Document:

exhibit103.htm

 

Exhibit 10.3

 

 

SECOND MODIFICATION AGREEMENT

	
DATE:

	
As of June 26, 2015 (the "Effective Date")

	  	  	  
	
PARTIES:

	
Borrower:

	
KNIGHT TRANSPORTATION, INC. an Arizona corporation

	  	  	  
	  	
Lender:

	
WELLS FARGO BANK, NATIONAL ASSOCIATION

RECITALS:

 

    A.   Lender has heretofore established a revolving line of credit (the "Loan") in the original maximum principal amount of $300,000,000 pursuant to that certain Amended and Restated Credit Agreement dated as of October 21, 2013, executed by and between Borrower and Lender (as previously or hereafter amended or modified, the "Loan Agreement").

 

    B.   The Loan is evidenced by that certain Amended and Restated Revolving Credit Note dated as of October 21, 2013, executed by Borrower to the order of the Lender (as amended from time to time, the "Note").

 

    C.   The indebtedness and obligations of Borrower have been guaranteed by Knight 101 LLC, an Arizona limited liability company, Arizona Hay Press, LLC, an Arizona limited liability company, Knight Ag Sourcing, LLC, an Arizona limited liability company, Knight Port Services, LLC, an Arizona limited liability company, Knight Capital Growth, LLC, an Arizona limited liability company, Squire Transportation, LLC, an Arizona limited liability company, Knight Management Services, Inc., an Arizona corporation, Quad-K LLC, an Arizona limited liability company, Knight Truck & Trailer Services, LLC, an Arizona limited liability company, Knight Transportation Services, Inc., an Arizona corporation, Knight Logistics LLC, an Arizona limited liability company (formerly known as Knight Brokerage, LLC, an Arizona limited liability company), Knight Refrigerated, LLC, an Arizona limited liability company, Knight Air, LLC, an Arizona limited liability company, Kool Trans LLC, an Arizona limited liability company, Barr-Nunn Transportation, Inc., an Iowa corporation, Barr-Nunn Logistics, Inc., an Iowa corporation, and Sturgeon Equipment, Inc., an Iowa corporation (each individually a "Guarantor" and collectively the "Guarantors"), pursuant to the terms and conditions of those certain Continuing Guaranty agreements dated as of October 21, 2013 and February 27, 2015, as applicable, executed in favor of the Lender (collectively, the "Guaranty Agreements").

 

    D.   The Loan Agreement, the Note, the Guaranty Agreements and all other documents related to or executed in connection with the Loan are referred to hereinafter, severally and collectively, as the "Loan Documents").

 

    Now, therefore, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

AGREEMENTS:

 

	
SECTION 1.

	
ACCURACY OF RECITALS; DEFINITIONS.

 

    1.1   The parties acknowledge and agree that the Recitals are accurate.

 

    1.2   Borrower acknowledges and agrees that as of June 1, 2015 the outstanding principal balance of the Loan is $62,400,000.

  

  

  

    1.3   Unless otherwise defined herein, all terms defined in the Loan Documents will have the same meanings when used herein.

	
SECTION 2.

	
MODIFICATIONS.

 

    2.1  The definition of "Applicable Margin" in Section 1.1 of the Loan Agreement is hereby amended and restated as follows:

 

    Applicable Margin shall mean the following:

 

	
LIBOR

	
Base Rate

	
Borrowing

	
Borrowing

	
62.5 basis points

	
0.0 basis points

 

    2.2    Section 2.6(a) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

(a)           The Borrower agrees to pay to the Lender (i) quarterly in arrears for each calendar quarter ending each March 31, June 30, September 30 and December 31, on the last Business Day of each calendar quarter, commencing June 30, 2015 and (ii) on the date on which the RLC Commitment shall be terminated as provided herein, for the period from the end of the preceding calendar quarter to the date of such termination, a commitment fee (the "Commitment Fee") at a rate per annum equal to 8.00 basis points (.08%) on the Average Adjusted Daily Undrawn Balance during the preceding calendar quarter (or shorter period (1) commencing with the date hereof or (2) ending with the RLC Maturity Date or any other date on which the Commitment shall be terminated).  The Commitment Fee shall be computed on the basis of the actual number of days elapsed in a year of 360 days.  The Commitment Fee shall be deemed to commence to accrue as of March 30, 2015 and shall cease to accrue on the earlier of the RLC Maturity Date and the termination of the Commitment of Lender as provided herein.

