Exhibit 10.14

NI HOLDINGS, INC.

 

Growth in Book Value Per Share Performance Share Unit Agreement

 

Name of Participant:

Target No. of Performance Share Units Covered:

Maximum No. of Performance Share Units Covered:

Date of Grant:

 

 

THIS PERFORMANCE SHARE UNIT AGREEMENT (this “Agreement”) governs the Stock Unit
Award granted by NI HOLDINGS, INC., a North Dakota corporation (the “Company”)
to the above-named individual (the “Participant”), in accordance with and
subject to the provisions of the Company’s 2017 Stock and Incentive Plan (the
“Plan”). A copy of the Plan has been made available to the Participant. Unless
the context indicates otherwise, capitalized terms that are not defined in this
Agreement shall have the meaning set forth in the Plan.

 

1.       Grant of Performance Share Units.

(a)       In accordance with the Plan, and effective as of the Date of Grant
specified above, the Company has granted to the Participant the number of
Performance Share Units specified at the beginning of this Agreement
(collectively, the “Performance Share Units,” and each a “Performance Share
Unit.”). Each Performance Share Unit represents the right to receive a share of
Common Stock (a “Share”) and dividend equivalent amounts corresponding to the
Share, subject to the terms and conditions of this Agreement and the Plan.

(b)       The Performance Share Units granted to the Participant shall be
credited to an account in the Participant’s name. This account shall be a record
of bookkeeping entries only and shall be utilized solely as a device for the
measurement and determination of the number of Shares to be issued to or in
respect of the Participant pursuant to this Agreement. Performance Share Units
may not be transferred by the Participant without the Committee’s prior written
consent other than by will or the laws of descent and distribution.

2.       Earned and Vested Performance Share Units.

(a)       Except as provided in paragraphs 2(b) through 2(e) below, if the
Participant remains in the continuous employ of the Company or an Affiliate from
the Date of Grant until the last day of the Measurement Period, the Participant
shall earn the number of Performance Share Units determined by taking the
percentage earned in the table shown in Exhibit 1, and multiplying the
percentage times the target number of Performance Share Units specified at the
beginning of this Agreement. The number of Performance Share Units that will

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be earned pursuant to this Section 2 will be determined by reference to the
Company Growth in Book Value per Share for the Measurement Period in Exhibit 1.

(b)       As soon as practicable after the end of the Measurement Period, but in
all events no later than ______ (the “Determination Date”), the Committee shall
certify the number of Performance Share Units (if any) that are earned and
vested pursuant to the terms and conditions hereof, and the Company shall cause
the Shares issuable in connection with the vesting of any such Performance Share
Units to be issued in accordance with Section 3; provided, however, that if the
Measurement Period ends on account of the Participant’s death or a Change in
Control, the Committee’s determination and certification shall not be necessary.

(c)       If the Participant dies while employed with the Company or an
Affiliate prior to the last day of the Measurement Period, then the target
number of Performance Share Units shall vest and become immediately payable.

(d)       If the Participant remains in the continuous employ of the Company or
an Affiliate from the Date of Grant until the date of a Qualifying Termination
that occurs before the last day of the Measurement Period, then (i) the
Performance Share Units will remain outstanding until the last day of the
Measurement Period, (ii) the number of earned Performance Share Units shall be
determined in accordance with Section 2(a) (except, if the Measurement Period
ends due to a Change in Control, the target number of Performance Share Units
shall be earned) and (iii) the Participant will have a fully vested and
non-forfeitable interest in a pro rata number of the earned Performance Share
Units as of the last day of the Measurement Period. The pro rata number of
earned Performance Share Units that vest shall be determined by multiplying the
total number of earned Performance Share Units by a fraction, the numerator of
which is the number of full and partial calendar months of the Participant’s
employment with the Company or an Affiliate from the first day of the
Measurement Period to the date of a Qualifying Termination and the denominator
of which is the number of full calendar months in the Measurement Period. A
partial month of service shall count as a full month.

