EXHIBIT 10.2
INVESTORS TITLE COMPANY
2001 STOCK OPTION AND RESTRICTED STOCK PLAN
STOCK APPRECIATION RIGHTS AGREEMENT
THIS STOCK APPRECIATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of May 17, 2006, by and between Investors Title Company, a North
Carolina corporation (the "Company"), and NAME OF DIRECTOR, a director of the
Company (the "Grantee"):
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company recognizes the value to it of the services of the
Grantee and desires to provide the Grantee with an incentive to remain as a
director of the Company and an opportunity to acquire common stock of the
Company, so that the Grantee may acquire or increase a proprietary interest in
the Company's success, and
WHEREAS, the Company desires to award the Grantee stock appreciation
rights ("SARs") under Article III of the Company's 2001 Stock Option and
Restricted Stock Plan, as amended and restated effective May 17, 2006 (the
"Plan"), and the Grantee desires to accept such SARs in accordance with the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, and intending to be legally bound hereby, the
parties agree as follows:
1. Grant of SARs. Subject to the terms and conditions of this Agreement
and the Plan, the Company hereby awards to the Grantee NUMBER (XX) SARs at an
exercise price of _________________ Dollars ($XXXX) per SAR (the "Exercise
Price"). Each SAR gives the Grantee the right upon exercise of the SAR in
accordance with the terms and conditions of this Agreement and the Plan, to
receive an amount equal to the difference between (i) the fair market value (as
defined in Section 2.2(b) of the Plan) of one (1) share of the Company common
stock as of the exercise date, and (ii) the Exercise Price. Upon exercise, such
amount shall be payable to the Grantee in shares of the Company common stock
(the "Shares") in a single payment as soon as administratively practicable (but
in no event later than [THIRTY (30)] days) following the exercise date. The
number of Shares to be delivered to the Grantee shall equal (x) the amount
payable to the Grantee upon exercise of the SARs divided by (y) the fair market
value (as defined in Section 2.2(b) of the Plan) of one share of the Company
common stock as of the exercise date, with cash payable for any fractional
share. The grant of these SARs has been duly authorized by the Committee that
administers the Plan, as established by the Board of Directors of the Company
pursuant to Section 1.3 of the Plan (the "Committee").
-1-
2. Vesting and Exercisability of SARs. The SARs shall vest in four (4)
quarterly installments if the Grantee continues to provide services as a
director of the Company through each of the vesting dates as follows:
Number of SARs
Vesting Date that become Exercisable
- ------------------------------- ----------------------------------------------
June 30, ___ one-fourth (1/4) of Shares covered by the SARs
September 30, ____ one-fourth (1/4) of Shares covered by the SARs
December 31, ____ one-fourth (1/4) of Shares covered by the SARs
March 31, ____ one-fourth (1/4) of Shares covered by the SARs
Notwithstanding the foregoing, all SARs granted hereunder shall fully vest in
the event of the Grantee's death.
The SARs granted hereunder shall become exercisable (1) at any time on
or after the first anniversary of the date of this Agreement or, (2) if earlier,
upon termination of the Grantee's services as a director of the Company but only
to the extent vested at the time of such termination, and shall remain
exercisable until the expiration of the SARs. Unless sooner terminated as
provided in the Plan or in paragraph 5 hereof, all vested SARs shall terminate,
and all rights of the Grantee hereunder shall expire, at the close of business
on the seventh anniversary of the date of this Agreement.
3. Transfer of SARs. The SARs may not be sold, pledged, assigned or
transferred in any manner other than by will or by the laws of descent or
distribution, unless otherwise agreed by the Committee.
4. Adjustments. If the shares of common stock of the Company are
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities through merger, consolidation, combination, exchange of
shares, other reorganization, recapitalization, reclassification, stock
dividend, stock split or reverse stock split in which the Company is the
surviving entity, the aggregate number of SARs and the Exercise Price shall be
appropriately and proportionately adjusted in the manner provided in the Plan.
