EX-10.17



 





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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