UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 9, 2012
FIRST DEFIANCE FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
| OHIO | 0-26850 | 34-1803915 | ||
|
(State or other jurisdiction of incorporation) |
(Commission File No.) |
(IRS Employer I.D. No.) |
601 Clinton Street, Defiance, Ohio 43512
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (419) 782-5015
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Section 5 – Corporate Governance and Management
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers . |
First Amendment to First Defiance Financial Corp. 2010 Equity Incentive Plan
On March 9, 2012, the Board of Directors (the “Board”) of First Defiance Financial Corp. (“First Defiance”) approved an amendment to the First Defiance Financial Corp. 2010 Equity Incentive Plan (“2010 Plan”). The 2010 Plan is being amended to establish specific Performance Criteria that may be used by the Compensation Committee of the Board (the “Committee”) to grant Performance-Based Awards (as defined in the 2010 Plan). The definition of Performance Criteria in the 2010 Plan is being amended to include revenue; income; earnings per share; loan, deposit, new market or asset growth; return measures; tangible equity; economic profit added; earnings before or after taxes, interest, depreciation and/or amortization; interest spread; productivity ratios; share price; expense targets; credit quality; efficiency ratio; market share; customer satisfaction; asset quality measures; capitalization; net income after cost of capital; strategic objectives; and such other measures as the Committee may select from time to time. The foregoing summary of the amendment to the 2010 Plan is qualified in its entirety by reference to the First Amendment to First Defiance Financial Corp. 2010 Equity Incentive Plan, a copy of which is attached as Exhibit 10.1 hereto.
Adoption of Incentive Compensation Plan
On March 9, 2012, the Board of First Defiance approved the creation of the First Defiance Financial Corp. and Affiliates Incentive Compensation Plan (“Incentive Plan”). The purposes of the Plan are to promote the Company’s financial success and increase shareholder value by motivating performance through payments of short-term incentive compensation and to attract and retain talented employees. Any employee of First Defiance or its wholly-owned subsidiaries, First Federal Bank of the Midwest and First Insurance Group of the Midwest, Inc., including the following named executive officers: Messrs. Allen, Hileman, Rohrs, Rose and Small, are eligible to participate. Under the plan, employees who are designated as participants by the Board are given the opportunity to earn awards of incentive compensation if First Defiance achieves various performance objectives established by the Board and described below.
Pursuant to the Incentive Plan, participants may earn incentive compensation based on the satisfaction of corporate and/or strategic performance criteria that must be satisfied over a prescribed performance period in order to receive payment. For each performance period, the Committee shall establish: (a) performance objectives used to determine the amount payable to each participant; (b) the requisite level of achievement of the performance objectives (which may include threshold, target and maximum levels); (c) the method for determining the amount payable based on the achievement of the performance objectives; and (d) any other terms and conditions.
The performance criteria that the Committee may use to establish awards under the Incentive Plan include revenue; income; earnings per share; loan, deposit, new market or asset growth; return measures; tangible equity; economic profit added; earnings before or after taxes, interest, depreciation and/or amortization; interest spread; productivity ratios; share price; expense targets; credit quality; efficiency ratio; market share; customer satisfaction; asset quality measures; capitalization; net income after cost of capital; strategic objectives; and such other measures as the Committee may select from time to time.
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In order to receive a payment of incentive compensation under the Incentive Plan, a participant must remain employed on the payment date. However, if a participant’s employment is terminated prior to the payment date due to death, disability or retirement (as defined in the Incentive Plan), the participant may receive a prorated payment. In the event that a participant is terminated after a change in control (as defined in the Incentive Plan), the participant will be entitled to receive a payment equal to the greater of the amount payable had the performance objectives been achieved at the “target” level or the actual amount payable based on achievement of the performance objectives through the fiscal quarter ended nearest to the date of termination.
The foregoing summary of the Incentive Plan is qualified in its entirety by reference to the First Defiance Financial Corp. and Affiliates Incentive Compensation Plan, a copy of which is attached as Exhibit 10.2 hereto.
2012 Actions With Respect to Incentive Compensation Plan
Pursuant to the Incentive Plan, the Committee recommended, and the Board approved on March 9, 2012, the establishment of awards for participants (the “2012 incentive awards”). The 2012 incentive awards permit employees who are selected as participants to earn a specified “target” percentage of their base salary, which is split equally between short-term awards (“2012 STI”) and long-term awards (“2012 LTI”).
The 2012 STI can be earned based on the level of achievement of the following performance objectives over a performance period of one year that began on January 1, 2012: diluted earnings per share, net charge offs, non-performing assets, classified assets, efficiency ratio and other strategic objectives.