5. Termination of SARs. The SARs hereby granted shall terminate and be
of no force or effect upon the happening of the first to occur of the following
events:
(a) expiration of three (3) months after the date of
termination of the Grantee's service as a director of the Company for
any reason other than the death of the Grantee;
(b) expiration of twelve (12) months after the death of the
Grantee while serving as a director of the Company;
-2-
(c) occurrence of any event described in paragraph 10 hereof
that causes a termination of the SARs; or
(d) the close of business on the seventh anniversary of the
date of this Agreement.
Any SARs that may be exercised for a period following termination of
the Grantee's service as a director may be exercised only to the extent such
SARs were vested immediately before such termination and in no event after the
SARs would expire by their terms without regard to such termination.
6. Method of Exercise. The SARs shall be exercised by delivery to the
Company at its principal place of business of a written notice, at least three
(3) business days prior to the proposed date of exercise, which notice shall:
(a) state the election to exercise the SARs, the number of
SARs which are being exercised, and the name, address, and social
security number of the person in whose name the stock certificate or
certificates for the Shares to be issued in connection with the
exercise of the SARs are to be registered;
(b) contain any such representations and agreements as to
Grantee's investment intent with respect to such Shares as shall be
reasonably required by the Committee pursuant to paragraph 8 hereof;
and
(c) be signed by the person entitled to exercise the SARs, and
if the SARs are being exercised by any person or persons other than the
Grantee, be accompanied by proof, satisfactory to the Committee, of the
right of such person or persons to exercise the SARs.
After receipt of such notice in a form satisfactory to the Committee,
the Company shall deliver to the Grantee a certificate or certificates
representing the Shares acquired hereunder, provided, that if any law or
regulation requires the Company to take any action with respect to the Shares
specified in such notice before the issuance thereof, the date of delivery of
such Shares shall be extended for the period necessary to take such action.
7. Rights of a Shareholder. The Grantee shall not be deemed for any
purpose to be a shareholder of the Company with respect to any Shares covered by
the SARs unless the SARs shall have been exercised in the manner provided
herein. No adjustment will be made for dividends or other rights where the
record date is prior to the date of exercise. Upon the exercise of the SARs as
provided herein and the issuance of the certificate or certificates evidencing
the Shares covered thereby, the Grantee shall have all the rights of a
shareholder of the Company, including the right to receive all dividends or
other distributions paid or made with respect to such Shares.
8. Compliance with Securities Laws. The Grantee recognizes that any
registration of the Shares issuable pursuant to the SARs under applicable
federal and state securities laws, or actions to qualify for applicable
exemptions from such registrations, shall be at the option of the Company. The
Grantee acknowledges that, in the event that no such registrations are
undertaken and the Company relies on exemptions from such registrations, the
Shares shall be issued only if the Grantee qualifies to receive such Shares in
accordance with the exemptions from registration on which the Company relies and
that, in connection with any issuance of certificates evidencing such shares,
the Board of Directors may require appropriate representations from the Grantee
and take such other action as the Board of Directors may deem necessary,
including but not limited to placing restrictive legends on such certificates
and placing stop transfer instructions in the Company's stock transfer records,
or delivering such instructions to the Company's transfer agent, in order to
assure compliance with any such exemptions. Notwithstanding any other provision
of the Plan or this Agreement (i) no Shares will be issued upon any exercise of
the SARs unless and until such Shares have been registered under all applicable
federal and state securities laws or unless, in the opinion of counsel
satisfactory to the Company, all actions necessary to qualify for exemptions
from such registrations shall have been taken and (ii) the Company shall have no
obligation to undertake such registrations or such actions necessary to qualify
for exemptions from registrations and shall have no liability whatsoever for not
doing so.
-3-
9. Rule 144. The Grantee acknowledges that, notwithstanding any
registration of the SARs and the Shares issuable upon exercise of the SARs under
the Securities Act of 1933 or under the securities laws of any state, if, at the
time of exercise of the SARs, he is deemed to be an "affiliate" of the Company
as defined in Rule 144 of the Securities and Exchange Commission, any Shares
acquired hereunder will nevertheless be subject to sale only in compliance with
Rule 144 (but without any holding period) or pursuant to an effective
registration statement under the Securities Act of 1933, and that the Company
shall take such action as it deems necessary or appropriate to assure such
compliance, including, to the extent it deems appropriate, placing restrictive
legends on certificates evidencing such Shares and delivering stop transfer
instructions to the Company's transfer agent.
