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EXHIBIT 10.1
COMMUNITY FINANCIAL SHARES, INC.
LONG-TERM RESTRICTED STOCK UNIT AGREEMENT
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This RESTRICTED STOCK UNIT AGREEMENT (this "Agreement"), dated as of February
17, 2010 (the "Grant Date"), is delivered by Community Financial Shares, Inc.
(the "Company") to Xxxxx Xxxxx (the "Participant").
RECITALS
WHEREAS, on May 15, 2009, the Company completed the sale of $6,970,000 in
preferred shares ("TARP Funds") to the U.S. Department of the Treasury (the
"Treasury") through the Capital Purchase Program ("CPP") under the Troubled
Asset Relief Program ("TARP") established under the Emergency Economic
Stabilization Act of 2008 ("EESA") and later amended under the American Recovery
and Reinvestment Act of 2009 ("ARRA"); and
WHEREAS, executive compensation and corporate governance standards under TARP
are referred to herein as the "TARP Regulations"); and
WHEREAS, pursuant to the TARP Regulations, the Company is prohibited from paying
or accruing any bonus, retention award, or incentive compensation while the
Company is receiving assistance under TARP to certain employees of the Company,
including the Participant, with the exception of certain long-term restricted
stock or restricted stock unit awards designed to comply with the TARP
Regulations; and
WHEREAS, the Company has decided to xxxxx Xxxx-Term Restricted Stock Units to
the Participant as an inducement for the Participant to continue in the employ
of the Company and promote the best interests of the Company and its
shareholders; and
WHEREAS, the value of the Restricted Stock Unit award is not greater than one
third (1/3) of the Participant's total annual compensation, as determined
pursuant to the TARP Regulations.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF RESTRICTED STOCK UNITS. Subject to Section 3 of this Agreement, the
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Company hereby awards to the Participant, as of the Grant Date, Restricted Stock
Units representing 5,875 shares of Company Stock (the "Grant"). Each Restricted
Stock Unit represents the right to receive one share, or the cash-equivalent of
one share, of Company common stock on the date determined in accordance with
this Agreement. The settlement of all Restricted Stock Units which vest under
the Grant shall be made, solely at the discretion of the Company, in shares of
Company common stock or in cash in an amount equivalent to the fair market value
of the shares (as determined by the Company) at the time of settlement. In no
event, however, shall any fractional shares be issued. Accordingly, the total
number of shares of Company Stock to be issued pursuant to the Grant shall, to
the extent necessary, be rounded down to the next whole share in order to avoid
the issuance of a fractional share.
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2. TARP REGULATIONS. This Agreement is intended to comply with the TARP
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Regulations. Notwithstanding anything in this Agreement to the contrary, this
Agreement and all payments, grants, awards or other forms of compensation
provided for in this Agreement (collectively, the "Payments") shall be subject
to all applicable laws, regulations, restrictions, or governmental guidance that
become applicable in connection with the Company's participation in TARP under
the EESA and the ARRA, or any similar program of the United States government
and the Company reserves the right to modify the Payments and this Agreement as
necessary to conform to any restrictions imposed under those laws, regulations,
restrictions, or governmental guidance, including the TARP Regulations.
3. VESTING.
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(a) The Restricted Stock Units shall vest in full on the first to occur of the
following dates; provided the Participant continues to be employed by, or
provide service to, the Company through the applicable date: (i) the second
anniversary of the Grant Date; (ii) the Participant's death; (iii) the
Participant's Disability; (iv) the effective date of an Change in Control Event;
or (v) the date determined in accordance with the provisions of Section 3(b)
below (the applicable date is referred to as the "Vesting Date").
Notwithstanding the foregoing, provided that an event specified in clauses
(ii)-(v) of the preceding sentence has not occurred, (i) the number of
Restricted Stock Units awarded to the Participant shall be adjusted as of
December 31, 2010, to reflect the forfeiture of such number of Restricted Stock
Units (if any) that may be required pursuant to the Participant's 2010 Incentive
Plan, which is incorporated by reference herein and (ii) such adjusted number of
Restricted Stock Units shall thereafter remain subject to the vesting
requirements of this Section 3.
