AMTRUST FINANCIAL SERVICES, INC. 2010 OMNIBUS INCENTIVE PLAN

You have been granted ________ shares of Restricted Stock, subject to the terms and conditions of this Agreement and the Plan.

The effective date of this grant of Restricted Stock is _______ ____, 20__ (“Grant Date”).

Your award of Restricted Stock  shall vest in four equal installments of 25% on each of the first, second, third and fourth anniversaries of the Grant Date, provided you remain in Service (as defined below) on the vesting date.

 

“Service” means that you are currently an employee of the Company, are a member of the Company’s Board of Directors, or are otherwise providing services to the Company.

 

Subject to the restrictions set forth in the Plan and this Agreement, the Award holder shall possess all incidents of ownership of the Restricted Stock granted hereunder, including the right to receive dividends with respect to such Restricted Stock and the right to vote such Restricted Stock.

 

Restricted Stock may not be transferred, assigned, pledged or hypothecated, whether by operation of law or otherwise (except by the laws of descent and distribution) nor may shares of Restricted Stock be made subject to execution, attachment or similar process.

 

Except as specifically provided in this Agreement or as may be provided in other agreements between you and the Company, no additional shares of Restricted Stock will vest after your Service has terminated for any reason and you will forfeit to the Company all of the Restricted Stock not yet vested or with respect to which all applicable restrictions and conditions have not lapsed.

 

If you have been employed by the Company for at least five years and your Service terminates due to your: (i) retirement on or after your sixty-fifth birthday; or (ii) retirement on or after your fifty-fifth birthday with the consent of the Company, the Restricted Stock granted under this Agreement will automatically vest as to the number of Restricted Stock that would have vested had you remained in Service for the 12 month period immediately following your retirement.

 

If your Service terminates because of your death, the Restricted Stock granted under this Agreement will automatically vest as to the number of Restricted Stock that would have vested had you remained in Service for the 12 month period immediately following your death.

 

If your Service terminates because of your Disability (as defined below), the Restricted Stock granted under this Agreement will automatically vest as to the number of Restricted Stock that would have vested had you remained in Service for the 12 month period immediately following your termination for Disability.

 

For purposes of this Agreement, “Disability” shall mean the Award holder is unable to perform the duties of their Service (or other services) (i) for a period of 90 consecutive days, or (ii) any 120 days during any consecutive 12 month period.

 

If your Service is terminated for Cause (as defined below), then you shall immediately forfeit all rights to your vested (but undelivered) and unvested Restricted Stock and this award shall immediately terminate.

 

For purposes of this Agreement, “Cause” shall mean (a) willful misconduct or gross negligence; (b) conviction of a felony or conviction of a crime involving moral turpitude; (c) any act constituting fraud or the misappropriation or embezzlement of money or other property of the Company; and (d) any willful act or course of conduct constituting an abuse of office or authority which has a material adverse impact on the Company’s reputation or financial condition.

 

 

If your Service with the Company (or any affiliate) is terminated by the Company without Cause within 12 months following the effective date of a “Change of Control,” the Board of Directors may accelerate the vesting of any award of Restricted Stock held by you.

 

For purposes of this Agreement: “Change in Control” shall mean:

(i) any “person” (as such term is used in Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including any syndicate or group deemed to be a “person” under Section 13(d)(3) of the Exchange Act) other than Barry Zyskind, George Karfunkel, Michael Karfunkel, any lineal descendants, any trust or charitable foundation controlled by any of them or their lineal descendants, any subsidiary or any employee benefit plan of the Company or a subsidiary or former subsidiary, is or becomes a beneficial owner, directly or indirectly, of stock of the Company representing 50% of more of the total voting power of the Company’s then outstanding stock;

 

(ii) a tender offer (for which a filing has been made with the Securities and Exchange Commission (the “SEC”) that purports to comply with the requirements of Section 14(d) of the Exchange Act, and the corresponding SEC rules) is made for the stock of the Company. In case of a tender offer described in this paragraph (ii), the “Change of Control” will be deemed to have occurred any time during the offer when the person (using the definition in (i) above) making the offer owns or has accepted for payment stock of the Company with 50% or more of the total voting power of the Company's outstanding stock; or

 

(iii)  individuals who were the Board’s nominees for election as directors of the Company immediately prior to a meeting of the stockholders of the Company involving a contest for the election of directors shall not constitute a majority of the Board following the election.

 

The Company shall issue the shares of Restricted Stock either (i) in certificate form or (ii) in book entry form, registered in the name of the Award holder, with legends, or notations, as applicable, referring to the terms, conditions, and restrictions applicable to the Award.  Any certificate issued for Restricted Stock prior to vesting will be inscribed with the following legend:

 

 

 

Any Restricted Stock issued pursuant to this Award shall be held by the Company in escrow for the benefit of the Award recipient. Upon vesting, a certificate for the vested shares shall be issued to the Award holder free of the restrictive legend.