 

    2.3   Section 2A.1(a) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

(a)           Provided that the Borrower has satisfied the conditions precedent contained in Section 2A.1(b) hereof, the Lender agrees, from time to time, to issue and/or renew Letters of Credit on behalf of the Borrower so long as (i) upon such issuance or renewal, an issuance fee is paid by the Borrower to the Lender in an amount equal to 62.5 basis points (0.625%) per annum (computed on the basis of the actual number of days elapsed in a year of 360 days) of the amount of each Letter of Credit, (ii) the Letter of Credit Balance, after giving effect to such Letter of Credit, will not exceed the Letter of Credit Commitment, and (iii) the outstanding aggregate principal amount of all Borrowings made by the Lender pursuant to the Revolving Loan, together with the Letter of Credit Balance, after giving effect to such Letter of Credit, will not exceed the Maximum RLC Commitment.

 

    2.4   Each of the Loan Documents is hereby modified to conform to the provisions of this Agreement and to provide that it will be a default or an event of default thereunder if Borrower fails to comply with any of the covenants of Borrower herein or if any representation, warranty or other statement of Borrower contained or incorporated herein is materially incomplete, incorrect, or misleading as of the date of execution hereof.

  

  

  

    2.5   Each reference in any of the Loan Documents to any of the other Loan Documents is hereby amended to be a reference to such document as modified herein.  

 

	
SECTION 3.

	CONDITIONS PRECEDENT TO EFFECTIVENESS.

   

    3.1   The agreements of Lender and the modifications contained herein shall not be binding upon Lender until Lender has executed and delivered this Second Modification Agreement and Lender has received, at the expense of Borrower, the following, each of which must be acceptable to Lender in form and content:

 

	
(a)

	
An original of this Second Modification Agreement fully executed by Borrower and each of the Guarantors.

	 	 
	
(b)

	
Payment to Lender of the Transaction Costs referred to in Section 4.5.

	 	 
	
(c)

	
All other documents Lender may require to reflect the modifications contained herein and to give effect to effectuate the purposes hereof.

       

	
SECTION 4.

	RATIFICATION OF DOCUMENTS; CERTAIN COVENANTS.

    4.1   Borrower agrees that: (a) the Loan Documents, as modified by this Second Modification Agreement, are the legal, valid, and binding obligations of Borrower and are in full force and effect, (b) the Loan Documents are unchanged, except as specifically modified by this Second Modification Agreement, and (c) any and all property or rights to or interests in property granted as security in any of the Loan Documents shall remain as security for the Loan and the obligations of Borrower under the Loan Documents, as modified hereby.

 

    4.2   Borrower hereby restates, as of the date of its execution hereof, each and every representation and warranty of Borrower in the Loan Documents, as fully as if set forth at length herein.

   

    4.3   Borrower agrees that the occurrence of a default or event of default under any document evidencing or securing any credit accommodation heretofore, herewith or hereafter established by Lender in favor of Borrower will constitute a default under the Loan Documents, as amended hereby.

 

    4.4   Borrower agrees to execute, deliver, and provide to Lender such additional agreements, documents, and instruments as reasonably required by Lender to effectuate the intent of this Second Modification Agreement.

 

    4.5   In consideration of Lender 's agreement to modify the Loan Documents as described herein, Borrower hereby agrees to pay, in addition to other amounts called for herein, the following amounts related to the transaction described herein (the "Transaction Costs"): all costs and expenses arising from the prepara­tion of this Second Modification Agreement and the documents called for herein, the monitoring and administration of the Loan, including, but not limited to, Lender 's reasonable attorneys' fees and all other charges that may be imposed on, or incurred by Lender as a result of the transaction described herein.

 

    4.6   Borrower and each of the Guarantors agrees to indemnify and hold Lender (and Lender 's present and former directors, shareholders, officers, employees, agents, representatives, successors and assigns, and their separate and respective heirs, personal representatives and successors and assigns) harmless from and against all claims, costs, expenses, actions, suits, proceedings, losses, damages and liabilities of any kind whatsoever (except those arising from the gross negligence or willful misconduct of Lender), including but not limited to attorneys' fees and expenses (including any allocated costs of Lender 's in-house counsel), arising out of any matter relating, directly or indirectly, to the Loan, whether resulting from internal disputes of Borrower or any Guarantor, or whether involving other third persons, or out of any other matter whatsoever related to this Second Modification Agreement, the Loan Documents, or any property encumbered as security for the Loan. This indemnity provision will continue in full force and effect and will survive the repayment of the Loan and the performance of all of Borrower's and/or any Guarantor's other obligations with respect to the Loan.

