Exhibit 10.17
NATIONAL INTERSTATE CORPORATION
RESTRICTED SHARES AGREEMENT
     This Agreement (the “Agreement”) is made as of March 12, 2007 (the “Date of
Grant”) by and between National Interstate Corporation, an Ohio corporation (the
“Company”) and David W. Michelson (the “Grantee”) and is being executed
contemporaneously with an Employment Agreement between the Company and the
Grantee.
     1. Grant of Restricted Shares. Subject to and upon the terms, conditions
and restrictions set forth in this Agreement and in the National Interstate
Corporation Long Term Incentive Plan (the “Plan”), the Company hereby grants to
the Grantee as of the Date of Grant 22,500 Common Shares as Restricted Shares
(the “Restricted Shares”). The Restricted Shares shall be fully paid and
nonassessable and shall be represented by a certificate or certificates
registered in the Grantee’s name, endorsed with an appropriate legend referring
to the restrictions hereinafter set forth.
     2. Vesting of Restricted Shares.
          (a) The Restricted Shares covered by this Agreement shall vest and
become nonforfeitable to the extent of one-third of the Restricted Shares
specified in Section 1 on each of January 1, 2008, January 1, 2009 and
January 1, 2010 as long as the Grantee remains in the continuous employ of the
Company and its Subsidiaries.
          (b) Notwithstanding the provisions of Section 2(a), all of the
Restricted Shares covered by this Agreement shall immediately become vested and
nonforfeitable if, during the vesting period and while the Grantee is in the
employ of the Company and its Subsidiaries (i) the Grantee dies or becomes
permanently disabled (as determined by the Committee), or (ii) a Change in
Control occurs.
          (c) For purposes of this Agreement, the continuous employment of the
Grantee with the Company or a Subsidiary shall not be deemed to have been
interrupted, and the Grantee shall not be deemed to have ceased to be an
employee of the Company or a Subsidiary, by reason of the transfer of his
employment among the Company or a Subsidiary or a leave of absence approved by
the Committee.
     3. Forfeiture of Shares. The Restricted Shares that have not yet vested
pursuant to Section 2 shall be forfeited automatically without further notice if
the Grantee ceases to be employed by the Company or a Subsidiary other than as a
result of his death or disability as provided in Section 2(b). In the event of a
forfeiture of the Restricted Shares, the certificate(s) representing the
Restricted Shares covered by this Agreement shall be cancelled.
     4. Transferability. The Restricted Shares may not be sold, exchanged,
assigned, transferred, pledged, encumbered or otherwise disposed of by the
Grantee, except to the Company, until the Restricted Shares have become
nonforfeitable as provided in Section 2. Any purported transfer or encumbrance
in violation of the provisions of this Section 4 shall be void, and the other
party to any such purported transaction shall not obtain any rights to or
interest in

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such Restricted Shares. The Committee, in its sole discretion, when and as is
permitted by the Plan, may waive the restrictions on transferability with
respect to all or a portion of the Restricted Shares, provided that any
permitted transferee (other than the Company) shall remain subject to all the
terms and conditions applicable to the Restricted Shares prior to such transfer.
     5. Dividend, Voting and Other Rights. Except as otherwise provided herein,
from and after the Date of Grant, the Grantee shall have all of the rights of a
shareholder with respect to the Restricted Shares, including the right to vote
the Restricted Shares and receive any cash dividends that may be paid thereon;
provided, however, that any additional Common Shares or other securities that
the Grantee may become entitled to receive with respect to the Restricted Shares
pursuant to a stock dividend, stock split, combination of shares,
recapitalization, merger, consolidation, separation or reorganization or any
other change in the capital structure of the Company shall be considered
Restricted Shares and shall be subject to the same restrictions as the
Restricted Shares covered by this Agreement. Any cash dividends paid with
respect to the Restricted Shares shall be subject to all required withholdings
for federal, state, local or other taxes.
     6. Custody of Restricted Shares. The certificate(s) representing the
Restricted Shares shall be held in custody by the Company until those shares
have become vested and nonforfeitable in accordance with Section 2 of this
Agreement. By execution of this Agreement and effective until the Restricted
Shares have become vested and nonforfeitable as provided in Section 2, the
Grantee hereby irrevocably constitutes and appoints the Company’s Secretary and
the Company’s Chief Financial Officer, or any of them, as attorneys-in-fact to
transfer on the books of the Company with full power of substitution all or any
portion of the Restricted Shares that are forfeited in accordance with this
Agreement. The Grantee agrees to take any and all other actions (including
without limitation executing, delivering, performing and filing such other
agreements, instruments and documents) as the Company may deem necessary or
appropriate to carry out and give effect to such transfer.
     7. No Employment Contract. Nothing contained in this Agreement shall confer
upon the Grantee any right with respect to continuance of employment by the
Company or a Subsidiary, nor limit or affect in any manner the right of the
Company or a Subsidiary to terminate the employment or adjust the compensation
of the Grantee.
     8. Taxes and Withholding. If the Company is required to withhold any
federal, state, local or other taxes in connection with the vesting of the
Restricted Shares, then the Grantee shall satisfy such withholding obligation by
surrendering to the Company a portion of the Common Shares that become vested by
the Grantee hereunder, and the Common Shares so surrendered by the Grantee shall
be credited against any such withholding obligation at the Market Value per
Share of such Common Shares on the date of such surrender. As a condition to
receiving this award, the Grantee acknowledges and agrees that he or she shall
not file an election under Section 83(b) of the Code with respect to all or any
portion of the Restricted Shares.