(b) If a Change in Control Event occurs while the Participant is employed by, or
providing service to, the Company, the Restricted Stock Units subject to this
Grant at the time of the Change in Control Event will vest immediately prior to
the closing of the Change in Control Event. The shares subject to vested
Restricted Stock Units shall be converted into the right to receive the same
consideration per share of Company common stock payable to the other
shareholders of the Company upon the consummation of the Change in Control Event
and such consideration shall be distributed to the Participant within ten (10)
business days following the effective date of the Change in Control Event, or on
such later date necessary to comply with the TARP Regulations.
(c) Except as otherwise provide for herein, if the Participant ceases to be
employed by, or provide service to, the Company for any reason prior to vesting
in the Restricted Stock Units subject to this Grant, then the Grant will be
immediately cancelled. The Participant shall thereupon cease to have any right
or entitlement to receive any shares, or the cash-equivalent of any shares, with
respect to those cancelled Restricted Stock Units.
(d) For purposes of this Section 3, the following definitions shall apply:
(i) "Disability" shall mean the inability of the Participant to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment expected to result in death or to be of continuous
duration of twelve (12) months or more. The determination of whether the
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Participant has become Disabled shall be made by the Committee based upon such
medical or other evidence as it may deem necessary and appropriate, and such
determination shall be conclusive and binding upon the Participant.
(ii) "Change in Control Event" shall mean the effective date of a
change in control event, within the meaning assigned to such term in Treas. Reg.
1.280G-1, Q&A-27 through Q&A-29.
4. ISSUANCE SCHEDULE. Shares, or the cash-equivalent of shares, with respect to
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the Restricted Stock Units in which the Participant vests in accordance with
Section 3 will become issuable, or payable, on the later of (a) the Vesting Date
and (b) the Repayment Date, determined in accordance with the TARP Regulations,
pursuant to which:
(i) Shares with respect to 25% of the vested Restricted Stock Units shall become
issuable on the date as of which 25% of the TARP Funds have been repaid to
Treasury;
(ii) Shares with respect to an additional 25% of the vested Restricted Stock
Units shall become issuable on the date as of which 50% of the TARP Funds have
been repaid to Treasury;
(iii) Shares with respect to an additional 25% of the vested Restricted Stock
Units shall become issuable on the date as of which 75% of the TARP Funds have
been repaid to Treasury; and
(iv) Shares with respect to the remaining vested Restricted Stock Units shall
become issuable on the date as of which 100% of the TARP Funds have been repaid
to Treasury.
Each date specified in (i) through (iv) as of which the specified percentage of
TARP Funds have been repaid shall be referred to herein as a "Repayment Date."
The Participant need not be employed by the Company on a Repayment Date to
receive shares, or the cash-equivalent of shares, with respect to vested
Restricted Stock Units. The actual issuance of the shares of Company common
stock, or the payment in lieu of shares, shall be effected on the applicable
Vesting Date or Repayment Date, or as soon as administratively practicable
thereafter.
5. LIMITED TRANSFERABILITY. Prior to actual receipt of the shares, or payment
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for the shares, with respect to the Restricted Stock Units that vest and become
issuable or payable hereunder, the Participant may not transfer any interest in
the Grant or the underlying shares or payment. Any rights in the Restricted
Stock Units which vest hereunder but which otherwise remain unissued at the time
of the Participant's death may be transferred pursuant to the provisions of the
Participant's will or the laws of inheritance or to the Participant's designated
beneficiary or beneficiaries of this Grant.
6. SHAREHOLDER RIGHTS AND DIVIDEND EQUIVALENTS
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(a) The holder of this Grant shall not have any shareholder rights, including
voting or dividend rights, with respect to the shares subject to the Grant until
the he becomes the record holder of those shares upon their actual issuance
following the Company's collection of the applicable Withholding Taxes.