  

  

  

    4.7   Borrower and each of the Guarantors fully, finally, and absolutely and forever releases and discharges Lender and its present and former directors, shareholders, officers, employees, agents, representatives, successors and assigns, and their separate and respective heirs, personal representatives, successors and assigns, from any and all actions, causes of action, claims, debts, damages, demands, liabilities, obligations, and suits, of whatever kind or nature, in law or equity of Borrower or any of the Guarantors, whether now known or unknown to Borrower or any Guarantor, and whether contingent or matured, in respect of the Loan, the Loan Documents, or the actions or omissions of Lender in respect of the Loan, the Loan Documents that arise from events occurring prior to the date of this Second Modification Agreement, including, without limitation, the negotiation of this Second Modification Agreement or any documents called for herein or related hereto.

	
SECTION 5.

	
MISCELLANEOUS.

 

    5.1   Except as modified hereby, the Loan Documents remain unchanged and in full force and effect.

 

    5.2   The Loan Documents, as modified herein, and all other documents called for herein or therein contain the complete understanding and agreement of Borrower and Lender in respect of the Loan and supersede all prior representations, warranties, agreements, arrangements, understandings, and negotiations. No provision of the Loan Documents, as modified herein, or any other document called for herein or therein may be changed, discharged, supplemented, terminated, or waived except in a writing signed by the parties thereto.

 

    5.3   The Loan Documents, as modified herein, and all other documents called for herein or therein, are and shall be binding upon and shall inure to the benefit of Borrower, Lender and their respective successors and assigns.

 

    5.4   This Second Modification Agreement and all other documents called for herein or therein shall be governed by and construed in accordance with the laws of the State of Arizona, without giving effect to any conflict of laws principles.

 

    5.5   Time is of the essence of this Second Modification Agreement, each of the Loan Documents, as modified hereby, and all other documents called for herein or therein.

 

    5.6   This Second Modification Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same document. Signature pages may be detached from the counterparts and attached to a single copy of this Second Modification Agreement to physically form one document.  Signatures transmitted by facsimile or electronic means shall bind the party signing.

 

    5.7   Paragraph or other headings contained in this Second Modification Agreement are for reference purposes only and are not intended to affect in any way the meaning or interpretation of this Second Modification Agreement.

  

  

  

 

    5.8   If any clause or provision of this Second Modification Agreement is determined to be illegal, invalid, or unenforceable under any present or future law by a final judgment of a court of competent jurisdiction, such clause or provision shall be ineffective, but the remainder of this Second Modification Agreement will not be affected thereby.

 

    5.9   Except as specifically set forth herein, the Loan Documents shall remain in full force and effect.  In the event of a conflict between the terms and provisions of this Second Modification Agreement and the terms and provisions of any of the Loan Documents, the terms and provisions of this Second Modification Agreement shall govern and control.

 

[signatures on following pages]

  

  

  

IN WITNESS WHEREOF, the parties execute this Second Modification Agreement as of the Effective Date.

	  	  	 	
KNIGHT TRANSPORTATION, INC.,

an Arizona corporation

	  	  	 	  
	  	
By:

	 	
/s/ David A. Jackson

	  	
 

	 	
David A. Jackson

	  	
 

	 	
President & CEO

	  	  	 	  
	  	  	 	
          BORROWER

	  	  	 	  
	  	  	 	
WELLS FARGO BANK,

NATIONAL ASSOCIATION

	  	  	 	  
	  	
By:

	 	
/s/ Keri M. Tignini

	  	
 

	 	
Keri M. Tignini

	  	
 

	 	
Senior Vice President

	  	  	 	  
	  	  	 	
          LENDER

  

  

CONSENT AND AGREEMENT OF GUARANTORS

The undersigned guarantors hereby consent and agree to the foregoing Second Modification Agreement (the "Agreement").  Each guarantor hereby also agrees that its Continuing  Guaranty dated as of October 21, 2013 or February 27, 2015, as applicable, executed in favor of Lender (each a "Guaranty Agreement"), continues in full force and effect and otherwise remains unaffected and unchanged.  Each undersigned guarantor hereby ratifies and reaffirms its Guaranty Agreement in favor of Lender.  Each of the Guarantors further reaffirm that their obligations under the Guaranty Agreement are separate and distinct from Borrower's obligations and agrees to join in and be bound by all of the terms and provisions of the Agreement applicable to the Guarantors.

