PERFORMANCE-BASED RESTRICTED STOCK AWARD AGREEMENT

 

Exhibit 10.3

 

PERFORMANCE-BASED RESTRICTED STOCK AWARD AGREEMENT

 

We are pleased to advise you that the Compensation Committee (the “Committee”) of the Board of Directors of ▇▇▇▇▇▇▇ Penn Bancorporation (the “Company”) has granted you a restricted stock award (the “Award”) pursuant to the ▇▇▇▇▇▇▇ Penn Bancorporation 2022 Equity Incentive Plan (the “Plan”) on [DATE] (the “Grant Date”). Capitalized terms used but not defined in this Performance-Based Restricted Stock Award Agreement (the “Agreement”) have the meanings given to them in the Plan. This award is subject to federal and local law and the requirements of the NASDAQ Stock Market LLC.

 

1.

Performance Shares

 

You have been granted [NUMBER] shares of the Company’s common stock (“Common Stock”) subject to the provisions and restrictions contained in the Plan and this Agreement (the “Performance Shares”).

 

2.

Vesting

 

a.

Performance Conditions.

 

i)

In General. Subject to the terms and conditions set forth in this Section 2(a) and in Section 2(b) below, you are eligible to earn all or portion of the Performance Shares based on the Company’s [INSERT PERFORMANCE REQUIREMENTS AND PERFORMANCE PERIOD].

 

The Committee will determine the number of Performance Shares, if any, that you are eligible to earn as specified above as soon as administratively practicable following the end of the Performance Period (your “Eligible Award”). In all cases, the number of Performance Shares, if any, in your Eligible Award will be rounded up to the nearest whole number of Performance Shares (as necessary) (but no more than the total number of Performance Shares). Upon the Committee’s determination of your Eligible Award, you will immediately forfeit all Performance Shares other than your Eligible Award. To become vested in all or a portion of your Eligible Award, you must satisfy the service requirements of Section 2(b) below.

 

ii)       Definitions of [PERFORMANCE METRIC]. [DEFINITION].

 

b.

Service Requirements.

 

i)

Normal Vesting. Except as provided in Sections 2(b)(ii) and 2(b)(iii) below, you will vest in your Eligible Award on the third anniversary of the Grant Date (the “Vesting Date”) provided that you remain continuously in service as an Employee with the Employer during the period beginning on the Grant Date and ending on the Vesting Date (the “Service Period”), and you will immediately forfeit all of your Performance Shares upon your upon your termination of service with the Employer (within the meaning of Article 10 of the Plan) prior to the Vesting Date.

 

ii)

Death or Disability. If you separate from service with the Company and its Affiliates due to your death or Disability prior to the Vesting Date, all Performance Shares will become vested on the date of such separation from service. Your Disabled status must become effective prior to the date of your separation from service in order to be recognized under this Agreement.

 

 

iii)       Impact of Change in Control.

 

A.

In General. Upon the effective date of a Change in Control, all references in this Agreement to employment or service with the Employer shall be deemed to include employment or service with the surviving entity in such Change in Control and its subsidiaries, and any transfer of employment or service from the Company or any Affiliate to the surviving entity in such Change in Control or any of its subsidiaries shall not constitute a termination of service or otherwise interrupt your continuous employment or service for purposes of this Agreement.

 

B.

Award not Assumed. If the surviving entity in the Change in Control does not assume your Performance Shares, then you will vest in your Performance Shares on the effective date of the Change in Control.

 

C.

Separation from Service without Cause. In the event of your involuntary separation from service with the Employer without Cause within 24 months after the effective date of a Change in Control and prior to the Vesting Date, you will vest in your Performance Shares on the date of such separation from service.

 

iv)

No Other Special Vesting Rights. Unless otherwise determined by the Committee, no accelerated vesting of your Performance Shares will apply except as specified in Section 2(b)(ii) and (iii) above. If you forfeit your Performance Shares at any time, you will cease to have any rights with respect to such forfeited Performance Shares.