(e)       If the Participant remains in the continuous employ of the Company or
an Affiliate from the Date of Grant until a Change in Control that occurs before
the last day of the Measurement Period, then the target number of Performance
Share Units shall be earned and converted into time-based Restricted Stock
Units. If the Participant’s Restricted Stock Units are assumed (or substituted
or replaced with an award of equivalent value), then the converted Restricted
Stock Units shall become fully vested if the Participant remains in the
continuous employ of the Company or an Affiliate until ______ or dies while
employed or terminates on account of Disability or Involuntary Termination Due
to Position Elimination or Reorganization. If the Participant resigns at or
after Retirement Age, the Restricted Stock units shall continue to vest and
become payable as of ______. In addition, if the Participant is involuntarily
terminated without Cause or resigns for Good Reason within twenty four (24)
months following the Change in Control but prior to ______, any Restricted Stock
Units (or replacement award) that remains unvested will vest in full and become
non-forfeitable as of the date of such termination. Notwithstanding the
foregoing, if the Participant’s Restricted Stock Units are neither assumed nor
substituted or replaced with similar rights (or cash equivalent value thereof),
then any unvested Restricted Stock Units will vest in full and become
non-forfeitable upon the Change in Control.

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(f)       Any Performance Share Units that do not vest pursuant to this
Agreement shall be forfeited without consideration therefor.

3.       Issuance and Settlement.

(a)       After any Performance Share Units vest in accordance with Section 2,
the Company shall cause to be issued to the Participant, or to the Participant’s
designated beneficiary or estate in the event of the Participant’s death, one
Share in payment and settlement of each vested Performance Share Unit, subject
to applicable required tax withholding. The Committee shall cause the Shares
issuable in connection with the vesting of any such Performance Share Units to
be issued as of the Determination Date (except, in cases where there is no
determination, Shares shall be issued within sixty (60) days of vesting), and
the Participant shall have no power to affect the timing of such issuance. Such
issuance shall be evidenced by a stock certificate or appropriate entry on the
books of the Company or a duly authorized transfer agent of the Company and
shall be in complete settlement and satisfaction of such vested Performance
Share Units.

(b)       Notwithstanding the foregoing, if the Participant has attained or will
attain Retirement Age prior to the last day of the Measurement Period under this
Agreement, such Units shall be treated as “deferred compensation” subject to
section 409A of the Internal Revenue Code (the “Code”). In such case, the
following special provisions shall apply to the payment of the underlying
Shares:

(i)       if any Performance Share Units vest and become payable on account of a
Change in Control, the Performance Share Units shall not become payable (even
though non-forfeitable) unless the Change in Control constitutes a “change in
control event” as defined in Treasury Regulations promulgated under section 409A
of the Code; and

(ii)       if any Performance Share Units vest and become payable on account of
the Participant’s (A) Involuntary Termination Due to Position Elimination or
Reorganization or (B) involuntary termination without Cause or resignation for
Good Reason on or after a Change in Control, the Performance Share Units shall
not become payable (even though non-forfeitable) unless the termination
constitutes a “separation from service” as defined in Treasury Regulations
promulgated under section 409A of the Code. In addition, if the Participant is a
Specified Employee, payment on account of separation from service hereunder
shall be made as of the date that is six months following the Participant’s
separation from service (or, if earlier, upon the Participant’s death).

(c)       The Participant may elect to satisfy any applicable required tax
arising in relation to the Performance Share Units by (i) delivering cash
(including check, draft, money order or wire transfer made payable to the order
of the Company) or (ii) having the Company withhold a portion of the Shares
otherwise to be delivered having a Fair Market Value equal to the amount of such
tax liability (subject to any limitations required under applicable financial
accounting standards to avoid liability accounting for the Award). In the case
of clause (ii), the Company will not deliver to the Participant any fractional
Shares (or equivalent cash value) remaining after reduction for taxes; rather,
any remaining fractional Shares will be cancelled without payment.

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4.       Shareholder Rights. The Performance Share Units do not entitle the
Participant to any rights of a shareholder of the Company. Notwithstanding the
foregoing, the Participant shall accumulate an unvested right to payment of cash
dividend equivalents on the Shares underlying Performance Share Units if cash
dividends are declared by the Company on the Shares on or after the Date of
Grant. Such dividend equivalents will be in an amount of cash per Performance
Share Unit equal to the cash dividend paid with respect to one Share, subject to
applicable required tax withholding. The Participant shall be entitled solely to
payment of accumulated dividend equivalents with respect to the number of
Performance Share Units equal to the number of Shares that become issuable to
the Participant pursuant to this Agreement. Dividend equivalents will be paid to
the Participant as soon as administratively possible following the date that the
Shares are issued to the Participant. The Participant shall not be entitled to
dividend equivalents with respect to dividends declared prior to the Date of
Grant. All dividend equivalents accumulated with respect to forfeited
Performance Share Units shall also be irrevocably forfeited. As of the date of
issuance of Shares underlying Performance Share Units, the Participant shall
have all of the rights of a shareholder of the Company with respect to any
Shares issued pursuant hereto.