10. Reorganizations. To the extent permitted under Section 409A of the
Internal Revenue Code of 1986, as amended, if the Company shall be a party to
any merger or consolidation in which it is not the surviving entity or pursuant
to which the shareholders of the Company exchange their common stock, or if the
Company shall dissolve or liquidate or sell all or substantially all of its
assets, the SARs granted hereunder shall terminate on the effective date of such
merger, consolidation, dissolution, liquidation or sale; provided, however, that
prior to such effective date, the Committee may, in its discretion, cause the
SARs to become immediately exercisable, and may, to the extent the SARs are
terminated as provided in this paragraph 10, authorize a payment to the Grantee
that approximates the economic benefit that the Grantee would realize if the
SARs were exercised immediately before such effective date, or authorize a
payment in such other amount as it deems appropriate to compensate the Grantee
for the termination of the unexercised portion of the SARs, or arrange for the
granting of substitute SARs to the Grantee.
This Agreement shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure, or to merge or consolidate, or to dissolve,
liquidate, sell or transfer all or any part of its business or assets.
-4-
11. Tax Matters. The Grantee acknowledges that, upon exercise of the
SARs, the Grantee will recognize taxable income generally in an amount equal to
the excess of the fair market value of the acquired Shares (plus cash for any
fractional shares), and the Company may have certain withholding obligations for
income and other taxes. It shall be a condition to the Grantee's receipt of a
stock certificate covering the Shares acquired upon exercise of the SARs that
the Grantee pay to the Company such amounts as it is required to withhold or,
with the consent of the Company, that the Grantee otherwise provide for the
discharge of the Company's withholding obligation. If any such payment is not
made by the Grantee, the Company may deduct the amounts required to be withheld
from payments of any kind to which the Grantee would otherwise be entitled from
the Company.
12. Construction. This Agreement shall be construed so as to be
consistent with the Plan and the provisions of the Plan shall be deemed to be
controlling in the event that any provision hereof should be inconsistent
therewith. The Grantee hereby acknowledges receipt of a copy of the Plan from
the Company and agrees to be bound by all of the terms and provisions of the
Plan.
Whenever the word "Grantee" is used in any provision of this Agreement
under circumstances where the provision should logically be construed to apply
to (i) the estate, personal representative, or beneficiary to whom the SARs may
be transferred by will or by the laws of descent and distribution or (ii) the
guardian or legal representative of the Grantee acting pursuant to a valid power
of attorney or the decree of a court of competent jurisdiction, then the term
"Grantee" shall be construed to include such estate, personal representative,
beneficiary, guardian or legal representative.
13. Severability. The provisions of this Agreement shall be severable
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereto.
14. Successor and Assigns. The terms of this Agreement shall be binding
upon and shall enure to the benefit of any successors or assigns of the Company
and of the Grantee.
15. Notices. Notices under this Agreement shall be in writing and shall
be deemed to have been duly given (i) when personally delivered, (ii) when
forwarded by Federal Express, Airborne, or another private carrier which
maintains records showing delivery information, (iii) when sent via facsimile
but only if a written facsimile acknowledgment of receipt is received by the
sending party, or (iv) when placed in the United States Mail and forwarded by
registered or certified mail, return receipt requested, postage prepaid,
addressed to the party to whom such notice is being given or such other address
as furnished to the Company from time to time for this purpose.
16. Entire Agreement; Modification. This Agreement and the Plan
constitute the entire agreement and understanding of the parties hereto with
respect to the SARs granted herein and supersedes any and all prior and
contemporaneous negotiations, understandings and agreements with regard to the
SARs and the matters set forth herein, whether oral or written. No
representation, inducement, agreement, promise or understanding altering,
modifying, taking from or adding to the terms and conditions hereof shall have
any force or effect unless the same is in writing and validly executed by the
parties hereto.
-5-
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina.
IN WITNESS WHEREOF, the Grantee has executed this Agreement and the
Company has caused this Agreement to be executed by its duly authorized officer,
effective as of the day and year first above written.
INVESTORS TITLE COMPANY
By: ____________________________ ________________________________
[Grantee]
Title: ____________________________
-6-