FORM OF RESTRICTED STOCK AGREEMENT

FEDERATED NATIONAL HOLDING COMPANY

RESTRICTED STOCK AGREEMENT

FOR

[RECIPIENT]

1.Award of Restricted Stock.  Federated National Holding Company (the “Company”)
hereby grants, as of [GRANT DATE] (the “Date of Grant”), to [RECIPIENT],
[QUANTITY] restricted shares of the Company’s Common Stock, par value $0.01 per
share (collectively the "Restricted Stock").  The Restricted Stock is being
issued pursuant to the Company’s 2012 Stock Incentive Plan as amended (the
“Plan”), which is incorporated herein for all purposes.  The Restricted Stock
shall be subject to the terms, provisions and restrictions set forth in this
Agreement and in the Plan.  As a condition to entering into this Agreement, and
as a condition to the issuance of any Shares (or any other securities of the
Company), the Recipient agrees to be bound by all of the terms and conditions
herein and in the Plan.    Unless otherwise provided herein, terms used herein
that are defined in the Plan and not defined herein shall have the meanings
attributable thereto in the Plan.

2.Vesting of Restricted Stock.

(a)Except as otherwise provided in Sections 2(b), 2(c), 2(d), 2(e) and 4 hereof,
provided that the continuous service of the Recipient continues through and on
the applicable Vesting Date, the shares of Restricted Stock shall become vested
in the following amounts, at the following times and upon the following
conditions:

Number of Shares of Restricted Stock

Vesting Date

[QUANTITY]

[QUANTITY]

[QUANTITY]

[QUANTITY]

[QUANTITY]

[VEST DATE 1]

[VEST DATE 2]

[VEST DATE 3]

[VEST DATE 4]

[VEST DATE 5]

﻿

There shall be no proportionate or partial vesting of shares of Restricted Stock
in or during the months, days or periods prior to each Vesting Date, and all
vesting of shares of Restricted Stock shall occur only on the applicable Vesting
Date.

﻿

(b)[In the event that a Change in Control of the Company occurs during the
Recipient's continuous service and the Recipient’s employment is terminated
without Cause or for Good Reason within the [●]-month period following the
Change in Control (a “Change in Control Termination”), the shares of Restricted
Stock subject to this Agreement shall become immediately and fully vested as of
the date of the Change in Control Termination, and shall be delivered, subject

--------------------------------------------------------------------------------

 

to any requirements under this Agreement, to the Recipient on the date of the
Change in Control Termination.]

(c)Notwithstanding any other term or provision of this Agreement, the
Administrator shall be authorized, in its sole discretion, to accelerate the
vesting of any shares of Restricted Stock under this Agreement, at such times
and upon such terms and conditions as the Administrator shall deem advisable.

(d)In the event that the Recipient’s continuous service terminates by reason of
the Recipient’s death, all of the shares of Restricted Stock subject to this
Agreement shall be immediately vested as of the date of such death, and shall be
delivered, subject to any requirements under this Agreement, to the beneficiary
or beneficiaries designated by the Recipient, or if the Recipient has not so
designated any beneficiary(ies), or no designated beneficiary survives the
Recipient, such shares shall be delivered to the personal representative of the
Recipient’s estate.

(e)For purposes of this Agreement, the following terms shall have the meanings
indicated:

(i)“Non-Vested Shares” means any portion of the Restricted Stock subject to this
Agreement that has not become vested pursuant to this Section 2.

(ii)“Vested Shares” means any portion of the Restricted Stock subject to this
Agreement that is and has become vested pursuant to this Section 2.

3.Delivery of Restricted Stock. 

(a)One or more stock certificates evidencing the Restricted Stock shall be
issued in the name of the Recipient but shall be held and retained by or on
behalf of the Administrator until the date (the “Applicable Date”) on which the
shares (or a portion thereof) subject to this Restricted Stock award become
Vested Shares pursuant to Section 2 hereof, subject to the provisions of Section
4 hereof.  All such stock certificates shall bear the following legend, along
with such other legends that the Administrator shall deem necessary and
appropriate or which are otherwise required or indicated pursuant to any
applicable law: 

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO SUBSTANTIAL VESTING
AND OTHER RESTRICTIONS AS SET FORTH IN THE RESTRICTED STOCK AGREEMENT BETWEEN
THE ISSUER AND THE ORIGINAL HOLDER OF THE SHARES, A COPY OF WHICH MAY BE
OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER.  SUCH RESTRICTIONS ARE BINDING
ON TRANSFEREES OF THESE SHARES, AND INCLUDE VESTING CONDITIONS WHICH MAY RESULT
IN THE COMPLETE FORFEITURE OF THE SHARES.

