Company: NWFL
Filing Date: 2025-09-19
Form Type: S-4
Source: 0001193125-25-208580
Chunk: 164

Company: NORWOOD FINANCIAL CORP
Filing Date: 2025-09-19
Form: S-4
Chunk 164
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 the effective time of the merger to the same extent as PB Bankshares currently provides for indemnification of its officers and directors. Additionally, for a period of six years following the effective time of the merger, Norwood has also agreed to maintain in effect PB Bankshares’s directors’ and officers’ liability insurance coverage or provide a policy with comparable coverage; provided, however, that Norwood shall not be obligated to make an aggregate premium payment for such six (6) year tail coverage period in respect of such policy (or coverage replacing such policy) which exceeds 150% of the annual premiums currently paid by PB Bankshares for such insurance. 105

Treatment of Stock Options

Certain directors and executive officers of PB Bankshares hold outstanding stock options to purchase shares of PB Bankshares common stock
granted under the PB Bankshares 2022 Equity Incentive Plan (the “EIP”). The EIP, including the number of shares of PB Bankshares common stock reserved thereunder, has been previously approved by shareholders of PB Bankshares. The merger
agreement provides that, at the effective time of the merger, each outstanding stock option granted under the EIP which is outstanding and unexercised, shall automatically become vested and shall be cancelled and, subject to PB Bankshares’s
receipt of an option surrender agreement shall be converted into the right to receive from Norwood a cash payment in an amount, less required withholding taxes, equal to the product of (i) the number of shares of PB Bankshares Common Stock
subject to the stock option, multiplied by (ii) the amount by which the Cash Consideration (the “Option Payment Amount”) exceeds the exercise price of such stock option. If the exercise price of a stock option is greater than the
Option Payment Amount, then at the Effective Time of the Merger, such stock option shall be cancelled without any payment made in exchange therefor. Such payments to the former option holder shall be reported as compensation on IRS Form W-2 or 1099-NEC, as applicable.

Treatment of Restricted Stock

Certain directors and executive officers of PB Bankshares hold shares of PB Bankshares Penn restricted stock granted under
the EIP. The merger agreement provides that, at the effective time of the merger, any vesting restrictions on each share of restricted stock units or restricted stock outstanding immediately prior thereto shall automatically lapse and the PB
Bankshares restricted stock award shall be treated as issued and outstanding shares of PB Bankshares common stock. PB Bankshares shall withhold a sufficient