 

v)

Definition of Cause. “Cause” means, with respect to the termination of employment of an employee by the Company or an Affiliate, that such termination is for “Cause” as such term (or term of like import) is expressly defined in a then-effective written employment or other agreement between the employee and the Company or Affiliate, and in the absence of such then-effective written agreement and definition, unless otherwise specified in the applicable Award Agreement:

 

A.

the employee’s personal dishonesty, act or failure to act constituting willful misconduct or gross negligence, that is materially injurious to the Company or any Affiliate or their reputation, breach of fiduciary duty involving personal profit, or willful violation of any law, rule, regulation (other than traffic violations or similar offenses), final cease and desist order;

 

B.

the employee’s material failure to perform the duties of his or her employment with the Company or any Affiliate (except in the case of a termination of the employee’s employment on account of the employee’s physical or mental inability to perform such duties) and the failure to correct such failure within thirty (30) days after receiving written notice from the Company specifying such failure in detail;

 

 

C.

the employee’s willful failure to comply with any valid and legal written directive of the Board, the Chief Executive Officer or the employee’s direct supervisor (if not the Chief Executive Officer);

 

D.

the employee’s willful and material violation of the Company’s or an Affiliate’s code of ethics or conduct policies which results in material harm to the Company or any Affiliate;

 

E.

the employee’s failure to follow the policies and standards of the Company or any Affiliate as the same shall exist from time to time, provided that the employee shall have received written notice from the Board, the Chief Executive Officer or the employee’s direct supervisor (if not the Chief Executive Officer) of such failure and such failure shall have continued or recurred for ten (10) days following the date of such notice;

 

F.

the written requirement or direction of a federal or state regulatory agency having jurisdiction over the Company or any Affiliate that the employee’s employment with the Company or any Affiliate be terminated;

 

G.

the employee’s conviction of or plea of nolo contendere to (i) a felony or (ii) a lesser criminal offense involving dishonesty, breach of trust, or moral turpitude; or

 

H.

the employee’s intentional breach of a term, condition, or covenant of this Agreement that results in material harm to the Company or an Affiliate and the failure to correct such violation within thirty (30) days after receipt of written notice from the Board, the Chief Executive Officer or the employee’s direct supervisor (if not the Chief Executive Officer) specifying such breach in detail.

 

For purposes of this definition, no act or failure to act shall be considered “willful” if the employee or Non-Employee Director acted or failed to act either (i) in good faith or (ii) with a reasonable belief that his or her act or failure to act was not opposed to the Employer’s best interests.

 

An individual shall be considered to have been discharged for Cause if the Company determines within 30 days after his or her resignation or discharge that discharge for Cause was warranted.

 

 

3.

Rights as Stockholder; Dividend Equivalents

 

a.

Certificates. Prior to vesting of the Performance Shares, the stock certificate(s) or other certificateless book entry evidencing the Performance Shares shall be registered on the Company’s books in your name as of the ▇▇▇▇▇ Date. Physical possession or custody of such stock certificates, if issued, shall be retained by the Company until such time as the Performance Shares vest in accordance with Section 2. While in its possession, the Company reserves the right to place a legend on any stock certificate(s) restricting the transferability of such certificates and referring to the terms and conditions (including forfeiture) of this Agreement and the Plan.

 

b.

Voting. You shall be entitled to vote the Performance Shares whether or not they are vested.

 

c.

Dividends and Other Distributions. You shall not be entitled to receive dividends and/or other distributions declared on the Performance Shares until the Performance Shares are vested. Any dividends or other distributions paid with respect to unvested Restricted Stock shall be held by the Company and shall become vested only when, and if, the corresponding Performance Shares become vested. If you forfeit any Performance Shares, you shall also forfeit any deferred dividends or other distributions corresponding to such forfeited Performance Shares. Within 30 days after each of the following dates (except as provided otherwise in Section 7 below), the vested portion of such deferred dividends and other distributions as of such date (if any) shall be paid to you:

 

i)

Each Vesting Date;

 

ii)

The date of your separation from service; and

 

iii)

The effective date of a Change in Control.

