax
withholding obligation arising in connection with the Participant’s receipt of
the Shares (provided that any fraction of a Share required to satisfy such
tax
withholding obligation will be disregarded and the amount due will be deducted
from any payment otherwise due and owing to the Participant as provided below
in
this Section 6); and the Company shall thereafter promptly deliver to the
Participant (or the person or persons to whom rights under this Agreement shall
have passed by bequest or inheritance, as the case may be) one or more stock
certificates for the remainder of the Shares. The Participant acknowledges
and
agrees that the fair market value of the Shares to be withheld will be
determined using the officially reported closing price for a share of Common
Stock as reported by the New York Stock Exchange (or, if different, the
principal exchange on which the Common Stock then is traded) on the Tax
Measurement Date. As used in this Agreement, the phrase “Tax Measurement Date”
means that date that is the later of (i) the Vesting Date and, if applicable,
(ii) the last day of the deferral period under Section 4(b) or 4(c) of this
Agreement, provided, however, that if the Common Stock did not trade on such
date, then the Tax Measurement Date shall mean the next preceding date for
which
there is an officially reported closing price for a share of Common
Stock.
«Employee»
February
16, 2007
Page 5
of 10
(d)
The
Participant further agrees that (i) the Company or a subsidiary or an affiliate
of the Company may withhold from any payment otherwise due and owing to the
Participant any amount needed to satisfy any other withholding obligation,
including an amount in lieu of withholding a fraction of a Share to satisfy
the
Participant’s tax withholding obligation upon the receipt of Shares after the
Vesting Date and any withholding obligation in connection with the Participant’s
receipt of a Dividend Equivalent Payment, and (ii) upon demand by the Company,
the Participant (or the person or persons to whom rights under this Agreement
shall have passed by bequest or inheritance, as the case may be) shall
immediately pay to the Company any additional amount as may be necessary to
satisfy such withholding tax obligation. Such payment shall be made in cash
or,
with the Company’s consent, shares of Common Stock.
7.
Certain
Definitions
(a)
As
used in
this Agreement, the term “Cause” means that after the Award Date and on or
before the Vesting Date the Participant
(i)
has
been
convicted by a court of competent jurisdiction of any criminal offense, whether
a felony or misdemeanor, involving dishonesty, breach of trust or
misappropriation, before or after the Award Date, or has entered a plea of
nolo
contendere
to any
such offense;
(ii)
has
been
the subject of any action taken by a regulatory body or a self regulatory
organization that, in the Committee’s good faith judgment, substantially impairs
the Participant from performing his or her duties to the Company or its
subsidiaries, as applicable;
(iii)
has
been
found, in the Committee’s good faith judgment, to have committed any act of
personal dishonesty, before or after the Award Date, in connection with the
Participant’s responsibilities to the Company or any of its subsidiaries that is
intended to result in the Participant’s personal enrichment;
«Employee»
February
16, 2007
Page 6
of 10
(iv)
has
been
found, in the Committee’s good faith judgment, to have willfully committed,
before or after the Award Date, a material violation of the policies or rules
of
the Company or its subsidiaries, as applicable, including the Company’s Code of
Ethics;
(v)
has
been
found, in the Committee’s good faith judgment, to have committed, before or
after the Award Date, a willful violation of any law, rule or regulation
applicable to the Company or any of its affiliates (A) which, in the Committee’s
good faith judgment, is a felony or misdemeanor, or (B) which, in the
Committee’s good faith judgment, will likely have or has had a material adverse
effect on the business, interests or reputation of the Company and its
subsidiaries, taken as a whole;
(vi)
has
been
found, in the Committee’s good faith judgment, to have committed, before or
after the Award Date, a willful and unauthorized disclosure of material
confidential information that the Participant received as a consequence of
the
Participant’s employment by or other service with the Company or any of its
subsidiaries, as applicable, which disclosure, in the Committee’s good faith
judgment, will likely have or has had a material adverse effect on the business,
interests or reputation of the Company and its subsidiaries, taken as a whole;
or
(vii)
has
been
found, in the Committee’s good faith judgment, to have committed, before or
after the Award Date, gross negligence or gross misconduct in the performance
of
duties reasonably assigned to the Participant in accordance with the custom
and
practices of the Company or its subsidiaries, as applicable, that, in the
Committee’s good faith judgment, will likely be or has been materially injurious
to the Company or any Affiliated Company or any of their customers;
or
(viii)
has
been
found, in the Committee’s good faith judgment, to have willfully refused to
perform any lawful order or instruction reasonably given to the Participant
after the Award Date in accordance with the custom and practices of the Company
or its subsidiaries, as applicable, other than a refusal resulting from the
Participant’s incapacity because of physical or mental illness, which refusal
continues for more than twenty (20) days after the Company gives written notice
to the Participant pursuant to a vote of the Committee, such notice and vote
setting forth in reasonable detail the nature of such refusal.