 

Upon vesting, restrictions related to the vested shares of Restricted stock shall lapse and the Company shall, as applicable, either remove the notations on such vested shares issued in book-entry form or deliver to the Award holder or their personal representative a stock certificate representing the number of shares of Stock, free of any restrictive legend, equal to the number of vested shares.  If certificates representing such Restricted Stock had previously been delivered to you, you shall return such certificates to the Company, complete with any necessary signatures or instruments of transfer prior to the issuance by the Company of shares of Stock without the restrictive legend.

 

(a)  You shall pay to the Company promptly upon request, and in any event at the time you recognize taxable income in respect of the Restricted Stock (whether in connection with the grant or vesting of the Restricted Stock, the making of an election under Section 83(b) of the Code in connection with the Award as described below or otherwise), an amount equal to the taxes the Company determines it is required to withhold under applicable tax laws with respect to the Restricted Stock.  Such payment may be made by any of, or a combination of, the following methods: (i) cash or check; (ii) out of your current compensation; (iii) in the sole discretion of the Company, by surrender of other shares of Common Stock of the Company that (a) in the case of shares initially acquired from the Company (upon exercise of a stock option or otherwise), have been owned by you for such period, if any, as may be required to avoid a charge to the Company’s earnings and (b) have a Fair Market Value on the date of surrender equal to the amount required to be withheld; or (iv) in the sole discretion of the Company, by electing to have the Company withhold or otherwise reacquire from you shares of Restricted Stock that vest pursuant to the terms hereof having a Fair Market Value equal to the minimum statutory amount required to be withheld in connection with the vesting of such shares.  For these purposes, the Fair Market Value of the shares to be withheld or repurchased, as applicable, shall be determined on the date that the amount of the tax to be withheld is to be determined (the “Tax Date”).

 

All elections by you to have the shares withheld or repurchased to satisfy tax obligations shall be made in writing in a form acceptable to the Company and shall be subject to the following restrictions:

 

(i) the election must be made on or prior to the applicable Tax Date;

 

(ii) once made, the election shall be irrevocable as to the particular shares as to which the election is made and you acknowledge that this irrevocable written instruction is intended to constitute an instruction pursuant to Rule 10b5-1 of the Exchange Act;

 

(iii) all elections shall be subject to the consent or disapproval of the Company; and

 

(iv) If you are subject to Section 16 of the Exchange Act, the election must comply with the applicable provisions of Rule 16(b)-3 promulgated under the Exchange Act and shall be subject to such additional conditions or restrictions as may be required thereunder to qualify for the maximum exemption from Section 16 of the Exchange Act with respect to Plan transactions.

 

(b)  Section 83(b) Election.  You hereby acknowledge that you may file an election pursuant to Section 83(b) of the Code to be taxed currently on the fair market value of the shares of Restricted Stock (less any purchase price paid for the shares), provided that such election must be filed with the Internal Revenue Service no later than thirty (30) days after the date of the Award.  You will seek the advice of your own tax advisors as to the advisability of making such a Section 83(b) election, the potential consequences of making such an election, and the other tax consequences of the Award under federal, state, and any other laws that may be applicable.  The Company and its affiliates and agents have not and are not providing any tax advice to you.

 

 

In the event that you violate any of your obligations pursuant to the Confidentiality, Non-Competition, or Non-Solicitation provisions of this Agreement, you agree to return to the Company, within five days of receipt of written demand from the Company, any gains you realize from the sale of all or any portion of the Restricted Stock during the 12 months immediately preceding such violation, and any remaining unsold portion of your Restricted Stock shall be immediately and totally forfeited.

 

During your Service, you will have access to confidential or proprietary data or information of the Company (and its affiliates) and its operations.  You agree not to at any time divulge or communicate the Confidential Information (defined below) to any person, nor shall you direct any employee to divulge or communicate to any person (other than to a person bound by confidentiality obligations similar to those contained herein and other than as necessary in performing your duties hereunder), or use to the detriment of the Company (or any of its affiliates) or for the benefit of any other person, any Confidential Information.  This restriction shall survive your Service hereunder, whether by the normal expiration thereof or otherwise.

 

The term “Confidential Information” shall mean all information, whether or not reduced to written or recorded form, that is related to the Company and that is not generally known or accessible to members of the public and/or competitors of the Company nor intended for general dissemination, whether furnished by the Company or compiled by the employee, including, without limitation, relating to the Company’s (or any affiliate’s) financial performance, customers, existing or proposed future projects, prospects, or business strategies, personnel information, financial information, customer lists, supplier lists, trade secrets, information regarding operations, systems, services, know-how, computer and any other processed or collated data, computer programs, pricing, marketing and advertising data.

 

You understand the Company intends to maintain the confidentiality of the Confidential Information notwithstanding that employees of the Company may have free access to the information for the purpose of performing their duties with the Company, and notwithstanding that employees not expressly bound by agreements similar to this agreement may have access to such information for job purposes. You  acknowledge that Confidential Information need not be marked as such to preserve the confidential nature of the information.

