UNITED COMMUNITY FINANCIAL CORP (Form: 8-K, Received: 03/09/2017 17:19:36)

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 3, 2017

UNITED COMMUNITY FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

OHIO

0-024399

34-1856319

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

275 West Federal Street, Youngstown, Ohio 44503-1203

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (330) 742-0500

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.

(e) On March 3, 2017, the Compensation Committee of United Community Financial Corp. (“UCFC” or the “Company”) approved annual incentive and long-term incentive awards to executive officers under UCFC’s 2015 Long Term Incentive Plan (the “2015 Plan”) approved by shareholders on April 30, 2015. To document those awards, the Company will enter into both a 2017 Long Term Incentive Plan Award Agreement (the “LTIP Agreement”) and a 2017 Annual Incentive Award Agreement (the “AIP Agreement”) with each of Messrs. Small, Garrity, Nohra and Esson and Mrs. Radis; the forms of both are attached hereto as Exhibits 10.1 and 10.2, respectively.

Under the AIP Agreement the “Target Award” for Mr. Small is $225,000, for Mr. Garrity $106,400, for Mr. Nohra $102,000, for Mr. Esson $90,000 and for Mrs. Radis $90,000. If earned, depending on continued service and Company performance, the award is paid in cash. The calculation of the award earned in the 2017 fiscal year performance period is determined by actual Company performance against target performance in five performance measures (weighted between 15-35%) as set forth in the AIP Agreement and can be paid out at a potential payout of up to 150% of the target level.

Under the LTIP Agreement, Mr. Small was granted 20,594 Performance Share Units (“PSUs”), Mr. Garrity was granted 10,652 PSUs, Mr. Nohra was granted 8,753 PSUs, Mr. Esson was granted 7,723 PSUs and Mrs. Radis was granted 9,010 PSUs. The PSUs granted to each were granted at a target level and, depending on Company performance, the LTIP Agreement provides for a potential payout at 150% of the target level. The LTIP Agreements provide potential long term incentive compensation based on Company performance over a three year performance period ending on December 31, 2019. Each performance share unit represents the right to receive one Company common share. The common shares that may be earned depend on continued service through the Compensation Committee certification date shortly after the performance period and will be determined based on the average base compensation over the performance period and on Company performance in three separate measures: (i) return on average equity versus peer group performance - 33%; (ii) three year net income versus annual budgeted net income over each of the three years – 33%; and (iii) three year total shareholder return versus peer group performance – 34%.

The summaries of the AIP Agreement and LTIP Agreement are qualified in their entirety by reference to a copy of each which is attached hereto as Exhibit 10.1 and Exhibit 10.2, respectively, and incorporated by reference herein.

Section 9 – Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d)

Exhibits


Exhibit Number		Description

10.1		2017 Annual Incentive Award Agreement

10.2		2017 Long Term Incentive Award Agreement

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.


UNITED COMMUNITY FINANCIAL CORP.

By:		/s/ Jude J. Nohra
		Jude J. Nohra, General Counsel & Secretary

Date: March 9, 2017

Exhibit 10.1

UNITED COMMUNITY FINANCIAL CORP.

2017 ANNUAL INCENTIVE PLAN AWARD AGREEMENT

This 2017 Annual Incentive Plan Award Agreement (this “Agreement”) is made and entered into as of [Date], (the “Grant Date”) by and between United Community Financial Corp. (the “Company”) and [Name] (the “Grantee”).

WHEREAS , the Company has adopted the United Community Financial Corp. 2015 Long Term Incentive Plan (the “Plan”) pursuant to which cash may be granted. Capitalized terms that are used but not defined herein have the meanings ascribed to such terms in the Plan;

WHEREAS , the Plan provides for Annual Bonus Awards;

WHEREAS , the Committee has determined that it is in the best interests of the Company and its shareholders to grant the Annual Bonus Award provided for herein.