In
the
case of clauses (ii) through (vii) of this Section 7(a), the Company shall
provide the Participant with written notice making reference to this Agreement,
stating that the Company intends to terminate the Participant for Cause within
the meaning of this Section 7(a), and setting forth in reasonable detail the
facts and circumstances allegedly constituting Cause. The Company shall give
such notice to the Participant not less than thirty (30) days prior to the
Committee’s definitive determination of Cause and not more than three (3) months
after the Company first has actual knowledge of facts and circumstances
allegedly constituting Cause. The Company shall afford the Participant an
opportunity to provide a written rebuttal to the Committee before the Committee
makes a definitive determination of Cause. For purposes of this Section 7(a),
no
act or failure to act on the part of the Participant shall be considered
“willful” unless it is done, or omitted to be done, by the Participant in bad
faith or without reasonable belief that the Participant’s act or omission was in
the best interests of the Company. Any act, or failure to act, based upon
express authority given pursuant to a resolution duly adopted by the Board
with
respect to such act or omission or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by
the
Participant in good faith and in the best interests of the Company.
«Employee»
February
16, 2007
Page 7
of 10
(b)
As
used in
this Agreement, the term “Good Reason” means the occurrence of any of the
following after the Award Date and on or before the Vesting Date:
(i)
a
substantial and adverse alteration in the nature, status, or prestige of the
Participant’s responsibilities, title, authority, powers, functions, duties or
reporting requirements, taken as a whole, as compared to the Participant’s
responsibilities, title, authority, powers, functions, duties or reporting
requirements, taken as a whole, immediately prior to the commencement of the
Pending Business Combination;
(ii)
a
reduction in the Participant’s annual base compensation as compared to the
annual compensation in effect immediately prior to the commencement of the
Pending Business Combination, other than a reduction of not more than ten
percent (10%) that is also applied to substantially all similarly situated
employees;
(iii)
a
reduction in the percentage of the Participant’s base salary on which the
Participant’s bonus is based as compared to the average percentage used during
the three years immediately preceding the commencement of the Pending Business
Combination, other than a reduction of not more than ten percent (10%) that
is
also applied to substantially all similarly situated employees;
(iv)
a
substantial reduction of the facilities and perquisites (including office space)
available to the Participant as compared to the facilities and perquisites
(including office space) immediately prior to the commencement of the Pending
Business Combination;
(v)
any
failure of the Company to provide the Participant with benefits at least as
favorable as those enjoyed by the Participant under any of the retirement,
life
insurance, medical, health, and accident, disability or other employee plans
of
the Company or any of its subsidiaries in which the Participant participated
immediately prior to the effective date of the commencement of the Pending
Business Combination, taken as a whole, or the taking of any action that would
materially reduce any of such benefits in effect as of the commencement of
the
Pending Business Combination, unless the reduction is part of a reduction
applicable to all employees;
(vi)
the
Company’s relocation, without the Participant’s prior written consent, of the
Participant’s principal place of employment to any place outside a twenty-five
(25) mile radius of the Participant’s principal place of employment immediately
prior to the commencement of the Pending Business Combination; or
«Employee»
February
16, 2007
Page 8
of 10
(vii)
a
breach
by the Company of any material obligation to the Participant;
provided,
however, that the Participant shall have given the Company written notice before
the Participant’s voluntary resignation, which notice must have made reference
to this Agreement, set forth in reasonable detail the facts and circumstances
allegedly constituting Good Reason, and stated that the Participant intends
to
voluntarily resign for Good Reason within the meaning of this Section 7(b),
and
that, within twenty (20) days after receipt of such notice, the Company and
its
subsidiaries, as applicable, shall not have rescinded or otherwise cured, and
held the Participant harmless against, each of the events cited in the
Participant’s notice as a basis for Good Reason.
(c)
As
used in
this Agreement, the phrase “Pending Business Combination” means
(i)
the
Company is a party to a binding definitive agreement providing for a Business
Combination (as defined in the Plan) that, as the result of or in connection
with such transaction or any combination of related transactions, will result
in
a Change in Control (as defined in the Plan or, to the extent more restrictive,
as defined in Section 409A(a)(2)(v) of the Code) of the Company, or
(ii)
a
tender
offer (for which a filing has been made with the SEC which purports to comply
with the requirements of Section 14(d) of the Exchange Act and the corresponding
SEC rules) has been commenced and not withdrawn for the stock of the Company
and
the person (including any entity or group of persons and/or entities acting
in
concert) making the tender offer could own, by the terms of the tender offer
plus any shares owned by such person, stock constituting a majority of the
total
voting power of the Company’s outstanding voting securities immediately
following the consummation of such tender offer.