The 2012 LTI can be earned based on a comparison of First Defiance’s average return on assets, increase in earnings per share, and revenue growth over a performance period of three years that began on January 1, 2012 and ending on December 31, 2014 as compared to a peer group of similar financial institutions.
Both the 2012 STI and 2012 LTI can be earned at between 0% and 150% of the specified “target”, depending on the level of attainment of the performance objectives. The amount payable with respect to the 2012 STI will be paid in three installments as follows: (1) 50% in 2013; (2) 25% in 2014; and (3) 25% in 2015. The amount payable with respect to the 2012 LTI will be paid in a lump sum in 2015.
Messrs. Small and Rohrs are prohibited from receiving any cash incentive compensation due to the limitations set forth in Section 111 of the Emergency Economic Stabilization Act of 2008, as amended by the American Recovery and Reinvestment Act of 2009 and the Interim Final Rule promulgated pursuant to 31 C.F.R. Part 30 (the “TARP Bonus Prohibition”). However, each can receive awards of certain “long-term restricted stock”. Due to the TARP Bonus Prohibition, the 2012 STI and 2012 LTI for each of Messrs. Small and Rohrs was granted in the form of restricted stock units that are intended to qualify as awards of “long term restricted stock” that are exempt from the TARP Bonus Prohibition. These awards are evidenced by Long Term Restricted Stock Unit Award Agreements (2012 Long-Term Incentive – TARP Applicable) attached hereto as Exhibit 10.3.
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The Committee also determined that 60% of the 2012 LTI of each participant, other than Messrs. Small and Rohrs, should be granted in the form of restricted stock units. These awards are evidenced by Restricted Stock Unit Award Agreements (2012 Long-Term Incentive) attached hereto as Exhibit 10.4.
The named executive officers who have been granted awards, their target award percentage, and the type of award granted (standard or TARP) are set forth below.
|
Name |
Title |
Target Award
Percentage of Base Salary |
||||
|
William J. Small |
Chairman, President and Chief Executive Officer of First Defiance | 90 | % | |||
|
Donald P. Hileman |
Executive Vice President & Chief Financial Officer of First Defiance and First Federal Bank and Chief Executive Officer of First Insurance Group | 70 | % | |||
|
James L .Rohrs |
Executive Vice President of First Defiance and President & Chief Executive Officer of First Federal Bank | 70 | % | |||
|
Dennis E. Rose, Jr. |
Executive Vice President of First Federal Bank | 50 | % | |||
|
Gregory R. Allen |
First Federal Bank President of Southern Market Area | 50 | % | |||
The foregoing summary is qualified in its entirety by reference to the Incentive Plan as approved by the Board, a copy of which is attached as Exhibit 10.2 hereto, and the award agreements entered into between First Defiance and each of the named executive officers, copies of which are attached as Exhibits 10.3 and 10.4 hereto.
First Defiance’s shareholders approved the 2010 Plan at the 2010 Annual Meeting of Shareholders of First Defiance held on April 20, 2010. A description of the material terms of the 2010 Plan was included in First Defiance’s definitive proxy statement on Schedule 14A filed with the Securities and Exchange Commission on March 19, 2010. The 2010 Plan was
Section 9 – Financial Statements and Exhibits
| Item 9.01 | Financial Statements and Exhibits . |
4
| (d) | Exhibits. |
|
Exhibit
|
Description |
|
| 10.1 | First Amendment to First Defiance Financial Corp. 2010 Equity Incentive Plan | |
| 10.2 | First Defiance Financial Corp. and Affiliates Incentive Compensation Plan | |
| 10.3 | First Defiance Financial Corp. Long-Term Restricted Stock Unit Award Agreement (2012 Long Term Incentive – TARP Applicable) | |
| 10.4 | First Defiance Financial Corp. Long-Term Restricted Stock Unit Award Agreement (2012 Long Term Incentive) | |
5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FIRST DEFIANCE FINANCIAL CORP. | ||
| By: | /s/ Donald P. Hileman | |
|
Donald P. Hileman, Executive Vice President & Chief Financial Officer |
||
Date: March 15, 2012
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Exhibit 10.1
FIRST AMENDMENT TO
FIRST DEFIANCE FINANCIAL CORP.
2010 EQUITY INCENTIVE PLAN
This First Amendment (this “Amendment”) to the First Defiance Financial Corp. 2010 Equity Incentive Plan (the “Plan”) is effective as of this day of February, 2012.