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(b) Notwithstanding the foregoing, if any dividend or other distribution,
whether regular or extraordinary and whether payable in cash, securities or
other property (other than shares of Company common stock), is declared and paid
on the outstanding Company common stock prior to the issuance of shares with
respect to the Restricted Stock Units subject to this Grant (i.e., those shares
are not otherwise issued and outstanding for purposes of entitlement to the
dividend or distribution), then a special book account shall be established for
the Participant and credited with a phantom dividend equal to the actual
dividend or distribution which would have been paid on the Restricted Stock
Units subject to this Grant had shares been issued with respect to such
Restricted Stock Units and been outstanding and entitled to that dividend or
distribution. The phantom dividend equivalents so credited shall vest at the
same time as the Restricted Stock Units to which they relate and shall be
distributed to the Participant (in the same form the actual dividend or
distribution was paid to the holders of the Company Stock entitled to that
dividend or distribution or in such other form as the Company deems appropriate)
concurrently with the issuance of shares with respect to such Restricted Stock
Units on the applicable Vesting Date or Repayment Date.
7. COLLECTION OF WITHHOLDING TAXES. If any shares or cash amount becomes
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distributable to the Participant in connection with the Restricted Stock Units,
then the federal, state and local income taxes required to be withheld with
respect to those amounts shall be collected from the Participant pursuant to
such procedures as the Company deems appropriate under the circumstances,
including (without limitation) the Participant's delivery of his separate check
payable to the Company in the amount of such withholding amounts.
8. COMPLIANCE WITH LAWS AND REGULATIONS. The issuance of shares of Company Stock
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pursuant to the Grant shall be subject to compliance by the Company and the
Participant with all applicable requirements of law relating thereto and with
all applicable regulations of any stock exchange on which the Company Stock may
be listed for trading at the time of such issuance.
9. SECTION 409A OF THE CODE. It is the intention of the parties that the
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provisions of this Agreement comply with the requirements of the short-term
deferral exception of Section 409A of the Code and Treasury Regulations Section
1.409A-1(b)(4). Accordingly, to the extent there is any ambiguity as to whether
one or more provisions of this Agreement would otherwise contravene the
requirements or limitations of Code Section 409A applicable to such short-term
deferral exception, then those provisions shall be interpreted and applied in a
manner that does not result in a violation of the requirements or limitations of
Code Section 409A and the Treasury Regulations thereunder that apply to such
exception.
10. NOTICES. Any notice required to be given or delivered to the Company under
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the terms of this Agreement shall be in writing and addressed to the Company at
its principal corporate offices. Any notice required to be given or delivered to
the Participant shall be in writing and addressed to the Participant at the
address indicated below the Participant's signature line on this Agreement. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.
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11. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided in this
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Agreement, the provisions of this Agreement shall inure to the benefit of, and
be binding upon, the Company and its successors and assigns and the Participant,
the Participant's assigns, the legal representatives, heirs and legatees of the
Participant's estate and any beneficiaries of the Grant designated by the
Participant.
12. CONSTRUCTION. This Agreement and the Grant evidenced hereby are made and
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granted pursuant to the Plan and are in all respects limited by and subject to
the terms of the Plan. All decisions of the Plan Administrator with respect to
any question or issue arising under this Agreement shall be conclusive and
binding on all persons having an interest in the Grant.
13. GOVERNING LAW. The interpretation, performance and enforcement of this
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Agreement shall be governed by the laws of the State of Illinois without resort
to that State's conflict-of-laws rules.
14. EMPLOYMENT AT WILL. Nothing in this Agreement or in the Plan shall confer
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upon the Participant any right to continue to be employed by, or provide service
to, the Company for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Company (or any parent or
subsidiary employing or retaining the Participant) or of the Participant, which
rights are hereby expressly reserved by each, to terminate the Participant's
employment or service with the Company at any time for any reason, with or
without Cause.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first indicated above.
COMMUNITY FINANCIAL SHARES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Title: Chairman
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PARTICIPANT
Signature: /s/ Xxxxx X. Xxxxx
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Address:
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