EXHIBIT 10.2

 

PERFORMANCE SHARE UNIT AWARD AGREEMENT

UNDER THE

MAINSOURCE FINANCIAL GROUP, INC.

2015 STOCK INCENTIVE PLAN

 

Notice of Grant

 

1. Grantee:      

 

2. Grant Date:      , 2015

 

3. Number of Performance Share Units:            (the “Performance Share Units”
or “PSUs”)

 

This Agreement is between MainSource Financial Group, Inc., an Indiana
corporation (the “Company”), and the Grantee named above, in accordance with the
terms of the MainSource Financial Group, Inc. 2015 Stock Incentive Plan (the
“Plan”).  The Grantee has been granted the Performance Share Units specified
above (collectively, the “Award”), subject to the terms and conditions of the
Plan and this Award Agreement (the “Agreement”).

 

The Plan contains terms and conditions applicable to the Award that are not
explicitly set forth in this Agreement, but which are incorporated herein by
reference. The terms of this Agreement are subject to the terms of the Plan.  In
the case of any conflict between the terms of this Agreement and the terms of
the Plan, the terms of the Plan will control.  The Grantee acknowledges
receiving a copy of the Plan and represents that he or she is familiar with the
terms and provisions of the Plan.  The Grantee has reviewed the Plan and this
Agreement in their entirety, has had an opportunity to obtain the advice of his
or her advisors prior to signing this Agreement and fully understands all
provisions of the Award.  The Grantee agrees to accept as binding, conclusive
and final all decisions or interpretations of the Committee upon any questions
arising under the Plan or this Agreement.  Capitalized terms used in this
Agreement and not otherwise defined have the meanings given to them in the Plan.

 

Grant of Performance Share Units

 

1.                                      Award of Performance Share Units. 
Subject to the terms of this Agreement and the Plan, the Company hereby grants
to the Grantee the Performance Share Units specified in the Notice of Grant
section above.

 

2.                                      Performance Period.  The Performance
Period to which this Award of PSUs relates is the three-year period beginning on
January 1, 2015 and ending on December 31, 2017.

 

3.                                      Performance Goals.  The Performance
Goals for the Performance Period are specified in Schedule A based on a
comparison of the Company’s performance over the Performance Period for
cumulative earnings per share (“EPS”) relative to the Company’s-long range plan
as well as average return on assets (“ROA”) and relative total shareholder
return (“rTSR”) relative to the peer group identified annually by the Committee.

 

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4.                                      Earning and Vesting of Performance Share
Units.  The Performance Share Units will become earned and vested for the
Performance Period to the extent (a) the Performance Goals are satisfied in
accordance with the earnings provision of Schedule A, and (b) the Grantee is
actively employed on the last day of the Performance Period.  If the Performance
Goals are not satisfied, those Performance Share Units eligible to be earned and
vested during such Performance Period will be forfeited effective as of the last
day of the Performance Period.

 

5.                                      Change in Control.  Notwithstanding any
other provision of this Agreement, the Performance Share Units shall be vested
upon a Change in Control of the Company as provided in Section 12.1 of the Plan.

 

6.                                      Form and Timing of Payment of PSUs. 
Payment of earned and vested Performance Share Units will be made as soon as
practicable in the calendar year after the end of the Performance Period.  The
Committee, in its sole discretion, may pay earned and vested Performance Share
Units in the form of cash or Shares (which have an aggregate Fair Market Value
equal to the value of the earned and vested Performance Share Units, determined
as of the last day of the Performance Period).

 

7.                                      Dividends.  The Grantee shall be
entitled to receive a cash payment at the same time payment for Performance
Share Units are paid as provided in Paragraph 6 above, equal to the hypothetical
dividends which would have been paid on the actual number of PSUs earned over
the Performance Period.

 

8.                                      Contingency.  The grant of Performance
Share Units set forth herein is subject to and contingent upon the approval of
the Plan by the shareholders of the Company at the 2015 Annual Meeting of
Shareholders.

 

General Provisions

 

1.                   Change in Company Stock.  In the event of any change in
Shares, as described in Section 3.6 of the Plan, the Committee shall make
appropriate adjustment or substitution in the shares of PSUs, all as provided in
the Plan.  The Committee’s determination in this respect shall be final and
binding upon all parties.

 

2.                   No Guarantee of Employment.  Nothing in this Agreement
(a) confers on Grantee any right to continue in the employment of the Company,
or (b) interferes with the Company’s right to terminate the employment of
Grantee at any time, with or without cause.