WHEREAS, First Defiance Financial Corp. (the “Company”) previously adopted the Plan; and
WHEREAS, pursuant to Section 13.1 of the Plan, the Company desires to amend the Plan as set forth in this Amendment;
NOW, THEREFORE, Section 1.23 the Plan is hereby deleted in its entirety and the following is substituted therefor:
1.23 “Performance Criteria ” shall mean: (a) revenue; (b) income (including, but not limited to, net earnings, net income, before or after taxes, interest income, non-interest income and fee income); (c) earnings per share; (d) loan, deposit, new market or asset growth; (e) return measures (including return on assets and equity); (f) tangible equity; (g) economic profit added; (h) earnings before or after taxes, interest, depreciation and/or amortization; (i) interest spread; (j) productivity ratios; (k) share price (including, but not limited to, growth measures and total shareholder return); (l) expense targets; (m) credit quality; (n) efficiency ratio; (o) market share; (p) customer satisfaction; (q) asset quality measures (including, but not limited to, non-performing assets, net charge-offs, classified assets, Texas Ratio, ALLL etc.; (r) capitalization (including, but not limited to, Tier 1 capital, CAMELS rating); (s) net income after cost of capital (NIACC); (t) strategic objectives (including, branding, mergers and acquisitions, succession management, dynamic market response, new product build out, expense reduction initiatives, risk management and regulatory compliance); or (u) such other measures as the Committee may select from time to time.
Different Performance Criteria may be applied to individual Participants or to groups of Participants and, as specified by the Committee, may relate to the individual Participant, the Company, one or more Affiliates, or one or more of their respective divisions or business units, or any combination of the foregoing, and may be applied on an absolute basis and/or be relative to one or more peer group companies or indices, or any combination thereof, in each case, as determined by the Committee in its sole discretion.
[signature page attached]
IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by its duly authorized officer effective as of the date set forth above.
| FIRST DEFIANCE FINANCIAL CORP. | ||
| By: | ||
| Its: | ||
Exhibit 10.2
FIRST DEFIANCE FINANCIAL CORP. AND AFFILIATES
INCENTIVE COMPENSATION PLAN
| I. | PURPOSE |
The purposes of this Plan are to promote the Company’s financial success and increase shareholder value by motivating performance through payments of short-term incentive compensation and attract and retain talented employees.
| II. | GRANTING AWARDS |
| (a) | Selection of Participants. For each Performance Period, the Committee shall approve those key employees and officers of the Company who are to be Participants for that Performance Period. |
| (b) | Selection of Performance Objectives. For each Performance Period, the Committee shall establish: |
| (i) | Performance objectives based on the Performance Criteria set forth in Section VII that will be used to determine the amount payable with respect to Awards, based on recommendations provided by the Company; |
| (ii) | The requisite level of achievement (which may include “threshold”, “target” and “maximum” levels) of such performance objectives; |
| (iii) | The method for determining the amount payable based on the achievement of the performance objectives; and |
| (iv) | Any other terms and conditions of the Award, including, without limitation, a requirement that some portion of the Award be payable in the form of equity or that payment be deferred. |
Different Performance Criteria may be applied to individual Participants or to groups of Participants and, as specified by the Committee, may relate to the individual Participant, the Company, one or more Affiliates, or one or more of their respective divisions or business units, or any combination of the foregoing, and may be applied on an absolute basis and/or be relative to one or more peer group companies or indices, or any combination thereof, in each case, as determined by the Committee in its sole discretion.
| (c) | Timing. The Committee shall establish the performance objectives, the level of achievement and the method for determining the amount payable with respect to of Awards before the outcome of such performance objectives is substantially certain but in no event later than the earlier of: (a) ninety (90) days after the beginning of the applicable Performance Period; or (b) the expiration of twenty-five percent (25%) of the applicable Performance Period. |
| (d) | Newly Eligible Participants. An employee who becomes a Participant during a Performance Period may be eligible to receive an Award under this Plan for such Performance Period on such terms and conditions as the Committee may determine. |
| III. | PAYMENT OF AWARDS |
| (a) | Determination of Amount Payable. For each Performance Period, the Committee shall determine the extent to which the performance objectives and other terms and conditions applicable to an Award have been achieved, if at all, and based on this determination, certify the amount payable, if any, with respect to each Award. |
| (b) | Eligibility for Payment. In order to receive payment with respect to an Award, the Participant must remain employed by the Company or an Affiliate on the date that payment is made. Notwithstanding the foregoing: |
| (i) | Death, Disability or Retirement. If a participant dies, becomes Disabled or Retires prior to the date on which an Award is paid, the Participant’s shall remain eligible for payment with respect to that Award; provided, however, the amount payable with respect to such Award shall be based on the achievement of the performance objectives determined as of the fiscal quarter ended nearest to the Participant’s death, Disability or Retirement, unless the Committee determines otherwise at the time such Award is granted. |