 

You acknowledge that (a) in the course of your Service with the Company and its affiliates, you have, and will continue to, become familiar with the Company’s and its affiliates’ trade secrets, methods of doing business, business plans and other valuable confidential and proprietary information concerning the Company, its affiliates, their customers and business partners and that your services have been and will be of special, unique and extraordinary value to the Company and its affiliates.  In consideration thereof and of this Award, during your Service with the Company or an affiliate and for a period of one (1) year thereafter, you shall not, without the Company’s prior written approval, become engaged, directly or indirectly, as a director, officer, employee or 5% or more stockholder or equity interest owner in, partner in, or consultant to, any business that is directly competitive with the business of the Company (or any affiliate) in any area or region where the Company (or any affiliate) conducts business (“Competition”).  Notwithstanding the foregoing, you shall not be deemed to be in Competition with the Company if you provide evidence satisfactory to the Company, in its sole and absolute discretion, that you: (i) work in a separate division, department or unit that does not compete with the business of the Company (or any affiliate); and (ii) will not have contact with the division, department or unit that does compete with the business of the Company (or any affiliate).  If you received your Restricted Stock grant as a non-employee member of the Company’s Board of Directors, this provision will not apply to you unless your Service is terminated for Cause (as defined above) or for cause pursuant to the Company’s Certificate of Incorporation.

 

During Service and for a period of two (2) years thereafter, you shall not, without the prior written consent of the Company, directly or indirectly, on your own behalf or on behalf of any other person, firm, corporation or business entity: (a) induce or attempt to induce any agent, affinity group or policyholder of the Company (or any affiliate), or any prior agent, affinity group or policyholder that was an agent, broker, affinity group or policyholder within twelve (12) months of such contact, to withdraw, decrease or cancel its business with the Company (or any affiliate) or otherwise terminate any written or oral agreement or understanding or other relationship with the Company (or any affiliate); (b) solicit or attempt to solicit, service or attempt to service, or for the purpose of obtaining the business of any customer of the Company (or any affiliate), or any prior agent, affinity group or policyholder that was an agent, broker, affinity group or policyholder within twelve (12) months of such contact, to the extent the business solicited is similar to, or competitive with, the business of the Company (or any affiliate), engage in discussions or other communications with (regardless of who initiates such discussions or communications) any person, firm or entity that was an actual or prospective agent, broker, affinity group or policyholder of the Company during any part of the twelve (12) month period immediately preceding termination of Service if you participated, directly or indirectly, in the solicitation or servicing of that agent, broker, affinity group or policyholder or prospective agent, broker, affinity group or policyholder, or supervised or managed those who did, during your Service with the Company at any time during such twelve (12) month period immediately preceding your termination of Service; (c) solicit or attempt to solicit, hire or attempt to hire, or communicate with, any person who is an employee, individual consultant or independent contractor of the Company (or any affiliate), or any prior employee, individual consultant or independent contractor that was an employee, consultant or independent contractor within twelve (12) months of such contact, with the purpose or intent of attracting such person from the employ of the Company (or any affiliate); or (d) induce or attempt to induce any person who is an employee, individual consultant or independent contractor of the Company (or any affiliate) to terminate or limit his or her Service or other relationship with the Company (or any affiliate), or any prior employee, individual consultant or independent contractor that was an employee, individual consultant or independent contractor within twelve (12) months of such contact.

 

Neither your Restricted Stock nor this Agreement give you the right to be retained by the Company in any capacity and your Service may be terminated at any time and for any reason.

 

You have no rights as a shareholder unless and until the Stock relating to the Restricted Stock has been issued to you (or an appropriate book entry has been made). Except as described in the Plan or herein, no adjustments are made for dividends or other rights if the applicable record date occurs before your Stock is issued (or an appropriate book entry has been made). If the Company pays a dividend on its Stock, you will, however, be entitled to receive a cash payment equal to the per-share dividend paid on the Stock times the number of Restricted Stock that you hold as of the record date for the dividend.

 

This Agreement shall be governed by the laws of the State of Delaware, with consent to jurisdiction by you in the State of New York.

 

To administer the Plan, the Company may process personal data about you. Such data includes the information provided in this Agreement, other appropriate personal and financial data about you such as home address and business addresses and other contact information, payroll information and any other information deemed appropriate by the Company to facilitate the administration of the Plan.

 

By accepting this award, you consent to the Company’s processing of such personal data and the transfer of such data outside the country in which you work or are employed, including, with respect to non-U.S. residents, to the United States, to transferees who shall include the Company and other persons designated by the Company to administer the Plan.

 

Certain statutory materials relating to the Plan may be delivered to you in electronic form. By accepting this grant, you consent to electronic delivery and acknowledge receipt of these materials, including the Plan and the Plan prospectus.