8.
No
Right to Continued Employment; No Restriction on the Company’s Right to Amend
Any Benefit Plan.
The
Participant acknowledges and agrees that the Participant shall have no right
to
continued employment by the Company or any of its subsidiaries by virtue of
this
Agreement or the Plan, and the rights granted hereunder or thereunder, and
nothing contained herein shall be construed to limit the Company's right at
any
time to terminate the Participant’s employment or service with or without Cause,
subject only to those obligations the Company may have for unpaid salary and/or
expenses, in accordance with provisions of law. The Participant acknowledges
and
agrees that nothing in this Agreement or in the Plan, nor any of the rights
granted hereunder or thereunder to the Participant, shall be construed to
restrict in any manner the right of the Company to modify, amend or terminate
any of its employee benefit plans, except as the Plan may otherwise expressly
provide.
9.
Effect
on Other Benefit Plans.
The
grant of the RSUs under this Agreement, and any delivery of Shares hereunder
(but not Dividend Equivalent Payments), shall constitute special incentive
payments to the Participant and shall not be taken into account in computing
the
amount of salary or compensation of the Participant for the purpose of
determining any pension, retirement, death or other benefits under (i) any
pension, retirement, profit-sharing, bonus, life insurance, 401(k) or other
employee benefit plan of the Company, or any of its affiliates or (ii) any
agreement between the Company or any of its affiliates on the one hand, and
the
Participant on the other hand, except as such plan or agreement shall otherwise
expressly provide. Without limiting the foregoing, the Participant, on his/her
own behalf and on behalf of his/her executors, heirs, representatives and
assigns, waives his/her rights and claims to any benefit, payment or other
thing
of value under any such plan or agreement to the extent computed on the basis
of
the RSUs or the Shares or any Dividend Equivalent Payment or any other income
generated by the RSUs or Shares, except as otherwise provided in the immediately
preceding sentence.
«Employee»
February
16, 2007
Page 9
of 10
10. Changes
in Capitalization.
If
during the Restricted Period the holders of Common Stock receive new or
additional or different shares or securities ("New Securities") on account
of
the occurrence of one of the following events, (i) the Company issues any of
its
shares of capital stock as a stock dividend upon or with respect to the Shares,
or (ii) the shares of Common Stock (or New Securities) are subdivided or
combined into a greater or smaller number of shares, or (iii) upon a merger,
consolidation, reorganization, split-up, liquidation, combination,
recapitalization or the like of the Company, then the Participant shall be
entitled to receive after the Vesting Date such number of Shares, other
securities of the Company, securities of such other entity, cash or other
property as the Participant would have received if the Participant had been
the
holder of the Shares at all times between the Grant Date and the date on which
the Shares would otherwise have been delivered.
11.
Prospectus
Delivery.
In
connection with the delivery of this Agreement to the Participant, the Company
will provide to the Participant a prospectus meeting the requirements of Section
10(a) of the Securities Act of 1933 (the “Prospectus”).
12.
Governing
Law.
This
Agreement and all rights under this Agreement shall be construed in accordance
with and governed by the internal laws of the Commonwealth of Massachusetts,
excluding any conflicts or choice of law rule or principle that might otherwise
refer construction or interpretation of this Agreement to the substantive law
of
another jurisdiction.
13.
Entire
Agreement.
This
Agreement embodies the entire agreement of the parties hereto with respect
to
the RSUs awarded hereby and the Shares that may be delivered hereunder, and
all
other matters contained herein. This Agreement supersedes and replaces any
and
all prior oral or written agreements with respect to the subject matter hereof.
This Agreement may be amended, and any provision hereof waived, but only in
writing signed by the party against whom such amendment or waiver is sought
to
be enforced. A waiver on one occasion shall not be deemed to be a waiver of
the
same or any other term or condition on a future occasion. If there is any
inconsistency between the provisions of this Agreement and of the Plan, the
provisions of the Plan shall govern.
IN
WITNESS
WHEREOF, the Company has caused this Restricted Stock Unit Agreement to be
executed under seal by is duly authorized officer as of the date first set
forth
above.
«Employee»
February
16, 2007
Page 10
of 10
| THE COMMERCE GROUP, INC. | |||
| By: | |||
| Name: | |||
| Its: | |||
By
signing
this Restricted Stock Unit Agreement below, the Participant hereby acknowledges
and agrees that the Participant has read, understands and accepts and agrees
to
all of (i) the terms and conditions set forth herein, (ii) the terms and
conditions set forth in the Company’s 2002 Amended and Restated Incentive Plan,
a copy of which Plan is attached to this Agreement, and (iii) acknowledges
receipt of the Prospectus accompanying this Agreement.
| Participant Signature | ||
| Print Name |