| (ii) | Termination for Cause . If a Participant is terminated for Cause, the Participant shall forfeit any right to payment with respect to an Award. |
| (iii) | Termination Following Change in Control. If a Change in Control occurs during the performance period applicable to an Award and the Participant is terminated by the Company, other than for Cause (but in no event after the end of the Performance Period), each Participant shall receive payment with respect to such Participant’s Awards equal the greater of: (i) the amount payable with respect to the Award as though the performance objectives had been satisfied at the “target” level of achievement for the performance period; or (ii) the amount that would have been payable with respect to the Awards based on the actual level of achievement of the performance objectives through the fiscal quarter ended nearest to the Participant’s termination, unless the Committee determines otherwise at the time such Award is granted. |
| (c) | Negative Discretion. In the sole discretion of the Committee or Board, the amount actually paid with respect to an Award to a Participant may be less than the amount otherwise payable based on the satisfaction of the performance objectives and other terms and conditions of such Award. |
| (d) | Modifying Performance Objectives . Performance objectives relating to Awards may be calculated without regard to extraordinary items or adjusted, as the Committee deems equitable, in recognition of unusual or non-recurring events affecting the Company and/or its Affiliates or changes in applicable tax laws or accounting principles. |
| IV. | ADMINISTRATION |
The Plan shall be administered by the Committee, which has full power and authority, to the extent not inconsistent with this Plan, to: (a) approve Participants; (b) establish performance objectives, the amount payable and any other terms and conditions with respect to Awards; (c) make any other determinations that the Committee deems necessary or desirable for the administration of the Plan; and (d) to delegate its administrative duties to one or more persons. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan in the manner and to the extent the Committee deems necessary or desirable. Any decision of the Committee in the interpretation and administration of the Plan shall be made in the Committee’s sole discretion and shall be final, conclusive and binding on all persons.
The Committee (and any delegate) shall be indemnified and saved harmless by the Company from and against all personal liability to which it may be subject by reason of any act done or omitted to be done in its official capacity as administrator in good faith in the administration of the Plan, including all expenses reasonably incurred in its defense in the event the Company fails to provide such defense upon the request of the Committee.
| V. | AMENDMENT AND ADMINISTRATION OF THE PLAN |
The Plan may be terminated or amended by the Committee or the Board at any time without the consent of any Participant.
| VI. | MISCELLANEOUS |
| (a) | No Guarantee of Employment. This Plan is not an employment policy or contract. It does not give any Participant the right to remain an employee of the Company or an Affiliate, nor does it interfere with the Company’s or an Affiliate’s right to terminate the Participant, with or without case, which right is expressly reserved. |
| (b) | Non-Transferability. The rights of Participants under this Plan cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner. |
| (c) | Applicable Law . The Plan and all rights hereunder shall be governed by the laws of the State of Ohio, without regard to any conflicts of laws principles, except to the extent preempted by the laws of the United States of America. |
| (d) | Entire Plan . This Plan (including any written or electronic communication to a Participant setting forth the terms and conditions of an Award for a Plan Year) constitutes the entire agreement between the Company and the Participant as to the subject matter hereof. No rights are granted to the Participant by virtue of this Plan other than those specifically set forth herein. |
| (e) | Tax Withholding. The Company or an Affiliate, as applicable, shall have the power and the right to deduct, withhold or collect any amount required by law or regulation to be withheld with respect to any taxable event arising with respect to an Award granted under the Plan. |
| VII. | DEFINITIONS |
| (a) | Affiliate means any entity that, along with the Company, would be treated as a single employer for purposes of Sections 414(b) or 414(c) of the Code, but modified under any Code section relevant to the purpose for which the definition is applied. |
| (b) | Award means the right to a payment of compensation pursuant to this Plan based on the achievement of performance objectives established by the Committee pursuant to this Plan. |
| (c) | Board means the Company’s Board of Directors. |
| (d) | Cause has the meaning given to it in the First Defiance Financial Corp. 2010 Equity Incentive Plan. |
| (e) | Change in Control has the meaning given to it in the First Defiance Financial Corp. 2010 Equity Incentive Plan. |
| (f) | Company means First Defiance Financial Corp. and any successor. |
| (g) | Committee means the compensation committee of the Company’s Board of Directors. |
| (h) | Code means the Internal Revenue Code of 1986, as amended. |