Dated as of the date of the Agreement:

 

	  	  	 	
KNIGHT 101 LLC, an Arizona limited liability company

	  	  	 	  
	  	
By:

	 	
/s/ David A. Jackson

	  	
 

	 	
David A. Jackson

	  	
 

	 	
President

	  	  	 	  
	  	  	 	  
	  	  	 	
ARIZONA HAY PRESS, LLC, an Arizona limited liability company

	  	  	 	  
	  	
By:

	 	
/s/ David A. Jackson

	  	
 

	 	
David A. Jackson

	  	
 

	 	
President

	  	  	 	  
	  	  	 	  
	  	  	 	
KNIGHT AG SOURCING, LLC, an Arizona limited liability company

	  	  	 	  
	  	
By:

	 	
/s/ David A. Jackson

	  	 	 	
David A. Jackson

	  	
 

	 	
President

	  	  	 	  
	  	  	 	  
	  	  	 	
KNIGHT PORT SERVICES, LLC, an Arizona limited liability company

	  	  	 	  
	  	
By:

	 	
/s/ David A. Jackson

	  	
 

	 	
David A. Jackson

	  	
 

	 	
President

	  	  	 	  

 

  

  

  

	  	  	 	
KNIGHT CAPITAL GROWTH, LLC, an Arizona limited liability company

	  	  	 	  
	  	
By:

	 	
/s/ David A. Jackson

	  	
 

	 	
David A. Jackson

	  	
 

	 	
President

  

 

	  	  	 	
SQUIRE TRANSPORTATION, LLC, an Arizona limited liability company

	  	  	 	  
	  	
By:

	 	
/s/ David A. Jackson

	  	
 

	 	
David A. Jackson

	  	
 

	 	
President

	  	  	 	  
	  	  	 	  
	  	  	 	
KNIGHT MANAGEMENT SERVICES, INC., an Arizona corporation

	  	  	 	  
	  	
By:

	 	
/s/ David A. Jackson

	  	
 

	 	
David A. Jackson

	  	
 

	 	
President

	  	  	 	  
	  	  	 	  
	  	  	 	
QUAD-K, LLC, an Arizona limited liability company

	  	  	 	  
	  	
By:

	 	
/s/ David A. Jackson

	  	 	 	
David A. Jackson

	  	
 

	 	
President

	  	  	 	  
	  	  	 	  
	  	  	 	
KNIGHT TRUCK & TRAILER SERVICES, LLC, an Arizona limited liability company

	  	  	 	  
	  	
By:

	 	
/s/ David A. Jackson

	  	
 

	 	
David A. Jackson

	  	
 

	 	
President

	  	  	 	  
	  	  	 	  
	  	  	 	
KNIGHT TRANSPORTATION SERVICES, INC., an Arizona corporation

	  	  	 	  
	  	
By:

	 	
/s/ David A. Jackson

	  	 	 	
David A. Jackson

	  	
 

	 	
President

	  	  	 	  

 

  

  

  

	  	  	 	
KNIGHT LOGISTICS, LLC, an Arizona limited liability company

	  	  	 	  
	  	
By:

	 	
/s/ David A. Jackson

	  	 	 	
David A. Jackson

	  	 	 	
President

	  	  	 	  
	  	  	 	  
	  	  	 	
KNIGHT REFRIGERATED, LLC, an Arizona limited liability company

	  	  	 	  
	  	
By:

	 	
/s/ David A. Jackson

	  	 	 	
David A. Jackson

	  	
 

	 	
President

	  	  	 	  

	  	  	 	  
	  	  	 	
KNIGHT AIR, LLC, an Arizona limited liability company

	  	  	 	  
	  	
By:

	 	
Knight Transporation, Inc., an Arizona corporation

	  	
Its:

	 	Member
	  	
By:

	 	
/s/ David A. Jackson

	 	 	 	David A. Jackson
	  	  	 	President
	  	  	 	  
	 	 	 	 
	  	  	 	