 

4.

Withholding; Tax Elections.

 

You are required to pay to the Company all applicable federal, state, local or other taxes, domestic or foreign, with respect to any payment made to you hereunder in the form of shares of Common Stock (the “Required Tax Payments”). Generally, all Required Tax Payments will be satisfied by the Company withholding shares of Common Stock otherwise to be delivered to you, having a Fair Market Value on the date the tax is to be determined, sufficient to make the Required Tax Payments. The Company will withhold the whole number of shares sufficient to make the Required Tax Payments and will make a cash payment to you for the difference between the Fair Market Value of the shares withheld and the Required Tax Payments on the payment date specified in Section 3 above (but if this would cause adverse accounting then the Company will withhold one less share and you must pay cash to the Company in an amount equal to any withholding due in excess of the Fair Market Value of the shares withheld). You shall have the right to make such elections under the Internal Revenue Code of 1986, as amended, as are available in connection with this Award.

 

5.

Transferability

 

Unvested Performance Shares may not be sold, pledged, assigned or transferred in any manner; other than by will or the laws of descent. Any such purported sale, pledge, assignment or transfer in violation of this Agreement shall be void and of no effect.

 

 

6.

Conformity with Plan

 

The Award is intended to conform in all respects with, and are subject to, all applicable provisions of the Plan which is incorporated herein by reference. Inconsistencies between this Agreement and the Plan shall be resolved in accordance with the terms of the Plan except as expressly provided otherwise in this Agreement. The Committee reserves its right to amend or terminate the Plan at any time without your consent; provided, however, that the Award shall not, without your written consent, be adversely affected thereby (except to the extent the Committee reasonably determines that such amendment or termination is necessary or appropriate to comply with applicable law or the rules or regulations of any stock exchange on which the Company’s stock is listed or quoted). All interpretations and determinations of the Committee or its delegate shall be final, binding and conclusive upon you and your legal representatives with respect to any question arising hereunder or under the Plan or otherwise, including guidelines, policies or regulations which govern administration of the Plan. By executing and returning the enclosed copy of this Agreement, you agree to be bound by all of the terms of the Plan and acknowledge availability and accessibility of the Plan document, the Plan Prospectus, and either the Company’s latest annual report to stockholders or annual report on Form 10-K on the Company website. You understand that you may request paper copies of the foregoing documents by contacting the Company’s Corporate Secretary.

 

7.

Compliance with Section 409A

 

a.

This Agreement shall be construed and administered in accordance with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), or an applicable exemption from Code Section 409A.

 

b.

It is intended that the Performance Shares and any and all dividends and other distributions payable with respect to the Performance Shares hereunder shall be exempt from Code Section 409A.

 

c.

To the extent that any compensation payable under this Agreement constitutes deferred compensation within the meaning of Code Section 409A and the Department of Treasury regulations and other guidance thereunder (“Section 409A”), (i) any provisions of this Agreement that provide for payment of compensation that is subject to Section 409A and that has payment triggered by your separation from service other than on account of your death shall be deemed to provide for payment that is triggered only by your “separation from service” within the meaning of Treasury Regulation Section §1.409A-1(h) (a “Section 409A Separation from Service”), (ii) if you are a “specified employee” within the meaning of Treasury Regulation Section §1.409A-1(i) on the date of your Section 409A Separation from Service (with such status determined by the Company in accordance with rules established by the Company in writing in advance of the “specified employee identification date” that relates to the date of such Section 409A Separation from Service or in the absence of such rules established by the Company, under the default rules for identifying specified employees under Treasury Regulation Section 1.409A-1(i)), such compensation triggered by such Section 409A Separation from Service shall be paid to you six months following the date of such Section 409A Separation from Service (provided, however, that if you die after the date of such Section 409A Separation from Service, this six month delay shall not apply from and after the date of your death); and (iii) to the extent necessary to comply with Section 409A, the definition of change in control that applies under Section 409A shall apply under this Agreement to the extent that it is more restrictive than the definition of Change in Control that would otherwise apply. You acknowledge and agree that the Company has made no representation regarding the tax treatment of any payment under this Agreement and, notwithstanding anything else in this Agreement, that you are solely responsible for all taxes due with respect to any payment under this Agreement.