(b)The Recipient shall deposit with the Company stock powers or other
instruments of transfer or assignment, duly endorsed in blank with signature(s)
guaranteed, corresponding to each certificate representing shares of Restricted
Stock until such shares become Vested Shares.  If the Recipient shall fail to
provide the Company with any such stock power or

2

--------------------------------------------------------------------------------

 

other instrument of transfer or assignment, the Recipient hereby irrevocably
appoints the Secretary of the Company as his attorney-in-fact, with full power
of appointment and substitution, to execute and deliver any such power or other
instrument which may be necessary to effectuate the transfer of the Restricted
Stock (or assignment of distributions thereon) on the books and records of the
Company.

(c)On or after each Applicable Date, upon written request to the Company by the
Recipient, the Company shall promptly cause a new certificate or certificates to
be issued for and with respect to all shares that become Vested Shares on that
Applicable Date, which certificate(s) shall be delivered to the Recipient as
soon as administratively practicable after the date of receipt by the Company of
the Recipient's written request.  The new certificate or certificates shall
continue to bear those legends and endorsements that the Company shall deem
necessary or appropriate (including those relating to restrictions on
transferability and/or obligations and restrictions under applicable securities
laws).

4.Acknowledgements of Recipient Regarding Forfeiture of Non-Vested Shares and
Company Clawback Policy.  By signing this Agreement where indicated below, the
Recipient hereby acknowledges and agrees as follows:

(a)If the Recipient’s continuous service with the Company and its subsidiaries
is terminated for any reason, any shares of Restricted Stock that are not Vested
Shares, and that do not become Vested Shares pursuant to Section 2 hereof as a
result of such termination, shall be forfeited immediately upon such termination
of continuous service and revert back to the Company without any payment to the
Recipient.  The Administrator shall have the power and authority to enforce on
behalf of the Company any rights of the Company under this Agreement in the
event of the Recipient’s forfeiture of Non-Vested Shares pursuant to this
Section 4.

(b)The Company’s Board of Directors (the “Board”) has adopted a Clawback Policy,
as may be amended from time to time (the “Clawback Policy”), which authorizes
the Company, when directed by the Board in its discretion, to seek to recover
from any current or former executive officer that has been determined by the
Board to have engaged in “Misconduct” any “Incentive-Based Compensation” (each
as defined in the Clawback Policy) awarded to such executive officer during the
time period specified in the Clawback Policy.  The Restricted Stock granted
hereby may constitute Incentive-Based Compensation that is subject to the
Clawback Policy.

5.Rights with Respect to Restricted Stock.

(a)Except as otherwise provided in this Agreement, the Recipient shall have,
with respect to all of the shares of Restricted Stock, whether Vested Shares or
Non-Vested Shares, all of the rights of a holder of shares of Common Stock of
the Company, including without limitation (i) the right to vote such Restricted
Stock, (ii) the right to receive dividends, if any, as may be declared on the
Restricted Stock from time to time, and (iii) the rights available to all
holders of shares of Common Stock of the Company upon any merger, consolidation,
reorganization, liquidation or dissolution, stock split‑up, stock dividend or
recapitalization undertaken by the Company; provided,  however, that all of such
rights shall be subject to the terms, provisions, conditions and restrictions
set forth in this Agreement (including without limitation conditions under which
all such rights shall be forfeited).   Any shares issued to the Recipient as a

3

--------------------------------------------------------------------------------

 

dividend with respect to shares of Restricted Stock shall have the same status
and bear the same legend as the shares of Restricted Stock and shall be held by
the Company, if the shares of Restricted Stock that such dividend is attributed
to is being so held, unless otherwise determined by the Administrator.  In
addition, notwithstanding any provision to the contrary herein, any cash
dividends declared with respect to shares of Restricted Stock subject to this
Agreement shall be (i) held in escrow by the Administrator until such time as
the shares of Restricted Stock that such cash dividends are attributed to shall
become Vested Shares, and in the event that such shares of Restricted Stock are
subsequently forfeited, the cash dividends attributable to such portion shall be
forfeited as well and (ii) paid on the date such shares vest in full, provided
that such payment shall be made in no event later than March 15 of the year
following the year in which such vesting date occurs.

(b)If at any time while this Agreement is in effect (or shares granted hereunder
shall be or remain unvested while Recipient’s continuous service continues and
has not yet terminated or ceased for any reason), there shall be any increase or
decrease in the number of issued and outstanding shares of Common Stock of the
Company through the declaration of a stock dividend or through any
recapitalization resulting in a stock split-up, combination or exchange of such
shares, then and in that event, the Administrator shall make any adjustments it
deems fair and appropriate, in view of such change, in the number of shares of
Restricted Stock then subject to this Agreement.  If any such adjustment shall
result in a fractional share, such fraction shall be disregarded.