KOOL TRANS LLC, an Arizona limited liability company

	  	  	 	  
	  	
By:

	 	
/s/ David A. Jackson

	  	
 

	 	
David A. Jackson

	  	 	 	
Manager

	  	  	 	  
	  	  	 	  
	  	  	 	
BARR-NUNN TRANSPORTATION, INC., an Iowa corporation

	  	  	 	  
	  	
By:

	 	
/s/ Adam Miller

	  	
Name:

	 	
Adam Miller

	  	
Its:

	 	
Assistant Treasurer

	  	  	 	  
	  	  	 	  
	  	  	 	
BARR-NUNN LOGISTICS, INC., an Iowa corporation

	  	  	 	  
	  	
By:

	 	
/s/ Adam Miller

	  	
Name:

	 	
Adam Miller

	  	
Its:

	 	Assistant Treasurer
	 	 	 	 
	 	 	 	 
	  	  	 	
STURGEON EQUIPMENT, INC., an Iowa corporation

	  	  	 	  
	  	
By:

	 	
/s/ Adam Miller

	  	
Name:

	 	
Adam Miller

	  	
Its:

	 	Assistant Treasurer

 

Back to Form 10-QExhibit 10.1

 

CITIZENS FIRST CORPORATION

2015 INCENTIVE COMPENSATION PLAN

PERFORMANCE UNITS AWARD AGREEMENT

 

This Award Agreement (“Agreement”) is entered into as of         ,      (“Grant Date”), by and between Citizens First Corporation, a Kentucky corporation (“Company”), and an officer or employee of the Company or one of its Affiliates (“Participant”).

 

Background

 

A. The Company adopted the Citizens First Corporation 2015 Incentive Compensation Plan (“Plan”) to further the growth and financial success of the Company and its Affiliates by aligning the interests of participating officers and key employees (“participants”) more closely with those of the Company’s shareholders, providing participants with an additional incentive for excellent individual performance, and promoting teamwork among participants.

 

B. The Company believes that the goals of the Plan can be achieved by granting Performance Units to eligible officers and other key employees.

 

C. The Compensation Committee of the Board has determined that a grant of Performance Units to the Participant, as provided in this Award Agreement, is in the best interests of the Company and its Affiliates and furthers the purposes of the Plan.

 

D. The Participant wishes to accept the Company’s grant of Performance Units, subject to the terms and conditions of this Award Agreement and the Plan.

 

Agreement

 

In consideration of the premises and the mutual covenants herein contained, the Company and the Participant agree as follows:

 

1. Defined Terms. For purposes of this Agreement, if the first letter of a word (or each word in a term) is capitalized, the term shall have the meaning provided in this Agreement, or if such term is not defined by this Agreement, the meaning specified in the Plan.

 

(a) “Appendix A” means Appendix A to this Agreement, which is hereby incorporated herein and made a part hereof. Appendix A describes the performance factors and goals with respect to the Performance Units.

 

(b) “Superior Performance” means the Performance Goal achievement required for the maximum permissible distribution with respect to a Performance Unit, as set out in Appendix A.

 

1

 

(c) “Threshold Performance” means the Threshold Performance Goal achievement required for any distribution to be made with respect to a Performance Unit, as set out in Appendix A.

 

(d) “Performance Goal” means a financial target on which the distribution with respect to a Performance Unit is based, as set out in Appendix A.

 

(e) “Performance Period” means the Performance Period specified in Appendix A.

 

(f) “Performance Unit” means a contingent right awarded pursuant to this Agreement for distribution of a Share upon attainment of the Performance Goals as set forth in Appendix A.

 

(g) “Section” refers to a Section of this Agreement.

 

(i) “Share Distribution” means, with respect to a Performance Unit, the total number of Shares to be distributed to the Participant.

 

(j) “Target Performance” means the Performance Goal achievement required for the targeted distribution with respect to an Performance Unit, as set out in Appendix A. If Target Performance is achieved but not exceeded for all Performance Goals, the Share Distribution with respect to a Performance Unit is one share of the Company’s voting common stock (“Share”).

 

2. Incorporation of Plan Terms. All provisions of the Plan, including definitions (to the extent that a different definition is not provided in this Agreement), are incorporated herein and expressly made a part of this Agreement by reference. The Participant hereby acknowledges that he or she has received a copy of the Plan.