| (i) | Disability means a Participant’s inability (established by an independent physician selected by the Committee and reasonably acceptable to the Participant or to the Participant’s legal representative) due to illness, accident or otherwise to perform his or her duties, which is expected to be permanent or for an indefinite duration longer than 12 months. |
| (j) | Participant means, with respect to each Performance Period, each employee approved for participation by the Committee. |
| (k) |
Performance Criteria means: (a) revenue; (b) income (including, but not limited to, net earnings, net income, before or after taxes, interest income, non-interest income and fee income); (c) earnings per share; (d) loan, deposit, new market or asset growth; (e) return measures (including return on assets and equity); (f) tangible equity; (g) economic profit added; (h) earnings before or after taxes, interest, depreciation and/or amortization; (i) interest spread; (j) productivity ratios; (k) share price (including, but not limited to, growth measures and total shareholder return); (l) expense targets; (m) credit quality; (n) efficiency ratio; (o) market share; (p) customer satisfaction; (q) asset quality measures (including, but not limited to, non-performing assets, net charge-offs, classified assets, |
| Texas Ratio, ALLL etc.; (r) capitalization (including, but not limited to, Tier 1 capital, CAMELS rating); (s) net income after cost of capital (NIACC); (t) strategic objectives (including, branding, mergers and acquisitions, succession management, dynamic market response, new product build out, expense reduction initiatives, risk management and regulatory compliance); or (u) such other measures as the Committee may select from time to time. |
| (l) | Performance Period means, unless a different period is established the Committee, each 12 month period beginning January 1. |
| (m) | Plan means this First Defiance Financial Corp. and Affiliates Incentive Compensation Plan, as it may be amended from time to time. |
| (n) | Retirement means, unless otherwise specified by the Committee at or after the time of grant, the retirement from the employ of the Company or an Affiliate under one or more of the retirement plans of the Company. |
Exhibit 10.3
FIRST DEFIANCE FINANCIAL CORP.
2010 EQUITY INCENTIVE PLAN
LONG-TERM RESTRICTED STOCK UNIT AWARD AGREEMENT
(2012 LONG TERM INCENTIVE – TARP APPLICABLE)
First Defiance Financial Corp. (the “Company”) hereby grants the undersigned Participant an Award of restricted stock units that is intended to constitute an award of “long-term restricted stock” as defined in 31 C.F.R. Part 30 (the “Award”), subject to the terms and conditions described in the First Defiance Financial Corp. 2010 Equity Incentive Plan (the “Plan”) and this Long-Term Restricted Stock Unit Award Agreement (2012 Long-Term Incentive – TARP Applicable) (this “Award Agreement”).
| 1. | Name of Participant : |
| 2. | Performance Period : The 36 month period beginning January 1, 2012 and ending on December 31, 2014 (the “Performance Period”). |
| 3. | Grant Date: January 1, 2012 (the “Grant Date”). |
| 4. | Award of Restricted Stock Units: The number of RSUs subject to the Award is equal to [insert number] (as adjusted pursuant to Section 9(a), the “Target Award”). |
| 5. | Vesting: At the end of the Performance Period, the Participant shall vest in between 0% and 100% of the RSUs subject to the Target Award based on the achievement of the Performance Objectives set forth in attached Exhibit A during the Performance Period. The Committee shall determine the number of RSUs vesting with respect to the Performance Period based on the level of achievement of the Performance Objectives and any other factors that the Committee deems relevant. The Committee, in its sole discretion, may adjust the number of RSUs vesting. |
| 6. | Limitations on Vesting: If the Participant’s employment terminates for any reason prior to the end of the Performance Period, the Participant shall forfeit all of the RSUs subject to the Target Award. Notwithstanding the foregoing: |
| (a) | Death; Disability; Retirement : If the Participant, dies, becomes Disabled or Retires during the Performance Period, the Participant shall vest in a number of RSUs based on the achievement of the Performance Objectives determined as of the fiscal quarter ended nearest to the Participant’s death, Disability or Retirement. Vested RSUs shall be settled in a lump sum within 60 days following the Participant’s death, Disability or Retirement. |
| (b) |
Change in Control : If a Change in Control occurs during the Performance Period and the Participant is terminated by the Company, other than for Cause (but in no event after the end of the Performance Period), the Participant shall vest in a number of RSUs equal to the greater of: (i) the number of RSUs that would have |
| vested if the Performance Objectives had been satisfied at the “target” level of achievement for the Performance Period; or (ii) the number of RSUs that would have vested based on the actual level of achievement of the Performance Objectives through the fiscal quarter ended nearest to the Participant’s termination. Vested RSUs shall be settled in a lump sum within 60 days following the Participant’s termination. |
| 7. | Form of Settlement : Each whole or fractional RSU entitles the Participant to receive a Share or a payment equal to the Fair Market Value of a Share on the date the RSU is settled. As a condition to receiving the Award, the Participant must elect whether to have vested RSUs settled in the form of cash and/or Shares by completing the form attached as Exhibit B . |