NOW, THEREFORE , the parties hereto, intending to be legally bound, agree as follows:

1. Grant of Target Award and Form of Payout .

The Company hereby grants to the Grantee a target award as further set forth in Statement of Award attached hereto as Exhibit A and incorporated herein by reference (the “Target Award”). Following the end of the calendar year, the Committee will certify performance results based on the results determined under the Corporate Performance Payout Table below and the level of achievement of the Grantee’s personal performance goals. The allocation of the Target Award between the Grantee’s personal goals and the Corporate Performance goals is set forth in the Statement of Award attached hereto as Exhibit A and incorporated herein by reference. Utilizing the Company’s performance results and the level of achievement of the Grantee’s personal performance goals as certified by the Committee, the Committee will determine the actual earned Target Award. The actual earned Target Award as determined and certified by the Committee is referred to in this Agreement as the “Actual Award.” Following the determination of the Actual Award, the Grantee shall receive a revised Statement of Award, setting forth the level of achievement of all goals and the amount of the Actual Award, which will be paid in cash (the “Cash Payment”) as soon as practicable, but not later than March 15, 2017.

The “Performance Period” shall be the period commencing on January 1, 2017, and ending on December 31, 2017.

2017 UCFC Long Term Incentive Plan-Annual Incentive Plan Award Agreement (NEO)

2. Performance Goals and Average Compensation .

The amount of the Actual Award earned by the Grantee for the Performance Period will be determined at the end of the Performance Period based on the level of achievement of the Performance Goals listed below and the personal performance goals of the Grantee, and the amount of the Grantee’s average base salary for the Performance Period. All determinations of whether Performance Goals have been achieved, the amount of the Actual Award earned by the Grantee, the adjustments attributed to changes in average base salary, and all other matters related to this Section 2 shall be made by the Committee in its sole discretion.

Promptly following completion of the Performance Period (and no later than sixty (60) days following the end of the Performance Period), the Committee will review and certify in writing (a) whether, and to what extent, the Performance Goals for the Performance Period have been achieved, and (b) the amount of the Actual Award that the Grantee shall earn, if any, subject to compliance with the requirements of Section 3 (the date upon which the Committee certifies performance is referred to in this Agreement as the “Certification Date”). Such certification shall be final, conclusive and binding on the Grantee, and on all other persons, to the maximum extent permitted by law.

As noted above, following the Certification Date, the Actual Award will be reflected on a Statement of Award, the form of which is attached hereto as Exhibit A .

Peer Group:

The Peer Group includes the following eighteen (18) organizations:


BankFinancial Corp (BFIN)		Independent Bank Corp. (IBCP)
Civista Bancshares, Inc. (CIVB)		Lakeland Financial Corporation (LKFN)
Farmers National Banc Corp (FMNB)		LCNB Bancorp Inc. (LCNB)
First Business Financial Services, Inc. (FBIZ)		Macatawa Bank Corp. (MCBC)
First Defiance Financial Corp. (FDEF)		Mercantile Bank Corp. (MBWM)
First Financial Corporation (THFF)		Mutualfirst Financial Inc. (MFSF)
First Mid-Illinois Bancshares (FMBH)		Peoples Bancorp Inc. (PEBO)
German American Bancorp Inc. (GABC)		QCR Holdings, Inc. (QCRH)
Horizon Bancorp. (HBNC)		Stock Yards Bancorp, Inc. (SYBT)

The Committee maintains discretion to amend, modify and replace one or more members of the Peer Group when events warrant, such as in the event that a Peer Group member ceases to be a reporting company or is acquired and in other similar circumstances. The Committee has approved two (2) replacement peers to be used as substitutes: Farmers & Merchants Bancorp (FMAO) and Old Second Bancorp, Inc. (OSBC).

Performance Measures, Weightings, Goals and Payout Calibration:

The Committee has identified five (5) financial performance measures that are aligned with the Company’s goals. Each of the five (5) performance measures has a weighting ranging from 15% to 35%. The Company’s results on one (1) of the five (5) measures will be evaluated relative to the peer group and the other measures (Net Income, Loan Growth, NPA Ratio and Deposit Growth) will be evaluated relative to the Board-approved annual budget compared to the performance goals or based upon actual results compared to the performance goals, all pursuant to the Performance Payout Table below.

The Performance-Payout Table describes the five (5) performance measures, their respective weighting, how performance on each measure will be evaluated (relative to peers, relative to budget or based upon actual results compared to the performance goal) and the goals for threshold performance, target performance and superior performance. Achievement of the threshold performance goal will result in 50% of the target payout, achievement of the target performance goal will result in 100% of target payout for the respective measure, and achievement of the superior performance goal will result in 150% of the target payout for the measure. Performance in between threshold and target, or between target and superior, will be interpolated.

