PERFORMANCE SHARE AWARD AGREEMENT
Exhibit 10.1
HORIZON BANCORP
2013 OMNIBUS EQUITY INCENTIVE PLAN
THIS AGREEMENT (the “Agreement”), made and executed as of the ____ day of ___________, _____, between Horizon Bancorp, an Indiana corporation (the “Company”), and ______________ an officer or employee of the Company or one of its Affiliates (the “Participant”).
WITNESSETH:
WHEREAS, the Company has adopted the Horizon Bancorp 2013 Omnibus Equity Incentive Plan (the “Plan”) to further the growth and financial success of the Company and its Affiliates by aligning the interests of Participants, through the ownership of Shares and through other incentives, with the interests of the Company’s shareholders; to provide Participants with an incentive for excellence in individual performance; to promote teamwork among Participants; to provide flexibility to the Company in its ability to motivate, attract and retain the services of Participants who make significant contributions to the Company’s success; and to allow Participants to share in the success of the Company; and
WHEREAS, it is the view of the Company that this goal can be achieved by granting Performance Shares to eligible employees; and
WHEREAS, the Participant has been designated by the Committee as an individual to whom Performance Shares should be granted as determined from the duties performed, the initiative and industry of the Participant, and his or her potential contribution to the future development, growth and prosperity of the Company;
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Participant agree as follows:
1. Award of Performance Shares. The Company hereby awards to the Participant, effective as of the date the Committee formally approves the award by resolution, ___________________(x,xxx) Performance Shares, subject to the terms and conditions of this Agreement and the provisions of the Plan. All provisions of the Plan, including defined terms, are incorporated herein and expressly made a part of this Agreement by reference. The Participant hereby acknowledges that he or she has received a copy of the Plan.
2. Performance Periods. The Performance Period to which the award of Performance Shares relates is the three-year period beginning on January 1, 20__ and ending on December 31, 20__.
3. Performance Goals. The Performance Goals for the Performance Period are specified in Schedule A based on a comparison of the Company’s average performance over the Performance Period (i.e., the summation of performance for calendar years one, two and three divided by three) for (a) return on common equity (“ROCE”), (b) compounded annual growth rate of total assets (“CAGR”), and (c) return on average assets (“ROAA”) relative to the average performance for publicly-traded banks with total assets between $1 billion and $5 billion on the SNL Bank Index (the “SNL Index”) for ROCE, CAGR and ROAA over the Performance Period. Only banks which have reported year-end results by March 1st will be considered for comparison purposes. In the event SNL Financial LC ceases to publish the SNL Index, the Committee will engage an independent compensation consultant to assist the Committee in selecting a new bank index or bank peer group for purposes of determining if a Performance Goal has been met.
4. Earning and Vesting of Performance Shares. The Performance Shares will become earned and vested for the Performance Period (a) to the extent the Performance Goals are satisfied in accordance with Schedule A, and (b) only if the employment‑based vesting requirements in Section 5 below have been satisfied (or waived in accordance with Section 6). If the Performance Goals are satisfied, the percentage of the Performance Shares that will be earned, vested and payable under Section 7 of this Agreement shall be determined through linear interpolation as set forth in Schedule B. If the Performance Goals are not satisfied, those Performance Shares eligible to be earned and vested during such Performance Period will be forfeited effective as of the last day of the Performance Period.
5. Employment‑Based Vesting Requirements. Except as otherwise provided in Section 6 below, the Participant satisfies the employment‑based vesting requirements only if he or she does not incur a Termination of Service prior to the last day of the Performance Period; provided, however, if the Participant incurs a Termination of Service due to death or Permanent and Total Disability prior to the last day of the Performance Period, the employment‑based vesting requirements will be treated as satisfied in a pro rata manner based on the number of days in the Performance Period in which the Participant was an employee prior to Termination of Service.