(c)Notwithstanding any term or provision of this Agreement to the contrary, the
existence of this Agreement, or of any outstanding Restricted Stock awarded
hereunder, shall not affect in any manner the right, power or authority of the
Company to make, authorize or consummate: (i) any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business; (ii) any merger, consolidation or similar transaction
by or of the Company; (iii) any offer, issue or sale by the Company of any
capital stock of the Company, including any equity or debt securities, or
preferred or preference stock that would rank prior to or on parity with the
Restricted Stock and/or that would include, have or possess other rights,
benefits and/or preferences superior to those that the Restricted Stock
includes, has or possesses, or any warrants, options or rights with respect to
any of the foregoing; (iv) the dissolution or liquidation of the Company; (v)
any sale, transfer or assignment of all or any part of the stock, assets or
business of the Company; or (vi) any other corporate transaction, act or
proceeding (whether of a similar character or otherwise).

6.Transferability.   Unless otherwise determined by the Administrator, the
shares of Restricted Stock are not transferable unless and until they become
Vested Shares in accordance with this Agreement, otherwise than by will or under
the applicable laws of descent and distribution. The terms of this Agreement
shall be binding upon the executors, administrators, heirs, successors and
assigns of the Recipient.  Except as otherwise permitted pursuant to the first
sentence of this Section, any attempt to effect a Transfer of any shares of
Restricted Stock prior to the date on which the shares become Vested Shares
shall be void ab initio.  For purposes of this Agreement, “Transfer” shall mean
any sale, transfer, encumbrance, gift, donation, assignment, pledge,
hypothecation, or other disposition, whether similar or dissimilar to those
previously enumerated, whether voluntary or involuntary, and including, but not
limited to, any disposition by operation of law, by court order, by judicial
process, or by foreclosure, levy or attachment.

4

--------------------------------------------------------------------------------

 

7.Tax Matters; Section 83(b) Election.

(a)If the Recipient properly elects, within thirty (30) days of the Date of
Grant, to include in gross income for federal income tax purposes an amount
equal to the fair market value (as of the Date of Grant) of the Restricted Stock
pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended (the
“Code”), the Recipient shall make arrangements satisfactory to the Company to
pay to the Company any federal, state or local income taxes required to be
withheld with respect to the Restricted Stock.  If the Recipient shall fail to
make such tax payments as are required, the Company shall, to the extent
permitted by law, have the right to deduct from any payment of any kind
(including without limitation, the withholding of any Shares that otherwise
would be issued to the Recipient under this Agreement) otherwise due to the
Recipient any federal, state or local taxes of any kind required by law to be
withheld with respect to the Restricted Stock.

(b)If the Recipient does not properly make the election described in paragraph
(a) above, the Recipient shall, no later than the date or dates as of which the
restrictions referred to in this Agreement hereof shall lapse, pay to the
Company, or make arrangements satisfactory to the Administrator for payment of,
any federal, state or local taxes of any kind required by law to be withheld
with respect to the Restricted Stock (including without limitation the vesting
thereof).  If the Recipient fails to comply with the tax obligations set forth
in the immediately preceding sentence (the “Tax Obligations”), then the
Recipient hereby irrevocably authorizes and instructs a broker to be designated
by the Company in its sole discretion to sell for the account of the Recipient a
sufficient number of shares of the Restricted Stock (based upon prevailing
market prices at the time of such sale) necessary to satisfy the Recipient’s Tax
Obligations, to remit to the Company the proceeds of such sale in such amount
necessary to satisfy the Tax Obligations and to remit any balance resulting from
such sale to the Recipient.  The Company and any such broker shall be entitled
to use and to rely upon the stock powers and other instruments of transfer
provided pursuant to Section 3(b) above.  In addition, the Company shall, to the
extent permitted by law, have the right to deduct from any payment of any kind
otherwise due to Recipient any federal, state, or local taxes of any kind
required by law to be withheld with respect to the Restricted Stock.

(c)Tax consequences on the Recipient (including without limitation federal,
state, local and foreign income tax consequences) with respect to the Restricted
Stock (including without limitation the grant, vesting and/or forfeiture
thereof) are the sole responsibility of the Recipient.  The Recipient shall
consult with his or her own personal accountant(s) and/or tax advisor(s)
regarding these matters, the making of a Section 83(b) election, and the
Recipient’s filing, withholding and payment (or tax liability) obligations.

8.Amendment, Modification and Assignment.  This Agreement may only be modified
or amended in a writing signed by the parties hereto.  No promises, assurances,
commitments, agreements, undertakings or representations, whether oral, written,
electronic or otherwise, and whether express or implied, with respect to the
subject matter hereof, have been made by either party which are not set forth
expressly in this Agreement.