| 8. | Time of Settlement: Provided that the Participant remains employed by the Company or an Affiliate on the payment date, all vested RSUs shall be settled between January 1 and March 15 of the first fiscal year following the end of the Performance Period in the form set forth in Section 7. Notwithstanding the foregoing, if the Participant is terminated for Cause after the end of the Performance Period but before the RSUs are settled, the Participant shall forfeit any right to settlement of the RSUs. |
| 9. | TARP Limitations: Notwithstanding anything in this Award Agreement to the contrary, to the extent and during the period that the Company and the Participant are subject to the limitations set forth in Section 111(b)(3)(D) of the Emergency Economic Stabilization Act of 2008, as amended, and 30 C.F.R. §30.10 (collectively, “TARP”), the following limitations will apply with respect to the RSUs: |
| (i) | Limitations on Number of RSUs . The number of RSUs subject to the Target Award, plus the aggregate value of all other “long term restricted stock” (as defined by TARP) for the fiscal year in which the Grant Date occurs, shall not exceed 1/3 of the Participant’s annual compensation for such fiscal year, determined by including the total Fair Market Value of all equity-based compensation granted during such fiscal year in the Participant’s annual compensation. |
| (ii) | Restrictions on Payment . The Participant will forfeit all RSUs if the Participant does not continue performing substantial services for the Company for two years from the Grant Date (other than due to the Participant’s earlier death, Disability or the earlier occurrence of a “change in control event” as defined in Treasury Regulations §§1.280G-1, Q&A 27 through 29 or 1.409A-3(i)(5)(i) involving the Company). |
| (iii) | Restrictions on Settlement : Payment with respect to any vested RSUs may only be made based on the date on which the Company repays the percentage of aggregate TARP financial assistance received, as set forth below: |
|
Percentage of TARP Financial Assistance Repaid |
Percentage of RSUs
Becoming Payable |
|
|
25% |
25% | |
|
50% |
50% | |
|
75% |
75% | |
|
100% |
100% |
| 10. | Miscellaneous: |
| (a) | Non-Transferability . RSUs may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, except by will or the laws of descent and distribution. |
| (b) | Beneficiary . Payments with respect to the Award shall be made to the Participant, except that, in the event of the Participant’s death, payment shall be made to the Participant’s beneficiary. Unless otherwise specifically designated by the Participant in writing, the Participant’s beneficiary shall be the Participant’s spouse or, if none, the Participant’s estate. |
| (c) | No Right to Continued Service or to Awards . The granting of an Award shall impose no obligation on the Company or any Affiliate to continue the employment of a Participant or interfere with or limit the right of the Company or any Affiliate to terminate the employment of the Participant at any time, with or without Cause, which right is expressly reserved. |
| (d) | Tax Withholding . The Company or an Affiliate, as applicable, will have the power and right to deduct, withhold or collect any amount required by law or regulation to be withheld with respect to any taxable event arising with respect to the RSUs. To the extent permitted by the Committee, in its sole discretion, this amount may be: (i) withheld from other amounts due to the Participant, (ii) withheld from the value of any Award being settled or any Shares transferred in connection with the exercise or settlement of an Award, (iii) withheld from the vested portion of any Award (including Shares transferable thereunder), whether or not being exercised or settled at the time the taxable event arises, or (iv) collected directly from the Participant. Subject to the approval of the Committee, the Participant may elect to satisfy the withholding requirement, in whole or in part, by having the Company or an Affiliate, as applicable, withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction; provided that such Shares would otherwise be distributable to the Participant at the time of the withholding if such Shares are not otherwise distributable at the time of the withholding, provided that the Participant has a vested right to distribution of such Shares at such time. All such elections will be irrevocable and made in writing and will be subject to any terms and conditions that the Committee, in its sole discretion, deems appropriate. |
| (e) | Requirements of Law . The grant of Awards shall be subject to all applicable laws, rules and regulations (including applicable federal and state securities laws) and to all required approvals of any governmental agencies or national securities exchange, market or other quotation system. |
| (f) | Governing Law . The Plan and all Award Agreements shall be governed by and construed in accordance with the laws of (other than laws governing conflicts of laws) the State of Ohio. |
| (g) | Award Subject to Plan . The Award is subject to the terms and conditions described in this Award Agreement and the Plan, which is incorporated by reference into and made a part of this Award Agreement. In the event of a conflict between the terms of the Plan and the terms of this Award Agreement, the terms of the Plan will govern. The Committee has the sole responsibility of interpreting the Plan and this Award Agreement, and its determination of the meaning of any provision in the Plan or this Award Agreement will be binding on the Participant. Capitalized terms that are not defined in this Award Agreement have the same meanings as in the Plan. |