 

3. Award of Performance Units. The Committee has awarded the Participant       Performance Units, effective as of the Grant Date, subject to the terms and conditions of the Plan and this Agreement.

 

4. Contingent Distribution on Account of Performance Units.

 

(a) Except as provided in Section 5, no distribution shall be made with respect to any Performance Unit, unless (i) the respective Threshold Performance is achieved or exceeded in accordance with the Performance Goal set out in Appendix A, and (ii) the Participant (A) is continually employed by the Company and/or an Affiliate at all times from the award of the Performance Units until the date on which Shares are distributed pursuant to Subsection (c) below; provided, however, the Committee may, in its discretion, waive the continuous employment requirement in this clause (ii), or (B) Terminates Service during the Performance Period on account of the Participant’s death, Disability, or Retirement.

 

(b) All distributions on account of a Performance Unit shall be made in the form of Shares. The Share Distribution with respect to a Performance Unit, if any, is dependent on the Company’s achievement of the Performance Goals, as specified in Appendix A. By way of example, if Target Performance for the Performance Period is achieved but not exceeded with 

 

2

 

respect to each Performance Goal, the Share Distribution shall consist of one share of the Company’s voting common stock (“Share”). The number of Shares distributed on account of a Performance Unit shall be reduced by applicable tax withholding as provided in Section 9. If, after reduction for tax withholding, the Participant is entitled to a fractional Share, the net number of Shares distributed to the Participant shall be rounded down to the next whole number of Shares.

 

(c) Except as expressly provided in Section 5, the Company shall distribute the Share Distribution, reduced to reflect tax withholding, on the date the Company files its Form 10-K with the U.S. Securities and Exchange Commission in the calendar year following the year in which the Performance Period ends.

 

(d) Notwithstanding any other provision of this Agreement, the Committee may, in its sole discretion, reduce the number of Shares that may be distributed as determined pursuant to the Share Distribution calculation set forth above. The preceding sentence shall not apply to a distribution made pursuant to Section 5.

 

(e) If a Participant Terminates Service during the Performance Period on account of Participant’s Disability or Retirement, Participant’s Performance Units shall remain outstanding as if Participant had not Terminated Service, and payments with respect to such Performance Units shall be made at the same time and subject to the same performance requirements as payments that are made to Participants who did not incur a Termination of Service during the applicable Performance Period.

 

(f) If a Participant Terminates Service due to death during the Performance Period, the performance requirements with respect to the Participant’s Performance Units shall lapse, and the Participant’s Beneficiary shall, on the date of such Termination of Service, be fully entitled to payment under such Performance Units as if targeted performance had been achieved and the Performance Period ended on the date of the Participant’s death, and such payments shall be made within sixty (60) days after the Participant’s death.

 

5. Change in Control. If a Change in Control occurs during the Performance Period, and the Participant has been continually employed by the Company and/or an Affiliate from the Grant Date until the day preceding the Change in Control date, the Company shall distribute to the Participant on the Change in Control date or within thirty (30) days thereafter the number of Shares actually earned through the date of the Change in Control (pro-rated for the portion of the Performance Period served through the date of the Change in Control), that would have been paid to the Participant pursuant to Section 4, if (i) the Participant had satisfied the employment requirement of Subsection 4(a), and (ii) the Performance Period ended on the Change in Control date with earned Performance Units to be calculated based on actual Company performance relative to the Performance Goals as of the Change in Control date. The Committee, in its sole discretion, may elect for the Company to pay the Participant, in lieu of distributing Shares, the cash equivalent of the Shares to be distributed to the Participant pursuant to this Section. Upon such cash payment or distribution of Shares, the Company’s obligations with respect to the Performance Units shall end.

 

3

 

6. Performance Goals. The applicable Performance Goals, the weight given to each Performance Goal, and the Threshold Performance, Target Performance, and Superior Performance are set out in Appendix A.

 

7. Participant’s Representations. The Participant agrees, upon request by the Company and before the distribution of Shares with respect to the Performance Units, to provide written investment representations as reasonably requested by the Company.

 

8. Income and Employment Tax Withholding. All required federal, state, city, and local income and employment taxes that arise on account of the Performance Units shall be satisfied through the withholding of Shares otherwise distributable pursuant to this Agreement.