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     9. Compliance with Law. The Company shall make reasonable efforts to comply
with all applicable federal and state securities laws and listing requirements
of the Nasdaq National Market System or any national securities exchange with
respect to the Restricted Shares.
     10. Amendments. Subject to the terms of the Plan, the Committee may modify
this Agreement upon written notice to the Grantee. Any amendment to the Plan
shall be deemed to be an amendment to this Agreement to the extent that the
amendment is applicable hereto. Notwithstanding the foregoing, no amendment of
the Plan or this Agreement shall adversely affect the rights of the Grantee
under this Agreement without the Grantee’s consent.
     11. Severability. In the event that one or more of the provisions of this
Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
     12. Relation to Plan. This Agreement is subject to the terms and conditions
of the Plan. This Agreement and the Plan contain the entire agreement and
understanding of the parties with respect to the subject matter contained in
this Agreement, and supersede all prior written or oral communications,
representations and negotiations in respect thereto. In the event of any
inconsistency between the provisions of this Agreement and the Plan, the Plan
shall govern. Capitalized terms used herein without definition shall have the
meanings assigned to them in the Plan. The Committee acting pursuant to the
Plan, as constituted from time to time, shall, except as expressly provided
otherwise herein, have the right to determine any questions which arise in
connection with the grant of the Restricted Shares.
     13. Successors and Assigns. Without limiting Section 4 hereof, the
provisions of this Agreement shall inure to the benefit of, and be binding upon,
the successors, administrators, heirs, legal representatives and assigns of the
Grantee, and the successors and assigns of the Company.
     14. Governing Law. The interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Ohio, without giving
effect to the principles of conflict of laws thereof.
     15. Electronic Delivery. The Grantee hereby consents and agrees to
electronic delivery of any documents that the Company may elect to deliver
(including, but not limited to, prospectuses, prospectus supplements, grant or
award notifications and agreements, account statements, annual and quarterly
reports, and all other forms of communications) in connection with this and any
other award made or offered under the Plan. The Grantee understands that, unless
earlier revoked by the Grantee by giving written notice to the Secretary of the
Company, this consent shall be effective for the duration of the Agreement. The
Grantee also understands that he or she shall have the right at any time to
request that the Company deliver written copies of any and all materials
referred to above at no charge.

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     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by its duly authorized officer and the Grantee has also executed this
Agreement, as of the Date of Grant.

            NATIONAL INTERSTATE CORPORATION
      By:   /s/ Paul F. Haffner       Name: Paul F. Haffner      Title: Vice
President, General Counsel and Secretary     

     The undersigned hereby acknowledges receipt of a copy of the Plan Summary
and Prospectus, and the Company’s most recent Annual Report and Proxy Statement
(the “Prospectus Information”). The Grantee represents that he or she is
familiar with the terms and provisions of the Prospectus Information and hereby
accepts the award of Restricted Shares on the terms and conditions set forth
herein and in the Plan.

                  /s/ David W. Michelson       Grantee            Date: March
12, 2007    

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