 

3.                   Restrictive Legend.  In the event the Shares are issued to
a Participant who is an “affiliate” of the Company (as defined by Rule 144
promulgated under the Securities Act of 1933, as amended), the Company may
require that the Shares to be issued to such Participant contain a legend in
substantially the following form:

 

THE HOLDER OF THE SHARES EVIDENCED BY THIS CERTIFICATE IS AN “AFFILIATE” OF THE
COMPANY (AS DEFINED BY RULE 144 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED), AND THEREFORE, THE SHARES ARE SUBJECT TO CERTAIN RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE

 

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SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS.

 

4.                   Clawback of Awards.  In the event the Company is required
to prepare an accounting restatement due to the Company’s material noncompliance
with any financial reporting requirement under securities laws, and Shares
became vested based on the erroneous data within three years preceding the date
of the accounting restatement, then the Grantee is required to repay the Company
the excess (in either cash or shares of common stock of the Company) which would
not have been paid to the Grantee under the accounting restatement. 
Additionally, to the extent any federal or state legislation applicable to the
Company, including but not limited to the Dodd-Frank Financial Reform Act,
requires the Company’s compensation plans to include a more restrictive clawback
provision, the Company and Grantee agree that such provision shall be
incorporated herein by reference.

 

5.                   Restrictive Covenants.  Grantee acknowledges that without
his or her making the covenants and agreements hereinafter contained in this
Section, the Company would not have granted this Award to the Grantee and the
grant of such Award is in reliance upon Grantee’s compliance with the covenants
and agreements made in this Section.

 

(a)                                  Noncompetition.  Grantee hereby covenants
and agrees that during Grantee’s employment with the Company and its Affiliates
and for a 18-month period following a Termination of Service for any reason,
Grantee agrees that he or she shall not, directly or directly, whether
individually or as a partner, shareholder, officer, director, employee,
independent representative, broker, agent, consultant or in any other capacity
for any other individual, partnership, firm, corporation, company or other
entity, engage in the following prohibited activities without prior written
authorization from the Company:

 

(i)                                     Have any ownership interest, in excess
of a one percent ownership interest, in any Restricted Organization (as
hereinafter defined);

 

(ii)                                Work or provide services for any Restricted
Organization;

 

(iii)                               Employ or seek to employ or engage or seek
to engage any person who has worked for or in conjunction with the Company or an
Affiliate during the 12-month period preceding the Grantee’s Termination of
Service, specifically including any consultant, employee, provider, or vendor
used by the Company or an Affiliate;

 

(iv)                              Solicit or induce any person currently
employed by or otherwise associated with the Company or an Affiliate to
terminate such employment or relationship;

 

(v)                                 Solicit or provide or offer to solicit or
provide any Restricted Product or Service to any business account or customer of
the Company or an Affiliate who was a business account or customer of the
Company or an Affiliate during the 12-month period preceding Grantee’s
Termination of Service or about whom Grantee obtained confidential information;

 

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(vi)                              Accept business from any business account or
customer of the Company or an Affiliate who was a business account or customer
of the Company or an Affiliate during the term of Grantee’s employment,
including, but not limited to, any business account or customer serviced or
contacted by Grantee, or for whom Grantee had direct or indirect responsibility,
on behalf of the Company or an Affiliate within the 12-month period preceding
the Grantee’s Termination of Service or about whom Grantee obtained confidential
information, when that business pertains to products or services which are
competitive with or substantially similar to any Restricted Product or Service;
or

 

(vii)                           Otherwise attempt to interfere with the Company
or an Affiliate’s business or its relationship with its business accounts,
consultants, customers, employees, or vendors.

 

(b)                                  Definitions.  For purposes of this Section:

 

(i)                                       “Restricted Product or Service” shall
mean a product or service in development or design, or produced, marketed, sold,
disseminated, offered or distributed by the Company or an Affiliate at any time
on or after the date of this Award Agreement and until Grantee’s Termination of
Employment.

 

(ii)                                    “Restricted Area” shall mean any county
in which the Company or any subsidiary of the Company has an office as of the
date of Termination of Service.

 

(iii)                                 “Restricted Organization” shall mean any
bank holding company, savings association holding company, financial services
holding company, bank, savings bank, thrift, any other financial institution or
other organization or entity that is primarily engaged in the financial services
industry within the Restricted Area, which competes with the Company or an
Affiliate.