 

9. Nontransferability. The Participant’s interest in the Performance Units or any distribution with respect to such units may not be (i) sold, transferred, assigned, margined, encumbered, bequeathed, gifted, alienated, hypothecated, pledged, or otherwise disposed of, whether by operation of law, whether voluntarily or involuntarily or otherwise, other than by will or by the laws of descent and distribution, or (ii) subject to execution, attachment, or similar process. Any attempted or purported transfer in contravention of this Section shall be null and void ab initio and of no force or effect whatsoever.

 

10. Indemnity. The Participant hereby agrees to indemnify and hold harmless the Company and its Affiliates (and their respective directors, officers and employees), and the Committee, 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 Participant to the Company or any failure on the part of the Participant to perform any agreements contained herein. The Participant 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 Participant in connection with his or her participation in the Plan.

 

11. Changes in Shares. In the event of any change in the Shares, as described in Section 4.04 of the Plan, the Committee, consistent with the principles set out in such Section, will make appropriate adjustment or substitution in the number of Performance Units, so that the contingent economic value of a Performance Units remains substantially the same. The Committee’s determination in this respect will be final and binding upon all parties.

 

12. Effect of Headings. The descriptive headings used in this Agreement are inserted for convenience and identification only and do not constitute a part of this Agreement for purposes of interpretation.

 

13. Controlling Laws. Except to the extent superseded by the laws of the United States, the laws of the Commonwealth of Kentucky, without reference to the choice of law principles thereof, shall be controlling in all matters relating to this Agreement.

 

4

 

14. Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which will be deemed an original, but all of which collectively will constitute one and the same instrument.

 

15. Recoupment/Clawback. Any grant of Performance Units under this Agreement or any other award granted or paid to the Participant under the Plan, whether in the form of stock options, stock appreciation rights, restricted stock, performance units, performance units or stock, is subject to recoupment or “clawback” by the Company in accordance with applicable law. This Section, “Recoupment/Clawback,” shall survive termination of this Agreement.

 

IN WITNESS WHEREOF, the Company, by its officer thereunder duly authorized, and the Participant, have caused this Performance Unit Award Agreement to be executed as of the day and year first above written.

 

	
PARTICIPANT
    	
 
    
	
 
    	
 
    
	
Accepted   By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Printed Name:
    	
 
    	
 
    
	
 
    	
 
    
	
Date:                        ,   2015
    	
 
    
	
 
    	
 
    
	
CITIZENS   FIRST CORPORATION
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    
				

 

5

 

APPENDIX A TO 2015 PERFORMANCE UNITS AWARD AGREEMENT

 

Grant Date:               ,

Performance Units Awarded:

Performance Period: January 1, 2015 through December 31, 2017

 

Factors for Determining Amount Payable Pursuant to Performance Award

 

The number of Shares payable on account of a Performance Unit (before tax withholding) will be based on the results of the following performance factors (“Performance Factors”) during the Performance Period:

 

Return on Average Assets (ROA)

Non-Performing Assets to Total Assets Ratio (NPAs)

Net Charge-Offs to Average Total Loans Ratio (NCOs)

 

Definitions Related to Performance Factors

 

Return on Average Assets (ROA): Return on Average Assets is defined as GAAP ROA, as reported in the Company’s Form 10-K for the fiscal year excluding, however, extraordinary items and non-recurring charges, both as determined under GAAP.

 

Non-Performing Assets to Total Assets Ratio: As reported in the Company’s Form 10-K for the fiscal year.

 

Net Charge-Offs to Average Total Loans Ratio: As reported in the Company’s Form 10-K for the fiscal year.

 

Performance Weighting Fraction

 

“Performance Weighting Fraction” means the relative importance of each performance measure in evaluating performance and determining the number of Shares to be distributed (before tax withholding) with respect to each Performance Unit. The following weights have been assigned to the Performance Factors:

 

Return on Average Assets 70%

Non-Performing Assets to Total Assets Ratio 15%

Net Charge-Offs to Average Total Loans 15%

 

Calculation of Performance

 

For each Performance Factor, the performance level will be determined at the end of the Performance Period. The performance level will then be multiplied by the Performance Weighting Fraction, resulting in the Company’s Performance Level. The table below shows the percentage of Shares to be issued with respect to each Performance Unit (before tax withholding) at various performance levels:

 

6

 

PERFORMANCE BASED UNITS

Performance Period - 2015 to 2017

Performance Range Schedule - ROA

 