Performance-Payout Table:


				Evaluated	Performance Goals
Performance Measure	Weight			Vs.	Threshold		Target		Superior
Net Income ($ in 1,000)		35	%	Budget	$	20,500	$	23,556	$	25,250
Loan Growth		20	%	Actual		6.0%		11.6%		13.9%
Average Customer Deposit Growth		15	%	Actual		0.0%		2.0%		4.0%
Efficiency Ratio		15	%	Peers		25th%ile		50th%ile		75th%ile
Non-Performing Assets		15	%	Actual		1.20%		0.76%		0.50%

Payout for Performance Level (% of Target Opportunity):						50%		100%		150%

Definitions:

•

Net Income: GAAP Net Income, excluding extraordinary items;

•

Loan Growth: change in gross loans (including loans held for sale) from January 1 – December 31;

•

Average Customer Deposit Growth: total average customer deposits less brokered deposits;

•

Efficiency Ratio: operating expense divided by operating revenue; and

•

Non-Performing Assets: Total nonperforming loans plus other real estate owned divided by end of period total assets.

The Committee maintains flexibility and discretion amend, modify, terminate or otherwise adjust the Plan, as necessary, including, but not limited to, adjusting measure definitions, if such adjustments ensure a better comparison relative to the peer group and most appropriately reflect the goals of the AIP and the Company’s compensation philosophy.

3. Vesting .

(a) Vesting of the Cash Payment . Except as otherwise provided in this Agreement, the portion of the Actual Award that constitutes the Cash Payment shall be vested on the Certification Date provided the Grantee is employed by the Company on that date.

4. Termination of Continuous Service .

(a) Except as otherwise expressly provided in this Agreement, if the Grantee’s Continuous Service terminates for any reason at any time before any part of the Target or Actual Award has vested, the Grantee’s unvested Target or Actual Award shall be automatically forfeited upon such termination of Continuous Service, and neither the Company nor any Affiliate shall have any further obligations to the Grantee under this Agreement. “Continuous Service” means that the Grantee’s service with the Company as an Employee is not terminated.

(b) Notwithstanding Section 4(a):

(i)

If the Grantee’s Continuous Service terminates before the Target Award has vested as a result of the Grantee’s death or Disability, the Target Award shall vest in accordance with Section 3 as if the Grantee’s Continuous Service had not terminated. The Cash Payment comprising the Actual Award shall be paid to the Grantee or Grantee’s estate or beneficiary(ies) as the case may be in accordance with Section 1; and

(ii)

If the Grantee’s Continuous Service terminates before the end of the Performance Period as a result of Retirement, termination by the Company without Cause, or termination by the Grantee for Good Reason, a pro rata portion of the unvested Target Award shall vest in proportion to the number of months, including any partial month, elapsed in the Performance Period. The Actual Award shall be determined on the Certification Date, and the Cash Payment comprising the Actual Award shall be paid in accordance with Section 1, subject to consideration of Section 409A (any Cash Payment issued is intended to comply with Section 409A).

(c) “Good Reason” means the definition of “Good Reason” set forth in the Grantee’s employment agreement, change in control and severance agreement or similar agreement, or in the absence thereof, “Good Reason” means:

(i)

a material reduction in the Grantee’s rate of base salary; or

(ii)

the Company changes by fifty (50) miles or more the principal location in which the Grantee is required to perform services; or

(iii)

the Company terminates, materially amends or materially restricts the Grantee’s participation in, any equity, bonus or equity-based compensation plans or qualified or supplemental retirement plans so that, when considered in the aggregate with any substitute plan or plans, the plans in which the Grantee is participating materially fail to provide him or her with a level of benefits provided in the aggregate by such plans prior to such termination or amendment; or

(iv)

the Company materially breaches the provisions of this Agreement.

A termination of the Grantee’s employment shall not be deemed to be for Good Reason unless (i) the Grantee gives notice to the Company of the existence of the event or condition constituting Good Reason within thirty (30) days after such event or condition initially occurs or exists, (ii) the Company fails to cure such event or condition within thirty (30) days after receiving such notice, and (iii) the Grantee’s termination occurs not later than ninety (90) days after such event or condition initially occurs or exists, in each case without the Grantee’s written consent.