 

8.

Recoupment/Clawback. The Performance Shares are subject to recoupment and clawback as provided in the Company’s Clawback Policy, as in effect at the time of the Agreement or as subsequently amended.

 

 

9.

Employment and Successors. Nothing in the Plan or this Agreement shall serve to modify or amend any employment agreement or other service agreement you may have with the Company or any Affiliate or to interfere with or limit in any way the right of the Company or any Affiliate to terminate your employment or service at any time, or confer upon you any right to continue in the employ of the Company or any Affiliate for any period of time or to continue your present or any other rate of compensation subject to the terms of any employment agreement or service agreement you may have with the Company. The grant of the Performance Shares shall not give you any right to any additional awards under the Plan or any other compensation plan the Company has adopted or may adopt. The agreements contained in this Agreement shall be binding upon and inure to the benefit of any successor of the Company.

 

10.

Amendment. The Committee may amend this Agreement by a writing that specifically states that it is amending this Agreement, so long as a copy of such amendment is delivered to you, provided that no such amendment shall adversely affect in a material way your rights hereunder without your written consent (except to the extent the Committee reasonably determines that such amendment or termination is necessary or appropriate to comply with applicable law or the rules or regulations of any stock exchange on which the Company’s stock is listed or quoted). Without limiting the foregoing, the Committee reserves the right to change, by written notice to you, the provisions of the Performance Shares and this Agreement in any way it may deem necessary or advisable to carry out the purpose of the grant of the Performance Shares as a result of any change in applicable law or regulation or any future law, regulation, ruling, or judicial decisions.

 

11.

Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company as follows:

 

▇▇▇▇▇▇▇ Penn Bancorporation

▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇

▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇

 

Any notice to be given under the terms of this Agreement to you shall be addressed to you at the address listed in the Company’s records. By a notice given pursuant to this Section 11, either party may designate a different address for notices. Any notice shall be deemed to have been duly given when personally delivered (addressed as specified above) or when enclosed in a properly sealed envelope (addressed as specified above) and deposited, postage prepaid, with the U.S. postal service or an express mail company.

 

12.

Severability. If all or any part of this Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any portion of this Agreement or the Plan not declared to be unlawful or invalid. Any section of this Agreement (or part of such a section) so declared to be unlawful or invalid shall, if possible, be construed in a manner that will give effect to the terms of such section or part of a section to the fullest extent possible while remaining lawful and valid.

 

13.

Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements or understandings, oral or written, with respect to the subject matter herein. By acknowledging this Agreement below, you accept the Performance Shares in full satisfaction of any and all obligations of the Company to grant shares of performance-based restricted stock to you as of the date hereof.

 

 

14.

Governing Law. This Agreement will be governed by and enforced in accordance with the laws of the State of Delaware, without giving effect to its conflicts of laws rules or the principles of the choice of law.

 

15.

Venue. Any action or proceeding seeking to enforce any provision of or based on any right arising out of this Agreement may be brought against you or the Company only in the courts of the State of Delaware or, if it has or can acquire jurisdiction, in the United States District Court for the District of Delaware; and you and the Company consent to the jurisdiction of such courts in any such action or proceeding and waive any objection to venue laid therein.

 

[Signature Page Follows]

 

 

	Very truly yours,
	▇▇▇▇▇▇▇ PENN BANCORPORATION
	By:
		▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
		Corporate Secretary

 

Acceptance by Participant of Performance-Based Restricted Stock Award Agreement to be Made by DocuSign