 

(c)                                   Adjustments and Extension of Restrictive
Period. Should any covenant or restriction included in this Section be held to
be unreasonable or unenforceable for any reason, including without limitation
the temporal limitation, geographic restrictions, or scope of activity covered
by a restrictive covenant, then such provision or restriction shall be given
effect and enforced to whatever extent would be reasonable and enforceable.  All
remaining covenants and restrictions shall remain in full force and effect in
accordance with the terms thereof.  If Grantee is deemed to have breached any of
the foregoing restrictive covenants, Grantee agrees that the restrictive period
shall be automatically extended by a period of time equal to the period of such
breach, measured from the date of the breach through the date of such
determination.

 

(d)                                  Survival of Obligations.  Grantee agrees
that Grantee’s obligations contained in this Section shall survive the Grantee’s
Termination of Service, whether such termination is voluntary or involuntary. 
Grantee further acknowledges that any breach by the Company of any contractual,
statutory, or other legal obligation to Grantee

 

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shall not excuse or terminate Grantee’s obligations hereunder or otherwise
preclude the Company from seeking relief pursuant to any provision of this
Agreement.

 

(e)                                   Reasonableness of Restrictions.  Grantee
hereby agrees and acknowledges that (i) the provisions of this Section are
reasonable, and (ii) Grantee has (A) read the foregoing provisions of this
Section, (B) been given ample time and opportunity to consult with counsel
concerning the meaning and effect of this Section, and (C) in no way been
coerced or in any way forced to agree to the provisions of this Section.

 

(f)                                    Remedies.  Grantee acknowledges and
agrees that any actual or threatened breach of the foregoing provisions of this
Agreement will cause irreparable harm to the Company and/or its Affiliates and
that it may be difficult to determine or adequately compensate the Company and
its Affiliates through monetary damages.  Accordingly, Grantee hereby agrees
that the Company may seek a restraining order or other injunctive remedy to
prevent or restrain such breach without the requirement to post or obtain a bond
or other security.  Grantee further agrees that the Company shall also be
entitled to recover reasonable costs and attorney’s fees incurred by it to
enforce the foregoing covenants and agreement.  Grantee further acknowledges
that nothing contained herein shall be construed to prohibit or limit the
Company and its Affiliates from pursuing any other remedies, whether such
remedies are contractual or arise at law or in equity.  Grantee further agrees
to indemnify and hold harmless the Company and its Affiliates, directors,
officers, employees, agents, successors and assigns from and against any and all
losses or liabilities which may result from the breach of the restrictive
covenants set forth in this Section.

 

6.                                     Amendment.  Subject to Section 409A of
the Internal Revenue Code of 1986, as amended, if applicable, and Section 10.1
of the Plan, the Board shall have complete and exclusive power and authority to
amend or modify this Agreement (and the Board shall have the power and authority
to amend or modify the Plan) in any or all respects; provided, however, that no
such amendment or modification shall adversely affect, in any material respect,
any rights of the Grantee with respect to the Award granted pursuant to this
Agreement, unless the Grantee consents to such amendment or modification, except
that any supplement, amendment, alteration or discontinuation may be made to
(a) avoid a material charge or expense to the Company or an Affiliate, (b) cause
this Plan to comply with applicable law, or (c) permit the Company or an
Affiliate to claim a tax deduction under applicable law.

 

7.                                     Indemnity.  The Grantee hereby agrees to
indemnify and hold harmless the Company and its Affiliates (and their respective
directors, officers and employees) from and against any and all losses, claims,
damages, liabilities and expenses based upon or arising out of the incorrectness
or alleged incorrectness of any representation made by Grantee to the Company or
any failure on the part of the Grantee to perform any agreements contained
herein.  The Grantee hereby further agrees to release and hold harmless the
Company and its Affiliates (and their respective directors, officers and
employees) from and against any tax liability, including without limitation,
interest and penalties, incurred by the Grantee in connection with the Grantee’s
participation in the Plan.

 

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8.                                     Compliance with Laws and Regulations. 
The grant and exercise of the Award, as applicable, and the issuance of the
Shares shall be subject to compliance by the Company and Grantee with all
applicable requirements of law relating thereto, including but not limited to
federal and state securities laws, and with all applicable regulations of any
stock exchange on which the Shares or an equivalent equity interest may be
listed for trading at the time of such exercise and issuance.  The inability of
the Company to obtain approval from any regulatory body having authority deemed
by the Company to be necessary to the lawful issuance and sale of any Share
pursuant to the Award shall relieve the Company of any liability with respect to
the non-issuance or sale of the Shares as to which such approval shall not have
been obtained.  The Company, however, shall use its best efforts to obtain all
such approvals.