5. Effect of a Change in Control . If there is a Change in Control during the Performance Period, the Target Award shall be earned and vested at Target levels on the effective date of the Change in Control and the amount of the Target Award shall be paid in cash no later than sixty (60) days following the effective date of the Change in Control.

6. Transferability . Subject to any exceptions set forth in this Agreement or the Plan, until vested, the Target or Actual Award or the rights relating thereto may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Grantee. Any attempt to assign, alienate, pledge, attach, sell or otherwise transfer or encumber the Target or Actual Award or the rights relating thereto prior to vesting shall be wholly ineffective and, if any such attempt is made, the Target or Actual Award will be forfeited by the Grantee and all of the Grantee’s rights to such Target or Actual Award shall immediately terminate without any payment or consideration by the Company.

7. No Right to Continued Service . Neither the Plan nor this Agreement shall confer upon the Grantee any right to be retained in any position, as an Employee, Consultant or Director of

the Company. Further, nothing in the Plan or this Agreement shall be construed to limit the discretion of the Company to terminate the Grantee’s Continuous Service at any time, with or without Cause.

8. Notices . Any notice required to be delivered to the Company under this Agreement shall be in writing and addressed to the Secretary of the Company at the Company’s principal corporate offices. Any notice required to be delivered to the Grantee under this Agreement shall be in writing and addressed to the Grantee at the Grantee’s address as shown in the records of the Company. Either party may designate another address in writing (or by such other method approved by the Company) from time to time.

9. Governing Law . This Agreement will be construed and interpreted in accordance with the laws of the State of Ohio without regard to conflict of law principles.

10. Interpretation . Any dispute regarding the interpretation of this Agreement shall be submitted by the Grantee or the Company to the Committee for review. The resolution of such dispute by the Committee shall be final and binding on the Grantee and the Company.

11. Target Award Subject to Plan . This Agreement is subject to the Plan as approved by the Company’s shareholders. The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

12. Successors and Assigns . The Company may assign any of its rights under this Agreement. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon the Grantee and the Grantee’s beneficiaries, executors, administrators and the person(s) to whom the Target or Actual Award or the rights relating thereto may be transferred by will or the laws of descent or distribution.

13. Severability . The invalidity or unenforceability of any provision of the Plan or this Agreement shall not affect the validity or enforceability of any other provision of the Plan or this Agreement, and each provision of the Plan and this Agreement shall be severable and enforceable to the extent permitted by law.

14. Discretionary Nature of Plan . The Plan is discretionary and may be amended, cancelled or terminated by the Company at any time, in its discretion. The grant of the Target Award in this Agreement does not create any contractual right or other right to receive any Target Award or other Awards in the future. Future Awards, if any, will be at the sole discretion of the Company. Any amendment, modification, or termination of the Plan shall not constitute a change or impairment of the terms and conditions of the Grantee’s employment with the Company.

15. Amendment . The Committee has the right to amend, alter, suspend, discontinue or cancel the Target Award, prospectively or retroactively; provided that, no such amendment shall adversely affect the Grantee’s material rights under this Agreement without the Grantee’s consent.

16. Section 162(m) . All payments under this Agreement are intended to constitute “qualified performance-based compensation” within the meaning of Section 162(m) of the Code. This Award shall be construed and administered in a manner consistent with such intent.

17. Section 409A . This Agreement is intended to comply with Section 409A of the Code or an exemption thereunder and shall be construed and interpreted in a manner that is consistent with the requirements for avoiding additional taxes or penalties under Section 409A of the Code. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A of the Code and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Grantee on account of non-compliance with Section 409A of the Code.

18. No Impact on Other Benefits . Except as otherwise provided in a Grantee’s employment agreement, the value of the Grantee’s Target Award is not part of his or her normal or expected compensation for purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit.

19. Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

20. Acceptance . The Grantee hereby acknowledges receipt of a copy of the Plan and this Agreement. The Grantee has read and understands the terms and provisions thereof, and accepts the Target Award subject to all of the terms and conditions of the Plan and this Agreement.