	
Performance   Weight
    	
 
    	
70
    	
%
    

 

	
Performance Range
    	
 
    	
ROA
    	
 
    	
Percent of
   Incentive 
   Earned
    	
 
    
	
SUPERIOR
    	
 
    	
0.98
    	
%
    	
150
    	
%
    
	
 
    	
 
    	
0.93
    	
%
    	
125
    	
%
    
	
TARGET
    	
 
    	
0.88
    	
%
    	
100
    	
%
    
	
 
    	
 
    	
0.86
    	
%
    	
80
    	
%
    
	
 
    	
 
    	
0.84
    	
%
    	
60
    	
%
    
	
 
    	
 
    	
0.82
    	
%
    	
40
    	
%
    
	
 
    	
 
    	
0.80
    	
%
    	
20
    	
%
    
	
THRESHOLD
    	
 
    	
0.78
    	
%
    	
0
    	
%
    

 

Performance Range Schedule - NPAs

 

	
Performance   Weight
    	
 
    	
15
    	
%
    

 

	
Performance Range
    	
 
    	
NPAs
    	
 
    	
Percent of 
   Incentive
   Earned
    	
 
    
	
SUPERIOR
    	
 
    	
0.50
    	
%
    	
150
    	
%
    
	
 
    	
 
    	
0.75
    	
%
    	
125
    	
%
    
	
TARGET
    	
 
    	
1.00
    	
%
    	
100
    	
%
    
	
 
    	
 
    	
1.10
    	
%
    	
80
    	
%
    
	
 
    	
 
    	
1.20
    	
%
    	
60
    	
%
    
	
 
    	
 
    	
1.30
    	
%
    	
40
    	
%
    
	
 
    	
 
    	
1.40
    	
%
    	
20
    	
%
    
	
THRESHOLD
    	
 
    	
1.50
    	
%
    	
0
    	
%
    

 

7

 

Performance Range Schedule - NCOs

 

	
Performance Weight
    	
 
    	
15
    	
%
    

 

	
Performance Range
    	
 
    	
NCOs
    	
 
    	
Percent of
   Incentive
   Earned
    	
 
    
	
SUPERIOR
    	
 
    	
0.05
    	
%
    	
150
    	
%
    
	
 
    	
 
    	
0.075
    	
%
    	
125
    	
%
    
	
TARGET
    	
 
    	
0.10
    	
%
    	
100
    	
%
    
	
 
    	
 
    	
0.15
    	
%
    	
50
    	
%
    
	
THRESHOLD
    	
 
    	
0.20
    	
%
    	
0
    	
%
    

 

Example: The following example shows the Share Distribution on account of 2,000 Performance Units, based on an ending period ROA of 1.10%, NPAs of 1.15% and NCOs of 0.20%.

 

	
 
    	
 
    	
ROA
    	
 
    
	
Actual Results
    	
 
    	
1.10
    	
%
    
	
Performance   Level (a)
    	
 
    	
100
    	
%
    
	
Factor Weight   (b)
    	
 
    	
70
    	
%
    
	
Shares Issued   With Respect to the Performance Units (before Withholding)
    	
 
    	
1,400
    	
 
    

 

	
 
    	
 
    	
NPA
    	
 
    
	
Actual Results
    	
 
    	
1.15
    	
%
    
	
Performance   Level (a)
    	
 
    	
40
    	
%
    
	
Factor Weight   (b)
    	
 
    	
15
    	
%
    
	
Shares Issued   With Respect to the Performance Units (before Withholding)
    	
 
    	
120
    	
 
    

 

	
 
    	
 
    	
NCO
    	
 
    
	
Actual Results
    	
 
    	
0.20
    	
%
    
	
Performance   Level (a)
    	
 
    	
100
    	
%
    
	
Factor Weight   (b)
    	
 
    	
15
    	
%
    
	
Shares Issued   With Respect to the Performance Units (before Withholding)
    	
 
    	
300
    	
 
    

 

8

 

Timing of Award Determination and Distribution

 

Once performance results for the Company are known and approved by the auditors, the Compensation Committee will review and approve the final performance results for the Performance Factor. The Compensation Committee reserves the right to use negative discretion to reduce the amount of any payment. The Shares will be distributed in accordance with the timing set forth in Section 4(c) of this Agreement.

 

9

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