| (h) | Section 409A of the Code . This Award Agreement is intended, and shall be construed and interpreted, to comply with Section 409A of the Code and if necessary, any provision shall be held null and void to the extent such provision (or part thereof) fails to comply with Section 409A of the Code or the Treasury Regulations thereunder. For purposes of Section 409A of the Code, each payment of compensation under the Award Agreement shall be treated as a separate payment of compensation. Any amounts payable solely on account of an involuntary termination shall be excludible from the requirements of Section 409A of the Code, either as separation pay or as short-term deferrals to the maximum possible extent. Nothing herein shall be construed as the guarantee of any particular tax treatment to the Participant, and the Company shall have no liability with respect to any failure to comply with the requirements of Section 409A of the Code. Any reference to the Participant’s “termination” shall mean the Participant’s “separation from service”, as defined in Section 409A of the Code. In addition, if the Participant is determined to be a “ s pecified employee” (within the meaning of Section 409A of the Code and as determined under the Company’s policy for determining specified employees), the Participant shall not be entitled to payment or to distribution of any portion of an Award that is subject to Section 409A of the Code (and for which no exception applies) and is payable or distributable on account of the Participant’s termination until the expiration of six months from the date of such termination (or, if earlier, the Participant’s death). Such Award, or portion thereof, shall be paid or distributed on the first business day of the seventh month following such termination. |
| (i) | Signature in Counterparts . This Award Agreement may be signed in counterparts, each of which will be deemed an original, but all of which will constitute one and the same instrument. |
[signature page attached]
| PARTICIPANT | ||||||
| Date: | ||||||
| Signature | ||||||
| Print Name | ||||||
| FIRST DEFIANCE FINANCIAL CORP. | ||||||
| By: | Date: | |||||
| Its: | ||||||
Exhibit 10.4
FIRST DEFIANCE FINANCIAL CORP.
2010 EQUITY INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT
(2012 LONG TERM INCENTIVE)
First Defiance Financial Corp. (the “Company”) hereby grants the undersigned Participant a Performance Award (the “Award”), subject to the terms and conditions described in the First Defiance Financial Corp. 2010 Equity Incentive Plan (the “Plan”) and this Performance-Based Award Agreement (2012 Long-Term Incentive) (this “Award Agreement”).
| 1. | Name of Participant : |
| 2. | Performance Period : The 36 month period beginning January 1, 2012 and ending on December 31, 2014 (the “Performance Period”). |
| 3. | Grant Date: January 1, 2012 (the “Grant Date”). |
| 4. | Award of Restricted Stock Units: The number of RSUs subject to the Award is equal to [insert number] (the “Target Award”)]. |
| 5. | Vesting: At the end of the Performance Period, the Participant shall vest in between 0% and 100% of the RSUs subject to the Target Award based on the achievement of the Performance Objectives set forth in attached Exhibit A during the Performance Period. The Committee shall determine the number of RSUs vesting with respect to the Performance Period based on the level of achievement of the Performance Objectives and any other factors that the Committee deems relevant. The Committee, in its sole discretion, may adjust the number of RSUs vesting. |
| 6. | Limitations on Vesting: If the Participant’s employment terminates for any reason prior to the end of the Performance Period, the Participant shall forfeit all of the RSUs subject to the Target Award. Notwithstanding the foregoing: |
| (a) | Death; Disability; Retirement : If the Participant, dies, becomes Disabled or Retires during the Performance Period, the Participant shall vest in a number of RSUs based on the achievement of the Performance Objectives determined as of the fiscal quarter ended nearest to the Participant’s death, Disability or Retirement. Vested RSUs shall be settled in a lump sum within 60 days following the Participant’s death, Disability or Retirement. |
| (b) | Change in Control : If a Change in Control occurs during the Performance Period and the Participant is terminated by the Company, other than for Cause (but in no event after the end of the Performance Period), the Participant shall vest in a number of RSUs equal to the greater of: (i) the number of RSUs that would have vested if the Performance Objectives had been satisfied at the “target” level of achievement for the Performance Period; or (ii) the number of RSUs that would have vested based on the actual level of achievement of the Performance Objectives through the fiscal quarter ended nearest to the Participant’s termination. Vested RSUs shall be settled in a lump sum within 60 days following the Participant’s termination. |
| 7. | Form of Settlement: Each whole or fractional RSU entitles the Participant to receive a Share or a payment equal to the Fair Market Value of a Share on the date the RSU is settled. As a condition to receiving the Award, the Participant must elect whether to have vested RSUs settled in the form of cash and/or Shares by completing the form attached as Exhibit B . |
| 8. | Time of Settlement: Except as otherwise provided in this Award Agreement, and provided that the Participant remains employed by the Company or an Affiliate on the settlement date, all vested RSUs shall be settled between January 1 and March 15 of the first fiscal year following the end of the Performance Period in the form set forth in Section 7. Notwithstanding the foregoing, if the Participant is terminated for Cause after the end of the Performance Period but before the RSUs are settled, the Participant shall forfeit any right to settlement of the RSUs. |