21. Clawback . Notwithstanding any other provisions in this Agreement or the Plan, all payments made to the Grantee pursuant to this Agreement shall be subject to recovery, deduction or clawback (collectively, “Clawback”) under any applicable law, regulation, stock exchange listing requirement requiring Clawback and under the Company’s Compensation Adjustment and Recoupment Policy (adopted by the Board on March 17, 2015), as may be amended from time to time.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.


United Community Financial Corp.


Name:		[Name]
Title:		[Title]


Name:		[Name]

EXHIBIT A

2017 ANNUAL INCENTIVE PLAN

STATEMENT OF AWARD


Grantee’s Name and Address :

[Name]
[Address]

Target Award :	$	( % of your base salary)

Corporate Performance %:	%
Personal Performance %:	%

Actual Award :

Award Date:

Corporate Performance %:	%
Personal Performance %:	%

Total Award (Cash Payment):	$

2017 UCFC Long Term Incentive Plan-Annual Incentive Plan Award Agreement (NEO)

Exhibit 10.2

UNITED COMMUNITY FINANCIAL CORP.

2017 LONG TERM INCENTIVE PLAN AWARD AGREEMENT

This 2017 Long Term Incentive Plan (“LTIP”) Award Agreement (this “Agreement”) is made and entered into as of [Date], (the “Grant Date”) by and between United Community Financial Corp. (the “Company”) and [Name] (the “Grantee”).

WHEREAS , the Company has adopted the United Community Financial Corp. 2015 Long Term Incentive Plan (the “Plan”) pursuant to which Performance Share Units may be granted; and

WHEREAS , the Committee has determined that it is in the best interests of the Company and its shareholders to grant the award of Performance Share Units provided for herein.

NOW, THEREFORE , the parties hereto, intending to be legally bound, agree as follows:

1. Grant of Target Award and Performance Period . The Company hereby grants to the Grantee a target award represented as Performance Share Units (“PSU”) as further set forth in Statement of Award attached hereto as Exhibit A and incorporated herein by reference (the “Target Award”). Each PSU represents the right to receive one Common Share, subject to the terms and conditions set forth in this Agreement and the Plan. The Target Award will be determined as a percentage of base salary, and translated into PSU’s based upon the Company’s average stock price for the twenty (20) trading days prior to the approval of the grant by the Compensation Committee (the “Committee”). The actual number of Common Shares that the Grantee earns for the Performance Period will be determined by the level of achievement of the Performance Goals in accordance with Section 2, and is referred to in this Agreement as the “Actual Award.” Capitalized terms that are used but not defined herein have the meanings ascribed to them in the Plan.

The “Performance Period” shall be the period commencing on January 1, 2017, and ending on December 31, 2019.

2. Performance Goals and Average Compensation .

The Actual Award that shall vest and be payable in Common Shares to the Grantee for the Performance Period will be determined at the end of the Performance Period based on the level of achievement of the Performance Goals listed below and the amount of the Grantee’s average base salary for the Performance Period. All determinations of whether Performance Goals have been achieved, the adjustments attributed to changes in average base salary, the Actual Award earned by the Grantee, and all other matters related to this Section 2 shall be made by the Committee in its sole discretion.

2017 UCFC Long Term Incentive Plan-Long Term Incentive Plan PSU Award Agreement (NEO)

Promptly following completion of the Performance Period (and no later than sixty (60) days following the end of the Performance Period), the Committee will review and certify in writing (a) whether, and to what extent, the Performance Goals for the Performance Period have been achieved, and (b) the number of Common Shares that the Grantee shall earn, if any, subject to compliance with the requirements of Section 3 (the date upon which the Committee certifies performance is referred to in this Agreement as the “Certification Date”). Such certification shall be final, conclusive and binding on the Grantee, and on all other persons, to the maximum extent permitted by law.

Following the Certification Date, the Actual Award will be reflected on a Statement of Award, the form of which is attached hereto as Exhibit A .