5.       Definitions. For purposes of this Agreement, the following shall have
the following meanings:

(a)       “Cause” means (i) the Participant’s willful conduct that is
demonstrably and materially injurious to the Company or an Affiliate, monetarily
or otherwise; (ii) the Participant’s material breach of written agreement
between the Participant and the Company; (iii) the Participant’s breach of the
Participant’s fiduciary duties to the Company or an Affiliate; (iv) the
Participant’s conviction of any crime (or entering a plea of guilty or nolo
contendere to any crime) constituting a felony; or (v) the Participant’s
entering into an agreement or consent decree or being the subject of any
regulatory order that in any of such cases prohibits the Participant from
serving as an officer or director of a company that has publicly traded
securities. A termination of the Participant shall not be for “Cause” unless the
decision to terminate the Participant is set forth in a resolution of the Board
to that effect and which specifies the particulars thereof and that is approved
by a majority of the members of the Board (exclusive of the Participant if the
Participant is a member of the Board) adopted at a meeting called and held for
such purpose (after reasonable notice to the Participant and an opportunity for
the Participant to be heard before the Board). No act or failure to act by the
Participant will be deemed “willful” if it was done or omitted to be done by the
Participant in good faith or with a reasonable belief on the part of the
Participant that the action or omission was in the best interests of the Company
or an Affiliate. Any act or failure to act by the Participant based upon
authority given pursuant to a resolution duly adopted by the Board or based on
the advice of counsel to the Company shall be conclusively presumed to be done
or omitted to be done by the Participant in good faith and in the best interest
of the Company and its Affiliates.

(b)       “Change in Control” means:

(i)       the approval of the shareholders of the Company, and consummation, of
(A) any consolidation, merger or statutory share exchange of the Company with
any person in which the surviving entity would not have as its directors at
least a majority of the Incumbent Board and as a result of which those persons
who were shareholders of the Company immediately prior to such transaction would
not hold, immediately after such

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transaction, at least 50% of the Voting Power of the Company then outstanding or
the combined voting power of the surviving entity’s then outstanding voting
securities; (B) any sale, lease, exchange or other transfer in one transaction
or series of related transactions substantially all of the assets of the
Company; or (C) the adoption of any plan or proposal for the complete or partial
liquidation or dissolution of the Company. For purposes of this Section 5(a),
“Voting Power” when used with reference to the Company shall mean the voting
power of all classes and series of capital stock of the Company now or hereafter
authorized; or

(ii)       the individuals who, as of the date of this Agreement, are members of
the Board of Directors of the Company (the “Incumbent Board”) cease for any
reason to constitute at least a majority of the Board (provided, however, that
if the election or nomination for election by the Company’s shareholders of any
new director was approved by a vote of at least a majority of the Incumbent
Board, such new director shall be considered to be a member of the Incumbent
Board).

(c)       “Growth in Book Value” shall have the meaning ascribed that term in
Exhibit 1 attached hereto.

(d)       “Disability” means the Participant has been determined, by a physician
selected by the Company and reasonably acceptable to the Participant, to be
unable to engage in any substantial gainful activity by reason of a medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than
12 months.

(e)       “Good Reason” means without the express written consent of the
Participant (i) a change in the Participant’s position with the Company or an
Affiliate which results in a material diminution of the Participant’s authority,
duties or responsibilities; (ii) a material reduction by the Company or an
Affiliate in the annual rate of the Participant’s base salary; or (iii) a change
in the location of the Participant’s principal office to a different place that
is more than fifty miles from the Participant’s principal office immediately
prior to such change. A reduction in the Participant’s rate of annual base pay
shall be material if the rate of annual base salary on any date is less than
ninety percent (90%) of the Participant’s highest rate of annual base pay as in
effect on any date in the preceding thirty-six (36) months. Notwithstanding the
two preceding sentences, a change in the Participant’s duties or
responsibilities shall not constitute Good Reason, and the Participant shall not
have Good Reason to resign, solely because the Company does not have common
shares or other securities that are publicly traded. A resignation by the
Participant shall not be with “Good Reason” unless the Participant gives the
Company written notice specifying the event or condition that the Participant
asserts constitutes Good Reason, the notice is given no more than ninety days
after the occurrence of the event or initial existence of the condition that the
Participant asserts constitutes Good Reason and the Company has failed to remedy
or cure the event or condition during the thirty day period after such written
notice is given to the Company.