9.Complete Agreement.  This Agreement (together with those agreements and
documents expressly referred to herein, for the purposes referred to herein)
embody the complete and entire agreement and understanding between the parties
with respect to the subject matter hereof, and supersede any and all prior
promises, assurances, commitments, agreements, undertakings or

5

--------------------------------------------------------------------------------

 

representations, whether oral, written, electronic or otherwise, and whether
express or implied, which may relate to the subject matter hereof in any way.

10.Miscellaneous.

(a)No Right to (Continued) Employment or Service.  This Agreement and the grant
of Restricted Stock hereunder shall not confer, or be construed to confer, upon
the Recipient any right to employment or service, or continued employment or
service, with the Company or any subsidiary.

(b)No Limit on Other Compensation Arrangements.  Nothing contained in this
Agreement shall preclude the Company or any subsidiary from adopting or
continuing in effect other or additional compensation plans, agreements or
arrangements, and any such plans, agreements and arrangements may be either
generally applicable or applicable only in specific cases or to specific
persons.

(c)Severability.  If any term or provision of this Agreement is or becomes or is
deemed to be invalid, illegal or unenforceable in any jurisdiction or under any
applicable law, rule or regulation, then such provision shall be construed or
deemed amended to conform to applicable law (or if such provision cannot be so
construed or deemed amended without materially altering the purpose or intent of
this Agreement and the grant of Restricted Stock hereunder, such provision shall
be stricken as to such jurisdiction and the remainder of this Agreement and the
award hereunder shall remain in full force and effect).

(d)No Trust or Fund Created.  Neither this Agreement nor the grant of Restricted
Stock hereunder shall create or be construed to create a trust or separate fund
of any kind or a fiduciary relationship between the Company or any subsidiary
and the Recipient or any other person.  To the extent that the Recipient or any
other person acquires a right to receive payments from the Company or any
subsidiary pursuant to this Agreement, such right shall be no greater than the
right of any unsecured general creditor of the Company.

(e)Law Governing.  This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Florida (without
reference to the conflict of laws rules or principles thereof).

(f)Interpretation.  The Recipient accepts the Restricted Stock subject to all of
the terms, provisions and restrictions of this Agreement and the Plan.  The
undersigned Recipient hereby accepts as binding, conclusive and final all
decisions or interpretations of the Administrator upon any questions arising
under this Agreement. 

(g)Headings.  Section, paragraph and other headings and captions are provided
solely as a convenience to facilitate reference.  Such headings and captions
shall not be deemed in any way material or relevant to the construction, meaning
or interpretation of this Agreement or any term or provision hereof.

(h)Notices.  Any notice under this Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally or when deposited in
the United States mail, registered, postage prepaid, and addressed, in the case
of the Company, to the Company’s

6

--------------------------------------------------------------------------------

 

Secretary at Federated National Holding Company, 14050 N.W. 14th Street, Suite
180, Sunrise, Florida  33323, or if the Company should move its principal
office, to such principal office, and, in the case of the Recipient, to the
Recipient’s last permanent address as shown on the Company’s records, subject to
the right of either party to designate some other address at any time hereafter
in a notice satisfying the requirements of this Section.

(i)Non-Waiver of Breach.  The waiver by any party hereto of the other party's
prompt and complete performance, or breach or violation, of any term or
provision of this Agreement shall be effected solely in a writing signed by such
party, and shall not operate nor be construed as a waiver of any subsequent
breach or violation, and the waiver by any party hereto to exercise any right or
remedy which he or it may possess shall not operate nor be construed as the
waiver of such right or remedy by such party, or as a bar to the exercise of
such right or remedy by such party, upon the occurrence of any subsequent breach
or violation. 

(j)Counterparts.  This Agreement may be executed in two or more separate
counterparts, each of which shall be an original, and all of which together
shall constitute one and the same agreement.

(k)Internal Revenue Code Section 409A.  The Restricted Stock granted hereunder
is intended to be exempt from Section 409A of the Internal Revenue Code of 1986,
as amended, and the Treasury regulations and other official guidance promulgated
thereunder.

﻿

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
executed this Agreement as of the date first written above.

﻿

﻿

 

 

 

﻿

FEDERATED NATIONAL HOLDING

 

﻿

COMPANY

 

﻿

 

 

 

﻿

 

 

 

﻿

By:

 

 

﻿

Name:  

 

 

﻿

Title:

 

 

﻿

 

 

 

﻿

Date:

 

 

﻿

﻿

 

 

 

Agreed and Accepted:

 

﻿

 

 

 

RECIPIENT:

 

﻿

 

 

 

By:  

 

 

 

﻿

[RECIPIENT NAME]

 

﻿

 

 

 

﻿

Date:  

 

 

﻿

 

 

 

﻿

7

--------------------------------------------------------------------------------