Peer Group:

The “Peer Group” includes the following eighteen (18) organizations:


BankFinancial Corp (BFIN)		Independent Bank Corp. (IBCP)
Civista Bancshares, Inc. (CIVB)		Lakeland Financial Corporation (LKFN)
Farmers National Banc Corp (FMNB)		LCNB Bancorp Inc. (LCNB)
First Business Financial Services, Inc. (FBIZ)		Macatawa Bank Corp. (MCBC)
First Defiance Financial Corp. (FDEF)		Mercantile Bank Corp. (MBWM)
First Financial Corporation (THFF)		Mutualfirst Financial Inc. (MFSF)
First Mid-Illinois Bancshares (FMBH)		Peoples Bancorp Inc. (PEBO)
German American Bancorp Inc. (GABC)		QCR Holdings, Inc. (QCRH)
Horizon Bancorp. (HBNC)		Stock Yards Bancorp, Inc. (SYBT)

Performance Measures, Weightings, Goals, and Payout Calibration:

The performance measures are:

•

3-year average ROE will be weighted 33% and be evaluated relative to Peer Group performance;

-2-

•

Annual Net Income for each year over a three year period will be weighted 33% and be evaluated relative to the Company’s annual budgeted net income for each of those three (3) years comprising the Performance Period, using annual budgeted Net Income for each of the three years as the goal; and

•

3-year relative Total Shareholder Return (TSR) will be weighted 34% and be evaluated relative to the Peer Group.

The table below sets forth the three performance measures, their respective weighting, how performance on each measure will be evaluated (relative to peers or relative to plan) and the goals for threshold performance, target performance and superior performance. Achievement of the threshold performance goal will result in 50% of the target payout, achievement of the target performance goal will result in 100% of target payout for the respective measure, and achievement of the superior performance goal will result in 150% of the target payout for the measure. Payouts for performance between threshold and target, or between target and superior, will be interpolated.

Performance-Payout Table:

Evaluated

Performance Goals

Performance Measure

Weight

vs.

Threshold

Target

Superior

3-year Average ROE

Peers

25th %ile

50th %ile

75th %ile

3-year Net Income

Annual

Budgeted Net

Income

75% of Plan

100% of Plan

125% of Plan

3-year Total Shareholder Return (rTSR)

Peers

25th %ile

50th %ile

75th %ile

Payout for Performance Level (% of Target Opportunity):

100%

150%

Definitions:

•

3-year Average ROE: determine the return on average equity versus peer for each annual period (“Stacked Ranking”). The sum of each Stacked Ranking is then averaged over the performance period;

•

3-year Net Income: on an annual basis, compare actual net income versus plan to determine performance (“Annual Performance Percentage”). The sum of each Annual Performance Percentage is then averaged over the performance period; and

•

Total Shareholder Return: stock price appreciation, plus reinvested dividends over the performance period.

-3-

3. Vesting of PSUs . The PSUs are subject to forfeiture until they vest. Except as otherwise provided herein, the PSUs will vest and become nonforfeitable on the Certification Date, subject to (a) the achievement of the minimum threshold Performance Goals for payout set forth in Section 2, and (b) the Grantee’s Continuous Service from the Grant Date through the Certification Date. The Actual Award earned upon PSU vesting shall be determined by the Committee based on the level of achievement of the Performance Goals set forth in Section 2 and shall be rounded to the nearest whole Common Share. “Continuous Service” means that the Grantee’s service with the Company as an Employee is not terminated.

4. Termination of Continuous Service .

(a) Except as otherwise expressly provided in this Agreement, if the Grantee’s Continuous Service terminates for any reason at any time before all of his or her PSUs have vested, the Grantee’s unvested PSUs shall be automatically forfeited upon such termination of Continuous Service, and neither the Company nor any Affiliate shall have any further obligations to the Grantee under this Agreement.

(b) Notwithstanding Section 4(a):

(i)

If the Grantee’s Continuous Service terminates during the Performance Period as a result of the Grantee’s death or Disability, all of the outstanding PSUs will vest in accordance with Section 3, and further provided that the amount to be paid shall be determined in the manner set forth in Section 2, as if the Grantee’s Continuous Service had not terminated; and

(ii)

If the Grantee’s Continuous Service terminates before the end of the Performance Period as a result of Retirement, termination by the Company without Cause, or termination by the Grantee for Good Reason, a pro-rata portion of the outstanding PSUs shall vest in proportion to the number of months, including any partial month, elapsed in the Performance Period, and further provided that the amount to be paid shall be determined in the manner set forth in Section 2.