(f)       “Involuntary Termination Due to Position Elimination or
Reorganization” means an involuntary termination of the Participant’s employment
by the Company or its Affiliates due to a job elimination, reduction in force,
business restructuring or other circumstances the Committee deems appropriate,
in its sole discretion, as qualifying as an Involuntary Termination Due to
Position Elimination or Reorganization.

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(g)        “Measurement Period” means the period beginning on ______ and ending
on the earliest of (i) ______; (ii) the date of the Participant’s death while
employed with the Company or an Affiliate; or (iii) the date of a Change in
Control.

(h)       “Qualifying Termination” means a termination of the Participant’s
employment on account of (i) Disability, (ii) Retirement or (iii) Involuntary
Termination Due to Position Elimination or Reorganization.

(i)       “Retirement” means the Participant voluntarily resigns from employment
with the Company and all Affiliates after having both attained age sixty (60)
and accumulated at least seventy (70) points (“Retirement Age”). The
Participant’s points shall equal the sum of the participant’s age (in years)
plus completed full years of employment with the Company and its Affiliates.

6.       No Right to Continued Employment. This Agreement and the grant of the
Stock Unit Award do not give the Participant any rights with respect to
continued employment by the Company or an Affiliate. This Agreement and the
grant of the Stock Unit Award shall not interfere with the right of the Company
or an Affiliate to terminate the Participant’s employment.

7.       Change in Capital Structure. In accordance with the terms of the Plan,
the terms of this Agreement and the number and kind of Shares shall be adjusted
as the Board determines to be equitably required in the event the Company
effects one or more stock dividends, stock split-ups, subdivisions, or
consolidations of shares or other similar changes in capitalization.

8.       Governing Law; Venue. The laws of the State of North Dakota shall
govern all matters arising out of or relating to this Agreement including,
without limitation, its validity, interpretation, construction and performance
but without giving effect to the conflict of laws principles that may require
the application of the laws of another jurisdiction. Any party bringing a legal
action or proceeding against any other party arising out of or relating to this
Agreement may bring the legal action or proceeding in the United States District
Court for the District of North Dakota or in any court of the State of North
Dakota sitting in Fargo, North Dakota. Each party waives, to the fullest extent
permitted by law (i) any objection it may now or later have to the laying of
venue of any legal action or proceeding arising out of or relating to this
Agreement brought in a court described in the preceding sentence and (ii) any
claim that any legal action or proceeding brought in any such court has been
brought in an inconvenient forum.

9.       Conflicts. In the event of any conflict between the provisions of the
Plan as in effect on the Date of Grant and this Agreement, the provisions of the
Plan shall govern. All references herein to the Plan shall mean the Plan as in
effect on the Date of Grant.

10.       Participant Bound by Plan. The Participant hereby acknowledges that a
copy of the Plan has been made available to the Participant and the Participant
agrees to be bound by all of the terms and provisions of the Plan.

11.       Binding Effect. Subject to the limitations stated above and in the
Plan, this Agreement shall be binding upon the Participant and the Participant’s
successors in interest and the Company and any successors of the Company.

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12.       Recoupment. The Participant acknowledges and agrees that the
Participant’s rights in the Performance Share Units, Shares and any dividends,
dividend equivalents or other distributions paid or payable with respect to the
Performance Share Units or Shares are subject to recoupment or repayment if, and
to the extent that, such action is required under applicable law or any Company
recoupment or “clawback” policy.

IN WITNESS WHEREOF, the Company and the Participant have executed this
Performance Share Unit Agreement as of the date first set forth above.

 

NI HOLDINGS, INC.   [NAME OF PARTICIPANT]                 By:              
Name:               Title:      

 

 

 

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