| 9. | Miscellaneous: |
| (a) | Non-Transferability . RSUs may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, except by will or the laws of descent and distribution. |
| (b) | Beneficiary . Payments with respect to the Award shall be made to the Participant, except that, in the event of the Participant’s death, payment shall be made to the Participant’s beneficiary. Unless otherwise specifically designated by the Participant in writing, the Participant’s beneficiary shall be the Participant’s spouse or, if none, the Participant’s estate. |
| (c) | No Right to Continued Service or to Awards . The granting of an Award shall impose no obligation on the Company or any Affiliate to continue the employment of a Participant or interfere with or limit the right of the Company or any Affiliate to terminate the employment of the Participant at any time, with or without Cause, which right is expressly reserved. |
| (d) |
Tax Withholding . The Company or an Affiliate, as applicable, will have the power and right to deduct, withhold or collect any amount required by law or regulation to be withheld with respect to any taxable event arising with respect to the RSUs. To the extent permitted by the Committee, in its sole discretion, this amount may be: (i) withheld from other amounts due to the Participant, (ii) withheld from the value of any Award being settled or any Shares transferred in connection with the exercise or settlement of an Award, (iii) withheld from the vested portion of any Award (including Shares transferable thereunder), whether or not being exercised or settled at the time the taxable event arises, or (iv) collected directly from the Participant. Subject to the approval of the Committee, the Participant may elect to satisfy the withholding requirement, in whole or in |
| part, by having the Company or an Affiliate, as applicable, withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction; provided that such Shares would otherwise be distributable to the Participant at the time of the withholding if such Shares are not otherwise distributable at the time of the withholding, provided that the Participant has a vested right to distribution of such Shares at such time. All such elections will be irrevocable and made in writing and will be subject to any terms and conditions that the Committee, in its sole discretion, deems appropriate. |
| (e) | Requirements of Law . The grant of Awards shall be subject to all applicable laws, rules and regulations (including applicable federal and state securities laws) and to all required approvals of any governmental agencies or national securities exchange, market or other quotation system. |
| (f) | Governing Law . The Plan and all Award Agreements shall be governed by and construed in accordance with the laws of (other than laws governing conflicts of laws) the State of Ohio. |
| (g) | Award Subject to Plan . The Award is subject to the terms and conditions described in this Award Agreement and the Plan, which is incorporated by reference into and made a part of this Award Agreement. In the event of a conflict between the terms of the Plan and the terms of this Award Agreement, the terms of the Plan will govern. The Committee has the sole responsibility of interpreting the Plan and this Award Agreement, and its determination of the meaning of any provision in the Plan or this Award Agreement will be binding on the Participant. Capitalized terms that are not defined in this Award Agreement have the same meanings as in the Plan. |
| (h) |
Section 409A of the Code . This Award Agreement is intended, and shall be construed and interpreted, to comply with Section 409A of the Code and if necessary, any provision shall be held null and void to the extent such provision (or part thereof) fails to comply with Section 409A of the Code or the Treasury Regulations thereunder. For purposes of Section 409A of the Code, each payment of compensation under the Award Agreement shall be treated as a separate payment of compensation. Any amounts payable solely on account of an involuntary termination shall be excludible from the requirements of Section 409A of the Code, either as separation pay or as short-term deferrals to the maximum possible extent. Nothing herein shall be construed as the guarantee of any particular tax treatment to the Participant, and the Company shall have no liability with respect to any failure to comply with the requirements of Section 409A of the Code. Any reference to the Participant’s “termination” shall mean the Participant’s “separation from service”, as defined in Section 409A of the Code. In addition, if the Participant is determined to be a “ s pecified employee” (within the meaning of Section 409A of the Code and as determined under the Company’s policy for determining specified employees), the Participant shall not be entitled to payment or to distribution of any portion of an Award that is subject |
| to Section 409A of the Code (and for which no exception applies) and is payable or distributable on account of the Participant’s termination until the expiration of six months from the date of such termination (or, if earlier, the Participant’s death). Such Award, or portion thereof, shall be paid or distributed on the first business day of the seventh month following such termination. |
| (i) | Signature in Counterparts . This Award Agreement may be signed in counterparts, each of which will be deemed an original, but all of which will constitute one and the same instrument. |
[signature page attached]
| PARTICIPANT | ||||||
| Date: | ||||||
| Signature | ||||||
| Print Name | ||||||
| FIRST DEFIANCE FINANCIAL CORP. | ||||||||
| By: | Date: | |||||||
| Its: | ||||||||