(c) “Good Reason” means the definition of “Good Reason” set forth in the Grantee’s employment agreement, or in the absence thereof, “Good Reason” means:

(i)

a material reduction in the Grantee’s rate of base salary; or

-4-

(ii)

the Company changes by fifty (50) miles or more the principal location in which the Grantee is required to perform services; or

(iii)

(iv)

the Company materially breaches the provisions of this Agreement.

5. Effect of a Change in Control . If there is a Change in Control during the Performance Period, all outstanding PSUs shall be earned and vest at Target Award levels for open years in the Performance period and in the manner set forth in Section 2 for any closed years in the Performance Period, on the effective date of the Change in Control and shall be paid in cash no later than sixty (60) days following the effective date of such Change in Control.

6. Payment of PSUs . Payment in respect of the PSUs earned for the Performance Period shall be made in Common Shares and shall be issued to the Grantee as soon as practicable following the later of the vesting date or the end of the Performance Period and in any event not later than two and one-half (2-1/2) months following the end of the year in which the vesting date or the end of the Performance Period occurs. The Company shall (a) issue and deliver to the Grantee the number of Common Shares equal to the number of vested PSUs, and (b) enter the Grantee’s name on the books of the Company as the shareholder of record with respect to the Common Shares delivered to the Grantee.

7. Transferability . Subject to any exceptions set forth in this Agreement or the Plan, the PSUs or the rights relating thereto may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Grantee, except by will or the laws of descent and distribution, and upon any such transfer by will or the laws of descent and distribution, the transferee shall hold such PSUs subject to all of the terms and conditions that were applicable to the Grantee immediately prior to such transfer.

-5-

8. Rights as Shareholder; Dividend Equivalents .

(a) The Grantee shall not have any rights of a shareholder with respect to the Common Shares underlying the PSUs, including voting rights. Notwithstanding the foregoing, dividends on the Common Shares underlying the PSUs, if any, paid prior to the certification date, whether in cash or in the form of additional Company Common Shares, shall accrue and be deferred and subject to forfeiture if the PSUs granted hereby do not vest with the Grantee on the Certification Date; then paid in cash or shares as applicable, subject to adjustment based upon the Actual Award paid to the Grantee.

(b) Upon and following the vesting of the PSUs and the issuance of Common Shares, the Grantee shall be the record owner of the Common Shares underlying the PSUs unless and until such shares are sold or otherwise disposed of, and as record owner shall be entitled to all rights of a shareholder of the Company (including voting and dividend rights).

9. No Right to Continued Service . Neither the Plan nor this Agreement shall confer upon the Grantee any right to be retained in any position, as an Employee, Consultant or Director of the Company. Further, nothing in the Plan or this Agreement shall be construed to limit the discretion of the Company to terminate the Grantee’s Continuous Service at any time, with or without Cause.

10. Adjustments . On any change in the number or kind of outstanding Common Shares of the Company by reason of recapitalization, merger, consolidation, reorganization, separation, liquidation, share split, share dividend, combination of shares or any other change in the corporate structure or Common Shares of the Company, the Company, by action of the Committee, is empowered to make such adjustment, if any, in the number and kind of PSUs subject to this Agreement as it considers appropriate for the protection of the Company and of the Grantee.

11. Tax Liability and Withholding .

(a) The Grantee shall be required to pay to the Company, and the Company shall have the right to deduct from any compensation paid to the Grantee pursuant to the Plan, the amount of any required withholding taxes in respect of the Common Shares issued upon the vesting of the PSUs and to take all such other action as the Committee deems necessary to satisfy all obligations for the payment of such withholding taxes. The Committee may permit the Grantee to satisfy any federal, state or local tax withholding obligation by any of the following means, or by a combination of such means:

(i)

tendering a cash payment;

(ii)

authorizing the Company to withhold Common Shares from the Common Shares otherwise issuable or deliverable to the Grantee as a result of the

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vesting of the PSUs; provided, however, that no Common Shares shall be withheld with a value exceeding the minimum amount of tax required to be withheld by law; or

(iii)

delivering to the Company previously owned and unencumbered Common Shares.

(b) Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or other tax-related withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains the Grantee’s responsibility and the Company (i) makes no representation or undertakings regarding the treatment of any Tax-Related Items in connection with the grant, vesting or settlement of the PSUs or the subsequent sale of any shares, and (ii) does not commit to structure the Award to reduce or eliminate the Grantee’s liability for Tax-Related Items.