6. Change in Control or Retirement. Notwithstanding any other provision of this Agreement, the employment‑based vesting requirements of Section 5 shall be deemed satisfied and the Performance Shares shall therefore be vested upon the Participant’s Retirement on or before the last day of the Performance Period or upon a Change in Control of the Company as provided in Section 11.1 of the Plan. In addition, upon a Change in Control prior to the end of a Performance Period, the Performance Period shall be deemed to end as of the last day of the calendar quarter preceding the Change in Control and the Performance Goals shall be applied based on the abbreviated Performance Period.
7. Form and Timing of Payment of Performance Shares. Payment of earned and vested Performance Shares will be made in either March or April of the calendar year after the end of the applicable Performance Period. The Committee, in its sole discretion, may pay earned and vested Performance Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned and vested Performance Shares, determined as of the last day of the Performance Period) or a combination thereof.
8. Pass-Through of Dividends. Prior to the payment of earned and vested Performance Shares, the Participant shall be entitled to receive those cash dividends which would have been paid with respect to a number of Performance Shares established by the Committee as if those Performance Shares had been actual Shares.
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9. Participant’s Representations. The Participant represents to the Company that:
(a) The terms and arrangements relating to the grant of Performance Shares and the offer thereof have been arrived at or made through direct communication with the Company or a person acting in its behalf and the Participant;
(b) The Participant has received a balance sheet and income statement of the Company and as an employee of the Company or one of its Affiliates:
(i) is thoroughly familiar with the Company’s business affairs and financial condition; and
(ii) has been provided with or has access to such information (and has such knowledge and experience in financial and business matters that the Participant is capable of utilizing such information) as is necessary to evaluate the risks, and make an informed investment decision with respect to, the grant of Performance Shares.
10. Nontransferability. Performance Shares cannot be (a) sold, transferred, assigned, margined, encumbered, bequeathed, gifted, alienated, hypothecated, pledged or otherwise disposed of, whether by operation of law, whether voluntarily or involuntarily or otherwise, or (b) subject to execution, attachment or similar process. Any attempted or purported transfer of Performance Shares in contravention of this Section or the Plan shall be null and void and of no force or effect whatsoever.
11. Issuance of Shares. Within a reasonable period of time following the end of the Period of Restriction, the Company shall issue to the Participant or his beneficiary the number of shares of Performance Shares specified in Section 1 of this Agreement, less any withholding required by Section 10 of this Agreement.
12. Restrictive Legend. In the event the Participant is an “affiliate” of the Company (as defined by Rule 144 promulgated under the Securities Act of 1933, as amended), the Company may require that the shares to be issued to such Participant contain a legend in substantially the following form:
“THE HOLDER OF THE SHARES EVIDENCED BY THIS CERTIFICATE IS AN “AFFILIATE” OF THE COMPANY (AS DEFINED BY RULE 144 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED), AND THEREFORE, THE SHARES ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS.”
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The Company shall issue such additional certificates as may be required to give effect to Section 17 of this Agreement.
Notwithstanding the foregoing provisions of this Section, the Company shall not be required to deliver any certificates for shares prior to: (a) the end of the Period of Restriction; (b) completing any registration or other qualification of the Shares, which the Company deems necessary or advisable under any federal or state law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body; and (c) obtaining any approval or other clearance from any federal or state governmental agency or body, which the Company determines to be necessary or advisable. The Company has no obligation to obtain the fulfillment of the conditions specified in the preceding sentence. As a further condition to the issuance of certificates for shares, the Company may require the making of any representation or warranty which the Company deems necessary or advisable under any applicable law or regulation.
13. Income and Employment Tax Withholding. The Participant shall be solely responsible for paying to the Company all required federal, state, city and local income and employment taxes which arise on the vesting of the Performance Shares. The Committee, in its sole discretion and subject to such rules as it may adopt, shall require the Participant to satisfy any withholding tax obligation by having the Company retain shares of Performance Shares which have a Fair Market Value, determined as of the date of payment for such Performance Shares to the Participant, equal to the amount of the minimum withholding tax to be satisfied by that retention.
14. Mitigation of Excise Tax. The Participant acknowledges that the Performance Shares issued hereunder is subject to reduction by the Committee for the reasons specified in Section 14.9 of the Plan.