 

9.                                     Income and Employment Tax Withholding. 
The Grantee shall be solely responsible for paying to the Company all required
federal, state, city and local income and employment taxes which arise on the
vesting of the Shares.  The Committee, in its sole discretion and subject to
such rules as it may adopt, may require the Grantee to satisfy any withholding
tax obligation by having the Company retain cash or Shares equal to the amount
of the minimum withholding tax to be satisfied by that retention.

 

10.                              Mitigation of Excise Tax.  The Grantee
acknowledges that the Award granted hereunder is subject to reduction by the
Committee for the reasons specified in Section 14.9 of the Plan.

 

11.                              Successors and Assigns.  The provisions of this
Agreement shall inure to the benefit of, and be binding upon, the Company and
its successors and assigns and Grantee, Grantee’s assigns and the legal
representatives, heir and legatees of Grantee’s estate.

 

12.                              Entire Agreement; Governing Law; Attorneys’
Fees.  The Plan is incorporated into this Agreement by reference.  The Plan and
this Agreement constitute the entire agreement of the parties with respect to
the subject matter of this Agreement and supersede in their entirety all prior
undertakings and agreements of the Company and the Grantee with respect to the
subject matter of this Agreement.  The Award and this Agreement shall be
construed, administered and governed in all respects under and by the internal
laws (but not the choice of law rules) of the State of Indiana.  The Company,
its Affiliates and the Grantee irrevocably consent to the jurisdiction and venue
of the Courts of the State of Indiana and the United States federal courts
serving Decatur County, Indiana with respect to any and all actions related to
the Award and this Agreement or the enforcement hereof, and the parties hereto
hereby irrevocably waive any and all objections thereto.  If the Plan or this
Agreement is challenged in a court of law, the prevailing party shall be
entitled to receive from the other party reasonable attorneys’ fees and other
costs and expenses incurred by the prevailing party in connection with such suit
regardless of whether such suit is prosecuted to judgment.

 

13.                              Counterparts.  This Agreement may be executed
in two or more counterparts, each of which will be deemed an original, but all
of which collectively will constitute one and the same instrument.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its
behalf by its duly authorized officer and Grantee, after thoroughly reviewing
and developing a complete understanding of the Plan and this Agreement,
including in particular the restrictions and covenants imposed by Section 5 of
the General Provisions, has also executed this Agreement as of the date first
above written.

 

GRANTEE:

 

MAINSOURCE FINANCIAL GROUP, INC.

 

 

 

 

 

By:

 

(Signature)

 

 

Archie M. Brown, Jr.,

 

 

 

Chairman, Chief Executive Officer and

 

 

 

President

 

 

 

(Printed Name)

 

 

 

 

 

 

 

 

(County and State)

 

 

 

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SCHEDULE A
EARNING OF PERFORMANCE SHARE UNITS

 

1.                                      Target PSU Award Opportunity for
Performance Period:

 

2.                                      Performance Period: January 1, 2015 —
December 31, 2017

 

3.                                      Performance Goal for Performance Period:

 

 

 

 

 

 

 

 

 

Performance Goals

 

Performance
Measure

 

Weight

 

Evaluated
vs.

 

Payout % Target

 

Threshold
0%

 

Target
100%

 

Superior
150%

 

ROA

 

50%

 

Peers

 

 

 

 

 

 

 

 

 

EPS

 

25%

 

Strategic Plan

 

 

 

 

 

 

 

 

 

rTSR

 

25%

 

Peers

 

 

 

 

 

 

 

 

 

 

4.                                      Sample Calculation Assuming Award of 100
PSUs

 

Measure

 

Weighting

 

PSU Grant

 

Assumed
Actual Result

 

Payout

 

Earned
Shares

 

3-year average ROA

 

50%

 

 

 

 

 

 

 

 

 

3-year Cumulative EPS

 

25%

 

 

 

 

 

 

 

 

 

3-year rTSR

 

25%

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Final Award Value (assuming $20.00 stock price)

 

 

 

 

 

 

 

$

*

 

Final Award Value (assuming $15.00 stock price)

 

 

 

 

 

 

 

$

*

 

 

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*In addition to this amount, dividends which would have been paid on         
shares during the Performance Period will be added to the stock or cash
distributed.

 

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