12. Compliance with Law . The issuance and transfer of Common Shares in connection with the PSUs shall be subject to compliance by the Company and the Grantee with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company’s Common Shares may be listed. No Common Shares shall be issued or transferred unless and until any then applicable requirements of state and federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel.

13. Notices . Any notice required to be delivered to the Company under this Agreement shall be in writing and addressed to the Secretary of the Company at the Company’s principal corporate offices. Any notice required to be delivered to the Grantee under this Agreement shall be in writing and addressed to the Grantee at the Grantee’s address as shown in the records of the Company. Either party may designate another address in writing (or by such other method approved by the Company) from time to time.

14. Governing Law . This Agreement will be construed and interpreted in accordance with the laws of the State of Ohio without regard to conflict of law principles.

15. Interpretation . Any dispute regarding the interpretation of this Agreement shall be submitted by the Grantee or the Company to the Committee for review. The resolution of such dispute by the Committee shall be final and binding on the Grantee and the Company.

16. PSUs Subject to Plan . The Performance Share Units are in all respects subject to the terms, conditions and provisions of the Agreement and the Plan.

17. Successors and Assigns . The Company may assign any of its rights under this Agreement. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon the Grantee and the Grantee’s beneficiaries, executors, administrators and the person(s) to whom the PSUs may be transferred by will or the laws of descent or distribution.

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18. Severability . The invalidity or unenforceability of any provision of the Plan or this Agreement shall not affect the validity or enforceability of any other provision of the Plan or this Agreement, and each provision of the Plan and this Agreement shall be severable and enforceable to the extent permitted by law.

19. Discretionary Nature of Plan . The Plan is discretionary and may be amended, cancelled or terminated by the Company at any time, in its discretion. The grant of the PSUs in this Agreement does not create any contractual right or other right to receive any PSUs or other Awards in the future. Future Awards, if any, will be at the sole discretion of the Company. Any amendment, modification, or termination of the Plan shall not constitute a change or impairment of the terms and conditions of the Grantee’s employment with the Company.

20. Amendment . The Committee has the right to amend, alter, suspend, discontinue or cancel the PSUs, prospectively or retroactively; provided that, no such amendment shall adversely affect the Grantee’s material rights under this Agreement without the Grantee’s consent.

21. Section 162(m) . All payments under this Agreement are intended to constitute “qualified performance-based compensation” within the meaning of Section 162(m) of the Code. This Award shall be construed and administered in a manner consistent with such intent.

22. Section 409A . This Agreement is intended to comply with Section 409A of the Code or an exemption thereunder and shall be construed and interpreted in a manner that is consistent with the requirements for avoiding additional taxes or penalties under Section 409A of the Code. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A of the Code and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Grantee on account of non-compliance with Section 409A of the Code.

23. No Impact on Other Benefits . Except as otherwise provided in a Grantee’s employment agreement, the value of the Grantee’s PSUs is not part of his or her normal or expected compensation for purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit.

24. Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

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25. Acceptance . The Grantee hereby acknowledges receipt of a copy of the Plan and this Agreement. The Grantee has read and understands the terms and provisions thereof, and accepts the PSUs subject to all of the terms and conditions of the Plan and this Agreement. The Grantee acknowledges that there may be adverse tax consequences upon the vesting or settlement of the PSUs or disposition of the underlying shares and that the Grantee has been advised to consult a tax advisor prior to such vesting, settlement or disposition.

26. Clawback . Notwithstanding any other provisions in this Agreement or the Plan, all payments made to the Grantee pursuant to this Agreement shall be subject to recovery, deduction or clawback (collectively, “Clawback”) under any law, regulation, stock exchange listing requirement requiring Clawback and under the Company’s Compensation Adjustment and Recoupment Policy (adopted by the Board on March 17, 2015), as may be amended from time to time.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.


United Community Financial Corp.


Name:		[Name]
Title:		[Title]


Name:		[Name]

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EXHIBIT A

2017 LONG TERM INCENTIVE PLAN

STATEMENT OF AWARD


Grantee’s Name and Address :

[Name]
[Address]

Target Award :		Performance Share Units

Actual Award :		Common Shares

2017 UCFC Long Term Incentive Plan-Long Term Incentive Plan PSU Award Agreement (NEO)