15. Indemnity. The Participant hereby agrees to indemnify and hold harmless the Company and its Affiliates (and their respective directors, officers and employees), and the Committee, from and against any and all losses, claims, damages, liabilities and expenses based upon or arising out of the incorrectness or alleged incorrectness of any representation made by Participant to the Company or any failure on the part of the Participant to perform any agreements contained herein. The Participant hereby further agrees to release and hold harmless the Company and its Affiliates (and their respective directors, officers and employees) from and against any tax liability, including without limitation, interest and penalties, incurred by the Participant in connection with the Participant’s participation in the Plan.
16. Financial Information. The Participant understands he or she is able to access the Company’s most recent quarterly balance sheet and quarterly income statement by visiting the following internet address: xxxx://xxx.xxx.xxx/Xxxxxxxxxx/xxxx.xxxx?xxxx000000.
17. Changes in Shares. In the event of any change in the Shares, as described in Section 3.6 of the Plan, the Committee shall make appropriate adjustment or substitution in the shares of Performance Shares, all as provided in the Plan. The Committee’s determination in this respect shall be final and binding upon all parties.
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18. Severability. In case any one or more of the provisions (or any portion thereof) contained herein will, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal or unenforceable provision or provisions (or portion thereof) had never been contained herein. If any provision of this Agreement shall be determined by a court of competent jurisdiction to be unenforceable because of the provision’s scope, duration or other factor, then such provision shall be considered divisible and the court making such determination shall have the power to reduce or limit (but not increase or make greater) such scope, duration or other factor or to reform (but not increase or make greater) such provision to make it enforceable to the maximum extent permitted by law, and such provision shall then be enforceable against the appropriate party hereto in its reformed, reduced or limited form; provided, however, that a provision shall be enforceable in its reformed, reduced or limited form only in the particular jurisdiction in which a court of competent jurisdiction makes such determination.
19. Effect of Headings. The descriptive headings of the Sections and, where applicable, subsections, of this Agreement are inserted for convenience and identification only and do not constitute a part of this Agreement for purposes of interpretation.
20. Controlling Laws. Except to the extent superseded by the laws of the United States, the laws of the State of Indiana, without reference to the choice of law principles thereof, shall be controlling in all matters relating to this Agreement.
21. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which collectively shall constitute one and the same instrument.
22. Compliance with Section 409A. The parties acknowledge and agree that, to the extent applicable, this Agreement shall be interpreted in accordance with, and the parties agree to use their best efforts to achieve timely compliance with or exemption from Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the Treasury Regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the date the Performance Shares are awarded. Notwithstanding any provision of this Agreement to the contrary, in the event that the Company determines that any compensation or benefits payable or provided under this Agreement may be subject to Section 409A of the Code, the Company may adopt such limited amendments to this Agreement and appropriate policies and procedures, including amendments and policies with retroactive effect, that the Company reasonably determines are necessary or appropriate to (i) exempt the compensation and benefits payable under this Agreement from Section 409A of the Code and/or preserve the intended tax treatment of the compensation and benefits provided with respect to this Agreement or (ii) comply with the requirements of Section 409A of the Code. Although the Company intends to take such actions so as to allow the Performance Units award under this Agreement to avoid adverse tax treatment pursuant to Section 409A of the Code and otherwise, the Company makes no representation to that effect and expressly disavows any covenant to maintain favorable or avoid unfavorable tax treatment. The Company shall be unconstrained in its corporate activities without regard to the potential negative tax impact on the Participant. Notwithstanding any other provision of this Agreement, to the extent the delivery of cash or the Shares represented by the Performance Shares is treated as non‑qualified deferred compensation subject to Section 409A of the Code, then (a) no delivery of such cash or the Shares shall be made upon a Participant’s termination of employment unless such termination of employment constitutes a “separation from service” within the meaning of Section 1.409A-1(h) of the Treasury Regulations and (b) if the Participant is deemed at the time of termination of employment to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, then to the extent delayed delivery of the cash or the shares to which the Participant is entitled under this Agreement, and which is deliverable to the Participant due to termination of employment, is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such delivery of cash or the Shares shall not be made to the Participant prior to the earlier of (x) the expiration of the six-month period measured from the date of the Participant’s “separation from service” (as such term is defined in Section 1.409A-1(h) of the Treasury Regulations) or (y) the date of the Participant’s death. The determination of whether the Participant is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code as of the time of separation from service shall be made by the Company in accordance with the terms of Section 409A of the Code and applicable guidance thereunder (including without limitation Section 1.409A-1(i) of the Treasury Regulations and any successor provision thereto).
IN WITNESS WHEREOF, the Company, by its officer thereunder duly authorized, and the Participant, have caused this Performance Share Award Agreement to be executed as of the day and year first above written.
HORIZON BANCORP PARTICIPANT
By: _____________________________ _____________________________
Xxxx X. Xxxxx [Name]
Chief Financial Officer
ATTEST
By: _____________________________
Xxxxx X. Xxxxxx
Chief Executive Officer
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SCHEDULE A
PERFORMANCE GOALS AND EARNINGS LEVELS
FOR PERFORMANCE PERIOD
|
Performance Goal
|
Weight
|
Threshold
25%‑49% Payout
|
Target
100%‑149% Payout
|
Maximum
150% Payout
|
|
Return on Common Equity: The ROCE of the Company compared with the ROCE of the banks included in the SNL Bank Index.
|
34%
|
25th to 49th Percentile
|
50th to 84th Percentile
|
Greater than 84th Percentile
|
|
Compounded Annual Growth Rate of Total Assets: The CAGR of total assets for the Company compared with the CAGR of total assets for the banks included SNL Bank Index.
|
33%
|
25th to 49th Percentile
|
50th to 84th Percentile
|
Greater than 84th Percentile
|
|
Return on Average Assets: The ROAA for the Company compared with the ROAA for the banks included in the SNL Bank Index.
|
33%
|
25th to 49th Percentile
|
50th to 84th Percentile
|
Greater than 84th Percentile
|
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SCHEDULE B
LINEAR INTERPOLATION PAYOUT
|
2017 Linear Interpolation Payouts
|
|||||
|
Threshold
|
Target
|
Maximum
|
|||
|
Threshold Percentile
|
Payout %
|
Target Percentile
|
Linear Payout %
|
Target Percentile
|
Maximum Payout %
|
|
49
|
49
|
50
|
100
|
85% or higher
|
150% of Target
|
|
48
|
48
|
51
|
101
|
||
|
47
|
47
|
52
|
103
|
||
|
46
|
46
|
53
|
104
|
||
|
45
|
45
|
54
|
106
|
||
|
44
|
44
|
55
|
107
|
||
|
43
|
43
|
56
|
109
|
||
|
42
|
42
|
57
|
110
|
||
|
41
|
41
|
58
|
111
|
||
|
40
|
40
|
59
|
113
|
||
|
39
|
25
|
60
|
114
|
||
|
38
|
25
|
61
|
116
|
||
|
37
|
25
|
62
|
117
|
||
|
36
|
25
|
63
|
119
|
||
|
35
|
25
|
64
|
120
|
||
|
34
|
25
|
65
|
121
|
||
|
33
|
25
|
66
|
123
|
||
|
32
|
25
|
67
|
124
|
||
|
31
|
25
|
68
|
126
|
||
|
30
|
25
|
69
|
127
|
||
|
29
|
25
|
70
|
129
|
||
|
28
|
25
|
71
|
130
|
||
|
27
|
25
|
72
|
131
|
||
|
26
|
25
|
73
|
133
|
||
|
25
|
25
|
74
|
134
|
||
|
75
|
136
|
||||
|
76
|
137
|
||||
|
77
|
139
|
||||
|
78
|
140
|
||||
|
79
|
141
|
||||
|
80
|
143
|
||||
|
81
|
144
|
||||
|
82
|
146
|
||||
|
83
|
147
|
||||
|
84
|
149
|
||||
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